It’s taxing: hikes and breaks
In President Obama’s speech tonight, he will speak of “tax reform,” among other topics But the details are being closely guarded.
It’s unclear whether he will propose some sort of tax hike for the “rich,” or the expiration some of the Bush tax cuts, as many have advocated. Some say that would be an excellent way to reduce the deficit. Some say it wouldn’t matter at all, and could even make things worse because raising taxes is almost invariably followed by raising spending (see also this).
What’s a poor voter to do, except be skeptical? Actually, the two positions I cited in the paragraph above are not inherently contradictory, because the first—that higher taxes would be highly effective in deficit reduction—also presupposes that Congress will not do anything to raise spending. The second says that’s unrealistic: saying that Congress can resist using the revenue for new goodies is like saying you’ll only eat one potato chip when there’s a bag in the cupboard crying out to be consumed.
That’s the practical issue, or at least one of them. Another is whether raising taxes actually provides the expected revenue, or whether people tend to adjust their behavior accordingly to foil the government.
And then there are the philosophical questions. One of the many differences between those on the left and those on the right is that the latter think that, for the most part, when rich people earn money it belongs to them, and that if we take that away we take away a great deal of the incentive that drives prosperity. The former think that rich people have stolen the money from the rest of us and that when we take it away from them we are just reclaiming what we rightfully own. So to the left (except for rich people on the left who are just as assiduous in hiring tax lawyers to take advantage of all loopholes), taxes on the rich are an inherently good thing, and they themselves are a bunch of modern-day Robin Hoods and his not-so-merry men and women.
I don’t think Obama’s original proposal to increase the tax rates on the top 2% of income earners will kill the economy. I know it’s sacrilege for a conservative to say that, but I don’t see how a minor tax increase on megamillionaires like Derek Jeter, LaBron James, Warren Buffett, or George Soros will matter much to the economy.
However, I oppose any increase in taxes simply because it takes the pressure off Congress/Obama to reduce spending.
If there were some way to absolutely positively guarantee that a tax increase on the super rich would be used to reduce the deficit, and not squandered, I would support it. But any time they get a new pot of money, they spend it. Look what they did with TARP. It was originally supposed to be used by the Treasury to buy the “toxic assets” that were preventing the banks from lending. Instead, Paulsen used a portion of the TARP money to buy preferred stock in the banks. Then Obama used the rest of it to modify home-owner’s mortgages and bailout the United Auto Workers union. None of these uses, by both parties, is why Congress voted for it originally.
In short, because Congress and the Executive branch of both parties have betrayed us taxpayers, I don’t trust them. I oppose all tax increases, because they have proven they won’t use the money to reduce the deficit and will just spend it.
Aside from the fact that the “rich” do not have enough income and wealth to fund the insatiable demands of government and its dependents, class warfare remains a primary tool for those politicans playing to the victim/dependent mentality.
Rich card, race card, gender card, big business card, and green card are all variations of the same demonization/envy ploy. Impressionable people tend to believe that the grass is always greener, and the other guy is always a selfish nasty crook who doesn’t deserve to keep what they have.
Take ALL the rich’s money and you just pay for this years deficit. But next year… there are no rich and the private pool of wealth necessary for investment and growth has been eliminated.
Until spending is reduced to sustainable levels, discussion of raising taxation is ‘placing the cart before the horse’.
But then, at the very heart of the matter, lies the simple decision to collectively live beyond our means.
Taxing beyond the amount needed for constitutionally stipulated expenditures can only be justified when the increased taxation is spent for war, national disasters or some form of investment; such as the creation of the national highway system, the establishment of the national parks and other expenditures, that monetarily or otherwise, provide a commensurate return on investment.
Unlike Neo, my conversion to being a conservative didn’t involve any deep philosophical issues initially. It occurred in the late 80’s after moving to New England, and watching after several years, as my take home income decreased each year even though my salary was increasing… all due to fed and state taxes. Pissed me off royally. It was then I decided to look into this whole “government is good” business.
In a sense I was returning to my roots as I was actually fairly conservative as a teenager, but then went to college…..’nuff said.
Letting rich people keep their money is good for the economy. I recall the short lived excise tax of the early 90’s on yachts, private aircraft, and luxury cars. In short order the boat building industry was flat on its back and aircraft workers were laid off. The tax was quickly repealed. I believe Teddy Kennedy was a major player in all this.
Funny, isn’t it? Those on the left think that the money should be taken away from the rich people because the rich people didn’t earn it. Then, the money should be given to the less wealthy . . . who haven’t earned it.
