Tax Policy

[G M]

Perhaps we could have a government body of economic fairness that can decide who gets what kind of compensation. I'm sure that's worked out well in the past......

[G M]

I could argue like GM has argued before (yachts) that Michelle's lifestyle helps keep people employed,  but that too is a rather silly argument. 

It's quite different when a private person hires people and buys things, creating economic activity vs. Queen Michelle's lavish taxpayer funded lifestyle.

[DougMacG]

Doug, I was using Mitts (Gov. Romney?) as an example.  Over and over did you notice I acknowledged that in my opinion he did absolutely NOTHING wrong.

Looking for wrongdoing was the lure used to get his private information into the public domain.  Now that everyone has his private information they (you) move to what else can we do with it, even pose hypotheticals that are absurd about what he has not done.  Doesn't fly with me. 

Again, what rate would you quadruple tax illusory incomes at?  Again, the inflation component of a gain is not a again, yet it is quadruple taxed.  Your story did not answer that.  If you can answer with a tax code less than twice the length of the Bible, then we may have an improvement over the current code.
---------------

This Crafty quote deserves repeating:

The wage earner does not risk losing money he has already received.  The wage earner does not have to put up his previous earnings in order to get the job.

I would add that the investor has already paid his FICA contribution when the money was earned.  Does anyone even know what the FICA 'tax' stands for anymore?  What are the second and third words??

Federal Insurance Contributions Act - It is an insurance contribution.  Like a pension, would you want Gov. Romney to be taxed all the way up on his income and then federally insured up to all or most of his highest annual income for his old age retirement.  I think not and same with the people who designed the system.

Social Security and FICA have already been partially repealed with the Obama political keynesian move to put a coffin nail through its biggest strength - that is was allegedly fully funded.

If you want to lower the tax on labor, do so!  If you want to further penalize and disincentivize the formation of capital in this country, do that too, but don't expect that the further lowering of investment with even fewer factories and employers hiring will help employment, national income or revenues to the Treasury, because it won't.  It's not rocket science.

Efficient investment is necessary for robust employment.  Hindering it kills off jobs and keeps capital from flowing to its most valuable use.  Does anyone ever look at actual results?  Or just focus group polling to set tax policy.

[Crafty_Dog]

http://www.foxnews.com/opinion/2012/02/13/mr-obama-dont-have-tax-problem-have-spending-problem/


Mr. Obama, we don't have a tax problem, we have a spending problem
By Wayne Allyn Root
Published February 13, 2012
FoxNews.com   

Aug. 31, 2011: President Obama gestures after a statement in the Rose Garden of the White House in Washington.
Did you see President Obama's new 2013 budget? It's filled with $1.5 trillion in tax increases for the rich.
It appears that the president and his leftist cabal believe we are all stupid. They believe if you tell enough lies, the lies become fact. They spend all day, every day, trying to convince Americans that taxes on the rich are too low.
The reality is taxes are not low at all. If you think they are, you've either been brainwashed, or you aren't paying taxes. The truth is: The taxes are too damn high.

We do have a serious problem in this country. But it's not a tax problem. It is a spending problem.
Our government is addicted to spending. It doesn’t matter what the tax rate is. It doesn’t matter how high the tax revenues. We could raise tax rates to 90% and government would still spend $1.40 for every dollar it takes in. So why are we blaming the victim (taxpayers) for the national debt?
Government is a spending addict and needs rehab. If you don't believe me, look at Europe.
Taxes are far higher than America, yet the countries of Europe are desperately broke. Bankrupt, Insolvent. Panic is setting in. Greece is burning. It may become the worst economic crisis in modern history. And it's all about big spending and high taxes.
Yet President Obama continues to claim in every speech that taxes on the rich are too low and we therefore desperately need to raise taxes.
When a private sector CEO lies to investors, it’s called fraud. You can go to prison for manipulating the facts. Yet President Obama and his leftist cabal in Congress lie, omit and manipulate the facts about taxes every day.
Let’s examine the bold faced lies of Obama and the left, who try to justify tax increases on "the rich" on a daily basis:

First, Obama quotes the dollars earned by the top 1% of income earners to prove that “the rich” are making too much and being taxed too little. That’s sleight of hand.
The president is lumping billionaires with yachts and private planes into the same boat with small business owners like myself. Within that top 1% are a few billionaire titans like Warren Buffett, hedge fund managers who earn $500 million per year, Wall Street tycoons who earn $100 million per year just in stock options, all mixed in with small business owners like me.
How can you use billion dollar stock gains, or $100 million hedge fund incomes, or $20 million Wall Street bonuses, to justify raising taxes on a small businessman who makes $250,000 to $500,000 per year by working 16 hours a day?
By courageously risking their own money, small business owners create over 70% of the new jobs in the U.S. economy.
President Obama is comparing these individuals to billionaires who share the same tax bracket. Mr. Obama claims that everyone in the top 1% tax bracket is making too much, and paying too little in taxes.
The president is playing a bait and switch shell game. Some might even go so far as to call that kind of manipulation tax fraud.

Second, Mr. Obama claims tax rates are currently among the lowest in history. Once again the president is purposely omitting the full picture.
Separate from federal income tax rates, U.S. taxpayers now pay the highest FICA and Medicare tax rates ever; the highest state, local and property taxes ever; the highest sales taxes ever; and the second highest business income taxes in the industrialized world.
Add it all up, and small business owners like myself are overburdened like never before in history. So we are clearly being deceived. Again, some might call that tax fraud.

Third, Obama is comparing apples to oranges when he compares tax rates. Rates are lower today than in the past because many valuable tax deductions were eliminated. And we now face caps, phase-outs, and the dreaded Alternative Minimum Tax.
Therefore quoting higher rates is a distortion of the truth. A tax rate of 70% from decades ago might actually be lower than today's rates once you include these factors.
As Ronald Reagan would say, “There you go misrepresenting, again, President Obama.”
Fourth, Obama constantly reports that tax rates were once much higher. Another distortion.
It is true that FDR raised the top rate in 1935 to 79%. But what Mr. Obama and his team doesn’t tell us is that it only applied to someone making the equivalent of $76,000,000 per year.
Only one man in the entire United States of America paid a penny at that rate in 1935: John D. Rockefeller.
Mr. Obama wants much higher taxes for millions of small business owners making $250,000 and above.
But he quotes "robber baron” rates to sell his bait and switch scheme. In the private sector you face civil or criminal charges for misleading investors like that.

President Obama also purposely leaves out a very important fact -- that only in the last 30 years have we moved away from a cash economy.
Tax rates at 70% or higher didn’t matter prior to 1980 because the whole country operated with an underground (cash) economy. Most small businesses earned unreported cash.
Does anyone- including President Obama -- believe that restaurant owners, bar owners, or retailers paid huge taxes on their cash incomes 30 years ago?
Today we have a computerized economy based on credit cards. Virtually every dollar that every business takes in is tracked and reported. Today, banks report to government all suspicious or big ticket deposits. Virtually every dollar in the U.S. economy is tracked and taxed. So the rate of taxes is immaterial -- all of us are paying far more in taxes than ever before. To not report that difference is deceptive. Some might call that tax fraud.

Finally, President Obama calls his desired tax increases "small" and "fair." In reality they are huge.
If President Obama got his way federal income taxes would hit 40% or higher. And he'd take the cap off FICA taxes. And he'd dramatically reduce or eliminate mortgage, charitable and business deductions. And then just for fun, he'd add a national VAT tax. Now add in the new taxes for ObamaCare. Add it up.
Americans would face tax rates approaching 70%. And this time there is no cash economy. The government would take 60 to 70 cents of every dollar we all make, while we do all the work. The mafia has nothing on the government!

So why is Obama playing fast and loose with the facts? Taxes aren't low and he knows it. And the increases he desires aren't small or fair, and he knows it.
Our government is heavily in debt, and Obama needs to find targets of opportunity (i.e. victims) to pay the bills, so America doesn’t go bankrupt on his watch.
Second, Obama’s only chance at re-election is to redistribute billions of dollars to his voters and campaign contributors in the way of entitlements, welfare, food stamps, stimulus, and green energy "investments" by government.
Third, by targeting, demonizing and punishing small business owners and high-income earners (the people who make almost all the contributions to conservative causes and candidates), Mr. Obama can starve his political opposition. If taxes are higher on the rich, then the president's opposition has no money left to give to conservative candidates.
My hero Ronald Reagan's plan was to lower taxes on the rich, to motivate and encourage investment, entrepreneurship and job creation, while at the same time starving big government.
Mr. Obama's plan is is the polar opposite: to raise taxes dramatically on the rich, so he can feed the beast of big government, and at the same time, starve his political opposition.
Wayne Allyn Root is a former Libertarian vice presidential nominee. He now serves as chairman of the Libertarian National Congressional Committee. He is the best-selling author of "The Conscience of a Libertarian: Empowering the Citizen Revolution with God, Guns, Gold & Tax Cuts." Visit his web site: www.ROOTforAmerica.com.

Read more: http://www.foxnews.com/opinion/2012/02/13/mr-obama-dont-have-tax-problem-have-spending-problem/#ixzz1mUYXm3CJ

[JDN]

Actually, selfishly speaking, I'm glad to hear about the problems in Greece.  We need a wake up call.  Better them than us.  You can't keep spending $1.40 for every dollar earned.

