Tag Archives: Income tax

Who Is The Threat?

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In 1787, Benjamin Franklin responded to a question about the new Constitution with the phrase “a republic, if you can keep it.” Our Founding Fathers envisioned a country with a weak central government and strong state governments. In the early 1900’s a number of things happened that paved the way for a strong central government and weak state governments. The year 1913 was a banner year for those who wanted a strong central government—federal income tax was passed, the federal reserve was created, and the direct election of U.S. Senators was passed. The direct election of U.S. Senators meant that the Senators were no longer subject to recall by their states if they did not represent their state. If a Senator sponsored a bill that would harm his state in some way, the state legislature would recall him. Woodrow Wilson was President when these three things happened. Signing these three things into law significantly shifted the balance of power in America from the states to the central government. The Inflation Reduction Act would never have passed the Senate if Senators were appointed by their states rather than elected.  One illustration of the growth and centralization of government is the fact that in 2023, twenty-five percent of all jobs created were government jobs. We are also in a situation where the majority of our laws are not laws—they are regulations passed by unelected bureaucrats. Any law passed by Congress was probably written by lobbyists. Our tax code is a shining example of what lobbyists can accomplish. According to the Tax Foundation, “There’s the literal statutes that Congress has passed (Title 26 of the U.S. Code). The Government Printing Office sells it spread over two volumes, and according to them, book one is 1,404 pages and book two is 1,248 pages, for a total of 2,652 pages. At perhaps 450 words per page, that puts the tax code at well over 1 million words. (By way of comparison, the King James Bible has 788,280 words; War and Peace runs 560,000 words; and the Harry Potter series is just over 1 million words.)”

The bureaucracy that has been ensconced in America in the past one hundred years or so does not want to give up the power it has co-opted. The biggest current threat to that power is President Donald Trump. He won’t be able to undo a hundred years of unconstitutional behavior in four years, but he will be able to make a beginning. President Trump is a serious threat to our own entrenched bureaucracy, and they are not going to give up their power easily.

President Trump has been accused of being a ‘threat to our democracy.’ First of all, we are a Republic–not a democracy. Secondly, the only threat that President Trump poses is a threat to the entrenched bureaucracy that has perverted the ideas that our Founding Fathers tried to enshrine in our government.

When Is Eliminating Taxes On Tips Bad?

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Recently Kamala Harris has stated in a campaign speech that she would like to eliminate income taxes on tips. That’s interesting. According to an article in Breitbart posted on Sunday, in 2022 she cast the deciding vote to allow the IRS to track down workers’ tips so that they could be taxed. That provision was part of the Inflation Reduction Act. Among other things, that bill provided $80 billion in additional funding to the IRS. The Senate voted 50-50 to approve the bill, and Kamala Harris cast the deciding vote.

On Monday, Breitbart posted an article reporting the following:

In a stunning display of hypocrisy and double standards, CBS News attacked former President Donald Trump when he announced his “no tax on tips” policy proposal in June and then suddenly became uncritical of the idea when Vice President Kamala Harris copied Trump on Saturday.

“Vice President Kamala Harris is rolling out a new policy position, saying she’ll fight to end taxes on tips for service and hospitality workers,” CBS announced in a Monday X post.

When President Trump proposed the idea, CBS immediately claimed that it would cost the federal government up to $250 billion over 10 years. Now that Kamala Harris has proposed it, there is no mention of the cost.

This is how the mainstream media works.

Your Vote Will Determine Your Taxes

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On Monday, PJ Media posted an article detailing changes they want to make in America’s tax code if President Biden is re-elected.

The article reports:

“The main goal here is this can’t just be a debate about the 2017 tax cuts,” Sen. Mark Warner (D-Va.) said, completely unshy about the threat. He told Bloomberg last week, “This is going to be Tax Armageddon.”

Prepare for the end of the world.

Federal income tax revenues jumped nearly $100 billion in the first year after Trump’s signature tax cuts went into effect and almost another $40 billion in 2019. The stupid and unnecessary COVID-19 lockdowns derailed that growth in 2020. Since then, revenues have continued to surge. Much of that “growth” was an illusion created by inflation, however, and the rest was due to increased taxes on energy and corporations which, of course, got passed on to consumers. 

Reminder: Corporations don’t pay taxes; they collect them.

But Democrats are just getting started. The tax man never merely cometh for “the rich.”

Washington has a spending problem, and Democrats aren’t shy about how to solve it: tax us poor bastards back to the Stone Age.

There are two issues at play here. 

The first is that Democrats have a desperate need to wipe out the Trump tax cuts because Orange Man Bad, although they hide it under the usual guise of “taxing the rich.” 

…The second issue is the Democrats’ longstanding desire to impose an unconstitutional wealth tax.

Sen. Ron Wyden (D-Wa.) chairs the Finance Committee and last Thursday “revived his pitch to tax the appreciation of assets for those with at least $100 million in income,” the Wall Street Journal reported. “Wyden plans to run through the door on wealth taxes that the Supreme Court left open Thursday in its lamentable decision in Moore v. U.S.”

Please note that in the third paragraph I quoted, the article reported that tax revenues jumped after President Trump cut taxes, so why do the Democrats want to raise taxes? Because in Washington, the more money you control, the more powerful you are. Who cares about the American taxpayer or reducing the deficit when you can have power?

If the Democrats take Congress or the Presidency, we can expect at least a serous attempt at increased taxes. Remember the Laffer Curve.

When Radical Isn’t Radical–It’s Original

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I am not an economist, but I am an observer of the obvious.

In a recent speech, President Trump talked about ending the Income Tax and restructuring the Federal Reserve. Either or both of those things would be good for all Americans and for the American economy.

