Tag Archives: Bush tax cuts

An Interesting Take On The Fiscal Cliff

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Erick Erickson posted an interesting article at Red State yesterday about the current wrangling regarding the fiscal cliff. Mr. Erickson pointed out that in his opinion, John Boehner should not raise tax rates–it would be better to go off the fiscal cliff.

The article explains what is really going on here:

Why would every other issue move quickly if the Republicans would just agree to raise rates? Because of two issues.

The White House knows that if they cannot get the GOP to vote to increase rates, they will get crushed on the tax issue in the midterms. Their red state Democrats need political cover before they can vote to increase taxes. That cover is a Republican cave.

The White House also knows that if they can get the GOP to vote to increase taxes once, it will be far easier to get them to do it again.

Barack Obama needs the Republicans to raise rates. If they do not get it before January 1, all of the Bush tax cuts will expire and the GOP will not permit any reduction without it being an across the board reduction. Moderate Democrats in the Senate and the few remaining blue dogs in the House will be in a very difficult position.

Raising tax rates, rather than simply eliminating some loopholes, would cause a serious split in the Republican party. It would result in a serious power struggle within the party during the elections of 2014, probably giving the Democrats additional seats in both the House and the Senate. What would happen after that would be a nightmare for America–there would be no control at all on Barack Obama’s spending plans. If John Boehner has any loyalty to the country and to the Republican party, he needs to resist the pressure to increase tax rates.

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A Broken Promise

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I seem to remember both Republicans and Democrats saying that they did not want to raise taxes on the Middle Class. Then how come, even if a deal is reached to avoid the fiscal cliff, taxes on the Middle Class are going up in January?

The Washington Free Beacon posted an article today explaining what is about to happen:

Employee payroll taxes are scheduled to rise nearly 50 percent in 2013 absent action by lawmakers, and there is a growing sense that both parties might be willing to let that happen.

Party leaders have about five weeks to resolve a host of budget issues to avoid going over the “fiscal cliff,” the term used to describe more than $600 billion in automatic spending cuts and tax increases scheduled to occur on Jan. 1, 2013.

The discussion thus far has focused on the Bush-era tax cuts, with very little discussion of what to do with the temporary cuts on employee payroll taxes that has been in effect for the past two years. The employee payroll tax cut affects roughly 160 million Americans and saves the typical middle class family $1,000 per year.

U. S. News posted an article in January 2012 which listed five facts about the employee payroll tax cut. One of these is very interesting:

Even though workers are paying less tax into the Social Security system, they do not suffer any reduction in the benefits that will ultimately be collected. The federal government promises to pay the benefit that would otherwise have been received. The benefits are figured on the basis of earnings (up to the wage base limit for the year) and not on the taxes paid.

So Congress took a program (Social Security) that has been teetering on bankruptcy for a number of years and reduced the amount of money paid into it without reducing the benefits being paid out. What a business plan!

The article at the Washington Free Beacon concludes:

There is some concern among Republicans that Democrats might disregard policy considerations in order use the payroll tax cut as a political wedge issue. Democrats did this in February when House Republicans arguably lost a showdown with the White House.

It remains to be seen whether or not lawmakers can strike a deal to avoid going over the fiscal cliff.

Either way, though, the payroll tax cut appears unlikely to survive.

Obamacare increases taxes on the Middle Class in January. It is likely that even if a deal is reached to avoid the fiscal cliff, other taxes on the Middle Class will be increased in January also. As Americans, we need to tell Washington–THE PROBLEM IS NOT A LACK OF REVENUE–IT IS TOO MUCH SPENDING!!! Until Congress and the President get that message, the American taxpayer will continue to be seen as a never ending source of money, and at some point the American taxpayer will run out of money.

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This Sounds Like A Lose Lose Situation

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CNS News is reporting today that the Congressional Budget Office (CBO) is predicting that if tax rates rise in 2013, the economy will slip back into recession. Unless Congress acts, there will be a significant tax increase on January 2013.