Neoneocon,
Your observation about changing behavior patterns is a virtual guarantee. If one looks at the following chart (see the column Total Receipts):
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205
Notice that, with the exception of a few outliers (20+% and 4.8%) the percentages cluster in the 17% to 19% range. This includes low tax rates of the early years as well as the draconian 90+% tax rates from WW II to the 1960s (which no one really paid because they adjusted their behavior to avoid such ridiculous taxation). This revenue strean remains relatively flat precisely because people adjust their behavior.
As I have noted before, the left does not understand that 10% of 1 million is greater than 20% of $100,000, or they really don’t care because their goal is not producing revenue, but using the economy as a means of social control of the populace.
Increasing the tax rate on the wealthiest is not about raising revenues, it is about “fairness”. The fact that an increase in the tax rate may actually decrease revenue is not material to whether the increase is fair or not. Liberals know all the arguments about the economic impact of tax increases, especially during a rescission. They either don’t understand the impact or don’t care that thousands of private sector jobs will not be created. (And, who speaks for the guy who doesn’t get a job that was not created due to an increase in taxes?) After all, if we are all out of work we could not be on a more even playing field.
A business person would set prices for its products in a manner designed to maximize its profits. This might require an increase or a decrease in price based on a multitude of factors that come into play. Similarly, a logical government would set income tax rates in a manner designed to maximize the revenue they would generate. Tax rate decreases under Kennedy, Reagan and Bush all resulted in revenue increases due to the increased economic activity they spurred. But liberals (deliberately) confuse the deficits caused by increased Congressional spending with the reductions in tax rates, notwithstanding the higher revenues. The Dope is not interested in maximizing revenue. He seeks to penalize the most productive of us in the name of fairness. He is not concerned with the poverty and pain this will cause. He is the Dope because he still sleeps well at night.
Listening to the President’s speech my favorite line was the idea of “reducing spending through the tax code”. The doublespeak is awesome unless Obama assumes that all the wealth in the country belongs to the government, not its citizens.
Obama founded the Marxist Student Club while at Occidental.
Which tells you where he’s coming from.
He wants to double down on further spending.
He’s getting his advice from Soros — who more or less advocates more Federal debt.
Stark,
Bumper sticker:
“All your money are belong to us!”
Obama/Biden 2012
It get complicated, considering people are able to do various things with their money.
Presume a guy has $20 mill in the bank and earns 6%, taxed at 33 1/3%. He keeps $800k Presume he has $20 mill in tax-free munis earning 4%. He keeps $800k.
Raise income taxes to 50%. First guy now keeps $600,000. Second guy keeps $800,000. First guy moves his money to municipals.
So make municipal bonds taxable income. Problem with that is that the tax-free feature allows municipalities to pay a lower yield, since the owner keeps it all. That makes it easier for municipalities to float their bonds, since they don’t have to tax as much to pay the interest. If munis become taxable, cities will have to offer higher yields, thus making it harder or more expensive to float bonds.
Keeping munis tax-free, though, has a benefit. The really rich who have their money in tax-free munis can piously say they would think a higher income tax is only fair. They won’t be paying it, but they’ll look good.
Somehow, I don’t think Michael Moore or George Soros will be affected by any tax increase.
He’s getting his advice from Soros – who more or less advocates more Federal debt.
Advice, instructions, orders. What’s in a word?
What is the real incentive to being in Congress? To get elected and make $175k a year? Or to get elected and spend other people’s money to ingratiate them to you so that you a)continue to be elected and wield power or b)get a really cushy gig that depends upon Congress wielding enormous amounts of power?
I think we should pay congresspeople $500k per year to attract the right kind of people- people who are in it to keep the job and get paid for the job. And then you take glenn reynold’s plan and tax them at 50% for any job they take after their positions for a term of 5 years, but I would say 100%.
The problem IS fairness. And fairness is, no 1, not taxing successful people more and more and more because Obama deems “they can afford it.” (That’s without an inkling of what their expenses and responsibilities are, too! But maybe he really is omniscient!) Especially when he applies that to everyone who makes more than $250,000/yr.
The top 1% pay some 45% of ALL TAXES PAID. That and Obama’s philosophy of wanted to tax the rich more, and then more and more — and even more, tells everyone that those earning less than $250,000 need not pay taxes. Let the richer people do it. But those who don’t pay deserve ever increasing entitlements, when the fact is, most billionaires don’t avail themselves of ANY of these entitlements because they have no need. So the plan is ultimately the rich support the poor. And the message is: we, the government, are going to take as much as we want and we will spend it as we want to (We know better than you!) — because we decide you just don’t need that much. And if we, the government, are going to spend that money we took from you on issues you don’t believe in, or go into foreign aid to countries who are our enemies — say, to bribe them to not take up arms against us or support terrorists, too bad! That is just as bad as the govt. using federal tax dollars to supplement abortions when almost have the public today are pro-life.
