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Posts Tagged ‘taxes’
December 22nd, 2012 at 3:36 pm
Silver Linings to Fiscal Cliff-Diving?

Avik Roy:

…despite all of the dramatic hyperbole about the “fiscal cliff,” it’s important to remember that going over the fiscal cliff will reduce the budget deficit by $503 billion in 2013, and $682 billion in 2014, relative to the “solutions” being bandied about on Capitol Hill.

Moreover, since President Barack Obama and his fellow liberals in Congress refuse to link tax increases with entitlement reform, perhaps it’s better to go over the fiscal cliff than accede to some tax increases and no reforms.  At least then Obama & Co. would own the tax-and-spending system their intransigence created.

December 20th, 2012 at 8:44 am
Rothenberg: GOP May Be Right, But Raise Taxes Anyway?

Stuart Rothenberg perfectly articulates the difficult post-election position of fiscal conservatives:

Republicans may well be correct that the nation’s biggest problem is that “the government spends too much, not that it taxes too little,” but at some point political realities rather than ideological beliefs or past party dogma ought to guide both party leaders and members of its rank and file.

The Roll Call columnist also shows just how much Beltway logic drives his analysis.  If Republicans are right that “the government spends too much, not that it taxes too little,” then Republicans are justified in pushing for reduced spending and resisting tax increases.  And, if Republicans are right, then President Barack Obama and his fellow liberals are wrong to demand the opposite.

That’s not ideology, just math and common sense.  Political calculations may end up trumping both eventually, but that doesn’t mean that fiscal conservatives within the Republican Party are wrong as a matter of logic from defending their position.

December 14th, 2012 at 8:37 am
Podcast: Challenging Washington to Spend One Dollar Less
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In an interview with CFIF, Alex Cortes, Executive Director of Let Freedom Ring, discusses his organization’s effort to influence the fiscal cliff negotiations, called “One Dollar Less,” and why it is important to move the debate from the imaginary spending cuts to actually spending less.

Listen to the interview here.

December 5th, 2012 at 5:34 pm
Ramirez Cartoon: The Last Temptation
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Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez. 

View more of Michael Ramirez’s cartoons on CFIF’s website here.

December 4th, 2012 at 1:34 pm
Two More Tax “Firsts” from ObamaCare

Forget the fiscal cliff negotiations.  If you’re a high-earning worker wondering if your taxes will go up in January, Reuters spotlights two new taxes coming your way courtesy of Obamacare:

The 3.8 percent surtax on investment income, meant to help pay for healthcare, goes into effect in 2013. It is the first surtax to be applied to capital gains and dividend income.

The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.

The tax applies to a broad range of investment securities ranging from stocks and bonds to commodity securities and specialized derivatives.

The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.

Released late on Friday, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.

Together, the two taxes are estimated to raise $317.7 billion over 10 years, according to a Joint Committee on Taxation analysis released in June.

These two new taxes take effect January 1, regardless of whether President Barack Obama and Congressional Republicans agree to raise other taxes on high-earning Americans.

As the saying goes, if you want less of something, tax it.  You’d think liberals could see that taxing high-earners into extinction very quickly guts the very social programs Big Government types love.

November 27th, 2012 at 1:47 pm
The Hypocrisy of Warren Buffett
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Kudos to Adam J. White at The Weekly Standard for hoisting Warren Buffett on his own petard. Buffett is out with a new New York Times op-ed agitating for — what else — higher taxes. His condescending opening reads as follows:

Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

An addendum: only in Grover Norquist’s imagination and Warren Buffett’s biography. White catches him thusly:

Early in his career, Buffett invested heavily—almost one third of his early fund’s capital—in Sanborn Map, a company that mapped utility lines and such. But he soon grew frustrated with the company’s leadership, which “operated more like a club than a business,” and which refused to return greater dividends to investors. So Buffett amassed more and more stock, and with control of the company finally in hand he pressed the board of directors to split the company in two (one for the mapping business, and one to hold the company’s other outsized investments).

