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A great piece by Walter Williams in Townhall.com today on the "poor" of America. Those who look at the data have known for years that there really are no "poor" people in America. Poor people stats:
--76% have air conditioning
--97% have a television
--73% have a microwave
--Three-quarters own a car (30% more than one)
--78% have a DVD player or a VCR
--62% have cable or satellite TV
--33% have a dishwasher
There's a good post on Cato's blog today by Chris Edwards on non-taxpayers. According to his analysis:
Good article on how the Tax Relief Coalition is back.
House Speaker Nancy Pelosi and some of the tax brains on K Street seem to have some muddled thinking on the Rangel tax hike.
Here's the Speaker's rather confused take:
“I certainly support his plan,” Pelosi (D-Calif.) said to the assembled reporters.
But when the transcript of the briefing came out, words were inserted — highlighted by brackets — clarifying that she supported his goal, if not his specific proposals.
The final transcript read: “I certainly support his plan [to begin tax reform.]”
And K Street:
Dorothy Coleman, the vice president for tax policy at the National Association of Manufacturers, said that giving up the so-called “section 199” tax break for manufacturers could be a “good deal” for her members if it is paired with a significant corporate rate cut. She emphasized that she would strongly oppose certain provisions if they were enacted alone, but regarded the overall proposal as “the beginning of a debate.” “We’ll take a look at it and see where it goes,” Coleman said.
Dave Winston has a good article in today's Roll Call where he points out that the Rangel bill cuts taxes for large corporations, and raises them on small businesses:
While big business gets a tax break, a good move, all in all, the headlines could have read: “Rangel to Small Business: Drop Dead.” He slaps a 4 percent surcharge on incomes over $150,000 (singles) and $200,000 (couples) to pay for the AMT and more income redistribution to poor Americans. What he fails to understand is that most small businesses, the biggest job creators in America, won’t qualify for the lower corporate rate because many file their profits as personal income and reinvest the money back into their companies.
Partnerships, S-corporations, and sole proprietorships are how the overwhelming majority of small businesses are organized. Raising taxes on the lifeblood of job creation is just a bad idea.
As promised, Charlie Rangel introduced H.R 3970, which he has called "the mother of all tax bills." Here's the lowdown:
The Good
The Bad
The Ugly
Rarely do opponents of shareholders give such a good telegraphing of their true intentions.
The Tax Foundation has released an interesting new study on the corporate income tax. The Left will tell you that this tax is paid by big, evil businesses. Economists will tell you that people pay taxes, not businesses. We all bear the burden of the corporate income tax in the form of higher prices, lower wages, and lessened investment returns.
In order to show how that burden is borne, this study breaks down the corporate income tax burden by Congressional district.
Good article by Dick Morris in today's Hill. In it, he describes the various components of the secret Democrat tax increase (assuming full control of the political branches after 2008). They include:
It isn't as if the Democrats are being coy about this. All you have to do is pick up the newspaper.
The Hill reports today that GOP Senators won't let the Democrat majority waive PAYGO for an AMT patch without getting something in return:
“I’m happy to waive pay-go as long as we’re consistent and we do it for some other things that affect even more taxpayers,” said Sen. Jon Kyl (Ariz.), who heads the Senate Republican Conference. Kyl said Republicans would ask for the extension of cuts on marginal rates, capital gains and dividends as well as estate tax relief as a price for cooperating on the AMT patch. The GOP strategy sets up a high-stakes game that Republicans hope will result in the extension of at least one of the Bush tax cuts. Because of the budget rules, Republicans can hold the AMT patch hostage to their demands without actually filibustering a tax cut that they would be loath to oppose.
Bravo, Senate GOP. This is exactly the kind of hardball tactics we need.
From our friends at the Center for Freedom and Prosperity...
Grassroots conservative activist Paul Jacob is facing imprisonment for collecting petitions in Oklahoma. To learn more about this Stalinist nightmare, click here.
