Rick Santorum timed the wave perfectly and rode it to within eight votes of Romney in the Iowa caucuses. Whether it was timing or real support is not certain, but where does he go from here, and I don’t mean geographically?
Internal Revenue Service
Photo by No Nein
President Obama has a plan to pivot toward jobs, after nearly three years on office. After spending boatloads of our money on a stimulus program that failed, according to his own standard of capping unemployment at 8%, he wants to spend more. He claims that he is also cutting spending, but when you drill down into the details, it is a myth.
Photo by aranami
An intervention is an orchestrated attempt by one, or often many, people (usually family and friends) to get someone to seek professional help with a serious problem. The term intervention is most often used when the traumatic event involves addiction to drugs or other items, such as spending. Intervention can also refer to the act of using a technique within a therapy session.
If you care about Tim Bishop, if you care about your fellow man, he needs our help. From people who know Tim Bishop they tell me he is a good man, a decent man. But he has a problem. He cannot seem to control his urge to spend, particularly other people’s money.
Photo by Dovina is Devine
After negotiating a debt limit deal that included no tax increases, the ink was hardly dry on the paper before President Obama and Harry Reid started talking about what? That’s right, tax increases.
It wasn’t long after the Paul Ryan budget was released that the disinformation Democrats began trumpeting seniors being starved, being unable to afford health care, and the usual demogogic scare tactics. But doctors are dropping coverage, the key slices of the pie above are growing much faster than inflation, and the Democrats have no plan other than the age old cut benefits (reimburse doctors less) and increase taxes, just enough to kick the can down the road for someone else to deal with. Congressman Ryan had the guts to come up with a plan to actually fix the system by giving seniors a choice and they seem to like the idea. Why?
I still find myself in awe of our Founding Fathers who created our form of government. The competing ideas that they sifted through to come up with our Constitution and the safeguards in it is wondrous. The designs upon it by the progressives is by equal measure disturbing.
President Obama, during his 2010 State of the Union address, did the unprecedented, which I suppose should surprise no one. He called out the Supreme Court, whose members were seated in front of him, and lambasted them on a recent decision called Citizens United v. Federal Elections Commission. The outcome of the case was that free speech was not limited only to individuals but could include corporations, groups of individuals, etc. As Justice Scalia pointed out in his concurring opinion, the First Amendment refers to speech not speakers.
In the August 23, 2010, New York Times, Paul Krugman decries that if we don’t let the Bush Tax cuts expire and thus have a massive tax increase in the midst of a weak Obama recovery, it will be so unfair, so evil…
First let’s look at how twisted the logic of the left has become. Mr. Krugman says, “These same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.” Er, not really, Paul, unless the richest 120,000 people are stupid enough, with all their financial advisors, to have that much tax withheld from their incomes. You see, Paul, the only reason the government would have to cut them checks is if they paid too much in taxes during the year, and since the current rates are already in place it is unlikely that they would change their behavior to suddenly have an extra $3 million sent to Washington. Here’s the problem with your thinking, Paul. It is not your money, it is not my money, it is not the government’s money to begin with. It belongs to the people who have earned it. It is the people to provide revenue to the government. It is not the government who gives money to those who produce. Got it?
Like most on the left Mr. Krugman always associates tax cuts with a loss of revenue and tax increases with a gain in revenue, and ignores how people change their behavior with regard to these changes.
As this chart shows, at the end of the Clinton administration and the dot.com bubble the economy fell into recession. The Bush tax cuts were implemented in 2001 and they were across the board tax cuts, not just for the wealthy. A second set of tax cuts came in 2003. As you can see revenues started to fall before the tax cuts, but bounced back sharply after the cuts in 2001 and 2003. But Mr. Krugman would have you believe that if you cut taxes, revenues fall and if you leave them along or increase them, revenues increase. You can also see that Clinton’s tax increase in 1993, didn’t have much effect in changing the rate of revenue growth, but when the Republicans took over Congress in 1994 and instituted tax cuts in 1997 you can see the slope of the curve bend upwards and it is even steeper with the Bush tax cuts. So in the absence of the 2001 recession, revenues collected increased with tax cuts, not tax increases.