Before 1913, the United State had neither the Federal Reserve nor the Income Tax. Both measures were passed in 1913. On February 25, 1913, the 16th Amendment (Income Tax) was certified as part of the U.S. Constitution. On December 23, 1913, the Federal Reserve Act created the Federal Reserve.

The men who met at Jekyll Island to create the Federal Reserve represented 25 percent of the wealth of the entire world. They met in secret, and their identities were concealed for many years afterward. Their goal was to keep that 25 percent of wealth in their hands. They created the system for the purpose of keeping New York City banks as the center of America’s wealth. The federal reserve created a system where money could be created out of nothing and loaned out through a leverage system to create interest. For example, over a 30-year mortgage, a bank can earn more from the sale of a house than any contractor who worked on the house.

The Income Tax was supposed to only impact the top 1 percent of Americans. Before 1913, the government’s expenses had been handled through tariffs.

To end the Income Tax, you would have to end the Welfare State. One way to do that would be to tax welfare benefits but not wages. When it becomes more lucrative to work than to collect welfare, it is possible that the work ethic that used to be part of American culture might be revived. You would also have to slash the bloated bureaucracy. The economic boom created by ending the Income Tax would give those who lose their jobs in government a great job market in which to search for new jobs. We need to get rid of any government department that is not successful–has education improved since the Department of Education was created? What has Housing and Urban Development accomplished? How many people in the Justice Department would have to be fired to end the corruption? You no longer need the Internal Revenue Service. You see where I am going with this.

The opposition to this plan would come from federal workers (fear of losing their jobs). Opposition would also come from Washington swamp creatures who would see it as a threat to their power (in Washington controlling money is power). It would also come from welfare recipients.

The other issue would be Social Security and its related taxes. That could be worked out easily by balancing payments to people who have paid into the program for more than forty years with alternatives for younger workers. With a retirement age of 70, most Americans pay the most into Social Security from about the age of 30.

This is all possible if Americans are willing to elect a businessman who has the economic knowledge to put it all together.

Imagine a world where you get to keep all of what you earn and the government cannot intimidate you about your taxes.

Exactly Who Pays Our Taxes?

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On Monday, The Washington Examiner posted an article about the progressive tax code in America. Just for the record, we are already overtaxing the wealthy.

The article reports:

The ultra-wealthy are paying the highest average share of taxes, according to a new analysis from a nonpartisan congressional committee.

The Joint Committee on Taxation found that the top 1% of earners pay an average tax rate of around 30% in combined income, employment, and excise taxes, double or more than the share of taxes that the bottom 80% of the country pays. Additionally, the top 5% of earners in the United States make up a whopping 46% of the country’s tax base.

According to the Economics Help page:

The Laffer Curve states that if tax rates are increased above a certain level, then tax revenues can actually fall because higher tax rates discourage people from working.

This is a picture of the Laffer Curve:

The Reagan tax cuts increased federal revenue. Unfortunately, the Democrats who controlled the House of Representatives offset those increases with increased spending. The Trump tax cuts also increased federal revenue, but again the House of Representatives increased their spending. At some point we need to realize that we don’t need more taxes, we need less spending.

The Biden administration is currently pushing for a tax on unrealized capital gains. The talking point is that it would only impact a very small number of taxpayers. Just for the record, this was the argument used to justify the establishment of a federal income tax in 1913.

Why They Should Still Teach Geography In School

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On April 1, The New York Post posted an article some changes in the population of Florida.

The headline reads:

Florida transplants fleeing in droves over relentless heat, damaging hurricanes

What did they expect? Come to North Carolina, we also have relentless heat and damaging hurricanes, but we don’t have blizzards or severe winters.

The article notes:

Thousands of Florida transplants who moved to the Sunshine State during the pandemic are packing up to move elsewhere, complaining of the relentless heat, damaging hurricanes and dangerous wildlife.

More than 700,000 people drawn by the promise of sunny weather, no income tax and lower costs moved to Florida in 2022 — including 90,000 from New York state, according to census data cited by NBC News.

But nearly 500,000 gave up on Florida and left in 2022, according to NBC News, which interviewed several disillusioned transplants who decided to head back north.

One of them was New Yorker Louis Rotkowitz, who lasted two years in the state.

“Like every good New Yorker, this is where you want to go,” the physician told NBC News by phone while driving to his new home in Charlotte, North Carolina. “It’s a complete fallacy.”

The article tells the story of a number of people who decided that Florida was too expensive, too hot, and too full of destructive and dangerous critters. Florida may be more expensive day to day than New York and other northern states, but how much do you pay in taxes in the northern states? The difference may well be the fact that you don’t really see the money taken away from your paycheck in taxes–you see the money you spend on housing and groceries. However, inflation has hit all fifty states–not just Florida. I wonder if the people leaving will be happy with what they find when they get back home.

When The Numbers Just Don’t Add Up

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Issues & Insights posted an article Monday about President Biden’s claims in his State of the Union address about the taxes the wealthy pay versus the taxes he thinks the wealthy should pay. The bottom line is ‘simply hang on to your wallet no matter how much you make,’ but the article refutes some of his claims.

The article reports:

First, consider his claim that the tax rate paid by billionaires is 8.2%. That plays well with soak-the-rich leftists. But where did he get this number?

Not from the IRS. It calculates the actual tax rate that various income groups pay, including the ultra-rich. Its data show that the 400 people with the biggest incomes in America were paying an average tax rate of more than 23%. Congress’ Joint Committee on Taxation figures that the tax rate on the top 0.4% of families is 26%.

So where does Biden come up with an 8.2% tax rate? He changes the definition of taxable income to include all unrealized gains from investments.

If you have money in the stock market, any gains in the value of those stocks would count as income to Biden, even if you don’t sell the stock. Presumably so would any gains in the value of your home. Or the value of any other assets you possess.

