Free Markets, Free People
Q: Why doesn’t Delaware fall into the ocean?
A: Because Maryland sucks.
Q: Why doesn’t California fall into the ocean?
A: Because Maryland really sucks.
I see that your financial picture is looking rather dicey again. Sorry to hear that. Who could have guessed that high taxes, profligate spending and a general hostility to business would lead to such things? No worries, though. I’m sure political leaders will continue to work hard at righting the ship and get Maryland sailing along smoothly again (how is that plan to repeal the laws of economics coming anyway?).
On a related note, I understand that the Maryland legislature, in collaboration with Gov. O’Malley, has passed a new tax on all six-figure income earners in Maryland. Well, bully for you! That’ll teach those nasty capitalists to stop being so productive. And Gaia knows that they really need to pay their fair share (I mean, how is it that the top 20% of earners only pays about 68% of the income taxes? How’s that “fair”?). So, here’s hoping that works out for you (fingers crossed!).
Of course, I seem to recall that the last time you all did something like this (with that “Millionaires Tax” thingy), we here in Virginia experienced a bit of an influx of former Marylanders. Not too many that we couldn’t handle it, mind you, and probably fewer than some thought. But it does raise an issue, especially since the latest tax scheme stands to affect a much larger portion of Maryland’s population. While we’re always happy to welcome you all into the Commonwealth, we’d really appreciate it if you’d leave things here the way you found them.
You see, all too often when Virginia takes in refugees of high tax and high regulation states, they tend to bring a lot of those policies with them. They seem to really like our neighborhoods, schools and business environment, but for some reason they get all worked up about the fact that our government doesn’t spend as much money as they’re used to (in fact, we’ve actually had a budget surplus the past couple of years, and look to do so again this year!). They also tend to push for more state intrusion into our lives. Thing is, we really don’t like that. (In fact, it’s a fairly common complaint in the South.)
You see, before they came, we were doing just fine. Sure, some of us moved to places like New York and California so that we could enjoy that wonderful embrace of the Nanny State, but for the most part it’s been the other way around: people moving from high-tax/high-regulation states to places like Northern Virginia. We completely understand why you would want to leave a place whose policies increase your costs of living, impair your livelihoods, and generally intrude on your lives in unwanted ways. That’s why we try not to do that sort of thing here (albeit, with some annoying exceptions). Problem is, when you all move in, you start enacting all the same policies that made the place you left so bad. We’d all really appreciate it if you wouldn’t do that.
So, like I said, I really hope that whole tax-the-hell-outta-the-rich thing works for you. If it doesn’t, and your looking for change of scenery, you’ll always be welcomed with open arms on this side of the Potomac. Come on over, make yourselves comfortable and set a spell. Just don’t go touching anything.
Michael J. Wade
If this is any indication of how France’s new president elect, Francois Hollande, plans to govern, I pity the French as well as the rest of Europe:
The 57-year-old Socialist has openly admitted that he “does not like the rich” and declared that “my real enemy is the world of finance”. This means taxing the wealthy by up to 75 per cent, curtailing the activities of Paris as a centre for financial dealing, and ploughing millions into creating more civil service jobs.
Add an explicit threat to renegotiate the euro pact to replace austerity with “growth-creating” spending, and you have one of the most vehemently left-wing programmes in recent history.
Of course reading through that helps one understand why, after learning of his victory, President Obama immediately invited him to the White House. Let’s see, tax the rich, go after the financial sector, grow government jobs and borrow, borrow, borrow to spend, spend, spend.
Huh … sounds familiar.
Sen. Democrats can’t produce a budget, but they can still find ways to raise taxes and redistribute income
The latest vote buying scheme? If you’re a small business man who owns an S-chapter corporation (that would be me), read it and weep:
Congressional Democrats and the White House have agreed to pay for a bill to freeze student loan interest rates for a year by raising taxes on so-called S Corporations, according to a top Senate Democrat and senior House and Senate aides, but Republicans said the tax increase may ensure the bill’s defeat in the Senate.
“We’ve got it worked out,” Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin, D-Iowa, said on Tuesday of the formula for paying for the legislation. Harkin spoke after Senate Majority Leader Harry Reid, D-Nev., said he will introduce within the next day a bill to prevent interest rates from doubling to 6.8 percent on July 1. That sets up Senate action on the bill next month after senators return May 7 from a one-week recess. A spokesman for House Minority Leader Nancy Pelosi, D-Calif., said she and House Education and Workforce ranking member George Miller, D-Calif., also signed off on the proposal.