House Ways and Means Committee Chairman Charlie Rangel is at it again. In his quest to triple the capital gains tax rate to 45%, he has leaked out details of his "mother of all tax bills."
They include eliminating the AMT, lowering the corporate income tax from 35% to 31%, imposing a surtax on higher-income taxpayers, eliminating some corporate tax deductions, and taxing carried interest as ordinary income
So, let's get this straight. The current capital gains and qualified dividends rate is 15%. His plan would make that about 45%, eventually. The same 45% top rate would apply to ordinary income (currently 35%).
And in exchange, we get a measly four-point cut in the corporate rate, still leaving us with a far higher rate than our European competitors?
Thanks, but no thanks.
From the debate on Sunday night:
Thompson: "...the indexing of benefits in the future, from wages to prices, is one way to [avoid generational warfare.] Current retirees -- or for those near retirement wouldn't be affected. And those retiring in the future would get the same benefits in real dollars as those retiring now, but not more."
Giuliani: "The first thing we have to do is get a consensus behind private accounts if we're going to change it...It doesn't make much sense to figure out what the compromises are going to be if you can't get the big thing that you need to really change Social Security."
Romney: "Higher-income Americans -- that is the Pozen plan -- yes, let's consider doing that. That is indexing based on prices rather than wages."
Huckabee: "When people reach retirement age, if they really have enough retirement benefits, they don't need Social Security for the long term, give them the option of one-time buyout, or the opportunity to purchase an annuity, with their funds, tax-free, that frees up the long-term obligation of the government."
This is a fairly-encouraging sign of life intellectually for the GOP. The top four candidates each espoused varied and serious ideas (price indexing, personal accounts, progressive price indexing, and cash annuitization). If they have this level of debate on other investor issues, there might be hope yet.
Over the weekend, Bobby Jindal was elected as the next governor of Louisiana. He managed to avoid a runoff by getting 54% in a multi-candidate field. All indications are he's going to be a rockstar, especially on taxes:
He shouldn't stop there. While he's at it, he should:
Reminding people that S-CHIP is about insuring children of the working poor, not enrolling adults and families earning up to $83,000 per year, Congressman Charles Boustany (R-LA) has a good article on today's NRO.
Adding to the huge pile of evidence that cutting the capital gains tax rate actually raises capital gains tax revenue is an op-ed today in the Wall Street Journal. The picture to the left tells a thousand words.
Michael Barone today has a good piece on a potential tax revolt in the U.K. Specifically, Conservative Party leader David Cameron called for an end to the British death tax on estates of less than about $2 million USD, and an end to "stamp taxes" imposed on home sales.
Good for the Brits. Marginal rate cuts would be even better, but this is an encouraging sign from the Tories. The British death tax, for instance, has a top rate of 40% (still better than us in America, but far too onerous a form of double taxation).
The budget deficit continues to plummet, according to the Treasury Department. With all the talk by Democrats of the need for tax increases, one might wonder what they will do when the budget balances in a few years.
The House voted last night to resurrect the death tax.
By a margin of 212-196, Congress re-affirmed the following death tax schedule:
2009: 45% rate
2010: No Death Tax
2011: 55% rate
Guess what year the grim reaper will be most welcomed? What a bizarre and sick tax for Congress to impose.
No Republican voted for this death tax resurrection, and only 10 Democrats voted against it. Good luck explaining that one to voters.
And, as a result, the Social Security and Medicare crisis has begun.
The headline says it all. Click here for the gory details.
The U.S. House today will vote on a provision to fully repeal the death tax. Americans for Tax Reform and the American Shareholders Association will rate this vote. Stay tuned for more details...
The usually-sober Martin Feldstein today took Rahm Emanuel's bait in the Wall Street Journal. In his commentary piece, Dr. Feldstein embraced Emanuel's plan to force every worker in America to pay an additional 1% of their income to a Social Security add-on account, and force every employer in America to match it.
That's what one might call a payroll tax increase.
