We Need A President Who Will Put Americans’ Interests First

Every four years, we elect a President of America. That person is not elected to be President of the world, he is elected to be President of America. Lately it seems as if some of our Presidents have forgotten this basic fact.

On Friday, Issues & Insights reported:

The Biden administration has just spent two years negotiating with a group of foreign countries to raise taxes on U.S. companies operating overseas. Now we’re being told it’s been “delayed” for two more years. But why delay a bad decision? It’s an awful idea that should be rejected out of hand.

“Americans have already been crushed by inflation caused by the Biden administration,” argued West Virginia congresswoman Carol Miller, in a recent op-ed. “But now, they want to add fuel to the fire by giving American taxes to foreign countries, raising costs for Americans, and sticking us with the bill for funding a global socialist agenda.”

Her analysis is spot on. The U.S. Treasury and White House have no business negotiating a deal to subvert America’s sovereignty and erode its economic power, which the accord with the 38-nation Organization for Economic Cooperation and Development (OECD), headquartered in the ultra-deluxe Château de la Muette in Paris, is clearly meant to do.

For the record, the U.S. already imposes a 10.5% minimum tax on U.S. businesses’ foreign income, and last year imposed a 15% “global minimum tax” on big multinational companies’ profits. And the standard corporate rate here in the U.S. is now already 21%, well above 15%. So what’s the issue?

Under the OECD “deal” that both President Joe Biden and Treasury Secretary Janet Yellen have embraced, there’s something called the Undertaxed Profits Rule (UTPR). That guideline basically would let other countries tax a U.S. company at a higher rate if the country determines that it is paying less than the 15% somewhere else. And the other country, not the U.S. taxpayer, gets the revenue.

The opportunity from this rule for global tax abuse and even graft are clear. Moreover, U.S. tax rates by law have always been determined by Congress and the president, not by foreign bureaucrats.

The first thing to understand here is that corporations do NOT pay taxes–they simply consider them a business cost and past the expense on to consumers. Higher taxes mean lower wages for employees and higher prices for the product produced.

The article concludes:

The House Ways and Means Committee has already held hearings, and will no doubt hold more in the future to halt or radically change the Biden-Yellen “deal,” which excluded congressional input. No doubt, more hearings are on the way.

Meanwhile, a post from the Committee’s website after a hearing earlier this month said it all: “Committee Members found the proposal would hurt American companies, kill American jobs, give Chinese Communist Party-sponsored businesses a global economic advantage, and surrender $120 billion in U.S. tax revenue.”

Sound like a good deal to you?

Who does our representative government represent?

Please Teach This Lady Economics!

Yesterday The Daily Wire posted an article that illustrates the lack of knowledge of economics in our country’s current leadership class.

The article reports:

White House Press Secretary Jen Psaki claimed during Monday’s press briefing that it would be “unfair and absurd” for companies to raise costs on consumers in response to the Biden administration raising the corporate tax rate.

The article notes that Forbes has a more realistic approach:

Forbes noted in a report that it was “important to remember that corporate taxes must be paid by people,” the report said. “Any corporate tax increase will be paid by either shareholders/owners, employees in the form of lower wages, or customers in the form of higher prices.”

The goal of running a business is to provide a service (or product) and to make a profit. When you are no longer making a profit, chances are that you will close the business. A profit is made when income is higher than expenses. Taxes are an expense. In order to keep the profit at a consistent level when taxes are raised, something has to compensate for that increase–the cost of the product has to increase, the wages paid to employees has to decrease, or the profit has to decrease. Again, making a profit is part of the goal of running a business. If an acceptable profit is not made, the business will close. I think Ms. Psaki needs to take an economics course.

When Common Sense Takes A Vacation

Let’s say you start a business selling bows. The cost of making a bow is 15 cents. You sell the bows for 50 cents. The 35 cent difference pays your expenses not directly involved in the manufacturing of the bows–the light bill, the manufacturing facility, the taxes, etc. and those expenses directly involved in the manufacturing process–salaries, materials, administration, etc.  You are a small business, and there isn’t a lot left over for your profit. Then the government comes along and increases your taxes by more than one-third (the tax that is only for people making more than $400,000 will probably apply to certain small businesses) by increasing the tax on corporations. The easiest way to maintain your profit margin is to raise the cost of your product or move your manufacturing overseas. Neither is helpful to the American economy.