Finally, the board capitulated. But with victory finally at hand, Buffett nearly scuttled the deal because of … taxes. As [Buffett biographer Alice] Schroeder recounts, quoting Buffett, one director proposed that the company just cleanly break the company, despite the tax consequences—”let’s just swallow the tax,” he suggested.

To which Buffett replied (as he recounted to Schroeder):

And I said, ‘Wait a minute. Let’s — “Let’s” is a contraction. It means “let us.” But who is this us?  If everyone around the table wants to do it per capita, that’s fine, but if you want to do it in a ratio of shares owned, and you get ten shares’ worth of tax and I get twenty-four thousand shares’ worth, forget it.’

Buffett was willing to walk away from a deal because the taxes would have taken too much of a bite out of it. Fortunately for him, the board gave in and allowed him to structure the deal that he liked, saving him from his own Norquistian response.

So is Warren Buffett an irrational businessman or an irrational policy analyst? All the evidence points in one direction.

November 23rd, 2012 at 5:23 am
Ramirez Cartoon: The Fiscal Cliff
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Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

November 6th, 2012 at 8:36 pm
Lame Duck Flapping Its Wings

Like I said last week, the lame duck Congress will be very active:

Confident that Republicans would retain their majority in the House, Speaker John Boehner, R-Ohio, told POLITICO that GOP lawmakers would reject any new taxes on households in the highest income tax bracket.

“We’re not raising taxes on small-business people,” Boehner said. “Our majority is going to get re-elected … We’ll have as much of a mandate as he will — if that happens — to not raise taxes.”

That anti-tax mandate would be shared by the White House if Mitt Romney wins tonight, of course.

H/T: NBC News

October 23rd, 2012 at 5:56 pm
Want to Keep More of Your Income? Move to a Red State
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In keeping with my recent focus on the fruits of federalism — the divergence between states based on public policy — I thought I’d pass along the Tax Foundation’s newest numbers on state and local tax burdens. Here are the 10 most confiscatory locales in the nation (as reported by CNS News), represented in terms of the tax burden as a percentage of state income:

  1. New York, 12.8 percent
  2. New Jersey, 12.4 percent
  3. Connecticut, 12.3 percent
  4. California, 11.2 percent
  5. Wisconsin, 11.1 percent
  6. Rhode Island, 10.9 percent
  7. Minnesota, 10.8 percent
  8. Massachusetts, 10.4 percent
  9. Maine, 10.3 percent
  10. . Pennsylvania, 10.2 percent

And here are the 10 lowest:

  1. Alaska, 7.0 percent
  2. South Dakota, 7.6 percent
  3. Tennessee, 7.7 percent
  4. Louisiana, 7.8 percent
  5. Wyoming, 7.8 percent
  6. Texas, 7.9 percent
  7. New Hampshire, 8.1 percent
  8. Alabama, 8.2 percent
  9. Nevada, 8.2 percent
  10. . South Carolina, 8.4 percent

Notice a trend? All of the top 10 high-tax states are consistently blue (Wisconsin and — less likely — Pennsylvania may be in play this year, but those are exceptions to the historical trend). Meanwhile, all of the top 10 low-tax states are reliably red, with the two exceptions of New Hampshire and Nevada, both of which are in play this year, but both of which, regardless of party affiliations, also boast very libertarian political cultures.

The upshot: if you want to increase your take-home pay, move to a red state.


October 22nd, 2012 at 5:43 pm
Go West, Young Man … Just Stop Before You Hit the Ocean
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Take it from this Californian — the Golden State is no longer the destination du jour for starry-eyed dreamers looking to turn ambition into fortune. The rest of the west, however, looks pretty good. From the Daily Caller:

If you are looking to start a new business, Wyoming might be a place to consider moving. According to the Tax Foundation’s annual State Business Tax Climate report, Wyoming ranks first among the fifty states for most business-friendly tax code.

Behind Wyoming are South Dakota, Nevada, Alaska, and Florida. Washington, New Hampshire, Montana, Texas and Utah rank in the top ten.

For those of you keeping score at home, that’s eight of the top ten states for business located in the West. And if a pro-energy candidate wins the White House, expect the numbers from those states to become even more impressive, given the tremendous amount of resources in the region.

