Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CST to 6…
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This Week's "Your Turn" Radio Lineup

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CST to 6:00 p.m. CST (that’s 5:00 p.m. to 7:00 p.m. EST) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT: Ambassador Francis Rooney, former U.S. Ambassador to the Holy See: Pope Francis' "Soft Power" Diplomacy;

4:15 CDT/5:15 pm EDT: Marita Noon, Executive Director of Energy Makes America Great: Proposed Gas Tax Increase;

4:30 CDT/5:30 pm EDT: Caitlin Poling, Director of Government Relations at the Foreign Policy Initiative: Boko Haram: Africa's Isis?;

5:00 CST/6:00 pm EDT:  Sally Pipes, President, CEO and Taube Fellow in Health Care Studies at the Pacific Research…[more]

January 26, 2015 • 03:31 pm

Liberty Update

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‘Fiscal Cliff’ Fight Ended in a Draw Print
By Quin Hillyer
Thursday, January 03 2013
Whereas President Obama was able to delay the sequestration by threatening Republicans with the tax portion of the fiscal 'cliff,' he no longer will enjoy that leverage.

Conservative doomsayers should chill out.

This week’s installment of a budget deal is definitely not the utter disaster that many enraged conservatives are portraying. While it might be a bitter pill, the deal actually gives conservatives some leverage moving forward, while leaving tax rates at levels that by historical standards aren’t bad.

Let’s first assess the history. One need not go back to the Carter-era top income-tax rates of 70 percent to see that the post-deal tax schedule is no catastrophe. Instead, just go back to the turn of the millennium.

In the year 2000, after six years of Republican control over both houses of Congress, vying with a relatively centrist Democratic president who had been weakened by multiple scandals and impeachment – in other words, a time when conservatives presumably had enjoyed plenty of opportunity to work their will on taxes – there was not a single significant tax rate higher than it will be when this week’s new law is implemented.

Imagine, in 2000, if you had been told the GOP would get completely routed in the elections of 2006, 2008 and 2012, and that the latter year would mark the sweeping re-election (322 electoral votes) of the most leftist, most media-sainted president in history – and that the just-re-elected president had just “won” a showdown in which he insisted on higher tax rates. Surely, then, you would be shocked to learn that every single American would emerge from the battle paying lower taxes on comparable income than they were paying in 2000. Every single one.

For every income level below the top marginal rate, the lower taxes would be substantial. Those formerly paying 31 percent would pay 28 percent. Those in 2000 paying 28 percent would pay 25. Many of those who were paying 15 percent would pay 10.

And the top rate, both in 2000 and in 2013 set at 39.6 percent, now will not kick in until a much higher income than in 2000. Back then, married couples filing jointly began paying the higher rate on income higher than $288,350. Adjusted for inflation, that would be $385,506 in today’s dollars. Yet in 2013, married couples won’t pay that higher rate until their earnings reach $450,000.

That’s a significant improvement. It shelters an extra $64,494 from the highest rate. That’s a difference greater than the median married family household income of $62,273. In other words, a couple running a mom-and-pop business can earn (through their business) an extra amount greater than the total earnings of the average married family before paying the higher rate.

Tax savings for that couple: $2,320 (not even counting their tax savings on the first $388,000 of income). That’s enough to hire a high-school kid for an 8-week (35-hour), $8-per-hour summer job, or enough to boost the economy by buying new equipment that increases productivity – or enough to pay compliance costs for all the extra, nonsensical regulations imposed on small businesses by Obama’s commissars.

Moving along: On dividends, top tax rates in 2013 will be barely half of what they were back then – 20 percent, not 39.6 percent. On death taxes, the difference is even more significant: Only $800,000 of inheritance was exempt from taxes then, compared to a substantial $5 million exemption today. (Better still, that exemption is newly indexed for inflation!) And the top rate then was 55 percent, but now will be 40 percent. Many thousands of inherited family farms could be saved from extinction by this policy improvement.

Overall, then, tax-rate policy isn’t optimal after the deal, but it’s not terrible either. It’s better, as already explained, than anything the Gingrich Congress achieved.

Of course, conservatives are right to be aghast at federal spending levels. But we fare no worse after the deal than before – not one bit. Sequestration of domestic discretionary spending still is scheduled to occur – but just two months later. The savings “lost” through the delay are entirely offset, though, mostly by reducing spending “caps” by a near-equal amount.

And whereas President Obama was able to delay the sequestration by threatening Republicans with the tax portion of the fiscal “cliff,” he no longer will enjoy that leverage. If Congress does nothing at all, no taxes will rise, but spending automatically will be cut by about $86 billion.

In the intervening two months, Republicans need merely pass a bill through the House removing defense spending from sequestration, putting the onus on the president to buck his own Secretary of Defense by opposing the bill. Other than that, Republicans can merely sit and wait; they win this battle on spending levels if no other bills pass.

Finally, the two intervening months give conservatives time to regroup and refurbish tactics and communications, without threat of an automatic tax hike. Those two months may be the best benefit of the whole deal.

Question of the Week   
The Congressional Review Act, which enables Congress to review and void certain rules issued by government agencies, was signed into law by which one of the following U.S. Presidents?
More Questions
Quote of the Day   
 
"When Netanyahu travels to the United States in March, he will not have the privilege of meeting with either President Barack Obama or Vice President Joe Biden. They will have their revenge against Netanyahu by completely yielding to him control of the national stage. That ought to show him."…[more]
 
 
—Noah Rothman, Hot Air Associate Editor
— Noah Rothman, Hot Air Associate Editor
 
Liberty Poll   

Will Bill Clinton’s association with convicted billionaire pedophile Jeffrey Epstein have significant negative effects on Hillary Clinton’s presidential aspirations?