Why won’t this administration look at this revenue source?
Because of their false agenda, that’s why. They’re still convinced that, despite 17 years of no warming (as recently admitted by the head of the IPCC), oil is bad and “green” is good and that they’re doing something to save the world. Disregard the fact that green is still unviable. Disregard the fact that everywhere it has or is being pushed, energy costs are skyrocketing. Nevermind the fact that we are sitting on a sea of fossile fuel products that we only need to access. Screw the fact that science can find no discernable warming. Their minds are made up.
That said, there’s also the fiscal side of the house. The debt. The deficit. And the demand by Democrats to raise more revenue.
Unfortunately, because of their agenda, they’re likely to completely screw up a golden opportunity to bring in much more revenue and drive energy prices down, because their agenda is against fossile fuel. And we all know the party agenda comes before what is best for the country.
Enter the administration with a renewed plan to tax oil companies instead of opening access to the vast natural riches we enjoy. The result? Well this chart will help you comprehend the vast differences in the two policy choices (full size here):
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So the either/or is “tax ‘em or open access”. The difference:
According to a 2011 study by Wood Mackenzie, increased oil and natural gas activity underpro-access policies would generate an additional $800 billion in cumulative revenue for government by 2030. The chart puts into perspective the size of these accumulating revenues – enough to fund entire federal departments at various points along the timeline. By contrast, Wood Mackenize also found that hiking taxes on oil and natural gas companies would, by 2030, result in $223 billion in cumulative lost revenue to government.
It only proves the old saw -”If you want more of it, reward it and if you want less, tax it”. Think about it – money to help run government and pay down the debt (not to mention the thousands, if not millions of jobs created) being passed up in the name of false science and agenda politics.
Meanwhile, we’ll be left in the cold and the dark, thanks to agenda driven policies with no foundation in reality.
~McQ
Common sense reasons why GOP should stand firm on tax increases
James Pethokoukis provides the reasons. As you’ll note, economically, they’re not rocket science, but they certainly are something that the left seems to want to ignore in focusing its solutions to the debt problem on getting tax increases included.
One – the economy will not tolerate a tax increase at this time. It is simply not in the shape in which it can shrug a tax increase off. And it certainly won’t matter if the tax is only on “the rich”. As someone once asked, “ever get a job from a poor man?” The increase in revenues generated by taxing the rich (or anyone for that matter) will not offset the loss it will generate in hiring or expansion of business. Pethokoukis points out that the economy is in incredibly fragile shape at the moment. Thus:
…[T]he economic recovery is sputtering with stall speed fast approaching. Now would be a terrible time to penalize investors and business, both big and small, with new taxes.
Common sense 101.
Two – Tax revenue isn’t our problem when it comes to debt. Spending is the problem. Yet as I pointed out Saturday, the solution the left seems to prefer involves nothing but tax revenue increases or tax increases. What they’re less inclined to do is focus on the spending problem and make appropriate spending cuts. “Greek heroin” is the reason. Take a look at this:
By 2021, the the CBO says, the annual budget deficit would be 7.5 percent of GDP and by 2035 a truly monstrous 15.5 percent. Throughout this period, tax revenue would be 18.4 percent, right around the historical average. But spending would be 25.9 percent in 2021, 33.9 percent in 2035 vs. an average of roughly 21 percent. It’s spending that’s way out of whack, not revenue.
That means that if the so-called “Bush tax cuts” (they’re just the current tax rates) are left in place, that’s where we find ourselves in 2035. As Pethokoukis proves, it isn’t tax revenue that’s the problem. Unless you believe that it’s the government’s money in the first place and they have every right to determine how much you get to keep.
Let’s go with that. Let’s see what happens if the left gets its way:
But let’s say all the Bush tax cuts were left to expire, as was AMT relief. Assuming no economic fallout, according to the CBO, revenue would be 23.2 percent of GDP by 2035. Three problems here: a) even with all those tax increases, the annual budget deficit would still be nearly an unsustainable 10.7 percent of GDP in 2035; b) the U.S. tax code has never generated that level of revenue and almost certainly can’t without a value-added tax; and c) there would be tremendous economic fallout. Axing all the Bush tax cuts would chop three percentage points off GDP growth, according to Goldman Sachs, certainly sending America back into recession. Tax revenue would again plummet.
Spending, not tax revenue, is the obvious problem.
Common sense 101.
Three – boosting economic growth is the fastest way to increasing tax revenues. However there’s one problem to that as far as an intrusive government is concerned. It has to get out of the way.