California has chosen gilded decline and reaped economic disaster. The rest of the west, however, has chosen freedom. And prosperity is following closely behind.

October 19th, 2012 at 7:06 pm
Obama Has Spent 56% More than Taxes Brought In

Larry Kudlow: “…reporter Jeffrey H. Anderson uses a Treasury Department study to chronicle the 7-Eleven presidency. In fiscal year 2012, ending September 30, the government spent nearly $11 for every $7 of revenues taken in. The exact figures are $2.5 trillion in tax revenues and $3.5 trillion in spending. In other words, it spent 44 percent more than it had coming in. Previous fiscal years look even worse: The government spent 56 percent more than revenues in fiscal year 2011 and 60 percent more in fiscal year 2010.

“All in all, according to Mr. Anderson, the government under the Obama administration received $6.8 trillion in taxes and spent $10.7 trillion — 56 percent more than it had available.”

Repeat after me: The government doesn’t have a revenue problem.  It has a spending problem.

October 11th, 2012 at 2:37 pm
New Cato Study Shows Tea Party Governors Delivering on Promises
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The Cato Institute came out this week with its Fiscal Policy Report Card on America’s Governors and the results are very good for Tea Partiers. The nation’s top five chief executives in terms of fiscal stewardship are virtually all proud limited government advocates who have followed through on their promises of reining in government:

1 (tie) — Sam Brownback (R-Kansas); Rick Scott (R-Florida)

3 (tie) — Paul LePage (R-Maine); Tom Corbett (R-Pennsylvania)

5 (3-way tie) — Bobby Jindal (R-Louisiana); Jack Dalrymple (R-North Dakota); John Lynch (D-New Hampshire)

Lynch deserves some credit for being the sole Democrat to crack the top of the list, but not nearly as much as the Republicans who swept to huge majorities in the Granite State’s legislature and forced the governor to abide by New Hampshire’s “live free or die” ethos.

And the nation’s worst fiscal leaders? Is it any surprise that it’s a cadre of blue state liberals?:

46. Christine Gregoire (D-Washington)

47. Neil Abercrombie (D-Hawaii)

48. Mark Dayton (D-Minnesota)

49. Dan Malloy (D-Connecticut)

50, Pat Quinn (D-Illinois)

The full report is here.

October 5th, 2012 at 12:03 pm
CNN Host Dismantles Obama’s $5 Trillion Tax Cut Claim

Kudos to CNN host Erin Burnett for getting Obama campaign spokeswoman Stephanie Cutter to admit that President Barack Obama’s charge that Mitt Romney is campaigning on a $5 trillion tax cut is just wrong.

From a transcript provided by RealClearPolitics:

Erin Burnett, CNN host: So you’re saying if you lower them by 20% you get a $5 trillion tab, right?

Stephanie Cutter: It’s a $5 trillion tab.

[crosstalk]

Burnett: But then when you close deductions it’s not going to be anywhere near $5 trillion, that’s our analysis.

Cutter: Well, okay, stipulated. It won’t be near $5 trillion but it’s also not going to be the sum of $5 trillion in the loopholes that he’s going to close. So it is going to cost someone and it’s going to cost the middle class. Independent economists have taken a look at this. There aren’t enough deductions for those at the top to account for the number of tax cuts that they get because of Mitt Romney’s policy so you have to raise taxes on the middle class. As Bill Clinton said, it’s just simple math.

Burnett: Okay, they’ll just say that you can do that. There are other studies. I know the one to which you’re referring, but there’s also the possibility of economic growth.

Cutter: Prove it. Erin, prove it.

Burnett: We can’t prove either side, that’s all I’m saying, but the one thing that I can say is not true is the $5 trillion tax cut.

Cutter: I disagree with you. You can prove it. So then they should just say that they’re counting entirely on economic growth to pay for a tax cut. Which is an interesting theory because that is what George Bush and let’s look at how that turned out, we had the slowest economic growth since World War II.

Burnett: They’re not saying entirely, they’re saying closing loopholes and economic growth, both. I understand you disagree with it.