By artificially inflating income, Biden can make their tax burden seem tiny. 

The idea of taxing unrealized gains — in other words, extending the income tax to things that aren’t income — could very well be unconstitutional in addition to being economically reckless.

Just for the record, Americans are already taxed on unrealized gains–every year we pay a real estate tax on what the city or county assesses is the value of our house. We haven’t sold our house. The only actual gain from our house is having a place to live, yet every year we pay taxes on it.

The article concludes:

What about his claim that taxing the wealth — not the income — of billionaires would raise $500 billion?

Sounds like a lot, doesn’t it? Except Biden is hoping nobody notices the caveat — that it’s $500 billion over 10 years. In other words, $50 billion a year.

Even that might sound like a lot … until you put it in context.

That $50 billion wouldn’t even cover one month’s worth of interest payments on the national debt, which was $69.2 billion in January.

It wouldn’t even pay half of the increase in the deficit in the first five months of this year compared with last year. (The deficit from October through February was $830 billion, which is up $108 billion from the same months the year before.)

The idea that an extra $50 billion could finance a new childcare entitlement, paid leave, and home care isn’t just ludicrous, it’s insane.

We don’t expect Biden to know or understand what he’s reading on the teleprompter, but shame on anyone else for believing the lies he’s spewing.

Someone needs to explain the Laffer Curve to the Biden administration.

Keeping The SALT Limit Where It Is

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On Wednesday, Yahoo News posted an article about a bill to change the SALT deduction. The bill failed in the House of Representatives. The SALT deduction is the State and Local Tax deduction that President Trump capped at $10,000. High-tax states like New York, New Jersey, California, and Pennsylvania want the limit higher. That way when they charge their residents exorbitant tax rates, the residents can deduct those taxes on their federal income tax. In some high-tax states, just the real estate taxes on an average home are over $10,000. Generally, allowing higher SALT deductions is a gift to wealthy people and to people who live in high-tax states. In a sense, lower-tax states are funding the spending of the higher-tax states.

The article at Yahoo states:

A bill called the SALT Marriage Penalty Elimination Act, which would have raised the tax cap for some married filers and ease some of the burden in high-tax states like New York, was on the table in the House of Representatives. But it was rejected before it could even be formally considered.

“I’m hopeful this can be a moment of unity among my colleagues on both sides of the aisle,” said Rep. Mike Lawler (R.-N.Y.), the bill’s lead sponsor, as the debate got underway on Wednesday afternoon.

But — as was widely expected — it was not to be, with both Republicans and Democrats voting against the bill as it failed to garner agreement in a procedural vote.

The final vote on adopting a combined rule was rejected in a tally of 195-225, a defeat that is likely the end of the bill for the time being.

While I agree that all of our taxes should go down, limiting the SALT deduction was a way to hold high-tax states more accountable.

Pot, Meet Kettle

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On January 24th, The Guardian posted the following headline:

Tim Scott’s behaviour around Trump is ‘humiliating’, says the Rev Al Sharpton

Not only is the criticism undeserved, the fact that it comes from Al Sharpton is ridiculous.

Just to refresh your memory, here is part of an NPR article from August 2013:

It was 1987 when a black teenager, Tawana Brawley, said she had been raped and kidnapped by a group of white men in Dutchess County, N.Y.

Her story of being attacked, scrawled with racial slurs, smeared with feces and left beside a road wrapped in a plastic bag made front pages across the nation — especially after the Rev. Al Sharpton took up her case.

But, as The Associated Press reminds readers, “a special state grand jury later determined that Brawley had fabricated her claims, perhaps to avoid punishment for staying out late.”

In 1998, Steven Pagones, who was the county prosecutor at the time, won a defamation suit against Sharpton, Brawley and Brawley’s attorneys. They had accused Pagones of being among Brawley’s attackers.

“Sharpton has since paid off his [$65,000] debt with money raised by his supporters,” the Village Voice says. Brawley was ordered to pay $190,000.

It’s been 15 years. With interest, the judgment against the now 40-year-old Brawley has grown to more than $430,000. Finally, the Poughkeepsie Journal reports, Pagones is receiving some of the money: $3,700, or about 1 percent of what he’s now owed.

Snopes also notes:

Sharpton himself owes New York state $806,875 and has federal liens for unpaid personal income taxes against him totaling $2.6 million, records show.

The Harlem-based NAN owed $813,576 to the federal government at the end of 2012, according to the most recent filings for the group.

Sharpton’s company, Rev-Al Communications, owes $447,826 to the state. His Bo-Spanky Consulting firm has only $18.21 in outstanding debt, according to state records.

This is the person who is criticizing Tim Scott. This is also The Guardian giving credence to that criticism. Always consider the source when it comes to news.

 

Ungrateful Doesn’t Even Come Close To Describing This

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Yesterday The Daily Caller posted an article about a recent statement by Governor Cuomo of New York. On Tuesday The Governor reminded everyone who came to New York to help with the coronavirus crisis that they are required to pay New York State income tax for any wages they earned while working there.

The article reports:

Health care workers that traveled from across the country to volunteer to help fight New York’s coronavirus outbreak will have to pay state taxes, Democratic Gov. Andrew Cuomo announced according to PIX 11.

In a Tuesday news conference, Cuomo said the state isn’t “in a position to provide any subsidies right now because we have a $13 billion deficit,” PIX 11 reported.

“So there’s a lot of good things I’d like to do, and if we get federal funding, we can do, but it would be irresponsible for me to sit here looking at a $13 billion deficit and say I’m gonna spend more money, when I can’t even pay the essential services,” he added.

The article notes:

Samaritan’s Purse, the Christian humanitarian aid organization that sent volunteers to New York to set up a temporary hospital, wasn’t aware that their organization would have to pay the state income tax.