On Friday, Breitbart reported the following:

During an interview aired on Thursday’s “MSNBC Live,” White House Press Secretary Jen Psaki reacted to concerns that corporations will raise prices if taxes on corporations are increased by stating that President Joe Biden believes people “know that corporations do not need to raise the cost of goods in order to pay more taxes and pay more of their fair share.”

Host Hallie Jackson asked, “Of course, he could only do so much if corporations end up raising prices on things if they end up having a tax hike as well, right?”

People who talk about the ‘fair share’ owed by corporations do not understand basic economics. A corporation will not pay higher taxes–it will simply pass the increased cost on to the consumer. As for their ‘fair share,’ corporations pay payroll taxes, real estate taxes, etc. They provide jobs for people. Basically they keep the economy running. Unfortunately they make good scapegoats for people who do not understand economics. That description pretty much includes all of the current people in the Biden administration.

Where Did The Jobs Go?

Today Fox Business posted an article that included some comments White House trade adviser Peter Navarro made on “Sunday Morning Futures.”

The article reports:

“We lost over 70,000 factories, over 5 million manufacturing jobs, and it was because Joe Biden likes made in China,” Navarro said. “Donald Trump came along. … He said, ‘Hey, that’s not good. That’s not right. I’m going to fix that.’ And so what President Trump has been carefully doing is putting in place a wide range of policies, whether it’s lowering the corporate income tax to bring investment on-shore, steel and aluminum tariffs, or buy American.”

The U.S. lost 5 million manufacturing jobs between January 2000 and December 2014 because of “growing trade deficits in manufacturing products prior to the Great Recession and then the massive output collapse during the Great Recession,” according to a 2015 report from the Economic Policy Institute.

The article notes:

China’s state-run tabloid Global Times deemed Biden “smoother to deal with” than President Trump in August.

I don’t doubt that!

The article concludes:

“Economic security is national security. That’s one of the principles of the Trump Administration and what we learned from this China virus pandemic,” Navarro said. “If we bring those jobs back onshore as we have been doing, we will create great jobs at great wages but also protect the American people from the Chinese communist party.”

Navarro touted Trump’s stance on U.S. manufacturing, but the president has repeatedly taken criticism for manufacturing his branded products in other countries, including China.

The goal should be to make it cheaper and more practical to manufacture things in America. That goal can be achieved through lower corporate taxes, tariffs on foreign goods, and reliable and inexpensive energy. President Trump has worked in all three of these areas to bring manufacturing back to America. Because of Hunter Biden’s continuing investments in China, it is unlikely that Joe Biden would continue policies that would move jobs away from China.

Killing A Growing Economy One Law At A Time

On January 4th, Investor’s Business Daily reported:

Since President Donald Trump took office nearly two years ago, some 4.8 million new payroll jobs have been created. That’s more than four times as many as created during President Obama’s first four years.

Hold on, you say, didn’t the unemployment rate jump from 3.7% to 3.9%? It did. Yes, but not because more people were unemployed, but because more people entered the labor force, seeking opportunities that didn’t exist before.

It’s actually a bullish sign. Some 419,000 people entered the workforce during the month, driving the labor force participation rate to 63.1%, up from 62.7% a year ago. That bellwether employment figure declined pretty consistently during the job-poor Obama years, from 65.7% when Obama entered office to 62.9% when he left. It stabilized under Trump. Last month’s 63.1% tied for the highest point since September 2013.

This rapidly improving economy is the result of President Trump’s deregulation and tax cuts. Cutting the corporate taxes and regulations resulted in manufacturing jobs returning to America (after President Obama told us they were never coming back). So why is the Democrat House of Representatives trying to undo this progress?

The Hill reported yesterday:

Rep. John Yarmuth, the new House Budget chairman, said his chamber’s budget blueprint will aim to claw back lost revenue by boosting the corporate tax rate from its current 21 percent to as high as 28 percent, with rate increases also possible for high-earning individuals.