Cutter: But that still leaves you at least a trillion dollars short. The math does not work with what they’re saying. And they won’t name those deductions, not a single deduction that they will close because they know that is bad for their politics. Now look, this is the center, this is the core of Mitt Romney’s economic policy. Last night, he walked away from it, said he didn’t have a $5 trillion tax cut. He does. That’s what lowering the rates amounts to.

Don’t confuse them with the facts!

October 4th, 2012 at 9:57 pm
Biden Trying to Replace Ryan on GOP Ticket?

If headlines earn a vice presidential candidate’s stripes, then Joe Biden may merit consideration as Mitt Romney’s most effective attack dog.

A few days ago Biden said the middle class has been “buried” during President Barack Obama’s economic stewardship.  Today, Obama’s self-immolating Vice President confirmed Mitt Romney’s charge that the Democratic incumbent would raise taxes if reelected:

Biden said Romney and other Republicans often say `Obama and Biden want to raise taxes by a trillion dollars.’ Guess what? Yes, we do in one regard: We want to let that trillion dollar tax cut expire so the middle class doesn’t have to bear the burden of all that money going to the super-wealthy. That’s not a tax raise. That’s called fairness where I come from.”

It’s true Biden is gaffe-prone, but these kinds of statements are too true to be unintentional.

Watch yourself, Paul Ryan – Good Ole’ Joe is gunning for your job!

H/T: Fox News

September 28th, 2012 at 1:37 pm
AARP’s Questionable Tax Reporting Merits New IRS Audit

My column this week explains how AARP, formerly known as the American Association of Retired People, exploited its relationship with liberal politicians to reap a $2.8 billion windfall from ObamaCare.  The massive payout comes from regulatory exemptions that help AARP increase its lucrative Medigap endorsement scheme.

But it’s not like President Barack Obama’s landmark health law ushered in a new era of revenues for the premier non-profit advocate for seniors.  With $458 million in revenues for 2011, AARP would rank as the sixth most profitable for-profit health care company, according to a report by staff members to Senator Jim DeMint (R-SC).

This puts AARP just behind Humana and ahead of industry giants like Coventry, Amerigroup and Health Net.

Best of all for AARP, because it designates much of its revenue as “royalty fees” instead of “commissions” for endorsing certain private Medicare plans it gets to avoid paying taxes on millions of dollars in income to the Internal Revenue Service.

An investigation (pdf) by House Ways and Means Committee members has asked the IRS to investigate whether AARP’s reporting practices violate federal law, and for good reason.

The investigators note that “In 1994 AARP paid the Internal Revenue Service (IRS) a one-time settlement payment of $135 million in lieu of taxes, resolving an audit over tax returns for years 1985 through 1993 for failure to fully pay unrelated business income tax (UBIT) on its commercial activities.”  And, “In 1999, the IRS and AARP once again reached a settlement to conclude tax years 1994 through 1998 with respect to the treatment of revenues AARP received from licensing and selling its name and logo to insurance companies.”

Sounds like AARP merits more scrutiny from the IRS.

September 24th, 2012 at 3:14 pm
The Libertarian Dream … in Honduras?
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From Fox News:

Small government and free-market capitalism are about to get put to the test in Honduras, where the government has agreed to let an investment group build an experimental city with no taxes on income, capital gains or sales.

Proponents say the tiny, as-yet unnamed town will become a Central American beacon of job creation and investment, by combining secure property rights with minimal government interference.

“Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” Michael Strong,  CEO of the MKG Group, which will build the city and set its laws, told FoxNews.com.

Strong said that the agreement with the Honduran government states that the only tax will be on property.

“Our goal is to be the most economically free entity on Earth,” Strong said.

It’s a fascinating experiment, though we can’t quite call it a novel one — this is, after all, a more extreme version of what Hong Kong does on a larger scale. And therein lies the rub. While there are a few minor shortcomings in the mechanics of this project (there’s already some protectionism in the new city’s labor laws, for instance, with businesses forced to meet quotas for native-born Honduran employees), the bigger concern is that it will be a lonely success.