The bill will require S Corporations with three or fewer shareholders who declare income of at least $250,000 a year to pay employment taxes, according to Harkin and Democratic staffers involved in the talks. An S Corporation is a specially structured entity that pays taxes under rules that allow earnings or losses to be passed through shareholders, reducing federal tax payments.
That’s right, S corps would be taxed to help keep interest rates on student loans down. Remember, the government now owns student loans.
And what have we looming right after the July 1st interest rate increase that might be hurt if that happens?
Why the November presidential election, of course.
Any wonder why the White House and Democrats are all for screwing small business to buy off a critical constituency?
It is no different in the category of desired political result than the $8 billion in spending HHS would do at the behest of the White House to slide the Medicare supplemental cost increase seniors will undergo from before the election to after.
This is outrageous. This is blatant vote buying and income redistribution to “pay” for Obama’s re-election. This is the essence of the Democratic ideology laid bare and the deviousness and immorality of their methods exposed for all to see – if they’ll see it.
No one makes anyone take out a student loan. And although it may be expensive, decades worth of those who’ve gone before have acted like adults and paid off the obligations they agreed too.
Now, if the Democrats get their way, it will be the job of those who’ve risked all to open a small business and built it with sweat equity and delayed gratification to pay to keep government controlled interest rates down?
“I don’t think anybody believes this interest rate ought to be allowed to rise,” Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday. “The question is, how do you pay for it? How long do you do the extension?”
Republicans are “in the process of discussing it among ourselves,” McConnell said.
Don’t even think about it Mr. McConnell! If, as Obama has said, it is wrong to raise taxes in an economic downturn, it is ALWAYS wrong. And if you think we’ve turned the corner economically, you’re not paying attention.
Government decided to take over the student loan business and now government can suffer the consequences of its actions. I have no desire or intent to bail it out.
If this doesn’t make you angry as hell then I’m fairly certain which lever you’re pulling in November.
Iguess we’ve moved into the realm of “guilty until you prove yourself innocent”:
The Republican House of Representatives may soon follow the Democratic Senate and give the IRS the power to confiscate your passport on mere suspicion of owing taxes. There’s no place like home, comrade.
‘America, Love It Or Leave It" might be an obsolete slogan if the "bipartisan transportation bill" that just passed the Senate is approved by the House and becomes law. Contained within the suspiciously titled "Moving Ahead for Progress in the 21st Century Act," or "MAP 21," is a provision that gives the Internal Revenue Service the power to keep U.S. citizens from leaving the country if it finds that they owe $50,000 or more in unpaid taxes — no court ruling necessary.
Note … “mere suspicion”. Like the IRS screws up its audit and thinks you owe more than you do (and at least $50k), your passport is yanked without going to court.
Let freedom ring, eh?
And, as the lede points out, it isn’t just the Democrats. Another attempt by both parties to shred the Constitution.
This is not the sort of power an unaccountable agency should be given. Any idea of how many people will suddenly find themselves on the wrong end of a suspicion they owe $50k or more in taxes? Whether true or not, with the power to grab your passport and only a suspicion needed (no court order), the IRS will likely “suspect” many people owe at least that much.
That’s certainly consistent with the history of such granted power. Go to the extreme quickly – there’s no reason not too. No penalty for them, certainly. Oh, you don’t owe $50k? Here’s your passport.
“Moving Ahead for Progress in the 21st Century”?
Since when is changing the IRS to a form of the KGB a “move ahead?”
The quote comes from a Heritage Foundation post on taxes and notes that today is “tax freedom day”, or the day in which what you earn from now on actually is supposed to belong to you:
In other words, for the first 111 days of the year, everything you earned went straight to Uncle Sam. Compare that to back in 1900, when Americans paid only 5.9% of their income in taxes and Tax Freedom Day came on January 22.
And in 1900, Americans felt that amount was outrageous. But this puts in context the huge growth of government in the last century.
Here’s the problem though, it’s going to get worse – 2013 would be the year of the Obama tax increases if he’s re-elected and Congress doesn’t move to keep the current tax rates (which the left insists on calling the “Bush tax cuts” but which have, instead, been our current tax rates for years).
If those tax rates are allowed to expire, you can tack on another 11 days before we see “tax freedom day”.
That’s all due to Taxmageddon — a slew of expiring tax cuts and new tax increases that will hit Americans on January 1, 2013, amounting to a $494 billion tax hike. Heritage’s Curtis Dubay reports that American households can expect to face an average tax increase of $3,800 and that 70 percent of Taxmageddon’s impact will fall directly on low-income and middle-income families, leaving them with $346 billion less to spend.