“Our financial comptroller called me, and he said, ‘Do you know that all of you are going to be liable for New York state income tax?’ Ken Isaacs, the Vice President of the organization told PIX 11.

“I said, ‘What?’”

 According to the New York State Department of Taxation and Finance, nonresidents who work in the state for more than 14 days must pay state income taxes. New York has one of the highest state income taxes in the country, ranging from 4% to 8.82% according to Business Insider. 

“What we’re even more concerned about than the money is the bureaucracy and the paperwork, and I think that once that’s unleashed, once you start filing that, you have to do that for like a whole year or something,” Isaac continued. 

Wow. The Governor may want to think about how this might impact the state’s ability to get people to come help in a future crisis.

What Happens If The Trump Tax Cuts Are Repealed?

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Yesterday The Washington Examiner posted an opinion piece with the following title, “Democrats want to repeal most important part of Trump’s tax cuts.”

I would like to note at this point that according to CNS News:

The federal government set records for both the amount of taxes it collected and the amount of money it spent in the first four months of fiscal 2020 (October through January), according to data released today in the Monthly Treasury Statement.

So revenue has increased under the tax cuts–not decreased.

The piece at The Washington Examiner continues:

Democrats are vowing to repeal the GOP’s 2017 tax reform bill, starting with raising the corporate income tax. The Democrat-controlled House Ways and Means Committee recently held a hearing laying the groundwork for this tax increase, falsely claiming that the corporate rate was lowered at the expense of middle-class families.

Reality belies this rhetoric. The corporate tax reduction from 35% to 21% has benefited families and workers alike by growing the economy, raising wages, and creating new jobs.

It’s no coincidence that, in the two years since the tax cut, unemployment has dropped to a 50-year low. It has hit all-time lows for key demographics including women, African Americans, and Hispanics. Thanks to these pro-growth policies, nearly seven million jobs have been created since Trump took office, and there are now fewer unemployed people than job openings.

Wages have also grown.

Annual hourly earnings have grown by 3% or more in the past 12 months. In fact, real median household income has increased by over $5,000 during Trump’s tenure, according to data released by Sentier Research. In addition to this wage growth, the tax cuts have allowed businesses to expand, hire new workers, and increase pay and benefits.

Savings are also on the rise.

When Trump was elected president, the Dow Jones sat at 18,332. It is now at roughly 29,000, an increase of about 60%. This stock market growth benefits the 100 million 401(k)s, the 46.4 million households that have an individual retirement account, and the nearly $4 trillion in public pension funds, half of which is invested in stocks.

And the Congressional Budget Office has revised revenue up by over $1.2 trillion, 80% of the cost of the tax cuts, due to improving economic conditions since the tax cuts were passed.

You have to wonder why the Democrats would want to undermine an economy that is obviously working for everyone. If federal revenue is at record levels, why would you change things?

The piece concludes:

Utility savings for households are another benefit of the corporate rate reduction. As a direct result of the corporate rate cut, utility companies in all 50 states reduced their prices. That means lower monthly electric, gas, and water bills for households and businesses. If Democrats raise the corporate rate, they will be saddling households with higher utility bills.

The Left won’t stop there, either.

Democrats have proposed trillion-dollar annual tax increases that include payroll tax increases, small-business tax increases, income tax increases, and even an increase in the “death tax.” The fact is, corporate tax cuts have grown the economy, lifted wages, and created more jobs. Democrats would undo these gains and harm middle-class families.

Are the Democrats economically ignorant, or do they simply not care about the impact of their policies on everyday Americans?

A Nightmare For Healthcare In America

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Issues & Insights posted an article today about Elizabeth Warren’s healthcare plan for America.

These are some highlights from the article:

So Warren simply waves her magic wand and makes $14 trillion in costs disappear. And how does she cut Medicare for All’s price tag by 41%?

By proposing:

    • impossibly deep cuts in drug prices,
    • devastating cuts in payments to hospitals and doctors,
    • and entirely unrealistic claims about overhead costs.

Even with Warren’s phony price tag of $20.5 trillion, the taxes required are truly astronomical. Warren says businesses would have to contribute $8.8 trillion in taxes to help finance Medicare for All. She says they should be grateful because under the current system they’ll spend $9 trillion on employee health benefits.  

But she doesn’t actually know that businesses will spend $9 trillion on health care over the next decade. It’s just a guess. And not a very good one, since businesses are finding new and better ways every day to keep their health costs under control.

Her plan is to pay for healthcare by doing the following:

Even the supposed business savings are phony since Warren would massively raise corporate income taxes. In her plan, she announces that she would:

    • repeal the Trump corporate tax cuts, reinstating the 35% tax rate that made U.S companies uncompetitive among industrialized nations,
    • enforce a “country by country” minimum tax of 35%,
    • and lengthen depreciation rules.

Combined, these and other new levies would raise corporate taxes by $2.9 trillion.And this doesn’t count the following:

    • the $800 billion tax on financial transactions she’d impose
    • the $100 billion fee on “big banks”
    • a 6% wealth tax
    • much higher capital gains tax rates
    • and a requirement that taxes be paid on cap gains every year, whether or not the stocks are sold

Guess who will be paying all those costs?

People need to remember that corporations do not actually pay higher taxes–they pass those tax hikes on to the consumer in the form of higher prices. Consumers pay higher corporate taxes and higher corporate taxes drive businesses out of the country.

The article concludes:

Meanwhile, drug companies would be entirely at the mercy of whatever price caps Warren decides to impose (namely, 70% cuts for brand name drugs and 30% cuts for generics), since they’d have no other buyers.

Pharmaceutical companies that don’t play ball, she says, would risk losing their patent protection (through compulsory licensing) while the government takes over drug manufacturing. Say goodbye to the pharmaceutical industry.