I think we can raise taxes (sorry) on the rich.  BUT we also need to lower spending.  Both sides need to be addressed.  

We should start with entitlements.  Why can't the retirement age be raised to age 70?  We are all living longer.

And public benefits need to be cut.  That means police, firemen, military, all public employees have their benefits cut; it's crazy that they
are able to collect retirement benefits after 20 years of service.  Make everyone wait to age 65 or age 70 to begin collecting benefits.

[DougMacG]

"I think we can raise taxes (sorry)..."

a)  Why be sorry if its the right thing to do. 

"... on the rich."

b) Why are we back less than 24 hours after worrying about equal protection,  again applying the laws unequally to different people depending on their circumstances?  Let's raise taxes on those people, over there.  If you don't like flat tax rates, at least make the changes across the board, affecting everybody.

c) My friend JDN, is it really not possible to train you to distinguish between taxes and tax rates after all these discussions?  You are an economist - and a voter- we need you to draw the distinction! I believe Crafty gave you 5 major examples where lowering tax rates raised taxes (revenues to the Treasury).  From what you write we have no idea if you favor raising tax rates or lowering them to generate more revenues.  If you are saying raise tax rates even further on the people who have the most options and the greatest sensitivity to tax rates, then I think all that will do is stall the economy out even further - and push unemployment up even further.  You should consider changing your thinking to pro-growth (Huntsman-like policies) sometime between now and the election. )

[JDN]

I'm not sure raising taxes on the "rich" will hurt tax revenue; frankly I think it will raise tax revenue.

That said, I'm in favor of a flat rate (perhaps two or three tier) rate structure.  BUT eliminate ALL the deductions.  You make money, you pay......

And I'm not "sorry"; raises taxes on the rich; it's the right thing to do.  But many on this forum have thin skin; I don't mean to offend. 

And I don't agree, the truly rich do not have the greatest sensitivity to tax rates.  I don't think raising their taxes will "stall the economy even further." 

PS Actually, I had a double major; one was economics!    And my best friend some time ago and former boat partner was a Phd. econometrics (Berkeley) and economist for BofA.

As for Huntsman, it's a package deal, but I liked him.  But no one else did.  And now look what the Republicans are left with....

[Crafty_Dog]

"PS Actually, I had a double major; one was economics!"

Where did you go?

"And my best friend some time ago and former boat partner was a Phd. econometrics (Berkeley) and economist for BofA."

Well, if he influenced you that may explain a fair amount.  In contrast I would date the beginning of my economics awakening to my days at U. PA when I was exposed to econometrics-- the epitome of Hayek's fatal conceit.    As for economist for BofA-- that too may explain a fair amount 

[JDN]

I went to the University of Southern California (USC).  Actually it's quite a conservative school; at least in comparison to many others.  I had been accepted at Berkeley but my parents thought it was too liberal for an impressionable young boy.  

As for my friend, he was the economist on the bank's international side at that time; we didn't talk economics much; most of our time we spent racing, chasing girls, drinking, or just sailing down to Mexico.
 

[DougMacG]

"...University of Southern California (USC).  Actually quite a conservative school; at least in comparison to many others.  I had been accepted at Berkeley but my parents thought it was too liberal..."

Your parents did the best they could for you under the circumstances.     Some of us here are trying to lure you to that next level of interest in economics, i.e. how people respond to different incentives and disincentives to produce.

"most of our time we spent racing, chasing girls, drinking, or just sailing down to Mexico."

The lifestyle of the 1%.  We should tax it more.  Or just ban it (sailing) with a federal law as they have done in the most beautiful part of MN.

"the truly rich do not have the greatest sensitivity to tax rates."

Please back that up at your leisure with something empirical. 

I would link this thread and this forum as a one-sided documentary as to the opposite, and I would be happy to pull out specifics across the world and throughout history for you, if requested.

[DougMacG]

http://online.wsj.com/article/SB10001424052970203960804577239120562365932.html?mod=WSJ_Opinion_AboveLEFTTop

    FEBRUARY 23, 2012

David Cameron's Tax Lesson
A 50% tax rate yields less revenue than advertised.

Speaking of higher taxes (and President Obama always does), there's news from once fair Britannia.

Preliminary figures out this week show that Britain's 50% top marginal income-tax rate may have reduced tax revenue from top earners by as much as 5%, compared to the old 40% top rate (That's a 25% increase!). Tax revenue from those filing self-assessments due January 31 was down some £500 million

[JDN]

http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9097219/50p-tax-rate-failing-to-boost-revenues.html

[JDN]

If only corporations paid rather than simply complained about the high tax rate.  For example,

"When corporations are hit with punitive damages, they’re able to write them off as an “ordinary and necessary” business expense (PDF). Consequently, Exxon’s $1.1 billion Alaska oil spill settlement actually cost the company $524 million after taxes. Obama’s budget proposes to eliminate the deductibility."

http://www.thedailybeast.com/articles/2012/02/25/8-ridiculous-tax-loopholes-how-companies-are-avoiding-the-tax-man.html

[G M]

If only corporations paid rather than simply complained about the high tax rate.  For example,

"When corporations are hit with punitive damages, they’re able to write them off as an “ordinary and necessary” business expense (PDF). Consequently, Exxon’s $1.1 billion Alaska oil spill settlement actually cost the company $524 million after taxes. Obama’s budget proposes to eliminate the deductibility."

http://www.thedailybeast.com/articles/2012/02/25/8-ridiculous-tax-loopholes-how-companies-are-avoiding-the-tax-man.html

I'm not sure why it's so difficult for you to grasp this concept, but corporations don't pay taxes, consumers of the products/services provided by the corporations pay the taxes.

[Crafty_Dog]

As Mitt Romney has noted "corporations are people too:    A reasonable argument could be made that shareholders would take note of significant penalties , , ,

[Crafty_Dog]

Viva La France? To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/5/2012
It’s not happening just in America. France will also elect a President this year. The French go to the polls on April 22 and, if necessary, a run-off vote will happen on May 6. The two top candidates are current president Nicolas Sarkozy – center-right by French standards, center-left by American – and the Socialist nominee Francois Hollande.
Last week, Mr. Hollande announced he wants to raise France’s top income tax rate to 75% from the current peak of 41%. He said “patriotism” and “justice” should convince French citizens to support his candidacy and his tax hike. The new tax rate would apply to those making more than one million euro per year (about $1,300,000). Those making more than €150,000 ($200,000) would face a tax rate of 45%.   
 
One thing most people know about us is that we are not friends of higher tax rates – they slow growth and undermine economic activity. Nonetheless, we see Mr. Hollande’s proposal as a “win-win” for global supporters of small government and free market capitalism.
 
Hollande is currently up by 10+ points over Sarkozy in polls. We would be very surprised if his lead doesn’t shrink substantially in the next several weeks.
 
If it does, then France – France! – can actually lead the advanced economies of the world in repudiating the left-wing effort to push income tax rates back up to pre-Reagan era levels. To paraphrase Frank Sinatra, if those kinds of tax rates can’t make it in France, they can’t make it anywhere.
 
But what if Hollande goes on to win? Right now, the top income tax rate is 41%. For every euro a worker in this tax bracket generates as income, he keeps 59 cents to spend. When spent, this money faces a value added tax (VAT) of 19.6%, meaning that every euro of earnings generates 52.6 cents for the government and 47.4 cents of personal consumption.
 
In Hollande’s France, one additional euro’s worth of output would get taxed at 75%, leaving the worker with only 25 cents on the euro. Then, the same VAT would apply to any spending, meaning that the worker gets to consume only 20.1 cents out of every euro. In other words, the marginal return to additional work would fall by more than half (from 47.4% to 20.1%).
 
The natural result will be a combination of less work by France’s most productive citizens, a demand by these workers for higher pre-tax pay (which will spread the burden to those with more modest incomes), and some of France’s best and brightest seeking their fortunes elsewhere.
 
During the 1980s, President Reagan’s tax cuts helped re-make the US as an example for the world, “a shining city on a hill.” The world copied Reaganomics, with virtually every country in the world following suit. Hollande’s tax hikes would make France a “dingy city in a ditch” and, after watching what happens there, we doubt the US or world will follow, no matter who wins US elections this November.
 
Either way, through repudiation or bad example, we think the US will eventually be the better for it. Viva La France.

[Crafty_Dog]

second post

"As David Brooks recently wrote in the New York Times, 'the U.S. does not have a significantly smaller welfare state than the European nations. We're just better at hiding it.' Whereas European countries 'provide welfare provisions through direct government payments,' the U.S. does it 'through the back door via tax breaks.' For instance, 'European governments offer public childcare. In the U.S., we have child tax credits.' European governments openly 'subsidize favored industries.' We provide 'special tax deductions and exemptions' for Washington's favored industries. This back-door approach allows Americans to indulge in the fantasy of their self-reliance and rugged individualism without actually being self-reliant or rugged. ... When you include both direct and back-door social spending, our welfare state is bigger than Italy's. It is 'far above average' when compared to other industrialized nations. Unless we intend to leave our children and grandchildren with an unconscionable debt burden, that must change." --author Chuck Colson

[DougMacG]

Thoughtful piece at City Journal gives a historical and intellectual perspective for anti-tax-increase principles:  Read it at the link and click on the ads:
http://www.city-journal.org/2012/22_1_taxes.html

William Voegeli is a senior editor of The Claremont Review of Books, author of Never Enough: America’s Limitless Welfare State

"...These critics would have you believe that the antitax movement is nothing but belligerent extremism. The truth, however, is that you don’t have to embrace Norquist’s famous ambition—to shrink government until it’s small enough to be drowned in a bathtub—to conclude that opposing tax increases is both smart politics and wise policy. Nor do you have to make the maximalist supply-side assertion that tax cuts always pay for themselves. In rejecting tax hikes, Republicans aren’t trading in fanaticism. Rather, they’re confronting a governing failure—an abiding lack of candor about what our welfare state costs—that voters grasp but Democrats refuse to admit."...