Like sequestration, these tax increases are scheduled to happen on January 1st of next year. Both are likely to have huge negative economic impacts.
On the tax side, Heritage’s Dubay points to immediate impact of some of the taxes that will become effective on that day:
If Congress fails to act, workers won’t have to wait very long to feel the effects. Every payday, they would see a jump in their payroll tax as it takes a bigger bite out of every paycheck. And that only reflects one of the direct hits they’ll face. They’ll feel the pain of other tax hikes they won’t pay directly, like the health care surtax on investment income and salaries over $250,000 — which begins in 2013 along with five other Obamacare tax hikes — because these hikes will slow job creation by taking away resources from businesses, investors, and entrepreneurs.
James Pethakoukis puts it into a chart for you:
If you combine all the other tax increases from 1980-1993, they add up to 3.3% of GDP, according to the brilliant budget team at Strategas Research. The coming “taxmageddon” of 2013 surpasses all those tax hikes combined! How could the Obama White House even toy with the idea, which it has, of letting them happen?
If they happen, can anyone guess what will happen to the economy?
So obviously, stopping this is a priority with President Obama, right?
That fact, though, isn’t making its way into President Obama’s talking points. He’s not mentioning that, absent action, Americans will pay higher income taxes, payroll taxes, and death taxes. He hasn’t spoken about the impending increase in the marriage penalty, the decrease in the child tax credit and the adoption credit, or how those who get tax breaks for education or dependent care costs will see them decreased. He hasn’t mentioned the new taxes under Obamacare, or how middle-income families will be forced to pay higher taxes under the Alternative Minimum Tax — a measure that was only supposed to impact “the rich.” Sound familiar?
Instead of dealing with Taxmageddon, President Obama wants to change the subject with a gimmicky policy like the “Buffett Tax.” The Senate obliged him yesterday by voting on this distraction. Fortunately, it was rejected. Still, while President Obama trains his fire on this class warfare policy, he ignores that if Taxmageddon strikes, the lower and middle class Americans that he says he is fighting for will pay substantially more in taxes to the federal government starting on January 1. Call it the unadvertised side effect of Barack Obama’s failed leadership.
So many “unadvertised” leadership failures in so few years. Let this happen and watch the economy head toward the bottom again. Of course, Obama won’t particularly care if he’s re-elected. He’ll no longer be answerable to the American people. He’ll have more “flexibility”. He’ll be free to move more to the left.
A wonderful scenario and, in answer to the question in the title – you ain’t seen nothin’ yet.
Ever have one of those days? My DSL has been down for 2 days, and I’m currently sitting in a public library trying to get some work done and sending out this post.
And I was actually going to concentrate on work until I saw this article about something Obama said about the Buffett Rule:
President Barack Obama argued Sunday that his calls for wealthier Americans to pay a greater share of taxes aren’t about sharing the wealth, but about getting the American economy on a path for solid growth.
“That is not an argument about redistribution. That is an argument about growth,” Obama said in response to a reporter’s question at a news conference in Colombia. “In the history of the United States, we grow best when our growth is broad based.”
Broad based growth is not driven by heavily taxing one income class, Mr. Obama. Nor is broad based growth driven by government spending (i.e. “redistribution” or “sharing the wealth”).
The “Buffet Rule” doesn’t do anything to provide those incentives or inspire that confidence. In fact, it seems to be mostly a tax of desperation. The numbers just don’t support the supposition that it will drive anything but more government spending, and, frankly, not much of that.
This is class warfare plain and simple. It is also an attempt to offer up the rich as a panacea to the revenue problem blamed as the reason we’ve seen government borrow multi-trillions of dollars.
There is no revenue problem. There is a spending problem. And taxing billionaires won’t solve that problem. In fact it will likely exacerbate it.
More importantly, the words Obama has spoken speak to two things: a) a deep seated ignorance of economics and b) a deep seated belief that government is the answer to all ills.
Both are dangerous and promise even more economic woes in our future.
We can’t afford that.
I sometimes wonder what world the editorial board of the New York Times calls home. It certainly isn’t the one the rest of us live in. But I guess it is necessary to live in an alternative world to be able to push narratives like it pushes in an editorial today. The NY Times has decided, to use a poker term, to go “all in” on Obama’s “right-wing extremism” and “dishonesty” meme.
Referencing the Obama speech yesterday, the editorial board says:
Mr. Obama provided a powerful signal on Tuesday that he intends to make this election about the Republican Party’s failure to confront, what he called, “the defining issue of our time”: restoring a sense of economic security while giving everyone a fair shot, rather than enabling only a shrinking number of people to do exceedingly well. His remarks promise a tough-minded campaign that will call extremism and dishonesty by name.