The article points out that Congress will not act to change the projected increase in taxes until after the election. Great. Translated loosely, that means that Congress does not want to take responsibility for any actions they might take regarding taxes. As you know, President Obama is already saying that he won’t do anything to stop the drastic defense cuts included in sequestration unless the Republicans agree to raise taxes. Does anyone honestly believe that additional tax revenue will be used to pay down the deficit? In the past, when taxes have been raised, has spending ever actually remained the same or been cut?

The article concludes:

While CBO included mandatory spending cuts from the federal budget sequester (the “fiscal cliff”) in its analysis, the vast majority of the impact to the economy will come from the tax increases – the expiration of the Bush tax cuts — due to their sheer size.

CBO estimated that the combination of spending cuts and tax increases would reduce the federal deficit by $487 billion in fiscal 2013, with the vast majority of that figure coming from tax increases.

CBO projects that if current tax policies are kept in place and do not expire in 2013 as scheduled, revenues would be $5 trillion less between 2012 and 2022.

Congress is not expected to address either the mandatory spending cuts or the expiration of the Bush tax rates until after the election.

We need to examine the way that we look at taxes, tax rates, etc. The American public has been fed a line that somehow the government has a legitimate right to the earnings of the American people. It does not. There is nothing greedy about wanting to keep money that you have worked hard to earn. There is something basically wrong about taking money from people who have worked hard to earn it and giving it to people who have chosen not to work. I am sure we have all heard stories about people who refused to take low paying jobs because they could make more money simply by being on welfare and they didn’t have to go to work all day. Because of the amount of taxes taken out of all of our paychecks, the line between making money at the bottom of the economic spectrum and collecting welfare has become very blurred.

It’s time to remember that money belongs to the people who have earned it–no one else is entitled to it–not even the government. Unless we elect an administration that understands that people are entitled to the rewards of their hard work (they did build that!), we are going to wind up in the same place as the bankrupt countries of Europe.

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Confusing Giving With Taking

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Investors.com posted an article yesterday which clearly shows a basic difference in philosophy between Governor Romney and President Obama. The article deals with the current debate over extending the tax rates put into place by President Bush about ten years ago. The Democrats are still fighting the battle to raise those taxes.

The article reports:

Speaking last Wednesday in New Orleans at a campaign event, Obama talked about “another trillion-dollar giveaway for millionaires” in reference to an extension of the Bush-era tax cuts.

A day later, White House spokesman Jay Carney did the same thing. He called the extension “another $1 trillion giveaway to the wealthiest Americans.”

What they are talking about is the House Republicans’ opposition to legislation approved in the Senate that would raise taxes on those earning more than $250,000 a year, a sum less than the president makes yet is somehow considered to be the mark of wealth.

ABC’s Jake Tapper questioned Jay Carney about the idea that tax-cuts are the same as giveaways:

ABC’s Jake Tapper wanted to know what he would “say to a small-business owner who says that’s not a giveaway, that’s my money, and by the way, I’m going to need some of that money in order to help pay the health care of individuals that I’m now mandated to do?”

Tapper further said, “It’s not giving anything away; it’s allowing me to keep my money.”

Needless to say, Jay Carney never directly answered the question.

The article concludes:

Americans should be deeply offended that anyone would categorize the act of keeping one’s own money as a giveaway. And they should be profoundly alarmed when policymakers and their aides hold that view because they can turn their beliefs into oppressive law.

Remember, government creates neither wealth nor jobs. It has to take everything that it owns, and that requires force — real or implied.

Obama was elected in 2008 on a platform of hope and change. The promises sounded good to many even if they were not defined.

Now those terms have taken shape — unmistakably and unsettlingly.

If a government that owns all is the change Obama promised in 2008, and it becomes the dominant governing philosophy of this country, then there’s not much hope left.

That pretty much says it all.

