American Shareholders Association

It's the Spending, Stupid: Part Two

The WSJ has a piece today on the dropoff in corporate income tax revenue, and imply that this is what's causing the larger budget deficit this year.

Hogwash.

Corporate income tax revenues, have indeed, fallen off.  But overall tax revenue is keeping pace with inflation (up 2.9%), and non-withheld income taxes are up over 7%.  Corporate income taxes being down 14% or so is not that much money--maybe $50 billion of the increased deficit, at the most.

No, the real culprit is spending.

Trifecta of News on HSAs

A few things on the health savings account (HSA) front:

1. The Republican Study Committee has come out with a very good refutation of the GAO report bashing HSAs
2. Helpful political news: the state of Georgia is giving small employers a $250 tax credit to open an HSA plan for their employees, is letting Georgians purchase HSA-qualified insurance inter-state, and is allowing HSAs to be a deduction against taxable state income.  Click here to read more
3. Harmful political news: Congressman Pete Stark (D-CA) is at it again.  He's holding a hearing this week on HSAs and other consumer-driven health care vehicles

Take Your Pick: Higher Taxes, or REALLY Higher Taxes

Very good analysis by Andrew Biggs in the WSJ this morning on how high taxes will go even if the Democrat tax hike is avoided.  The numbers if the tax hike is achieved by Obama and friends are staggering:

If the tax cuts expire, income-tax revenues by 2018 will rise to 10.8% of the total economy from 8.7% today – an increase of 24%. Compared to the average over the last 50 years, allowing the rates to rise would increase tax revenues by 32%.  Believe it or not, income taxes will rise even if the tax cuts remain in place, because the revenue-increasing effects of bracket creep more than offset the lower rates. With the lower rates, total income-tax revenues will increase to 9.3% of GDP by 2018. This level is 7% higher than today, and 13% above the 1957-2007 average...So even if the tax cuts are made permanent, future Americans will pay a greater share of their incomes to the government than in the past. But for some in Washington, that's not enough.

Jobless Claims Continue to Stabilize

More signs today that the labor side of the economic equation isn't all that bad.

Initial jobless claims fell by 18,000, and the more important four-week moving average ticked up by only 2500, to 367,000.  There were modest job losses in April.  The unemployment rate is at an historically-low 5.0%.  Average hourly earnings are up 3.4% from April 2007, about in line with inflation.

Let's not forget the fact that we haven't yet had a quarter of negative GDP growth.

So where's this recession everyone assumes we're in?