Remember Obama, who’s answer to the “defining issue of our time”, submitted each of the two years (I’m talking about his budgets) has gone a collective 0-511. That’s right, the two budgets he’s submitted to address the “defining issue of our time” hasn’t garnered a single vote in two years.
Why? Primarily because neither of the budgets convinced a single legislator of either party, to include the President’s own, that they addressed that issue at all.
Yet he presumes to lecture the GOP on the failure to confront this issue? And the NYT somehow manages to buy into that nonsense?
The GOP budget at least passed the House. The NYT presumes that no negotiations are possible because, again, it buys into the Obama claim that the GOP won’t compromise. Nonsense. Compromise doesn’t mean wholesale capitulation. In an negotiation or compromise there are lines drawn over which the two parties won’t give in. Each side has them. The NYT and Obama, naturally, want to characterize the lack of movement as GOP intransigence. But the Democrats are equally intransigent. They want more money in taxes. The GOP continues to point out that taxes aren’t the problem. The problem is spending.
Says the NYT:
Mr. Obama has, in recent months, urged Republicans to put aside their destructive agenda. But, in this speech, he finally conceded that the party has demonstrated no interest in the values of compromise and realism. Even Ronald Reagan, who raised taxes in multiple budget deals, “could not get through a Republican primary today,” Mr. Obama said. While Democrats have repeatedly shown a willingness to cut entitlements and have agreed to trillions in domestic spending cuts, he said, Republicans won’t agree to any tax increases and, in fact, want to shower the rich with even more tax cuts.
Ronald Regan agreed to raising taxes in return for what from the Democrats?
Spending cuts. In fact as I recall, his deal was 1 1/2 to 2 times the spending cuts to the tax increases. Guess what never happened?
That’s right – spending cuts.
So call it a lesson learned. What the GOP is pointing out that until the spending cuts are implemented and take effect, there is no reason to discuss revenue increases.
That’s a common sense approach that best safeguards the citizenry’s money and is based on a history that says the Democrats don’t keep their word about spending cuts.
I don’t blame the GOP for refusing to compromise on taxes.
Finally, and I’ve flipped the paragraph order in the editorial, consider the NYT lede:
President Obama’s fruitless three-year search for compromise with the Republicans ended in a thunderclap of a speech on Tuesday, as he denounced the party and its presidential candidates for cruelty and extremism. He accused his opponents of imposing on the country a “radical vision” that “is antithetical to our entire history as a land of opportunity.”
There has been no search for compromise with President “I won”. None. And it is amazing to see smaller and less intrusive government being characterized as a “radical vision” that is “antithetical to our entire history”. It is the basis of our entire history up until the welfare state came into being.
“The land of opportunity” was such because of a lack of government interference, not because of it. Obama and the left continue to attempt to rewrite history in a manner in which they redefine the words and key phrases that characterized our nation differently than they’d like prior to the institution of the welfare state.
The radical vision is that which Obama, the NYT and the Democrats continue to push, not the GOP. They don’t seem to understand that the majority of the American people have come to understand that we just can’t afford their radical vision and that government control of more and more of our lives is not a “good thing”.
If there is anyone out of touch with the American people it is Mr. 0-511. He hasn’t a clue.
And neither does the New York Times editorial board.
UPDATE: A further thought sparked by a comment by The Shark. If compromise is what Obama and the Democrats really want, they’ve had two opportunities to actually force that or at least make the argument they attempted it. For two years the GOP House has passed a budget. The way the Congress works is the Senate then passes its version of the budget and the two houses of Congress get together and hash out the differences (known commonly as “compromise).
Except the Democratically controlled Senate hasn’t passed a budget in over 1000 days. So who isn’t interested in compromise, Mr. President? And why aren’t you exerting a little leadership and confronting the Senate about its dereliction of duty? If “compromise” is so all fired important to you, why are you neglecting the easiest way of forcing it?
Bruce Bartlett takes a look at Britain’s experience and a study that documents it and concludes the same is probably true for here:
The study concluded that the behavioral effect of raising the top rate was much more powerful than anticipated. Two factors in particular had a large effect on revenues.
There was a timing effect. People moved income that they anticipated receiving forward so it would be taxed before the new higher rate took effect. They also postponed the receipt of income into the future in anticipation of a change in the tax rate after the election of a new government.