Of course, a much more logical solution is NOT TO SPEND WHAT YOU DON’T HAVE in the first place! We shouldn’t do that as individuals; why is it OK for the government. And we have banruptcy laws that allow businesses to reorganize starting from scratch, wiping out debts, reorganizing structure. Is the Left’s end goal to bankrupt this company…and then reorganize it as they see fit?
Two other significant considerations:
1) not too long ago, being a millionaire meant you were RICH. I mean really, really, REALLY rich! Today, not so much. A husband and wife who save to better their circumstances, have nicer lifestyle that should come with success, hard work, send their children to college, put away for security in their older years — are penalized for upward aspirations.
Obama and his ilk, make no distinction between those who have net worth of $1 million or a few million, and those who have, say, $20 million, $50 million, hundreds of millions, then billions.
There is a huge difference and classifying all those with incomes over an arbitrary amount — which includes with 2 income earners (i.e. a husband and a wife) (or a husband and a husband; wife and wife) into one group assigned the same tax rate.
2) There has been zero – absolutely zero — discussion about private giving to causes that individuals support, have a special connection to, or believe in passionately.
In an age when an incumbent President is planning on raising $! BILLION — ONE BILLION DOLLARS — to campaign for a 2nd term — all of which is supposed to be from private givers — there is no reason on earth that private givers who believe in Women’s Choice/abortion, should not be able to supplent Planned Parenthood, or the Left supporting media like NPR. Besides, the latter would be tax deductible donations. Contributions to a political campaign are not. (Now I understand why one of the first things on Obama’s agenda was to remove tax deductibility from charitable donations.)
And all the pork that is buried deep in the endless volumes of llaw, awarding federal dollars to very small groups of people with a very specific use not common to all and whose benefit is potentially nil with regard to the common good — should rely on private giving. If it’s important enough, the dollars will come.
The bottom line is that Democratic/Progressive policy does not incentivize people to take personal responsibility, and it recreates a vast and permanent welfare state. Instead of encouraging future generations to save to have money in old age; to save for unforeseen circumstances that happen in all our lives; to aspire to greater success
which has the snowball effect of enhancing private lives as well as the public economy, they want to promote fear, envy, and quash work ethics by promising to take from those who work and succeed and simply give money as a reward for not working, not saving — and most important of all: voting their benefactors back into office over and over again.
Lastly, none of the above should prevent those who DO believe the rich should give more in taxes — particularly the rich who support this — from volunteering the donation of more money than they are assessed by the tax laws. If you prefer to give to the government, instead of giving to private institutions, go for it: write a check!
But then one has to ask why the Bill Gates and Warren Buffetts and George Soros’s of the world, the enormously wealthy Hollywood celebrities, not to mention obscenely paid athletes who publicly do not just endorse Obama’s philosophy but enthusiastically promote it — why do they have their well-paid (all aspiring upward I should note!) accountants, financial and estate planners, and money managers form countless tax shelters, private foundations which allow them to pick and choose which causes they personally want to support, where they want to give all those dollars away — instead of letting Big Government decide for them?
Obama=Chavez.
I hope we can change that to Obama=Allende. Where is our Pinochet?
It’s really that bad?
YES.
Via realclearpolitics.com
On rare occasions, Joe Biden’s judgement can be quite perceptive.
http://www.realclearpolitics.com/video/2011/04/13/biden_falls_asleep_during_obama_budget_speech.html
A lot of us are creeping on the edge. I include the Boehners and Cantors in this. That we know what the Left does and wants helps naught in fixing our hurtle to social and fiscal disaster. They are driving our ship onto the shoals and we must seize the helm lest we all drown.
No more Mr Nice Guy. We must just DO IT. NOW.
Bumper sticker:
“All your money are belong to us!”
Obama/Biden 2012
ROFL!
Seriously, as others have noted; we could take every penny, every every off-shore asset, piece of property, every bond, and every stock (and then feed them to food stamp recipients) from the ‘rich’ and it wouldn’t cover the current FY deficit.
BTW, Ryan gave a great rebuttal. http://dailycaller.com/2011/04/13/paul-ryan-responds-to-obamas-deficit-speech/
PS: IMO Ryan’s proposal is a many trillions of dollars short.
Hint 1) Reduce Obama’s personal wealth in proportion to wealth reduction of the country.