In sum, Warren is peddling a health plan that, if it were actually enacted, would devastate the economy, wreck the nation’s health care, and put the government in control of just about every business decision. And she has a good chance of claiming the Democratic party’s nomination. That’s frightening.

And right now, she is one of the leading candidates for President.

Logic Takes A Vacation

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Breitbart posted an article today about the State of New York’s $2.3 billion budget shortfall. Governor Cuomo is blaming the Trump tax bill for the shortfall.

The article explains the logic:

According to Cuomo, it was Trump’s tax cut that caused “many of the state’s richest residents — who pay 46 percent of the state’s income tax — to either change their primary residence or leave New York entirely.”

…What Trump’s tax reform did was to restore fairness to the tax code, was to put an end to the injustice of all Americans — including those in the middle class — paying for the sky high tax rates in states like New York.

You see, before Trump reformed the tax code, all Americans were subsidizing the rich.

It used to be that you could write off every penny of your state income tax on your federal income tax. Trump put an end to this outrage. Here’s how it works…

In the state of New York, if you earn over $1.078 million per year, you pay an income tax to the state of almost nine percent.

In other words,  using round numbers, a New York resident who earns $10 million owes the state of New York close to $900,000 in income taxes. But…

Democrat-run states like New York knew that their rich residents would not feel the sting of that $900,000 tax bill because that $900,000 could be written off of their federal tax bill.

Basically, this was a sleazy way for Blue States to steal money from federal taxpayers, to make all of us pay for their grotesque tax rates. These Democrat-run states not only got all of this tax money, they also avoided getting voted out of office for over-taxing because the federal write-off removed most of the sting for the wealthy taxpayer.

Thankfully, Trump’s tax bill put an end to this shell game. Whereas before there was no limit on the amount of state income tax you could write off on your federal taxes, now there is a $10,000 limit. This means that the poor sap gutted for $900,000 in income taxes by New York, now eats $890,000 of it, which is as it should be.

Hey, if you’re a rich guy who thinks your taxes are too high, instead of making middle class taxpayers subsidize your ass, maybe stop voting for Democrats? Just an idea.

For those who want the rich to pay more taxes, the Trump tax plan has accomplished exactly that in New York and some other states that have excessive taxes.

The article concludes:

The truth, though, is spelled out very well by economist Marty Cantor, who laid it out for a local news outlet.

“The problems here are caused by the governor and his administration,” he told News12, “It’s too expensive to live on Long Island and in New York state. Taxes are too high, people are leaving. It has nothing to do with Trump.”

Here’s the kicker: The $10,000 write-off limit did not go into effect until  2018. So how does Cuomo explain 2017’s $4.4 billion deficit? How did the Orange Bad Man create that one?

Crickets.

How Cutting Taxes Creates Revenue

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On November 16th, Hot Air posted an article about the impact of the Trump tax cuts on government revenue. As I am sure you remember, the Democrats called the tax cuts on individuals ‘crumbs’ and swore that the tax cuts would bankrupt the country. Well, that’s not exactly what happened.

The article reports:

Unemployment is at an historic low. Employment is at an all-time high. Wagers are growing after years of stagnation.

And now from all that increased economic activity, the federal government has just reported historic record tax revenues in October, the first month of the new fiscal year, of $252,692,000,000.

That’s more than $11.4 billion above revenue for October of last year, which was the previous record tax revenue for an October.

And it did this by collecting more than $3 billion less in personal income taxes, thanks to the tax cuts.

The new revenues were the result of increased business taxes because of increased business. Here’s how much different it was:

Corporation income tax receipts to the U.S. Treasury this year in October were a whopping $8,000,000,000. This compares to the previous October’s $3.8 billion.

Despite the record tax revenues in October, the federal government ran a deficit of $100.5 billion that month because, spending. That’s a problem that newly-elected members of Congress such as Indiana’s senator-elect Mike Braun, a businessman, said would be a major target in 2019.

The thing to remember here is that as unemployment decreases, government spending should also decrease. Unfortunately Congress did not get the message. Our problem is not the revenue–the problem is the spending. If either party were serious about curbing government spending, it would have been done by now. Obviously they are not. There are a few members of the Republican party who have been trying to put the brakes on runaway spending for years, but they are either not trying very hard or they are ineffective. At any rate, we need to elect Congressmen (regardless of party) who will pledge to bring the spending under control. It does no good to increase the revenue if the spending increases right along with it.

Why All Congressional Bills Need To Be Read Carefully

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CBN News reported today on an unnoticed item in the tax cut bill passed by Congress this year.

The article reports:

Churches and non-profit organizations are calling for the repeal of a provision in the GOP’s tax cuts law that would force ministries to file federal tax returns, and in some cases pay taxes.

Last winter, as lawmakers touted the tax savings in the Tax Cuts and Jobs Acts, no one mentioned this new federal tax on local churches. But for non-profits like Christian ministries, that little-known provision in the legislation has become a big cause for concern.

…Under the new tax plan, churches, hospitals, colleges and other historically tax-exempt groups must pay a 21 percent tax on some benefits they provide their employees, such as parking, transportation and other related benefits.

Dan Busby is president of the Evangelical Council for Financial Accountability. He says churches weren’t expecting to get hit with – of all things – an income tax bill, and this one could be a huge burden on groups that have historically enjoyed tax-exempt status.
 
“There are nearly 15 million employees that work in the United States for nonprofits – nearly 10 percent of the workforce – so that’s 15 million parking places. And conservatively, it’s going to cost the non-profit community as a whole up to a billion dollars,” Busby said.

That’s a lot of money for ministries that rely on donations. In response to the news, the ECFA put out a petition that churches and nonprofits can sign to protest the employee parking tax. 