Let’s look at who is paying what share of the taxes. The follow chart shows what percentage of the tax burden was paid by what percentile of the income earners by Adjusted Gross Income.
| Year | Top 1% | Top 5% | Top 10% | Top 25% | Top 50% | Bot 50% |
| 1999 | 36.18% | 55.45% | 66.45% | 83.54% | 96.% | 4.00% |
| 2007 | 40.42% | 60.63% | 71.22% | 86.59% | 97.11% | 2.89% |
So even as the Bush tax cuts reduced tax rates across the board, the “evil” rich still ended up carrying a larger share of the overall tax burden than they did before the cuts. So just what is Mr. Krugman’s beef?
I argue that were are nearing a dangerous threshold politically, where the majority of voters may soon find they pay no taxes and the minority pays all. If that tipping point is reached, what is to prevent this majority from voting for massive tax increases that will only affect the minority? All Americans should carry some share of the cost of government. It should not be a free ride for some and a minority pays the tab.
To further emphasize the fairness issue look at the following chart from the IRS in 2004. The brown bars show the share of the income that the percentile on the vertical axis earns. The blue bar shows the share of the total income tax bill they pay.
The problem folks is spending. As the first chart makes pretty clear, we have not been suffering from a revenue problem, we have been suffering from a spending problem. This administration and their instigators, like Mr. Krugman, have been urging reckless spending upon reckless spending and even decrying that the administration has not spent nearly enough. Krugman is sloppy in making his case and tries to convince his readers that we will be carrying buckets of money to the wealthy when the truth is that he wants to open the spigot wider from those who produce in this country to the profligate government who can then spend it on more turtle crossings in Florida, and to prop up the unions, and bankrupt states. Stop spending, cut taxes, shrink the federal beast, and we will be in good shape in short order.
As many people have said, “I never got a job from a poor man.” In looking back at my own career, I have worked for several companies that were started by entrepreneurs and who became wealthy. Do I care if they were wealthy? No. Do I wish they were taxed to the eyeballs? No. If they were, those are jobs I would probably wouldn’t have had. Opportunity is what made America the country where people around the world fight to get into, not bashing the successful. All who stive to come here want to become those wealthy successful people and give the same opportunity to their children.
An article in today’s New York Times is just one more, “Don’t let a crisis go to waste,” move from this administration. The article, titled “As Oil Industry Fights a Tax, It Reaps Billions From Subsidies,” uses the same tired talking points to justify another tax increase that will ultimately be passed along to consumers.
The article talks about how the oil companies take advantage of tax credits and breaks and then it also talks about how many oil based companies re-incorporate in countries like Panama, the Marshall Islands, the Cayman Islands, and Switzerland because it will lower their taxes. When with the Statists get it? If you raise taxes both corporations and people will change their behavior to lower their taxes. Impose a millionaire’s tax in Maryland and Maryland discovers they have one-third fewer millionaires a year later and hundreds of thousands of dollars in less revenue. Impose among the highest tax rates in the developed world on businesses and businesses will move to where the taxes are lower. Create tax breaks and then somehow the Progressives are surprised that companies took advantage of them.
The initial thrust of the article was that the tax on oil companies was necessary to pay for the cleanup of the oil spill in the Gulf. Pardon my confusion, but didn’t the government just get BP to pony up $20 billion into an escrow fund for this purpose? Hasn’t BP said from day one that they will pay the cost for the clean up? So why are the Progressives in Congress rushing to put a new tax in place other than to take advantage of a crisis to reach into your wallet?
Another unintended consequence of our onerous tax policy is that when companies incorporate in other countries, those countries often have lower engineering and environmental standards.