Pethokoukis and I part ways a bit here as he endorses a consumption tax vs. an income tax and further endorses raising the revenue percentage of government’s part of the GDP to 19%. Can’t go there with him even if Rep. Paul Ryan’s plan is similar. I’m not so much against a consumption tax (it at least taxes what you consume thereby not penalizing you for what you save, nor do you get double taxed assuming the income tax goes away) but I am against such an increase in the tax percentage. I think very aggressive cuts in government spending plus fairly massive deregulation (and the obvious cuts in compliance spending by businesses that would save) would yield a fast recovering and growing economy. Granting an increase in the historic percentage of GDP that government has taken opens a door of precedence I don’t want opened. It is time government lived within its means and understood that that economic growth takes precedence over government growth – every time.
It is spending – uncontrolled and wasteful spending – that is our problem. Not tax revenue. Government must be cut and cut fairly severely. That’s something the heroin addicts don’t want to hear. So they spin out solutions which always end up in one place – “the problem is revenue, we need more revenue”.
No. They don’t.
And the GOP, if it is to have any credibility with voters come 2012, had best not cave on this point.
Again, Common Sense 101.
~McQ
Twitter: @McQandO
One picture tells the US’s problem
It is sort of surprising that it is even necessary to put this up, but as most of us know, people pay more attention to visual evidence than written. And written is sometimes open to misinterpretation. I challenge anyone to misinterpret this:
If the US were a business, this would be it’s “Income Statement”. And this isn’t a one time “it’ll get better next year” sort of statement either. Neither income nor spending are projected by the administration to be much different in its 10 year budget projections.
Note where 58% of the spending comes from. Do your own calculations -the most simple, of course is taking $2.2 trillion from $3.5 trillion and understanding that you have a shortfall of S1.3 trillion.
The chart comes from a very interesting report from a financial analyst at KPCB, Mary Meeker. She takes a look at the US’s finances as if the country was a business. Business Insider (HT: Pundit Review) lays out some of the gory details and what is discussed in the report as recommendations:
• Spending as a percent of GDP rose 3 percent each year from 1790 and 1930. Worse: It rose 24% in 2010.
• Debt levels will be three times current levels by 2030. Entitlements and interest alone will exceed total revenue by 2025.
• Only 1 in 50 Americans needed Medicaid when it was first created in 1965, 1 in 6 Americans receives Medicaid now.
• Extended unemployment benefits could set back America Inc. $34 billion in the next two years alone.
• The only good investments: technology, education and infrastructure.
• The crucial reforms: entitlement and tax policies
• There is no quick-fix to America’s deficit problem. While raising taxes could help, the only real solution is cutting costs.
• Why we should cut Medicare benefits by 53%
• Why we should increase the retirement age to 73 or cut Social Security benefits by 12%.
Emphasis mine. Essentially the ground truth about the country’s financial situation is the only way to get it in order is to commit to massive cuts in spending. Superfluous to that argument is any argument claiming certain programs or government departments or any other aspect of government should be exempt. That said, it is clear to anyone with eyes that the major problem lies in too much spending for entitlements. For instance how is it a program that was designed to fund medical care for the poor in this country and when started had 1 in 50 Americans enrolled now enrolls 1 in every 6 Americans? My guess is you’ll find the same to be true of most so-called “anti-poverty” programs today.
And the billions upon billions we throw at education through the Dept. of Education which hasn’t raised the yearly results of our students one iota since its inception. Or the Department of Energy – created in Jimmy Carter’s day to do what? Lessen our dependence on foreign oil. That’s worked well hasn’t it?
We’re talking drastic action here, folks. And we’re talking getting a grip and facing reality – not this “hey, make cuts but don’t touch our entitlements” nonsense that some polls reflect. Nor can these cuts fall victim to whining by special interests. And it would be wonderful, in an obvious era of austerity, if the White House could manage a little leadership as well:
Last July, Obama announced that he wanted federal workers to cut down on business travel and commuting by car in order to reduce emissions produced by the federal government:
The White House was announcing Tuesday that the government will aim to reduce carbon dioxide and other greenhouse gas emissions from indirect sources like employee driving by 13 percent in 2020, compared with 2008 levels.
That’s for everyone else. The Obama’s of course, are exempt from such things and as an example, fly in their personal trainer every week for a workout. Imagine the reduction in emissions if they were to actually practice what they preach and hire a local personal trainer.