The Kentucky Democrat said Friday he wants to mark up a fiscal 2020 budget resolution, which will outline his party’s vision for taxes and spending over the next decade, in time to reach the House floor in early April. Yarmuth said Democratic leaders have told him they want to be ready so they can set the procedural stage for passage of all 12 appropriations bills before the August recess.

Are they simply economically badly informed or is there another motive? Well first I would like to mention my favorite Milton Friedman quote, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I think there are two forces at work here–first of all the Democrats love taxes. They believe that the more of everyone else’s money they have to spend, the more powerful they are. Second of all, Democrats with brains realize that increasing taxes will slow economic growth. Slowing the Trump economy is the only chance the Democrats have of taking the presidency in 2020. That is the plan. Hopefully the Senate will not pass the House of Representative’s budget plans. They will be harmful to average Americans. President Trump has helped average Americans economically. President Obama helped Wall Street but ignored Main Street. The House Democrats seem determined to go back to that model which ignored average Americans.

The New York Times Posts A Favorable Opinion Article About Donald Trump

Wow. The opinion page of the New York Times today posted an article entitled, “Why This Economy Needs Donald Trump.” The article was written by David Malpass, a senior economic adviser to the Trump campaign.

Mr. Malpass explains:

There is no doubt who has the better plan. Our economy is growing at only 1.1 percent per year, a fraction of our average rate, and the Congressional Budget Office forecasts just 2 percent annual growth (in inflation-adjusted gross domestic product) for the next 10 years.

Yes, we went through a deep recession, but it ended in 2009. The recovery has been the weakest in decades, and the first that has actually pushed median incomes down. Business investment and profits are lower now than a year ago. Counterproductive federal policies squash small businesses with inane regulatory sprawl that affects hiring, taxes, credit and medical care.

The result is a stagnant economy that leaves out millions of Americans who would like to work and get ahead, and a devastating report card on the Obama White House.

To restart growth, Mr. Trump would immediately lower tax rates, including for middle-income voters, and simplify the tax code. Americans would be able to exempt average child-care expenses from taxes, and Mr. Trump’s administration would eliminate the death tax, which falls especially hard on some small businesses and farmers.

The article goes on to explain that simplifying the tax system while reducing corporate taxes and eliminating or capping many tax deductions would make us more competitive in the world market and create jobs in America. Mr. Malpass contrasts this with Hillary Clinton’s plan to raise taxes, creating an noncompetitive corporate tax rate and discouraging investment with higher estate and capital gains taxes. Obviously Mrs. Clinton is not familiar with the Laffer Curve. This is a picture of the Laffer Curve. What the curve illustrates is that there is a point of no return in raising taxes where increased taxes no longer result in increased revenue.LafferCurveMr. Malpass also points out that Donald Trump wants to halt the negative impact of federal regulations on business. These regulations represent a hidden tax that increases the cost of doing business so that the consumer is forced to pay higher prices for goods. Government overreach is expensive.

The article concludes:

Voters will have an opportunity to decide for or against a government that’s failing on health care, taxes, trade, cost control and regulation. One candidate wants higher tax rates. The other would lower them. One candidate thinks the economic recovery has been successful whereas the other thinks it left millions of Americans out. One candidate has spent her lifetime seeking the presidency. Mr. Trump hasn’t.

As Thomas Jefferson said, “A little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.” It’s time for one now.

Agreed.

Warren Buffett And Taxes

President Barack Obama and Warren Buffett in t...

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On Tuesday there was an editorial in the Wall Street Journal about Warren Buffett and his taxes. I am not linking to the article because it is a subscribers only article.

The editorial staff of the Wall Street Journal points out that despite the fact that he is a strong cheerleader for increasing taxes on the wealthy, Warren Buffett does not practice what he preaches. Recently Mr. Buffett invested in Bank of America. Under normal circumstances, Berkshire Hathaway pays a top federal income tax rate of 35 percent. However, corporations can exclude 70 percent of the dividends they receive from an investment in another corporation. Because of that law, Berkshire will pay a tax rate of 10.5 percent on the $300 million in dividends it will receive each year from Bank of America. The shareholders in Berkshire Hathaway may appreciate this, as well they should, but it really doesn’t sound like the actions of someone who believes that the rich should pay more taxes. Maybe Mr. Buffett thinks that the ‘other’ rich should pay more taxes.

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