..."When they refuse to raise taxes, Republicans force Democrats to make a deeply unpersuasive argument. Major expansions of the welfare state are indispensable, this argument goes; but the $5.08 trillion of federal, state, and local government outlays in 2010—35 percent of GDP—is already being spent on its very best uses; therefore, our new government endeavors will require corralling more of the 65 GDP percentage points that now roam contentedly beyond the fence.

Such a platform would be helpful for any candidate seeking the presidency—so long as it was the presidency of the American Federation of State, County, and Municipal Employees. But no Democratic politician will ever use it successfully to win over a large, diverse electorate residing outside our blue ghettos, which is why Democratic presidential candidates avoid it and instead promise not to raise taxes. This silence is a deafening testament to Democrats’ morose conviction that Americans don’t like their party’s agenda enough to give it the only endorsement that really matters: voting to pay for it. It’s hard to see what incentive Republicans have to extricate Democrats from this dilemma."

[Crafty_Dog]

"Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute." --Thomas Paine (Rights of Man, 1791)
===========
Under cover of the Republican Presidential Primary debates about how to defeat Barack Hussein Obama's socialist agenda and his plan to fund the final chapter of that agenda with enormous tax increases, Sen. Lamar Alexander (R-TN, no relation!) and Sen. Dick Durbin (D-IL) have teamed up to promote one of the largest tax increases in U.S. history -- a heavy levy on all Internet sales.
The so-called "Marketplace Fairness Act" S. 1832 was first proposed in November 2011 by Sen. Michael Enzi (R-WY), and now awaits action in the Committee on Finance. (And you thought all that "fairness" rhetoric was limited to leftists promoting Democratic Socialism.)
Some otherwise erudite conservative senators, such as my friend Bob Corker, have joined Alexander in this errant folly. They are backing the Republican version of the legislation because it is allegedly better than the Democrat version. For the record, I do not consider that to be a legitimate selling point.
Before explaining this enormous tax increase, allow me to provide some insights demonstrating how detached Lamar is from marketplace reality and how he became so disoriented.
I once admired Lamar, an affable and intelligent fellow whose successful 1979 gubernatorial campaign trademark was his folksy grassroots plaid shirt. After a couple of terms as governor, he accepted an appointment as Secretary of Education from George H.W. Bush in 1991. In that role, he unfortunately supervised the expansion of that department rather than its contraction as proposed by Bush's former boss, Ronald Reagan.
Predictably, after Lamar's move to Washington, he progressively lost touch with his grassroots base and began a slide into the mediocrity of Republican moderation -- which often renders its adherents ideologically indistinguishable from their Democrat opponents. I diagnose this condition as Chronic Potomac Fever, which infects too many well-meaning Republicans after they take up residence inside the Washington Beltway.
Post Your Opinion: What is the best way to eradicate the epidemic of Potomac Fever?
By 2002, Lamar had become a card carrying "establishment Republican." After his well-funded but narrow primary defeat of a strong conservative, Rep. Ed Bryant, Lamar went on to win the Senate seat vacated by Fred Thompson. To the detriment of conservatives and our Constitution, Lamar was elevated to Conference Chairman of the Republican Party from 2007 until 2012. However, given the influx of conservatives into the House and Senate ranks in 2010, Lamar announced his resignation, noting he was "stepping down from leadership to regain my independence."
The day after Lamar announced his support for the Internet tax, he sent me this explanation -- which aptly demonstrates just how disconnected he has become.
"This bill is about states' rights; closing tax loopholes that basically subsidize out-of-state businesses at the expense of Tennessee businesses... Today, if you buy boots from a store in Nashville, by law the store collects the sales tax you owe and sends it to the state to pay for our roads, schools and other services we ask the state to provide. But if you buy the same boots online from a company outside Tennessee, that company doesn't collect the sales tax you owe the state. ... That's not right. If businesses are going to fail or succeed, it should be based on the services they provide and the price of their products -- not on whether a company can successfully avoid collecting sales taxes that their Tennessee competitors can't get around collecting."
 
Memo to Lamar, et al.
I replied to his contorted and disconnected marketplace reasoning with a reality check, noting first that under our present Constitution, if I purchase a product from another state, it is NOT subject to state taxes in my state of residence unless that vendor has a retail presence in my state. That has been the standard for interstate commerce for generations, whether placing orders by mail, by phone or by Internet (Quill v. North Dakota regarding the latter).
Thus, suggesting that I "owe the state" sales tax when I purchase a product from another state is patently false. (Of course, some states endeavor to circumvent the sales tax exclusion by implementing "use taxes" -- without much success due to the ludicrous complexity requiring that citizens track and report every purchase when filing state tax returns.)
Further, it is absurd to suggest that the "boot purchase" example -- avoiding sales tax -- is the force that drives online sales. In some cases, people will go into a retail outlet, find a product they like, and then search online for a better price. I believe that is morally wrong. (And in regard to Sen. Alexander's laudable desire to support local businesses, those boots were probably made in China or India.)
The vast majority of Internet sales are driven by product, price comparison and convenience -- old-fashioned free enterprise competition -- not by short-circuiting a local vendor's sale to avoid sales tax. In fact, many items purchased on the Internet may not be available in a local market.
Post Your Opinion: What is the real motivation behind the so-called "Marketplace Fairness Act"?
As for Alexander's assertion, "If businesses are going to fail or succeed, it should ... not be on whether a company can successfully avoid collecting sales taxes that their Tennessee competitors can't get around collecting," again, this is a false premise. The shipping cost on a pair of boots purchased on the Internet is likely to be as much or more than the sales tax on the same pair of boots, if purchased locally.
Moreover, given the high price of fuel and the fact that a critical percentage of the fuel we use is imported from the Middle East, not only do Internet orders conserve fuel and preserve our environment, they promote national security.
For example, if 1,000 people in a single ZIP code place 1,000 Internet orders, the majority of those orders will be delivered by a common carrier in that ZIP code. In other words, a couple of FedEx or UPS trucks making multiple deliveries in one ZIP code is far more energy efficient than 1,000 consumers driving to multiple locations endeavoring to make those purchases.
The fact is, the Marketplace Fairness Act is really about generating billions of dollars in windfall taxes for state governments, many of which are as bloated and inefficient as the federal government and therefore just as bankrupt. If Lamar wants to implement an enormous tax increase and stifle free enterprise, then he should call it what it is, rather than obfuscate his motivation by claiming lofty rationales such as "states' rights."
The bottom line is, conservatives should opposed any tax increase, opting instead to cut federal and state government spending, most of which is not supported by the constitutions of either. Moreover, any tax increase that is not revenue neutral should be flatly rejected by even the most dullard of establishment Republicans.
In other words, if Sen. Alexander is going to support an Internet sales tax on Tennesseans in order to "level the playing field," he should also support an equal reduction in the overall rate of sales taxation to offset his tax increase.
PS: If you are curious as to why online behemoth Amazon.com supports the Internet sales tax measure, it is because Amazon already has locations in many states, meaning Amazon sales in those states are already subject to sales tax. But Amazon's support is more sinister. Determining, collecting and delivering state and local sales taxes on every purchase massively increases transactional overhead for small businesses that compete with Amazon. But Amazon is positioning itself to "rescue" those poor little businesses by processing all their transactions -- in return for substantial surcharges on the taxes collected, of course. Caveat emptor!
Deus et Constitutione — Libertas aut Mortis!
Semper Vigilo, Fortis, Paratus et Fidelis!
 
Mark Alexander
Publisher, The Patriot Post

[Crafty_Dog]

http://online.wsj.com/article/SB10001424052970204781804577269791012344900.html?mod=WSJ_Opinion_AboveLEFTTop

April 1 is a date that every politician and business executive in America should circle on the calendar. That's when Japan cuts its corporate tax rate to 36.8% from 39.5%. The United States will then hold the title of highest corporate tax rate, with average combined federal and state profit levies of 39.2%.

Yes, that's higher than Sweden. Higher than Russia. And China, Mexico, Denmark and even France. Doesn't it make you want to break out in a chant: U-S-A, U-S-A?

Tokyo's move is striking because its political class has long behaved as if tax rates don't matter, and the government is wrestling with the need to finance a typically large budget deficit and an aging population. But in 2010 politicians had a radical idea: Cutting the corporate profits tax would boost economic activity and lead to higher revenues.

The government approved an overall five percentage-point cut, which was delayed by last year's earthquake and tsunami. But the first installment arrives April 1 and in three years the rate will drop another 2.3 percentage points to 34.5%.

Japan's neighbors in Asia convinced Tokyo to act by luring investment from what used to be the world's second-largest economy and is now the third, after the U.S. and China. Korea has cut its top corporate rate to 22%, Taiwan to 17% and Thailand is moving to 20% over the next two years. Hong Kong and Singapore have led the way with longstanding rates of 16.5% and 17%, respectively.