Pulling it all together, this is the problem we face in getting the country’s house in order. Those that are talking about (and actually trying) cutting spending are now cast as bad guys. Special interests are spooling up their sob stories. The bureaucracy is beginning to fortify the walls around its huge and expensive kingdom. And much of the public wants cuts without pain. Meanwhile, other than lip service, the so-called leadership of this country doesn’t seem to understand what leadership is, what it entails and why it is important to set a good example – that is if they’re actually serious about doing what they claim we must do.
If this were a company, as Mary Meeker lays out in her study, investors would be cashing out as quickly as they could and others would be avoiding anything to do with this wreck. The bottom line of Meeker’s report is the road down which we’ve kicked the can for decades has come to a dead-end. We’re there. We can’t kick it one single foot further.
The time has finally come and the question is, are we up to the task at hand? Do we have the political will and leadership necessary to get done what must be done? Unfortunately, I don’t think so – financially speaking and addressing the quality of leadership available, the election of the empty suit in the White House couldn’t have come at a worse time.
There are at least two ways this crisis will be solved. Deliberately through tough and painful measures enacted by a leadership that directly confronts the problem and makes tough choices, or spontaneously when we reach a tipping point and everything collapses in a heap and we’re left surveying the ruins and wondering what happened.
Any guess as to which scenario I think is most likely?
~McQ
Beware – revenue hungry Leviathan
Keeping with the previous post’s theme, and noting we’ve made the claim in earlier posts that government’s at all levels are revenue hungry (they want to maintain the size of the ravenous beast they’ve developed over the years and they want to do it with your money), this should come as no surprise to anyone:
Between her blog and infrequent contributions to ehow.com, over the last few years she says she’s made about $50. To [Marilyn] Bess, her website is a hobby. To the city of Philadelphia, it’s a potential moneymaker, and the city wants its cut. In May, the city sent Bess a letter demanding that she pay $300, the price of a business privilege license.“The real kick in the pants is that I don’t even have a full-time job, so for the city to tell me to pony up $300 for a business privilege license, pay wage tax, business privilege tax, net profits tax on a handful of money is outrageous,” Bess says.
I have no idea what Bess blogs about, but unless it is specifically set up to generate income I don’t see any justification for the tax/license. I do see a possibility of a First Amendment issue.
Certainly a blog that generates $50 has an income of sorts. And if, as the story mentions, it was "dutifully reported", then she probably paid whatever taxes were due during that dutiful reporting.
But, as Leviathan loves to do, government just decided to invent a new category of "fees" and licensing (to avoid the tax word) to suck up more revenue. And, most likely, recognizing that most blogs don’t make much revenue they opted for a licensing fee. For instance, if you’re government, which would you rather have from almost 99% of the blogs out there, 5% of their revenue generated or $300?
So, given the nature of blogging and the fact that it has democratized social commentary, could a $300 bogus "licensing" fee be considered a bar to entry? And doesn’t that have First Amendment implications concerning free speech?
You have to love the irony of the license name. A "privilege license". Government, for a measly $300 will allow you the privilege of putting your opinion on line.
Really? I thought that was what the First Amendment – incorporated over all the states – guaranteed without impediment by government. Did I somehow misunderstand the intent?
But the city of Philadelphia – once the seat of freedom – sees it differently:
Even though small-time bloggers aren’t exactly raking in the dough, the city requires privilege licenses for any business engaged in any "activity for profit," says tax attorney Michael Mandale of Center City law firm Mandale Kaufmann. This applies "whether or not they earned a profit during the preceding year," he adds.
So even if your blog collects a handful of hits a day, as long as there’s the potential for it to be lucrative — and, as Mandale points out, most hosting sites set aside space for bloggers to sell advertising — the city thinks you should cut it a check. According to Andrea Mannino of the Philadelphia Department of Revenue, in fact, simply choosing the option to make money from ads — regardless of how much or little money is actually generated — qualifies a blog as a business. The same rules apply to freelance writers.
Essentially, what this will do is have those who wish to blog without interference or “licensing” by government drop any advertising they might presently carry – even the $11 one other blogger the story highlights made in a year. I.e bloggers will be forced to drop advertising to avoid the fee. 99% will. Of the possible 1% that make more than the $300 fee, my guess is most will attempt to find a way to claim, legally, that their blog isn’t located in Philadelphia proper. I’m not sure what you’d need to do to do that, but I’d guess it is possible (have a silent blogging partner who “owns” the blog and is resident in some other part of the country, I suppose).
But, this is government. This is what it does. Government, with the economic downturn, is on steroids. And as it searches for more and more revenue to support itself, it will intrude into your life and on your freedoms more deeply every day.
A jackal can’t help but act like a jackal – especially when it is hungry.
~McQ