“Tax practitioners who have evaluated Section 512(a) (7) generally believe that the result of this new provision is that tax‐exempt organizations that provide parking to their employees will be subject to unrelated business income tax on the cost of the parking provided. A nonprofit organization that simply allows its employees to park in a parking lot or garage that is part of the organization’s facilities will be subject to a tax on the cost of the parking provided,” the ECFA explained in a position statement available for download on its website.

This is the link to sign the petition against the new tax  –  https://www.ecfa.org/DocSig.aspx

Taxing churches on their staff parking places has to be one of the dumbest ideas I have ever encountered.

It Has Never Worked, Why Did They Think It Would Work?

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Fox News posted an article today about Finland’s decision to end its universal basic income program by the end of the year.

The article reports:

The Finnish government reportedly announced Tuesday that it will end the country’s universal basic income program by year’s end — and appears to be taking on new measures to cut benefits to those who do not actively seek employment.

Finland was considered the first European country to pay a monthly check of $685 to its unemployed between ages 25 and 58. It was considered a pilot program — serving 2,000 randomly selected jobless people — that its founders hoped to expand.

…”Proponents said the program wasn’t comprehensive enough to gauge its merits,” Whitley wrote. “Critics say it would have required a 30 percent tax increase on an already over-taxed population to be viable.”

This is a chart showing Finland’s Personal Income Tax Rate. The source is a website called tradingeconomics:

This is what taxes look like under socialism. Consider this–if you are making $15 an hour in Finland, you are making slightly less than $8 an hour after taxes. This is what the conservative members of Congress are trying to avoid. We need to cut spending in America–we need to learn the lesson of socialism–giving people something they did not work for is not a plan for a successful economy.

The critics of the program may have known something that those backing the program did not:

The initial move was met with skepticism from citizens who questioned whether an unemployed young person would be motivated to find a job if they were making a steady income, albeit small.

“There is a fear that with basic income they would just stay at home and play computer games,” Heikki Hiilamo, a professor at the University of Helsinki, told the paper.

The problem isn’t really socialism as much as it is human nature. There is something built into us that generally is not willing to work for something we can get for free.

Leadership Matters

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Bloomberg is reporting today that real disposable income, or earnings adjusted for taxes and inflation, advanced 0.6 percent from the prior month, the biggest gain since April 2015, according to a Commerce Department report Thursday. Part of that I suspect is due to the tax cuts, but there are other things that have made this possible.

The article reports:

The data, covering the first month since the tax law was signed in December, reflected a $30 billion increase in one-time bonuses and a $115.5 billion annualized drop in personal taxes, the Commerce Department said. Such boosts to Americans’ wallets, along with a tight labor market, will sustain spending. Those items, plus rising prices, are likely to keep Fed policy makers on track for at least three interest-rate increases this year, including one that’s widely expected later in March.

 A separate Labor Department report on Thursday showed weekly filings for unemployment benefits fell to the lowest level since 1969.

 The reduction in taxes helped boost the saving rate to 3.2 percent, the highest since August, from 2.5 percent in December, which was the lowest since 2007.

Most Americans pay a higher percentage of their income in taxes than what Medieval serfs paid the lord of the manor to farm their land.

The article concludes:

The Fed’s preferred price gauge — tied to consumption — rose 0.4 percent in January from the previous month and was up 1.7 percent from a year earlier. Inflation has mostly missed the central bank’s 2 percent target since 2012, though policy makers expect it to rise toward the goal.

Excluding food and energy, so-called core prices rose 0.3 percent, matching the median estimate. The core index, which Fed officials see as a better indicator of underlying price pressures, was up 1.5 percent from January 2017, the same annual gain as the prior three months.

Adjusted for inflation, personal spending declined 0.1 percent in January from the prior month, the first decrease in a year. The weakness reflected a 1.6 percent slump in outlays for durable goods as auto sales cooled.

There are a number of reasons for the improvement of the economy–ending regulations that made it very difficult to start or run a business, putting more money in Americans’ pockets by lowering the individual tax burden, ending the financial penalties that were included in ObamaCare, lowering corporate tax rates to make American more competitive worldwide as a place to locate a business, and simply making it clear that America now welcomes businesses and is prepared to encourage entrepreneurship. Even if you don’t support President Trump, you need to acknowledge that he has been a successful businessman who is attempting to bring that success to America as a whole.

The Tax Bill Passed Last Night

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This is the summary from Thomas.gov of the tax bill that passed the Senate last night.

H.R.1 — 115th Congress (2017-2018)

Introduced in House (11/02/2017)

Tax Cuts and Jobs Act

This bill amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses.

With respect to individuals, the bill:

  • replaces the seven existing tax brackets (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%) with four brackets (12%, 25%, 35%, and 39.6%),
  • increases the standard deduction,
  • repeals the deduction for personal exemptions,
  • establishes a 25% maximum rate on the business income of individuals,
  • increases the child tax credit and establishes a new family tax credit,
  • repeals the overall limitation on certain itemized deductions,
  • limits the mortgage interest deduction for debt incurred after November 2, 2017, to mortgages of up to $500,000 (currently $1 million),
  • repeals the deduction for state and local income or sales taxes not paid or accrued in a trade or business,
  • repeals the deduction for medical expenses,
  • consolidates and repeals several education-related deductions and credits,
  • repeals the alternative minimum tax, and
  • repeals the estate and generation-skipping transfer taxes in six years.

For businesses, the bill:

  • reduces the corporate tax rate from a maximum of 35% to a flat 20% rate (25% for personal services corporations),
  • allows increased expensing of the costs of certain property,
  • limits the deductibility of net interest expenses to 30% of the business’s adjusted taxable income,
  • repeals the work opportunity tax credit,
  • terminates the exclusion for interest on private activity bonds,
  • modifies or repeals various energy-related deductions and credits,
  • modifies the taxation of foreign income, and
  • imposes an excise tax on certain payments from domestic corporations to related foreign corporations.