This is part of a world-wide recognition that high corporate taxes create economic distortions. Most obviously they encourage businesses to locate operations in other countries. American liberals argue that most U.S. companies don't pay the top federal statutory rate of 35% because of various loopholes and credits, but the high rate encourages multinationals to keep their profits overseas to invest there, rather than in the U.S.

High rates also create incentives for tax avoidance that go far beyond making work for creative accountants. For instance, because interest payments are tax-free, corporate taxes encourage debt as opposed to equity financing, making companies more vulnerable to interest-rate shocks and business downturns. A mound of economic evidence also shows that high corporate rates result in lower compensation for workers.

Yet for two decades American politicians have done nothing as the rest of the world has cut corporate taxes, leaving the U.S. rate 10 to 15 percentage points above the international average. Now almost everyone—even President Obama—agrees that it's time to act. Mr. Obama unveiled a plan last month to chop the federal rate to 28% from 35%, but at the same time it would impose such a high penalty on U.S. firms with overseas operations that business groups rightly say the plan would be worse than doing nothing.

The last four years have seen numerous U.S. economic milestones—four years of trillion-dollar deficits, some $5 trillion in new debt, the loss of America's AAA credit rating, three years of near-zero interest rates, postwar records for federal spending as a share of the economy, and now the world's number one corporate tax rate.

Some conservatives say Mr. Obama doesn't believe in American exceptionalism. Clearly he does.

[DougMacG]

http://www.nytimes.com/2012/03/18/business/marginal-tax-rates-and-wishful-thinking-economic-view.html?_r=1

"A family’s marginal tax rate is what its members pay to the government if they earn another dollar. If the government takes a smaller chunk of that dollar, a family has more incentive to earn it. Workers may choose to work additional hours, or a stay-at-home spouse may decide to work outside the home. Likewise, entrepreneurs may invest in a new enterprise or expand an existing one. Lower marginal rates also reduce people’s incentives to shield income from taxes, through legal and illegal means."

Oddly, Romer goes on to try to minimize that reality.  With all the scrutiny over copyrights, I end my interest in what she has to say right there.  My advice is don't bother click on the link or read it all.  She is trying to tell potential skydivers without parachutes that the law of gravity is no big deal.

[ccp]

On the eve of IRS day I post this challenge from Buchanan to Obama (sorry Rachel, I guess you no longer come to the board loaded with troglodytes so I what you don't see won't offend you; beyond that absolutely nothing personal meant and I do hope you will return to posting on the forum).

In any case here is Pat's pointed challenge:

***The glaring inequality of Obamavilleby Patrick J. Buchanan03/20/2012
CommentsRising inequality "is the defining issue of our time," said President Obama in his Osawatomie speech that echoed the "New Nationalism" address Theodore Roosevelt delivered in that same Kansas town a century ago.
   
In the last two decades, the average income of the top 1 percent in the U.S. has grown by 250 percent, bemoaned our populist president, while the income of the average American has stagnated.
   
"This kind of inequality -- a level we haven't seen since the Great Depression -- hurts us all," said Obama.
   
"Inequality ... distorts our democracy. ... It gives an outsized voice to the few who can afford high-priced lobbyists ... and runs the risk of selling out our democracy to the highest bidder."
   
But is the president, a former disciple of radical socialist Saul Alinsky, truly serious about closing the inequality gap?
   
Or is this just political blather to frame the election year as a contrast between Barack Obama, champion of the middle class, and a Republican Party that supposedly hauls water for the undeserving rich?
   
Obama's retort to those who say he is waging class warfare?
   
Republicans alone prevent him from raising the top U.S. income tax rate from 35 to 39.6 percent, where it stood under Bill Clinton, and advancing America toward true equality.
   
Republicans reply that the top 1 percent of U.S. taxpayers already carry 40 percent of the income tax load, while half of the nation and a majority of Obama voters pay no income tax at all. Moreover, these free-riders also consume almost all of the $900 billion the nation spends annually on Great Society programs.
   
Yet, a path has just opened up to test the seriousness of the president, to determine if he is a phony on the inequality issue, or a true egalitarian eager to close the gap.
   
That opportunity comes from a report last week that income inequality in America is at its greatest in the electoral precinct where Obama won his largest majority: Washington, D.C.
   
In Washington, the top 5 percent of households have an average income of $473,000, highest of all of the 50 largest cities in America. The average income of the top 20 percent of district households is $259,000. Only San Francisco ranks higher.
   
Moreover, that $259,000 average household income for the top 20 percent is 29 times the average household income of the bottom 20 percent, which is only $9,100 a year.
   
The citadel of liberalism that Obama carried 93-7 has a disparity of incomes between rich and poor that calls to mind the Paris of Louis XVI and Marie Antoinette.
   
Washington is a textbook case of the inequality that Obama says "distorts our democracy," and it is the ideal place to prove that he is serious.
   
For Washington is Obamaville. The mayor is a Democrat. The city council is Democratic. There are more lawyers and lobbyists concentrated here than in any city in America.
   
Here we have the perfect test case -- the most liberal city in the republic, with the greatest income inequality, where Obama's political clout and personal popularity are highest. And there is no obstructionist Republican cabal to block progressive reforms.
   
If Obama and the Democratic Party will not use their power to close the inequality gap right here in their own playpen, how do they remain credible in Middle America?
   
How to proceed, if the left is serious about inequality?
   
Consider. The District of Columbia income tax reaches 8.5 percent after the first $40,000 in income. A 5 percent surtax takes that rate to 8.95 percent for incomes over $350,000.
   
Yet, half a dozen states have higher and more progressive income tax rates than that.
   
Obama should call on his allies in the city government to raise the district income tax to the 15 percent level New York had in the 1970s.
   
Since district income taxes are deductible against federal income taxes, this would translate into an actual top tax bite on the Washington rich of 9.75 percent. Is that too much to ask of true progressives?
   
The new revenue could be transferred to Washington's working class and poor through tax credits, doubly reducing the district's glaring inequality.
   
Republicans will argue that raising the district tax rate to 15 percent on incomes above $250,000 will precipitate an exodus into Maryland and Virginia, where the top tax rates are not half of that. Conservatives believe as an article of faith that tax rates heavily influence economic behavior.
   
But Obama, who has kept the U.S. corporate tax rate among the highest in the world and wants U.S. personal tax rates raised closer to European levels, rejects this Republican argument.
   
Has he the courage of his convictions?
   
When the district's schools were desegregated in the 1950s, liberals fled. Let us see if they will stick around for a "progressive income tax" to reduce this unconscionable inequality between Kalorama and Spring Valley -- and Anacostia and Turkey Thicket.


--------------------------------------------------------------------------------****

[Crafty_Dog]

http://online.wsj.com/article/SB10001424052702303816504577305302658158454.html?mod=opinion_newsreel
By PHIL GRAMM
AND STEVE MCMILLIN
In the stagnant days of the Carter administration, when inflation was approaching 13.5% and interest rates were peaking at 21.5%, income was more evenly distributed than in any period in 20th-century America. Since the days of that equality in misery, the measured income of the top 1% of income tax filers has risen over three and a half times as fast as the income of the population as a whole.

This growth in income inequality is largely the result of three dynamics:

1) Changes in the way Americans pay taxes and manage their investments, which were a direct result of reductions in marginal tax rates.

2) A dynamic shift in the labor-capital ratio, resulting from the adoption of market-based economies around the world.

3) The flourishing of economic freedom and technological advances in the Reagan era, which were the product of lower tax rates, a reduced regulatory burden, and an improved business climate. These changes have not only raised the measured income of the top 1%, they benefited the nation and the world.

While income distribution has become a source of protest and political debate, any analysis of taxes paid in high tax-and-spend countries shows that the U.S. has the most progressive income tax system in the world. An inconvenient truth for the advocates of higher taxes on America's rich is that big governments in developed countries are funded not by taxing the rich more than the U.S. does, but by taxing everybody else more.

In 1986, before the top marginal tax rate was reduced to 28% from 50%, half of all businesses in America were organized as C-Corps and taxed as corporations. By 2007, only 21% of businesses in America were taxed as corporations and 79% were organized as pass-through entities, with four million S-Corps and three million partnerships filing taxes as individuals. By reducing personal tax rates below the level of the corporate rate, the Tax Reform Act of 1986 dramatically influenced how entrepreneurs structure businesses.

This has had a profound effect on what is now measured as the income of the top 1%, since a significant amount of what is now declared as personal income is actually income from businesses that are now taxed as individuals.

Enlarge Image

CloseDavid Gothard
 .In 1986, just 5.6% of the income of top 1% filers came from business organizations filing as Sub-chapter S-Corps and partnerships. By 2007, almost 19% of income declared on tax returns filed by the top 1% came from business income. A significant amount of income that critics claim is going to John Q. Astor actually is being earned by Joe E. Brown & Sons hardware store.

The reported income of the top 1% also significantly increased as tax rates on capital gains were lowered, first under President Bill Clinton and then under President George W. Bush. At a top tax rate of 28%, realized capital gains were 2.5% of GDP and made up 17.7% of the income of top 1% filers. As the top tax rate fell to 20% in 1997 and 15% in 2003, realized capital gains rose to 4.6% and then to 5% of GDP. The percentage of the income of top 1% filers coming from capital gains grew to 26% in the 1997-2002 period and 28.1% during 2003-07.