I am no fan of corporate welfare so why don’t we take the IRS code and run it through a shredder? Get rid of the tax breaks across the board. Lower the tax rate to a fixed number that is on par with other developed countries. According to the Heritage Foundation, the freest economy in the world is Hong Kong, which oddly enough is located in Communist China. The Chicoms were smart enough to leave well enough alone when Hong Kong reverted to their control from Britain in 1997. Their individual tax rate is progressive ranging from 2% to 17% or an option for a 15% flat rate depending on which liability is lower. The top corporate tax rate is 16.5%. Their five-year compound annual GDP growth rate is 5.7%; unemployment is 3.5%; and their inflation is 4.3%. By comparison, our top corporate tax rate is 35%, more than double that of Hong Kong; our five year compound annual GDP growth rate is 2.2%; unemployment is 9.4% (at the time of this study); and inflation is 3.8%.
If we could implement real tax reform it would not only simplify our lives, save several hundred billion dollars in compliance costs, reduce uncertainty for business, create jobs, and grow the economy. With a larger pie, overall tax revenues will also increase.
In that Heritage study the United States has the eighth freest economy in the world, down one place from the year before; not the direction we should be going. Imagine if we set a goal to become the freest economy in the world. Americans like a challenge so let’s set our sights on becoming number one. The first three to concentrate on passing are those directly in front of us: Canada, Switzerland and Ireland. On this Fourth of July, let’s plant our flag and get to work.
Did anyone not see this coming? An article in yesterday’s Wall Street Journal reports that new home sales plunged. Why? The government’s meddling tax credit for first time home buyers expired and gee, the trend didn’t continue? What a surprise. Meanwhile the government has another program, Making Home Affordable, to help homeowners refinance their home mortgages that they can no longer afford. Instead of letting the chips fall where they may and have prices find a bottom and adjust, we have the drip-drip-drip torture of these programs and the recession drags on.
New home sales fell 32.7% from April to a record low seasonally adjusted annual rate of 300,000. Compared to last year the sales fell 18.3%. In addition the previously reported sales numbers for March and April were adjusted downward.
Here is what we have. Our government is taking our tax dollars and giving them to people to help them buy a house. You may be struggling to pay your own mortgage and instead of the government letting you keep more of your own money and perhaps make an extra payment on your own mortgage to lower your outstanding debt or increase spending which would help grow the economy, you are paying for your mortgage and your neighbor’s. Instead of letting those who can’t afford their mortgage face that reality, the government steps in and drags out the process. If government got out of the way, then the banks would have the incentive to negotiate in good faith rather than looking for a government bailout. If a mortgage is salvageable, they should renegotiate with the homeowner and take a small loss rather than a big one. If the mortgage is not salvageable, then foreclose or short sell it and be done with it. The housing overhang on the economy would get quickly sorted out and we could return to a more stable housing market. Get the government out of the way and let us keep our tax dollars.
In 1920-21 there was a steep and serious recession. This was before the age of government intervention of Hoover, FDR and all who followed. Businesses were able to cut wages and react to the circumstances in that freer market. Unemployment peaked at 11.7%, almost 2% higher than we have now, but by the following year it was down to 6.7% and they year after it fell further to 2.4%. We are a year and a half into the current mess and the current administration seems intent on matching FDR’s record of stretching this out for eight years. We have a robust economy that can rebound sharply, if the government gets out of the way. But this government keeps tinkering and the economy keeps bouncing along the bottom. And let’s not forget fraud.
The Treasury’s Inspector General for Tax Administration, J. Russell George, reported that 19,000 filers for the first time home buyers credit hadn’t purchased a home and there were 74,000 filers had purchased a home but it was not their first. In additiona there were 53 cases where IRS employees filed “illegal or inappropriate” claims for the credit and today we learn that $9 million was stolen by prisoners who were incarcerated when they filed for the credit. So don’t worry folks your tax dollars are not only prolonging the recession, but they are being stolen as well. Feel better about your benevolent government? Aren’t you glad we live in a country where your government can forcefully take the fruit of your labor and throw it to the wind?
Government that governs least governs best. Let’s cut the beast down to size.