Hint 2) See hint 1.
Tom says, “They are driving our ship onto the shoals and we must seize the helm lest we all drown.”
I have a slightly different analogy: We are on a ship of fools sailing to a place beyond the edges of the map. This place is an unknown destination from which no one has ever returned. The left fervently believes this place beyond the boundaries of the map is where unicorns find a pot of gold at the end of infinite rainbows. In reality, it is likely that monsters reside where unicorns fear to tread.
The Torah and Laffer’s curve (otherwise known as “taxable income elasticity”) agree in knowing that taxing income too high will cause behaviors that lessen everyone’s prosperity. Torah discourages, perhaps even forbids, the giving away of more than 30% of one’s income. Interestingly, 30% is the level of taxation which causes the unintended consequences.
Taxable income elasticity isn’t disputed by rational minds. (See link below)
We’ve gone around full circle and reputable science proves the wisdom we have all decided is too embarrasing to even consider.
Does anyone think it a national disgrace that fully one half of our population gives nothing?
There is a rather analogous king in Israel’s history:
Rehoboam. As recounted in 1st Chronicles:
13, 14: and king Rehoboam forsook the counsel of the old men and answered them after the advice of the young men saying, My father made your yoke heavy, but I will add thereto: my father chastised you with whips, but I will chastise you with scorpions.
Of course, King Obama, is not able to state his intentions so baldly, but his rejection of good counsel and sage advice is the same as Rehoboam’s. Horrible was the result.
One may not consider the Tanach to be the THE Word of God, but surely it has some claim as a repository of wisdom.
http://www.cato.org/pub_display.php?pub_id=6432
We got snookered!
http://www.nationalreview.com/
I knew it in my gut. Boehner just can’t haul the mud. (If you’ve ever worked in concrete, you know what I mean.)
Excerpt from Obama’s speech:
“Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome. Some are kids with disabilities so severe that they require 24-hour care. These are the Americans we’d be telling to fend for themselves.”
Liar!
And this is the guy our RINO’s are afraid to go after? Afraid to demand his birth certificate? Afraid to call a liar?
Curtis provides an excerpt from Obama’s speech:
“Many are poor children. Some are middle-class families who have children with autism or Down’s syndrome. Some are kids with disabilities so severe that they require 24-hour care. These are the Americans we’d be telling to fend for themselves.”
In my America these people do exist. That can not be denied. Who provides assistance and care is the question. And in the America I want to live in the answer is we provide for them as best we can at the local or state level. We don’t need to send tax revenues to DC, and in return have the whores & thieves in DC and their bureaucratic drones, tell us how to address the problem while they extort 40 cents on the dollar and return 60 cents to us to deal with the problem at hand. In my America its none of your business Mr. Obama. Your responsibilities are clearly spelled out in the Constitution, and likewise limited by said document.
Curtis goes on to say, “And this is the guy our RINO’s are afraid to go after? Afraid to demand his birth certificate? Afraid to call a liar?”
The RINOs you speak of are busy trying to get access to the MSM microphones and obtaining invitations to inside the beltway cocktail parties.
“And then there are the philosophical questions. …those on the right…think that, for the most part, when rich people earn money it belongs to them…. [Those on the left] think that rich people have stolen the money from the rest of us and that when we take it away from them we are just reclaiming what we rightfully own.”
Another way of looking at this is to see that the right believes it is possible to create wealth by sweat and ingenuity. The left views the wealth of the world in zero-sum terms. I always try to remember to ask who, in the zero-sum world, Jobs stole the iPad from.
Apocalypse: Deal Only Cuts $352 Million In Actual Spending
–Ace
“As I noted: The Democrats offered Boehner a crooked “deal” wherein they’d offer some smoke and mirrors only-in-accounting-world “cuts” and all Boehner had to do was say yes and the Democrats would play along and pretend they’d been beaten.
“First Boehner announced he would not go along with such a deceit.
“And then he did, with the Democrats and their allies in the media playing “the Republicans won” narrative, per the agreement, until the Democrats could contain their quiet victory no longer and began announcing it.
“So there you go. We started this process, we thought, with $101 billion in cuts, which we only found out after the election was a promise to cut $61 billion.
“Then Hal Rodgers — who must resign — had an opening bid of around $30 billion, which the Tea Party got angry about and forced him to push a supposed $61 billion cut, but the hand was tipped, it was clear we were not only not holding out for $61 billion, but if we had our druthers, we wouldn’t even start there, nevermind end there.