By reducing the penalty for transferring capital from one investment to another, these lower tax rates increased the mobility of capital. High-income taxpayers sold more assets, declared more income, and paid more taxes.

Similarly, when the tax rate on dividends fell to 15% in 2003, dividend income for the top 1% grew 178% by 2007 to make up 5.6% of the income of these filers. In 2007, immediately prior to the recession, capital gains and dividend income combined was equal to the amount of salary, bonus and exercised stock options earned by the average top 1% filer.

Lower tax rates made dividend-paying stocks more attractive to high-income investors and made dividend payouts more attractive for companies that would have previously retained those earnings or bought back their stock. Capital trapped in companies with below-market rates of return was redeployed and the entire economy benefited.

All of this has had a huge impact on the measured income of the top 1% and the growth in income inequality. This impact can be estimated by examining what would have happened to the income of the top 1% if tax rates had not been lowered and these economic transformations had not occurred.

If the share of income coming from businesses, capital gains and dividends had remained at the levels before the tax rate changes of 1986, 1997 and 2003 respectively, the income of top 1% filers would have been 31% lower in 2007. The growth in income since 1979 for top 1% filers would have been only 2.5 times as large as the income growth of all taxpayers—not 3.6 times as large.

More businesses would have remained C-Corps and been taxed as corporations, fewer assets would have been sold and thus fewer capital gains would have been declared, and fewer dividends would have been paid. All of this would have lowered the income declared by the top 1%. Economic growth would have been lower and aggregate measured income of all taxpayers would have fallen, but the distribution of income would have been flatter.


The growing participation of China, India, Brazil, Russia and Turkey in the world economy has also affected income inequality. The vast expansion of labor engaged in world commerce has raised the return on capital and reduced the relative return on labor. The share of income flowing to capital—both traditional and human capital such as education and training—has risen.

In relative terms, the return to unskilled labor has fallen. Short of a crippling reversal in world trade, which would reduce the value of both labor and capital, this effect will dominate world markets for the foreseeable future. Since high-income Americans own more capital and have higher levels of education and training, their incomes have grown faster than everyone else's.

The flowering of talent from the expanded freedom and technological progress ushered in by the Reagan era has also played a role. Inequality is a natural result of the expansion of liberty and the development of new technology and new products. Henry Ford, Andrew Carnegie, Sam Walton and Bill Gates caused the income distribution to become more uneven, but they enriched the world.

To vilify success and the rewards it garners is an assault not just on capitalism but on liberty itself. As Will and Ariel Durant observed in "The Lessons of History" (1968), "freedom and equality are sworn and everlasting enemies, and when one prevails the other dies . . . to check the growth of inequality, liberty must be sacrificed."

Nowhere is the political debate over income inequality more detached from reality than the call for the top 1% of American income earners to pay their "fair share." The Organization for Economic Cooperation and Development (OECD) data on the ratio of the share of income taxes paid by the richest taxpayers relative to their share of income show that the U.S. has the world's most progressive tax burden.

The top 10% of earners in the U.S. pay 35% more of the income tax burden than in Sweden and 22% more than in France. These figures—from the 2008 OECD publication "Growing Unequal?"—include all household taxes imposed on income at the federal, state and local level, including social insurance taxes.

In an eternal irony unique to large welfare states, it is the expansion of government in the name of the poor and middle class that always costs poor and middle-class families the most. When the U.S. collects 16.1% of GDP in income taxes, the top 10% of taxpayers pay 7.3% and the other 90% pick up 8.9%.

In France, however, they collect 24.3% of GDP in income taxes with the top 10% paying 6.8% and the rest paying a whopping 17.5% of GDP. Sweden collects its 28.5% of GDP through income taxes by tapping the top 10% for 7.6%, but the other 90% get hit for a back-breaking 20.9% of GDP.

If the U.S. spent and taxed like France and Sweden, it would hardly affect the top 10%, who would pay about what they pay now, but the bottom 90% would see their taxes double.

Since OECD members have significantly higher consumption taxes on average than the U.S., the total tax burden of bigger government is even more heavily borne by lower-income citizens in developed nations than these numbers suggest.


The real and alarming message in these OECD numbers is that there appear to be limits in the real world to how much tax blood can be extracted from rich turnips. With much higher marginal income-tax rates, countries that are clearly willing to soak the rich have proven to be incapable of doing so.

Proposals to raise taxes on high-income Americans in the name of "fairness" not only threaten economic growth. The experience of nations with large governments shows that this argument is simply a red herring for a massive tax increase on middle-income Americans.

In the end, taxing is about feeding government, not redistributing wealth. What nation ever set off on the road to big government promising to tax middle-income workers, and what nation ever got big government without doing it?

Mr. Gramm is a former Republican senator from Texas and senior partner of U.S. Policy Metrics, where Mr. McMillin, a former deputy director of the White House Office of Management and Budget, is also a partner.

[G M]

http://hotair.com/archives/2012/04/06/the-obama-administration-loves-tax-cuts-in-china/

The Obama Administration loves tax cuts….in China
 

posted at 7:33 pm on April 6, 2012 by John Hawkins
 





If what’s good for the goose is good for the gander, then why doesn’t the Obama Administration think what’s good for the Chinese Dragon is also good for the American Eagle?
 

While making positive comments about the most recent five-year-plan developed by the Communist government of the People’s Republic of China, Undersecretary of State Robert Hormats specifically applauded China’s decision to lower taxes because it would spur economic growth.
 
….“China lowered taxes very recently, which will help increase demand, but it’s also good to boost consumption in China,” said Hormats. “So I think what’s interesting is that—sure, there are issues with China that I’ve mentioned–but I think a lot of the reform procedures that are going on in China are consistent with the kind of things that we think will be good for China and for the global system.”
 
Meanwhile, in a speech in Vermont on Friday, President Barack Obama argued that it was “basic math” that taxes needed to be increased on wealthy Americans so the government could provide more to the poor.
 
“But if you’re making more than $1 million a year, you can do a little more,” Obama said. “This is not class envy. This is not class warfare. This is basic math–that’s what this is.
 
“Look, if somebody like me gets a tax break that they don’t need and that the country can’t afford, then one of two things are going to happen–either it adds to our deficit, or we’re taking something away from somebody else,” said Obama.
 
“Look, there’s no way of getting around that,” said Obama. “Either folks like me are doing more, or somebody who can’t afford it is getting less. And that’s not right.”
 
Wait, so according to the Obama Administration, cutting taxes in China “will help increase demand, but it’s also good to boost consumption,” while cutting taxes in America “either…adds to our deficit, or we’re taking something away from somebody else.” It’s almost as if Hormats is pointing out the obvious economic benefits of a tax cut while Obama is completely ignoring those same benefits.

But, to what end? Why would the President do such a thing? Has he had any recent head trauma? Could he be a double just PRETENDING to be the President? Wait, you don’t suppose that Barack Obama could be stoking class warfare and touting policies that are bad for America because he thinks it will help him politically, do you? Wait, what am I saying? This is a man who campaigned on hope, unity, and a new tone in Washington. Certainly he wouldn’t stoop to demonizing American citizens and pushing bad economic policy for the sake of mere politics. Sigh…I guess the explanation will just have to remain as one of those great mysteries, like whatever happened to Jimmy Hoffa.

[ccp]

The whole theme of this liberal story is the poor disabled student whose loans are considered income and now she owes taxes on them.  He loans should be forgiven and of course her taxes too.  NO mention of tax reform.   No discussion of the burden on the rest of us who are paying taxes (up the ass);  just another "F" liberal  MSM sob story:

http://abcnews.go.com/Business/cancelled-student-loan-debt-creates-tax-nightmare/story?id=16086241

Bottom line make the "rich" pay up.

[Crafty_Dog]

While I fully get the accounting standards that say cancellation of debt is income, I gotta say that given the facts of this particular case I am not without a goodly amount of sympathy for this particular woman.

[ccp]

"I am not without a goodly amount of sympathy for this particular woman."

Well she got a loan debt written off.   The issue is not lets just talk about writing off her tax burden too and narrow the focus to this particular sob story.  The focus should be that the tax laws are totally crazy in this country, unfair, and without any limit.

To me taxes are a Democrat party extortion scheme.

[Crafty_Dog]

Well, 100% agreement on tax laws!!!

That said, I DO want to focus on this particular story.  We have here a person who by any normal standard would be allowed to declare bankruptcy-- and properly so!!!- but cannot because the creditor is the Govt, instead of private sector.

I'm sorry for thinking from my conclusions first, but this seems quite wrong to me.

[ccp]

One opinion on bankruptcy and IRS debts:

http://www.unclefed.com/AuthorsRow/Daily/Fwdcsea.html

I wonder if this person had a problem with the progressive tax code when she was making a social workers salary?

In the meantime 139K of gov. student loans are otherwise forgiven.  Still not too bad.

[Crafty_Dog]

I wonder what the treatment before Obamacare (remember, Obamacare took over student loans from the admittedly subsidized private sector) was of such loans by the tax code?

[DougMacG]

Instructions to Form 1040EZ is 43 pages!  http://www.irs.gov/pub/irs-pdf/i1040ez.pdf

Can't figure out my own taxes and now I need to figure them out for my daughter.  Argh!