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Killing The American Economy Because Of Class Envy

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For some reason Democrats (even rich Democrats) seem to have the idea that somehow we will all be happier if we punish people who have been successful in business in America. I totally do not understand how Kennedy’s, Pelosi’s, and Kerry’s and other wealthy Democrats want to raise taxes (unless of course you take into account that because of tax shelters, they may not be impacted very much by tax increases). The thing we need to remember is that raising taxes on the ‘rich’ really does not have a big impact on the budget deficit–somehow when taxes are raised on the ‘rich’ the middle class always gets hurt.

Yesterday’s Wall Street Journal posted an article on the Democrat’s latest temper tantrum.

The article reports:

That was the chest-pounding message Monday from Patty Murray, the Washington Democrat who runs her party’s Senate campaign committee. In a speech at the Brookings Institution, she declared that if Republicans won’t raise taxes on income above $250,000 before November, Democrats will gladly let all of the Bush tax rates expire at the end of the year—even on the middle class, and no matter the economic consequences.

“If we can’t get a good deal—a balanced deal that calls on the wealthy to pay their fair share—then I will absolutely continue this debate into 2013 rather than lock in a long-term deal this year that throws middle-class families under the bus,” Mrs. Murray said, in what sounded like an ultimatum.

That bit about throwing middle-class taxpayers “under the bus” is political spin, because Republicans say they’re ready to vote to extend for another year the current tax rates on all taxpayers, including everyone who makes less than $250,000. The Murray Democrats are the ones holding the middle-class rates hostage to a GOP vote to raise taxes on the affluent.

If I hear ‘tax breaks for the rich’ one more time, I may scream. First of all, in many states (New York and California to name two), $250,000 a year is middle class. Second of all, many small business owners file their taxes in a way that the gross income of the company (before expenses) shows as their personal income. They would be severely impacted by raising taxes on those making $250,000 a year. These are the people who create jobs. Just for the record, my husband and I do not make more than $250,000 a year, nor are we in danger of doing so. I just think class warfare is wrong.

The article concludes:

Perhaps Senator Murray and her fellow Democrats really don’t think tax increases will hurt all that much, and it’s clear she’s clueless about the way expectations influence economic decisions. But at least voters now know that Democrats are willing to toy with recession to win an election.

The “Bush Tax Cuts” have been in effect for at least ten years. When are they going to stop being the “Bush Tax Cuts” and simply become the current tax rate?

Today Is April 15th–Unless Congress Acts, The Taxes We Paid This Year Will Seem Miniscule Next Year

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 On Friday CNS News posted a story about the coming ‘automatic’ tax increases that will begin on January 1, 2013. The tax burden of the average American family will increase by $3,800–in a single year. Congress will deny being responsible for the increase–they didn’t pass anything. So what happened–the “Bush tax cuts” are set to expire. Those “tax cuts for the rich” saved the average American family $3,800 every year they were in effect.

The article reports:

It’s a near-perfect fiscal storm — occurring just after a major national election, no less. Among the tax breaks that are expiring: the Bush tax cuts that occurred in 2001 and 2003, the payroll tax cut, and the tax cut from the 2009 stimulus.

That’s not all. The estate tax, known more accurately as the Death Tax, rises to 55 percent. The 100 percent exemption for business investment goes away. Also among the soon-to-be-missing: the patch that lawmakers passed to ensure that the Alternative Minimum Tax (AMT) doesn’t snare more and more middle-income earners (instead of the super-rich it was originally designed for).

This $494 billion increase is unprecedented in scope. To give you a better idea of how big it really is, consider that all of the tax hikes in Obamacare — a huge tax hike in and of itself — add up to $502 billion over a 10-year period. Taxmageddon will extract almost that much from Americans next year alone. Saddling a “jobless” recovery with this monster hike is spectacularly bad policy.

This disaster can be avoided in one of three ways–the present Congress can stop it by extending the Bush tax cuts, we can elect a new Congress that will stop it as soon as they are sworn in, or Congress could redo the tax code in a transparent manner that is fair to all taxpayers The first option is highly unlikely, the second option is extremely necessary, and the third option will happen right after pigs fly.