The bill also repeals or modifies several additional credits and deductions for individuals and businesses.

Some Facts About The Republican Tax Plan

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The first fact to remember about the Republican tax plan is that what is eventually passed by Congress will be different than what was introduced today. How different we don’t know, but it will be different.

The Daily Signal posted an article today highlighting some of the proposed plan. The plan would simplify taxes, lower income tax rates, and positively impact business taxes.

The article reports:

The tax reform package would simplify and lower the current tax rate structure, from seven different rates ranging from 10 percent to 39.6 percent, to four rates: 12 percent, 25 percent, 35 percent, and 39.6 percent.

Most low- to middle-income earners would face lower marginal tax rates, which would help encourage more work and also put more money back into taxpayers’ pockets to spend more productively than the federal government.

Unfortunately, the plan maintains the top marginal rate of 39.6 percent (which reaches 43.4 percent when factoring in the Obamacare surtax).

While only 1 of every 150 taxpayers actually pays the top rate, more than 1 of every $5 of taxable income is subject to that tax rate. That means a lot of economic activity is affected by the top rate, and lowering it would have a significant and positive impact on investment, productivity, incomes, and job growth in the U.S.

Maintaining a high top rate for wealthy Americans may make the plan more politically palatable, more appealing to average Americans, and help reduce the alleged “costs” of the tax reform plan. In reality, though, it would not result in nearly as much revenue as static estimates project, and it would limit the plan’s ability to maximize job growth and boost incomes for everyday Americans.

One aspect of the tax plan that is going to meet with a lot of resistance is the change to state and local tax deductions.

The article explains:

The proposed tax plan would partially eliminate state and local tax deductions by getting rid of the deduction for income or sales taxes, and by capping the deduction for property taxes at $10,000.

State and local tax deductions provide no economic benefit. In fact, they are outright detrimental to the economy.

By allowing those who itemize their taxes to deduct property taxes as well as income or sales taxes they pay to state and local governments, these deductions shift the burden of high-tax states onto low-tax states, and spread a portion of high-income earners’ taxes onto lower- and middle-earners’ tax bills.

For example, just seven states (California, New York, New Jersey, Illinois, Massachusetts, Maryland, and Connecticut) receive more than 50 percent of the value of the state and local tax deductions.

And on net, the average millionaire receives 102 times as much benefit from the state and local tax deductions as a typical household that makes between $75,000 and $100,000.

Eliminating the sales and income tax deductions would be a huge benefit to at least 85 percent of Americans.

Please follow the link above to read the entire article. It explains how each part of the tax plan would impact families in all income brackets. What we are hearing in the mainstream media is not necessarily accurate.

 

 

It’s Not The Income–It’s The Spending

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CNS News posted an article today about the tax revenue the government has received in the first six months of fiscal 2017 (Oct. 1, 2016 through the end of March). The government has collected $7,387,280,000 more in income tax revenue in the first six months of fiscal 2017 than were collected in the first six months of fiscal 2016.

The article reports:

The federal government also collected $547,491,000,000 in Social Security and other payroll taxes during the first six months of fiscal 2017. That is about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes (in constant 2017 dollars) that the government collected in the first six months of fiscal 2016.

Despite collecting record amounts of individual income taxes and payroll taxes, the Treasury still ran a deficit of $526,855,000,000 in the first six months of fiscal 2017. (The emphasis is mine)

No matter how much money we give them, it will never be enough. We need a budget (not continuing resolutions) that does the things that are constitutional for the federal government. All other functions need to be left for the states (as stated in the Tenth Amendment). Spending cuts are needed.

Another Way To Interfere With The Profit Margins Of Businesses

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What you are about to read is not the most ridiculous thing I have ever heard, but it is definitely close.

Yesterday The New York Post posted an article about a recent statement by Microsoft founder Bill Gates.

The article reports:

Bill Gates, the co-founder of Microsoft and world’s richest man, said in an interview Friday that robots that steal human jobs should pay their fair share of taxes.

“Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, Social Security tax, all those things,” he said. “If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

How do you tax a robot? If he doesn’t pay his taxes, do you take out his battery?

This is another example of the government interfering in the free market. As some people in the government push to raise the minimum wage, certain businesses will have no choice but to replace human workers with robots.

The article further reports:

Recode, citing a McKinsey report, said that 50 percent of jobs performed by humans are vulnerable to robots, which could result in the loss of about $2.7 trillion in the U.S. alone.

“Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now,” Gates said. “Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.”

Another example of the government finding new ways to take money away from people who have earned it.

The Government Doesn’t Need More Tax Revenue–It Needs To Cut Spending

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CNS News reported the following today:

The federal government brought in a record of approximately $213,300,000,000 in individual income tax revenues through the first two months of fiscal 2017 (Oct. 1, 2016 through the end of November), according to the Monthly Treasury Statement released today.

That is approximately 36 times the $5,966,000,000 the federal government brought in from customs duties imposed on foreign imports over the same two-month span.

In constant 2016 dollars (adjusted using the BLS inflation calculator), the record $213,300,000,000 in individual income taxes the Treasury raked in during October-November of this year was up $6,432,550,000 from the $206,867,450,000 it brought in October-November of last year.

Meanwhile the website usgovernmentdebt.com posted the following:

The tax revenue is going through the roof and the deficit is rising. Would you run your household budget this way?

One Reason Washington Insiders Fear Ted Cruz

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Senator Ted Cruz is not a Washington insider. Despite the fact that his career path has taken him to Washington, he is not part of the ‘in-crowd.’ He has shown numerous times that he has basic principles and that he is willing to take a stand on those principles whether anyone joins him or not. This sort of thinking is dangerous to the Washington establishment–of either party. That is one reason the attacks on him will increase as the primary elections continue.