Meanwhile, President Obama who promised reform instead says hey, look at this shiny object - over here. http://www.nationaljournal.com/2012-presidential-campaign/priebus-calls-buffett-rule-a-shiny-object--20120415

And he is diverting money from life saving medical devices over to expanding the IRS.  Is that hope or change?

[JDN]

It is rather ridiculous. What should take (I presume your daughter is not some famous rock star making $$$) 5 minutes to complete becomes a headache. 

In recent years, including this morning I've been using TurboTax.   A few dollars well spent; it holds my hand step by step.  In contrast, the Federal/State Instructions for Tax Forms requires an advanced degree and if you misinterpret you are liable plus penalties and interest.  A flat 2-3 tier tax with basically no deductions/exclusions for anything (my take on a tax plan) if nothing else (there are other benefits) offers simplicity. 

[DougMacG]

A Turbotax error became the Geithner defense for why he failed to pay 4 major years of taxes.  For me it is the bringing together of all the records and numbers for input that is the hard task, not the filling in out the forms or even paying the tax.

The largest tax for me (other than property taxes which are more than 100% of take home income) is the cost of not doing certain transactions at all because of the tax consequence.

Make it simple, yes, but also make the rates low.

[JDN]

Doug said, "For me it is the bringing together of all the records and numbers for input that is the hard task"

That is true, and I acknowledge some businesses are more difficult than others, however my point is that if you eliminated nearly(all) the deductions
the necessity for many of the records for input wouldn't be necessary. 

I don't mind lowering rates, but lower/eliminate deductions too.  Most of the Republican proposals I've seen are a blanket "lower the tax rate" without eliminating deductions. 
To be fair, the Democrats seem to want to raise the tax rate, but keep or somehow increase some deductions; equally bad.  Somehow it seems wrong that a high earner pays less as a percentage than a lower wage earner because of deductions. 

Doug you once asked me for my tax plan.  I suggest a 2-3 tier system with almost no deductions.  Of course it needs to be phased in, but I don't think we should
have mortgage deductions, charitable deductions, farm deductions, retirement deductions, medical deductions, heck any deductions, nor do I think capital gains or any other income should be treated any different than simple wage income.  Simply put, if you make money you pay a certain percentage in tax.  That said, the tax rate should be much lower than it is today.  Easier, understandable, and IMHO fairer.  But both sides of the aisle would complain for their own selfish reasons. 

I didn't know about Geithner and Turbo Tax.  You mean I too might have an excuse if I did something wrong?   

[DougMacG]

"I didn't know about Geithner and Turbo Tax.  You mean I too might have an excuse if I did something wrong? "

No, other than for Geithner that defense has been rejected for ordinary taxpayers.  - Today's WSJ: http://online.wsj.com/article/SB10001424052702304444604577339840734386180.html?mod=WSJ_Opinion_LEADTop
"Mr. Geithner's episode notwithstanding, there's a growing issue here. Taxpayers who utilize a professional tax adviser such as a CPA or attorney can often avoid IRS penalties by alleging reliance on the tax adviser. (You're always responsible for the underlying tax itself and any interest on the amount.) But for someone who uses commercial software to prepare returns, no such defenses are generally available: The software isn't considered to be a "professional tax adviser." That's unfortunate, because growing numbers of Americans may end up with Mr. Geithner's the-software-did-it problem."
---------------------

"Doug you once asked me for my tax plan.  I suggest a 2-3 tier system with almost no deductions"

We aren't very far apart on the structure, but the rates are crucial.  I would keep the mortgage and charitable deductions until marginal rates are lowered enough that ending those won't kill off housing and charities.  I would personally be fine without those two but the economy won't - at this point.  Phase out would be fine but you would have to simultaneously phaseout the artificial costs that government is adding to housing and remove  the duplication of government charging for what ought to be done by private charities. 

I would word it differently, not end deductions but end the social engineering in the tax code (other than those two).  No spending whatsoever in the tax code, state or federal.  Spending for great causes like helping the poor goes over on the spending side of the ledger.  The Romney plan will limit deductions like home mortgages of the upper incomes instead of raising their marginal rates to punitive levels. What you might call deductions I might call business expenses that MUST be deducted from revenues to calculate income.  I can't pay the Feds what I already gave to the state and the Feds or vice versa.  I already have a greater than 100% tax rate and pretty soon they won't even be able to take my first born as she prepares to venture from the nest.

The tax code needs to be efficient.  Collect the money to run the essentials of the public sector but do the least possible harm disrupting the engine that drives it.
-------------------
"nor do I think capital gains or any other income should be treated any different than simple wage income."

Should an inflationary gain which is not a gain at all be taxed as ordinary income? 

Capital gains should be taxed to maximize economic activity and revenues to the Treasury.  (Same for corporate tax rates.) When you change the goal from raising money to fairness you raise less money.  With deficits still over a trillion and accumulated debt approaching 16 trillion, why can we afford deliberate inefficiency?

We could tax investment gains at 40% federal plus 12% state plus 15.3% FiCA plus any other surcharges that we want but no one is going to make new investments or sell off any old ones, there won't be jobs and revenues would most certainly decline.  It would end both the private and public sectors as we know them.  It doesn't work and we are lucky the Dem supermajorities of 2009-2010 did not try it.  What they propose to a Republican House in an election year that most certainly won't pass and that they did not pass themselves when they had complete control is demagogic rhetoric.  Best not to take it all too literally.

The first step in any tax burden sanity plan is to spend less.

[JDN]

While a radical change in the tax code is fun discussing, I doubt if anything of substance will happen.

That said, I agreed that eliminating the interest deductibility for mortgages needs to be phased in.  However most
industrialized nations don't have a mortgage deduction, yet real estate seems to do just fine. 

As for charity, giving is great; I think it's wonderful, but don't give because it's deductible.  I find it a little offensive that one can
give money to an organization that I don't agree with or art I don't like and take a deduction depriving society
of your tax money. 

As for business expenses being deductible, well that's only important to lower your income, thereby lowering your tax rate.
If for example there were no business deductions, you would still make investment in people and goods if you could
increase revenue/profit wouldn't you?  If the tax rate was sufficiently low, offsetting the "benefit" of deductions, well why not?

The only ones who would suffer would be the 10's of thousands of accountants and quite a few lawyers.

As for your comment about "social engineering" I also agree.  I drink; so what, why should there be an alcohol tax where the money
raised is used for schools or highways?  Or a tax on cigarettes or junk food beyond the amount necessary to enforce safety.
We need taxes; nothing is free but let's have a direct relationship between taxes and the service/product. 
Gas taxes for example should go to roads, not a long list of other items. 

It's radical and it will never happen, but frankly I think it's more fair than our current convoluted system. 

[DougMacG]

"most industrialized nations don't have a mortgage deduction, yet real estate seems to do just fine."

Agree but it is putting toothpaste back in a tube. I never made an investment based on a tax benefit because I wouldn't trust that it would still be there later.  But millions of people did.

"As for charity, giving is great; I think it's wonderful, but don't give because it's deductible."

No, but you can't pay for cradle to grave government covering all expenses for all people in need including yourself and all medical and scientific research and everything else and then expect that people will have money left over after taxes to help others.  This was a choice made to shift that all to government, even the funding of 'charities' comes from government (ex: ACORN).  If we want some of these functions to be done privately we can't also force people to pay for it all publicly. That is cognitive dissonance or just bad math.  Another path would be to set public safety nets very low and unattractive keeping the public financial burden low and trust your fellow citizens to prosper and contribute voluntarily to help those who can't, as you say, without a deduction.  You will notice that one side of the aisle is quite intentionally mis-using words like 'give-back', pay their fair share and 'contribute' when the programs are mandated and the payments are coerced.

What they forget  is that they cannot coerce you to make the investments or earn the income in the first place.  When the incentive become too negative, the levels of activity fall off steeply, witness 2008 coming into the first scheduled end to the 'Bush' marginal tax rate cuts.  The investor based financial disaster very quickly became jobs lost in the millions and revenues lost in the trillions.

[JDN]

Putting toothpaste back in the tube is always difficult, but that analogy could apply to many "benefits".  Maybe it's time to stop selling toothpaste with the expectation of being
able to take an interest deduction?  Further, I find it to be a progressive "tax"; if I can't afford a house, I rent, I don't get a deduction.  Further, if I can't afford a house,
but need a car for work, well, too bad, the interest on that loan is not deductible.  However, if I take a line of credit on my house, buy a car, the interest is deductible.  Is
that fair?

As for charity, I think you underestimate the kindness and generosity of Americans.  I don't give to my church and other needy causes because I get a deduction.

As for coercing people to make investments, actually I think my idea is the opposite.  I would substantially lower taxes (eliminate deductions) so there is a greater incentive
to make a profit and invest. 

I repeat myself, but I find it disingenuous to argue that we should lower tax rates only when in fact many/most people making the most money don't pay as a percentage
anywhere close to their supposed tax bracket, mostly because their excellent highly paid accountants find deductions.

Anyway, it's a fun forum discussion, but it will never happen.  Too many interest groups will oppose eliminating deductions for their special cause/project.  It becomes a merry
go round; if we don't eliminate the deductions, we can't lower the taxes.  The money has to come from somewhere.

[DougMacG]

"As for coercing people to make investments, actually I think my idea is the opposite.  I would substantially lower taxes (eliminate deductions) so there is a greater incentive to make a profit and invest."