Also, because the British top rate had increased above that in all other major countries except Japan, many Britons relocated in reaction. For example, 1,379 people in high-income occupations moved to Switzerland in 2010, a 29 percent increase over the previous year.
The point, of course, is those who fall in the bracket in which the tax is increased are going to do what is necessary to minimize the impact of that tax.
Human nature 101. Consequently, the revenue projections are almost always high – and wrong.
Additionally, the Democrats like to imply that taxing the rich is a panacea for the spending problems we have. In the name of “fairness” they imply that if the rich would only pay their “fair share” well everything would be hunky dory. Of course we know the real problem is spending not revenue. But regardless, the real effect of the “Buffet Rule” for instance, is negligible:
But a March 20 analysis from Congress’s Joint Committee on Taxation estimates that implementation of the so-called Buffett rule, which would require those making $1 million or more a year to pay an effective federal income tax rate of at least 30 percent, would raise only $46.7 billion over the next 10 years. That’s a drop in the bucket compared with the $41.2 trillion in federal revenues expected to be collected under current law.
Note that last number and remember, this is a government which is claiming that it can’t get by on $41.2 TRILLION over 10 years.
Where again is the problem?
Despite what Democrats thing and despite the fact that they’ve doubled down on this theme, the “tax the rich” meme of their class warfare agenda isn’t at all as popular as they think it is, as the Hill reports:
Three-quarters of likely voters believe the nation’s top earners should pay lower, not higher, tax rates, according to a new poll for The Hill.
The big majority opted for a lower tax bill when asked to choose specific rates; precisely 75 percent said the right level for top earners was 30 percent or below.
The current rate for top earners is 35 percent. Only 4 percent thought it was appropriate to take 40 percent, which is approximately the level that President Obama is seeking from January 2013 onward.
So this is another issue in which the GOP would be able to find majority support.
And on corporate taxes, much the same thing:
The Hill Poll also found that 73 percent of likely voters believe corporations should pay a lower rate than the current 35 percent, as both the White House and Republicans push plans to lower rates.
The Hill tires to argue that the results of their poll is counter to what other recent polls have found. But in reality, it isn’t:
The new data seem to run counter to several polls that have found support for raising taxes on high-income earners. In an Associated Press-GfK poll released Friday, 65 percent said they favored President Obama’s “Buffett Rule” that millionaires should pay at least 30 percent of their income. And a Pew poll conducted in June found 66 percent of adults favored raising taxes on those making more than $250,000 as a way to tackle the deficit.
Again, note the percentage number in the AP-GfK poll – 30 percent or the percentage they’re now paying. When you ask voters to put a percentage to the nebulous “the rich should pay more” meme, you find the majority of voters consider 30% more than fair. The fact that many may not know that the so-called “rich” are paying that amount is means the GOP needs to do a little educating and informing, but it is clear that voters find the 30% threshold to be more than enough taxation.
So while the Democrats continue to try to push 40% as “fair”, most voters don’t see it as that. The majority of votes seem to think that fairness in the amount of taxes paid is found at the 30% level. That’s information to exploit and use against the class warfare Democrats.
Additionally the AP-Gfk polls shows majority support for spending cuts over tax increases. That’s a winner for the GOP.
What the GOP can’t do is allow the Democrats to take the issue and frame it as Timothy Geithner tired to do the other day:
“…the only way to achieve fiscal sustainability is through unacceptably deep cuts in benefits for middle class seniors, or unacceptably deep cuts in national security."
That’s patent nonsense, but the usual scare tactics employed when anyone talks about significant cuts in spending. Always threaten the security of a large body of voters with false choices. There are literally thousands of different ways to work toward sustainability before either of those programs would have to be touched (and yes, those programs should be “touched” as well).
So what do Republicans have to do?
“It might be that people are underestimating how much the rich pay now,” said Bruce Bartlett, a former Reagan adviser and Treasury official under President George H.W. Bush.
The data could indicate a challenge to Obama’s push to increase taxes on the wealthy. The White House’s fiscal 2013 budget request included a number of tax hikes targeting the nation’s wealthiest. In addition to the “Buffett Rule,” it calls for raising taxes on family income above $250,000 in 2013, and returning the top individual rate to 39.6 percent.
But as Obama continues his push to allow the higher-end Bush tax cuts to expire at the end of the year, the poll suggests it might be difficult to persuade voters to buy in when it comes to hard numbers.
Start talking hard numbers and percentages. Point out that our problem doesn’t revolve around the “rich” not paying enough in taxes, but instead with our politicians spending money we don’t have.
The sustainability problem has never been a problem of revenue. It has always been a problem of overspending. And it is that which has to stop.