Hong Kong, for instance, is consistently deemed the freest economy in the world, a trait that has led to it having a higher per capita GDP than the United States. Were this simply an argument on the merits over whether free markets work, the jury would be in. But this is no academic seminar. In less economically free nations, ideology may inform some of the hostility to capitalism, but the bigger issue is that opening up markets takes the power to select winners and losers away from government — a bridge too far for many politicians. Embracing economic freedom in the fashion of the Honduras experiment is laudable. But the hard work is not in allowing capitalism to succeed; it’s in convincing politicians to give it the chance to do so. That’s the biggest accomplishment here.

September 19th, 2012 at 12:18 pm
Obamacare in One (Very Long) Sentence.
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Dr. Barbara Bellar is running for State Senate in Illinois. That is a real shame for the Romney camp, which certainly could have used her services in the speechwriting department:

August 20th, 2012 at 9:00 am
Ramirez Cartoon: Important Campaign Issues
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Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

August 9th, 2012 at 5:38 pm
Donald Trump Provides Econ 101 Lesson … In 140 Characters or Less

Early this week, the liberal group Americans United for Change and the American Federation of State, County and Municipal Employees launched a $280,000 ad campaign targeting some Republicans who voted to extend all of the Bush tax cuts for all Americans.  The ad charges them with voting “to give people like Donald Trump a tax break worth $150,000 a year…” [Emphasis added]

In response, the Donald took to Twitter and fired back with the following:

To the geniuses at ‘Americans United for Change’: the more you tax me the less people I employ. Get it?

That’s the problem, Mr. Trump.  They don’t get it.

August 8th, 2012 at 1:36 pm
Bloomberg: Obama Can Win Sweeping Victory by Raising Everyone’s Taxes
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Yes, you read that right. New York City Mayor Michael Bloomberg (who, let’s be honest, is the most irritating politician in America) has an ingenious campaign strategy for Barack Obama that’s totally going to spellbind the room at his next cocktail and caviar soiree. From a phone interview Bloomberg gave to the Huffington Post:

“What Obama should do is say he’s going to veto any change to the end of the expiration of the Bush era tax cuts for everybody, and I feel very strongly about the everybody because you don’t want to split the country — that’s not what America is all about,” said Bloomberg.

“Obama would win this election going away if he’d stand up and say, ‘I’m gonna do this,’ and then turn to Republicans and say, ‘You know, you didn’t want any more revenues … I just outfoxed you. Now work with me on cutting expenses, and we’ll actually balance the budget in 10 years, and we’ll do it responsibly.'”

Bloomberg here reminds me a bit of Walter Mondale, who thought it was utter genius to declare in his 1984 acceptance speech at the Democratic Convention that he would raise taxes (Newt Gingrich, who was part of a Republican rapid response team during that convention, has noted that his group decided to pack up and go home after Mondale’s declaration, figuring they couldn’t damage him any worse than he had himself). Mondale’s theory was that both he and Reagan would end up hiking taxes, but that voters would give him points for being honest about it (for a thorough understanding of the truth of Reagan’s tax record, by the way, this Matt Lewis piece is indispensable). Later, after losing 49 states in the Electoral College, he probably thought better of that.

Here’s the foundational error in both cases: the tax argument is about substance, not style. Mondale thought he’d be rewarded for being honest about the fact that he was going to take more money away from the American people. But we don’t generally reward honesty when it’s a truthful admission of nefarious intent. Similarly, Bloomberg seems to think that “unity” is more important than tax rates, and that the American people will reward Obama if he makes clear that he’s going to put the screws to all of them with equal force. But, to paraphrase Obama from 2008, no one much cares what shade of lipstick you apply to a pig. The equal distribution of suffering is not a compelling campaign rationale (although it might be the most honest slogan Obama could devise).

There’s another irony at work here, of course: if Bloomberg thinks that tax rates should be harmonized in order to avoid “splitting the country,” the most logical step he could take would be to promote a flat tax. But that probably wouldn’t fly at the open-bar receptions of the Upper East Side.