Agree. That comment was aimed at the current Dem scheme, you current proposal is closer to the various Republican plans - if you really would lower the rates.

Deductions are regressive because they apply most to the people who make and pay in the most.  Hard to find income tax breaks for the half of the country that doesn't pay in (though we do that too).  It is social engineering but at least in this one case we are incentivising something that perhaps improves neighborhoods and stability. 

PP's take on the mtg deduction in housing IIRC was that ending it would collapse the housing market and the construction sector and all of the banks.  A very high risk or high cost and it just doesn't gain you much.  Again, Romney's plan is more realistic.  Bring the rates down but limit the deductions for people at the high end.

If the argument of Buffet and Obama was true (the rich pay the lowest rate), this would be the perfect time to implement a true, one rate flat tax on all income and sort out the progressivity and redistribution over on the spending side.  This whole idea that we should rob Peter to pay Paul because it is polling well with Paul is antithetical to our founding and former values.

[G M]

What’s Your Plan?


By Mark Steyn

April 14, 2012 4:00 A.M.

 
In the end, free societies get the governments they deserve. So, if the American people wish to choose their chief executive on the basis of the “war on women,” the Republican theocrats’ confiscation of your contraceptives, or whatever other mangy and emaciated rabbit the Great Magician produces from his threadbare topper, they are free to do so, and they will live with the consequences. This week’s bit of ham-handed misdirection was “the Buffett Rule,” a not-so-disguised capital-gains-tax hike designed to ensure that Warren Buffett pays as much tax as his secretary. If the alleged Sage of Omaha is as exercised about this as his public effusions would suggest, I’d be in favor of repealing the prohibition on Bills of Attainder, and the old boy could sleep easy at night. But instead every other American “millionaire” will be subject to the new rule — because, as President Obama said this week, it “will help us close our deficit.”
 
Wow! Who knew it was that easy?
 
A-hem. According to the Congressional Budget Office (the same nonpartisan bean-counters who project that on Obama’s current spending proposals the entire U.S. economy will cease to exist in 2027) Obama’s Buffett Rule will raise — stand well back — $3.2 billion per year. Or what the United States government currently borrows every 17 hours. So in 514 years it will have raised enough additional revenue to pay off the 2011 federal budget deficit. If you want to mark it on your calendar, 514 years is the year 2526. There’s a sporting chance Joe Biden will have retired from public life by then, but other than that I’m not making any bets.
 
Let’s go back to that presidential sound bite:
 
“It will help us close our deficit.”
 
I’m beginning to suspect that the Oval Office teleprompter may be malfunctioning, or that perhaps that NBC News producer who “accidentally” edited George Zimmerman into sounding like a racist has now edited the smartest president of all time into sounding like an idiot. Either way, it appears the last seven words fell off the end of the sentence. What the president meant to say was:
 
“It will help us close our deficit . . . for 2011 . . . within a mere half millennium!” [Pause for deafening cheers and standing ovation.]
 
Sometimes societies become too stupid to survive. A nation that takes Barack Obama’s current rhetorical flourishes seriously is certainly well advanced along that dismal path. The current federal debt burden works out at about $140,000 per federal taxpayer, and President Obama is proposing to increase both debt and taxes. Are you one of those taxpayers? How much more do you want added to your $140,000 debt burden? As the Great Magician would say, pick a number, any number. Sorry, you’re wrong. Whatever you’re willing to bear, he’s got more lined up for you.
 
Even if you’re absolved from federal income tax, you too require enough people willing to keep the racket going, and America is already pushing forward into territory the rest of the developed world is steering well clear of. On April Fools’ Day, Japan and the United Kingdom both cut their corporate-tax rates, leaving the United States even more of an outlier, with the highest corporate-tax rate in the developed world: The top rate of federal corporate tax in the U.S. is 35 percent. It’s 15 percent in Canada. Which is next door.
 
Well, who cares about corporations? Only out of touch dilettante playboys like Mitt Romney who — hmm, let’s see what I can produce from the bottom of the top hat — put his dog on the roof of his car as recently as 1984! That’s where your gran’ma will be under the Republicans’ plan, while your contraceptiveless teenage daughter is giving birth on the hood. “Corporations are people, my friend,” said Mitt, in what’s generally regarded as a damaging sound bite by all the smart people who think Obama’s plan to use the Buffett Rule to “close the deficit” this side of the fourth millennium is a stroke of genius.
 
But Mitt’s not wrong. In the end, a corporation doesn’t pay tax. The marble atrium of Global MegaCorp’s corporate HQ is indifferent to the tax rate; the Articles of Incorporation in the bottom drawer of the chairman’s desk couldn’t care less. Every dollar of “corporate” tax has to be fished out the pocket of a real flesh-and-blood human being, whether shareholder, employee, or customer.
 
And that’s the problem. For what Obama’s spending, there aren’t enough of them, or us, or “the rich” — and there never will be. There is only one Warren Buffett. He is the third-wealthiest person on the planet. The first is a Mexican, and beyond the reach of the U.S. Treasury. Mr. Buffett is worth $44 billion. If he donated the entire lot to the government of the United States, they would blow through it within four and a half days. Okay, so who’s the fourth-richest guy? He’s French. And the fifth guy’s a Spaniard. Number six is Larry Ellison. He’s American, but that loser is only worth $36 billion. So he and Buffett between them could keep the United States government going for a week. The next-richest American is Christy Walton of Walmart, and she’s barely a semi-Buffett. So her $25 billion will see you through a couple of days of the second week. There aren’t a lot of other semi-Buffetts, but, if you scrounge around, you can rustle up some hemi-demi-semi-Buffetts: If you confiscate the total wealth of the Forbes 400 richest Americans it comes to $1.5 trillion, which is just a little less than the Obama budget deficit for a year.
 
But there are a lot of “millionaires,” depending on how you define it. Jerry Brown, California’s reborn Governor Moonbeam, defines his “millionaire’s tax” as applying to anybody who earns more than $250,000 a year. “Anybody who makes $250,000 becomes a millionaire very quickly,” he explained. “You just need four years.” This may be the simplest wealth-creation advice since Bob Hope was asked to respond back in 1967 to reports that he was worth half a billion dollars. “Anyone can do it,” said Hope. “All you have to do is save a million dollars a year for 500 years.”
 
It’s that easy, folks! Like President Obama says, all you have to do to pay off his 2011 deficit is save $3.2 billion a year for 500 years.
 
He thinks you’re stupid. Warren Buffett thinks you’re stupid. Maybe you are. But not everyone is. And America’s foreign debtors understand that “the Buffett Rule” is just another pathetic sleight of hand en route to the collapse of the U.S. dollar, and of American society shortly thereafter.
 
When he’s not talking up his buddy Warren, the Half-Millennium Man has been staggering around demonizing Paul Ryan’s plan, which would lead, he says, to the end of the weather service, air-traffic control, national parks, law enforcement, and drinkable water. Given what’s at stake, you might think then that the president would have an alternative plan. But he has none, save for his proposal to pay off the 2011 federal deficit by the year 2526. The Obama No-Plan plan means the end of everything. That really ought to be the only slogan the Republicans need this fall:
 
What’s your plan?
 
And all you hear are crickets chirping.
 
But don’t worry, they’re federally funded crickets, chirping at a research facility in North Carolina investigating whether there’s any correlation between chirping crickets and the inability of America’s political institutions to effect meaningful course correction.
 
Hey, relax. The Buffett Rule will pick up the tab.

[G M]

**Happy tax day! Is this what hope and change means? Chicago corruption on a national scale.

http://hotair.com/archives/2012/04/17/gsa-inspector-general-investigating-potential-bribes-and-kickbacks-at-agency/

GSA Inspector General investigating potential bribes and kickbacks at agency
 

posted at 11:01 am on April 17, 2012 by Ed Morrissey
 





This may come as a shock to readers, but the agency that spent hundreds of thousands of taxpayer dollars on bogus, self-congratulatory “meetings” and bubble baths for its regional commissioner might also have been involved in a little graft, too.  The Inspector General of the GSA told Congress yesterday that he has opened an investigation into allegations of bribery and kickbacks, deepening the potential scandal:
 

The inspector general for the General Services Administration said Monday that he is investigating possible bribery and kickbacks in the agency, as lawmakers accused the former GSA administrator of allowing a Las Vegas spending scandal to erode taxpayers’ trust in government.
 
Inspector General Brian Miller told a congressional committee scrutinizing an $823,000 Las Vegas conference that his office has asked the Justice Department to investigate “all sorts of improprieties” surrounding the 2010 event, “including bribes, including possible kickbacks.” He did not provide details.
 
Miller’s revelations of possible further misconduct by organizers of the four-day event, coming on the heels of a highly critical report, enraged Democrats and Republicans on the House Oversight and Government Reform Committee. The lawmakers put GSA officials on the defensive during a tense four-hour hearing, with some Republicans loudly rebuking former administrator Martha N. Johnson and her colleagues.
 
Small wonder, then, that regional commissioner Jeff “Bubble Bath” Neely took the Fifth Amendment when called to answer for himself in Congress yesterday:
 

The General Services Administration official at the center of a scandal over lavish government spending declined to answer questions at a congressional hearing on Monday, invoking the Fifth Amendment.
 