Currently the Internal Revenue Service Tax Code is a tribute to the effectiveness of lobbyists. The tax code is used to encourage certain behavior and discourage other behavior. There are times when the tax code has been used to encourage marriage and families and times when it has been used to discourage marriage. Certain business with strong lobbyists have received tax breaks in the past. The tax code has been used to subsidize certain industries and behaviors. Crony capitalism has been a major force behind changes and writing of the tax code. It is time for that to end, and Ted Cruz has an interesting suggestion as to how to end it.

The following is taken from Ted Cruz’s webpage:

FlatTaxPlanWouldn’t it be nice to be able to pay your taxes on this simple form?

The website further reports:

PERSONAL INCOME TAX – SINGLE RATE: 10%

The Simple Flat Tax creates a simple, single-rate flat tax for individuals. The existing seven different rates of individual income tax will become one low rate: 10%.

  • A family of four will pay no taxes on their first $36,000 of income.
  • The plan exempts a large amount of initial income for low- and middle-income taxpayers, with a $10,000 standard deduction and $4,000 personal exemption. It also keeps the Child Tax Credit and expands and modernizes the Earned Income Tax Credit with greater anti-fraud and pro-marriage reforms.
  • The plan keeps the charitable giving deduction and features a home mortgage interest deduction, capped at principal value of $500,000.

BUSINESS FLAT TAX – SINGLE RATE: 16%

The corporate income tax along with the payroll tax are abolished, replaced by a 16% Business Flat Tax.

  • The current corporate tax code is riddled with years of accumulated loopholes and special favors, burdening U.S. businesses with the highest top tax rate among the advanced nations. This convoluted and anti-competitive structure will be replaced with a simple 16% tax on net business sales (gross sales minus expenses and capital expenditures).
  • The current payroll tax discourages work and job creation. The vast majority of Americans pay more in payroll tax than in income tax. The Simple Flat Tax will eliminate the payroll tax, boosting jobs and wages for working Americans, while guaranteeing funding for Social Security and Medicare.

UNIVERSAL SAVINGS ACCOUNTS (USA)

The Simple Flat Tax creates Universal Savings Accounts (USA) allowing savings of up to $25,000 per year in tax-deferred dollars.

Savers can withdraw the funds at any time for any reason – whether it be for college tuition, a down payment on a home, or their son or daughter’s wedding. This savings feature harmonizes with the tax elements of the Cruz Simple Flat Tax to move toward encouraging savings and investment – a recipe for economic growth and jobs.

There are other tax reform plans out there, but this plan looks possible and interesting. The plan also eliminates the death tax, the overseas profits tax, the Alternative Minimum Tax, and the ObamaCare taxes.

I would just like to note that there is some serious double taxation in our current tax code–the death tax taxes money that taxes were paid on during the life of the person who died. Taxes paid on Social Security income are being paid on money that was already taxed when it was earned. The government needs to become considerable less greedy and allow Americans to keep more of the  money they earn.

 

 

The Problem Is Not The Revenue–It’s The Spending

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CNS News posted a story today stating that the federal government raked in a record of approximately $2,883,250,000,000 in tax revenues through the first eleven months of fiscal 2015 (Oct. 1, 2014 through the end of August), according to the Monthly Treasury Statement released Friday. This equals approximately $19,346 for every person who was working either full or part-time in August.

The article further reports:

Despite the record tax revenues of $2,883,250,000,000 in the first eleven months of this fiscal year, the government spent $3,413,210,000,000 in those eleven months, and, thus, ran up a deficit of $529,960,000,000 during the period.

…The largest share of this year’s record-setting October-through-August tax haul came from the individual income tax. That yielded the Treasury $1,379,255,000,000. Payroll taxes for “social insurance and retirement receipts” took in another $977,501,000,000. The corporate income tax brought in $268,387,000,000.

The chart below is an illustration of America‘s spending problem.

The article also noted that under ObamaCare new taxes took effect in 2013.

Excessive spending is a problem that Washington has no incentive to fix. It is up to the voters to give them an incentive–fix this or we vote you out of office!

 

This Is Called Blackmail

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Yesterday Fox News posted an article with the title, “IRS chief warns of refund delays over budget cuts.” You don’t have to be a rocket scientist to figure out what is going on here. If people experience delays in getting their tax refunds, they will complain. If they make enough noise, Congress will have to give the IRS more money to get the refunds out promptly. I hope Congress is smarter than that.

The IRS in recent years has abused its power and become a political tool. I think it is time to cut its funding (actually, I think it is time to make it go away and replace the income tax with a consumption tax of some kind).

The article reports:

IRS Commissioner John Koskinen gave details Thursday on ways the tax-collection agency might try to cut costs. He said everything from taxpayer services to enforcement efforts could be affected.

But, in a move that could impact millions, he said there could be a lag in refunds being processed.

“Everybody’s return will get processed,” Koskinen told reporters. “But people have gotten very used to being able to file their return and quickly getting a refund. This year we may not have the resources, the people to provide refunds as quickly as we have in the past.”

In recent years, the IRS says it was able to issue most tax refunds within 21 days, if the returns were filed electronically. Koskinen wouldn’t estimate how long they might be delayed in the upcoming filing season, which is just a few weeks away.

Congress cut the IRS budget by $346 million for the budget year that ends in September 2015. The $10.9 billion budget is $1.2 billion less than the agency received in 2010. The agency has come under heavy fire from congressional Republicans for its now-halted practice of applying extra scrutiny to conservative groups seeking tax-exempt status.

I totally support cutting the budget of the IRS. I would also support eliminating the agency.