“Then some Tea Party people and the Republican Study Group pushed to get it back up to $100 billion, but leadership, including Eric Cantor, voted that down, and some in our very own party used Democratic language in defending their precious spending, saying the cutters wanted to take a “meat axe” to the budget and hurt people who depend on government.
“Then we started cutting every week, which turns out now to have been a scam, because we weren’t cutting spending, we were cutting future spending authority which wasn’t likely to be spent anyway. In essence, when I thought we were making progress, we were actually just giving the Democrats their way by funding government at the same level as usual.
“Then we finally agreed on $38.5 billion. Later inspection checked more closely, and determined that most of that wasn’t really cuts at all, but accounting gimmicks, fake cuts, and that the real amount of cuts was around $14 billion.
“Then someone noticed — actually, it’s closer to $8 billion.
“And now the CBO looks at it.
“$352 million, with an m, in cuts. What the government spends in… oh, it’s like $6 billion a day, so $352 million is what the government spends in about an hour and twenty minutes.
“That’s what we fought for in November–so that we could cut the 365 days of spending of 2010 into 354 days, twenty two hours, and forty minutes worth of spending.
“Hal Rodgers has to go. Has to go. The party has to demand he resign from his post. There have to be consequences.
“Someone has to pay.
“The rest have to know they’re next. We can’t hang them all, but we can hang one of them. To encourage the others.
“Biggest spending cut in history, huh?”
P.J. O’Rourke had a good analogy in one of his books or essays: The left believes wealth is a pie of fixed size, and their solution is make the slices smaller so everyone can have a piece. The right believes that the pie can be made to any size, therefore, the right’s solution is to produce a bigger pie where it’s ok if you take a large slice. There’s still more than enough to go around. I like the right’s solution better. With the left’s, eventually you run out of pie.
Waltj,
I’ve mentioned exactly this before on this blog.
Furthermore, the corrollary to the finite economic pie is that they believe the govt’s power to tax is infinite. The have it precisely back-asswards.
Carry that one step further, though. When the left is in control, the institute policies that suffocate the economy. Their response is,”See, we TOLD you the economic pie is finite.” They create a self-fulfilling prophecy which reinforces their belief in their own myth.
Look to a the sky…
see the infinite…
and wonder…
how can there be a fixed pie…
Art, you know probably better than most of us that the left long ago stopped looking to the sky, perhaps because they couldn’t find a way to tax it. So of course the left believes in fixed pies, and, as T notes, rigs the game so there does appear to be a finite amount of wealth. But there isn’t. Any successful entrepreneur can tell you that.
Waltj,
The question is 1) can they really be this stupid?
2) Do they actually understand what they’re doing and they have an ulterior motive (to bring down the American economy)? or 3) Are they just so blinded by their belief in their own ideology that it makes them that stupid?
What scares me is that with each new news dispatch, the one-time Democratic party of Tip O’Neill and Daniel Patrick Moynihan is, more and more, resembling the People’s Democratic Party of the Soviet Union (“We govern! You pay for it! Don’t ask any questions!”). I mean, Pelosi, Slaughter, Wasserman-Schultz and Schumer are absolutely unhinged at this point.
Waltj,
Furthermore, regarding your comment on not being able to tax they sky, I SCUBA dive. When I fill my tank, the govt taxes (sales tax) the very air I breathe. Just thought you’d like to know.
The answers to your questions:
1). Yes.
2). Some know exactly what they’re doing, and they are doing it to bring our economy, and therefore our society, to its knees.
3). Again, some want so much to believe in “the narrative” that it makes them unconscious to all the problems that leftist policies cause.
Whether they’re knavish fools or foolish knaves, to reprise a conversation that’s been on this blog before, is ultimately irrelevant, I think. There is some percentage of each, along with some who are just along for the ride, and the results are the same either way–disastrous for our country.
I know about the sales tax on SCUBA air. But you can still look at the sky for free. For now.
Beverly, you’re basically seeing all the GOP and bureaucratic insurgents in DC doing what they want to do. The same as they did in McCain’s campaign vs Sarah Palin. They, like the Left, know where and how to get the most money while doing the least amount of work. And they are acutely aware of WHOM most threatens them. And it isn’t Boehner.
Where were the protests and domestic insurgency that we saw in Wisconsin if this was so dangerous to Leftist spending? Why couldn’t they produce one victim group protesting if the spending cuts were so huge?
The Left are organized. They are organized to destroy people’s livelihoods. That cannot be fought by people willing to be bribed by social and economic and political gains. How can people have a spine when they know that they can just give up and be paid for it? No, people will only fight if you back them into a corner and provide no way out. As Sun Tzu said, on death ground.