“Mr. Chairman, on the advice of my counsel I respectfully decline to answer based upon my Fifth Amendment constitutionally privilege,” Jeff Neely, the GSA official, said repeatedly in response to a string of questions from Rep. Darrell Issa (R-Calif.), the chairman of the House Oversight and Government Reform Committee.
 
I wondered about Neely’s action when I first heard about it.  Certainly, it’s every American’s right to protect himself against self-incrimination while under oath, but until now, there hadn’t been any allegations of serious criminality in the GSA scandal — only exceedingly poor judgment.  If the IG has now begun looking into graft and corruption at the agency, that makes this an entirely different kettle of very stinky fish indeed.
 
That’s not to say that the potential criminality is the entire extent of the scandal, though.  Last week’s reporting on the story included a couple of smaller but still significant items into the mindset of the people involved — and the administration’s efforts to defend itself.  First, Roll Call’s Jonathan Strong reported that the GSA didn’t just settle for overspending on normal team-building events, but went way out of their way to find excuses to stage new ones, including the creation of a Jackass Award:
 

Officials at the General Services Administration invented fake awards as an excuse to hold taxpayer-funded dinner events at conferences, according to an interview transcript obtained by Roll Call.
 
At one such event, GSA bestowed the “jackass award” on an employee, a GSA employee told the agency’s Office of Inspector General, according to the transcript. …
 
In the interview transcript obtained by Roll Call, a GSA employee who attended the Las Vegas conference said the administration’s officials routinely created awards to justify taxpayer reimbursement for dinner events.
 
“Typically at any — any conference in my memory over the last three or four years, probably even further back, there was always — there’s always one night where we have an awards ceremony and people are fed. I mean, it’s not even like it’s snacks. I mean, sometimes it’s pretty close to being like a full meal,” the employee said.
 
Describing the award ceremonies as a “running joke,” the employee said, supervisors explained that the fake awards were designed to justify dinner events at the conferences.
 
“He says: ‘OK, everybody, just remember, the only way we can have food is if we have an awards ceremony.’ Maybe not in those exact words, but fairly similar,” the employee said.
 
Also last week, an anonymous source within the Obama administration tried to argue that costs had actually gone down at GSA events since the lavish years of the Bush administration.  US News reported that this Politico source flat-out lied to get the heat off of the White House:
 

But an anonymous source provided numbers to the news outletPolitico last week, floating the idea that the opulence of the GSA Western Region Conference had its roots in the Bush administration.
 
The source turned over documents to Politico showing that from 2004 to 2006 the cost of the conference ballooned by nearly 250 percent from $93,000 to $323,855.
 
But the Committee on Oversight and Government Reform says that whomever provided those numbers from the Obama administration fibbed.
 
“Instead of costs going up 248 percent between 2004 and 2006 as had been claimed, costs were actually reduced from $401,024 in 2004 to $323,855 in 2006—a 19 percent decrease,” the press release from the Committee on Oversight and Government Reform stated.
 
Classy.  The very stinky fish tends to rot from the head down, after all.

[Crafty_Dog]

Lets try the Corruption thread for , , , drum roll please , , , matters pertaining to corruption.

http://dogbrothers.com/phpBB2/index.php?topic=1872.0

[G M]

You don't think fraud/waste/abuse and potential bribery/kickbacks aren't corruption?

[G M]

Ooof! I just looked up.   

Ok, ok.....

[Crafty_Dog]

 

[Crafty_Dog]

he Patriot Post
Digest -- Friday, April 20, 2012
=================================
On the Web: http://patriotpost.us/edition/2012/04/20/digest/
Printer Friendly: http://patriotpost.us/edition/2012/04/20/digest/print
PDF Version: http://pdf.patriotpost.us/2012-04-20-digest.pdf

-------------

The Foundation

"Would it not be better to simplify the system of taxation rather than to spread it
over such a variety of subjects and pass through so many new hands." --Thomas
Jefferson

-------------

Government & Politics

-------------

Election Year Taxes

As we have documented over the years, the Leftmedia are quite adept at using polls
to drive public opinion rather than reflect it. The latest such example was a poll
on taxes in advance of Income Redistribution Day, but as we shall see, there's more
here than meets the eye.

Gallup reports
(http://www.gallup.com/poll/153896/Less-Half-Americans-Consider-Tax-Bill-High.aspx
), "As tax filing day looms, Americans fall into two closely matched camps: those
who believe the amount they pay in federal income tax is too high (46%) and those
who consider it 'about right' (47%). Just 3% consider their taxes too low." It's
hardly newsworthy that so few find their taxes to be too low, but for so many to see
them as "about right" is interesting. Here's why: Roughly half of Americans don't
pay any income taxes at all. It's no coincidence, then, that roughly half of
Americans think their tax burden is "about right."

We'll give Gallup one thing: They made clear that Americans had a much more negative
view of their taxes prior to the Bush tax cuts. And why wouldn't they? Contrary to
media myth, the Bush tax cuts applied to everyone -- not just the wealthy. The top
rate went from 39.6 percent to 35 percent, the next tier dropped from 36 to 33,
followed by 31 to 28, 28 to 25 and the lowest bracket dropped from 15 percent to 10
percent. For those who appreciate math, the bottom bracket had both the greatest
nominal drop -- 5 points -- and the greatest percentage drop -- 33 percent -- but
you won't hear that on the network news.

Indeed, the Leftmedia have suppressed that inconvenient truth to the point that a
CNN poll shows that almost 70 percent of Americans think the tax system favors the
wealthy. The fact is, according to CNS News
(http://cnsnews.com/news/article/americans-making-over-50000-year-paid-933-percent-all-taxes-2010
) and the Tax Foundation, "Americans making more than $250,000 had an effective tax
rate of 23.4 percent and their total share of the tax burden was 45.7 percent." That
contrasts with Americans earning less than $50,000, who paid an effective rate of
3.5 percent for a share of 6.7 percent. Yet with Barack Obama's canard that the rich
don't pay their "fair share" being blasted through the sycophantic media bullhorn,
it's no wonder the idea sticks.

Perceptions could change on Jan. 1, 2013, when the Bush tax cuts are set to expire.
Some were extended by the last Congress, but rates will go up for everyone in
January unless an extension passes this year. The aforementioned rates will return
to their previous levels, the child tax credit will drop from $1,000 to $500, the
marriage penalty will return, the death tax will skyrocket to 55 percent, the
capital gains tax rate will increase from 15 percent to 20 percent (with another 3.8
percent tacked on for ObamaCare), and the tax on dividends will go from 15 percent
to the rate of ordinary wages -- as high as 39.6 percent. The temporary payroll tax
cut will also expire. The total tax bomb on the struggling economy will be close to
$500 billion.

Instead of defusing the issue, the Senate took up but failed to pass Obama's beloved
Buffett Rule, an election-year tax gimmick that would require millionaires to pay no
less than 30 percent in taxes. We call this a gimmick because, as columnist Charles
Krauthammer points out
(http://patriotpost.us/opinion/charles-krauthammer/2012/04/13/free-lunch-egalitarianism/
), "If we collect the Buffett tax for the next 250 years -- a span longer than the
life of this republic -- it would not cover the Obama deficit for 2011 alone."

An extension of the Bush tax cuts, on the other hand, should be a no-brainer during
an election year. It should not only be permanent, but there should be fewer and
even lower rates, which would lead to economic growth. As Joe Biden might say
(http://patriotpost.us/edition/2012/04/16/brief/ ), "It's not class warfare. It's
math." Of course, he meant that comment to further the administration's class
warfare against the wealthy and presumptive GOP nominee Mitt Romney in particular.
Obama and his minions want you to focus on what Romney does with his income, and not
what Obama does with yours.

[DougMacG]

Video at the link.  They show the debate clip from 2008 with Obama confronted with the historical facts that lowering capital gains rates increased revenues every time and raising them lowered revenues.  The President doesn't care about the revenues. It's about 'fairness'.  Watch the clip.

http://www.realclearpolitics.com/video/2012/04/20/krauthammer_buffett_rule_is_an_embarrassment_shameless_preposterous_and_deceptive.html

"This is a preposterous statement [a quote of Obama shown defending the Buffet tax] and he know it is. Also on growth, it is equally deceptive. What the tax is, it's a doubling of the capital gains tax. It's disguised, but that's the reason why the Buffett rates are lower, it's the capital gains rate and it's lower than the rate for normal income. So he double its. The reason that's not a good idea is because when you double the rate, you actually decrease the amount that the treasury receives. And you decrease the growth because you are shrinking the pool of capital that is out there that people can invest and hire other people. The reason that we had an economic boom after the Kennedy tax cuts and the Reagan cuts, 20 years later, it's precisely that they cut rates and particularly that they cut capital gains rates," Krauthammer said.

[JDN]

"Why not raise taxes on capital gains but lower them on income?"

http://www.latimes.com/news/opinion/commentary/la-oe-campbell-flaws-in-the-buffett-rule-20120422,0,441132.story

[Crafty_Dog]

Also, IIRC Gingrich got Clinton to sign off on a cap gains tax rate cut too and it too generated and increase in revenues.

[ccp]

Angry celeb over Obama and taxes.  The only thing I would add is that the whole Democratic party should be blamed for their personal power tax.   The whole modus is to rob people with money to buy votes.  Every tax I pay I think I am paying the Democrat mafia extortionists:

http://news.yahoo.com/snl-alum-obama-f-king-asshole-audio-140806261.html