 

 

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The Tax Increase No One Is Talking About

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Yesterday Hot Air posted an article by J.E. Dyer on the tax increase scheduled for January 1. This tax increase has nothing to do with the super committee or any recent actions by Congress–it is simply the result of the expiration of the ‘Bush tax cuts.’ As you remember, the Republicans never had enough of a majority in Congress to make the Bush tax cuts permanent–they were renewed in a budget deal in December, but only for a year. Now the Clinton tax rates are set to come roaring back and totally devastate any economic growth that may be coming down the pike.

Some examples of the taxes involved show that the Bush tax cuts gave serious tax relief to middle class families. The article explains:

Bob Jennings at Fox Business ran some numbers for a young couple with two kids and combined income of $100,000.  (H/t: Lonely Conservative.)  Their tax bill would go up by nearly $3600 between 2011 and 2012, or about $300 a month.  And that’s just federal income tax:  they’re also paying property taxes (they have a mortgage), probably state income tax as well, and sales taxes and special excise taxes (e.g., federal gas tax) – plus they’re sending 13% of each of their earned incomes to Social Security and Medicare.

If you are a young family with children, $300 a month is significant. Unless Congress acts to continue the George Bush tax policies, more young families will struggle economically.

The article gives some specific examples of changes:

It’s not just rate increases for the “rich.”  The 10% bracket goes away, with the lowest rate reverting to 15%; the child tax exemption goes from $1000 per child back to $500; the “marriage penalty” comes back in terms of personal exemptions – and those are just the changes that will be felt by the most people.  Taxes on dividend income will go up as well, and all exemptions will be phased out as income rises (which will hit the small-business proprietors and professionals whose activities with their own money make an outsize contribution to economic growth and prosperity – not to mention dealing a blow to charities).

Hopefully, someone is Congress will prevent these tax increases from taking effect, but I am not optimistic. We need to constantly remind Congress–taxes are not too low–spending is too high!

 

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Why The Deficit Cutting Supercommittee Won’t Work

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On Sunday, The Hill reported that Representative James Clyburn (S.C.) is vowing to use his position on the Joint Select Committee on Deficit Reduction to tackle the nation’s enormous wealth gap.

The article reports:

Clyburn said he’ll be pushing for revenue raisers – not just cuts – in the next round in order to “secure our nation’s financial future in a fair and balanced way that requires shared sacrifice and creates opportunity for all Americans.”

There is a basic problem with this statement. We will never be able to eliminate poverty. We can try to make poverty more comfortable–food stamps, housing, etc., but we will never eliminate it.  Jesus, who seemed to have a pretty good idea of what human nature was like, stated in Mark 14:7, “For you have the poor with you always, and whenever you wish you may do them good.” Lyndon Johnson declared war on poverty more than forty years ago. We lost. What we have done has not worked, what is Representative Clyburn planning to do that is different?

What is responsible for the nation’s wealth gap? Part of it may be due to educational opportunities, but more of it is due to work ethic, ambition, attitude, values, etc. Unless you are willing to work on some of those areas, you will not change the wealth gap.

The article further reports:

While Democrats are insisting on tax-revenue increases as part of the package, Republicans are equally as adamant that they be excluded.

“We were not elected to raise taxes or take more money out of the pockets of hardworking families and business people,” House Majority Leader Eric Cantor (R-Va.) wrote Monday in a memo to fellow Republicans.

There is a basic philosophic difference between the statements of James Clyburn and Eric Cantor. Eric Cantor understands that people who have wealth have generally worked hard to obtain it. Taking it away from those people will not make the poor any richer–it will make everyone poorer. Shared sacrifice does not work–it is not good for anyone.

Raising taxes in a recession is not a good idea. The Democrats stated in January when they extended the Bush tax cuts that raising taxes in a fragile economy was not a good idea. What has changed? The supercommittee is political theater. The problem is that when they fail, our defense budget will be stripped and we will pay a heavy price for that in national security. The defense budget is not our problem and low taxes are not our problem–it’s the spending, stupid!

If you truly want to tackle the wealth gap, lower everyone’s taxes, cut regulations, and tell everyone on welfare that the payments will stop in three months. At that point, the economy will grow!

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