Dr. Feldstein correctly points out that taxing people to force them to invest would create an additional pool of savings. But to call a tax-and-save scheme a "compromise" is not helpful. Indeed, we should let the auto-save provisions of the Pension Protection Act take hold before the government gets in the business of forcing people to save from currently-untaxed dollars. We might find that workers are saving enough for retirement on their own, and higher-income workers might not need Social Security a few decades from now.
So what are free market conservatives for? We're for what we've always been for--large personal accounts for younger workers, and no tax increases. If we can't get there this year, raising taxes is not the "compromise"; it's the surrender.
The Tax Foundation this weekend released a new study that shows that the top 1% of income earners (those households making more than about $365,000 per year) pay 40% of federal income taxes (thanks to Tax Prof Blog for posting it).
How about the lowest 50% (those coming from households making less than about $30,000 per year)? They pay only 3% of federal income taxes.
Remember that the next time someone tells you the federal income tax isn't progressive enough.
How has this been trending in the Bush Administration? In 2000, the last non-Bush year, the top 1% of income earners paid 37% of all income taxes--less than now. The lowest 50% of income earners paid 4% of all income taxes--higher than now. So, the Bush Administration has seen the rich pay more and the lower half pay less. So much for giveaways to the rich.
How is this possible? Simple--you tax something less, and you get more of it. In this case, lowering the top tax rate on ordinary income (mostly small business income) led to more small business income. Lowering the top rate on capital gains and dividends led to more capital gains and dividends. That in turn led to higher income levels producing more tax revenue, even though a lower rate is applied to it.
You might have heard of this: it's called supply-side economics, and it's now worked in the 1920s, 1960s, 1980s, 1990s, and 2000s.
Steve Moore has a good article in the WSJ detailing Dave Winston's poll on how independent voters view tax cuts. Some lessons include:
--"The Bush tax cuts" are not viewed as helping the economy, and talking about them (and not the tax cuts of the future) is a political loser
--Voters are distrustful of efforts to raise taxes (smartly figuring they would probably get hurt, too), even as they feel "the rich" aren't paying their fair share. 65% feel that now is not the time to raise taxes
Continue reading "Stormclouds and Silver Linings for GOP on Tax Cuts" »
Today, the Department of Labor announced that non-farm payrolls rose by 110,000 in September. More interestingly, the August job dip was revised to a gain of 89,000. That means that September of 2007 is the forty-ninth consecutive month of job creation, a new record.
President Bush used the opportunity to tout the benefits of tax relief, and to vow to veto any tax increases the Democrats in Congress will send him.
Over the past several years, the unemployment rate has remained in the "full employment" range of 4-5%.
Larry Kudlow has a very interesting article in NRO today detailing the series of phone calls, meetings, and consultations he had with Bob Rubin, Hank Paulson, and others. Worth a read.
We remain skeptical that such a large rate cut won't have significant inflationary side effects.
There's a secret majority in Congress for making the internet access tax ban permanent. The problem is, the Democrat leadership doesn't want to bring it up, since it would strain their relationship with state governments. A good report on it is here.
As background on the issue, there is a federal ban on state and local government taxation of internet access fees. Dating back to 1997, this federal ban prevents toll booths from being slapped up on Al Gore's information superhighway.
ASA Executive Director Ryan Ellis today spoke at AFP's "Defending the Dream" summit. His remarks are listed below the click.
Continue reading "ASA Executive Director Ryan Ellis Speaks At
AFP's "Defending the Dream" Summit" »
The Wall Street Journal points out today just how absurd Congressman David Obey's "war surtax" idea really is. As can be seen in the chart to the left, defense spending as a percent of GDP has only increased modestly since 9/11, and is below the Reagan-era level.
As pointed out here yesterday, their plan would raise the top marginal tax rate from 35% all the way to 50%--the same level it was at before Reagan cut the top rate to 28% in 1986.
They don't stop there. Since they want the Bush tax cuts to expire, the top rate would climb to 54.6% in 2011. Throw in their 4% surtax to pay for AMT repeal, any we're all the way up to 58.6%. That would be the highest top marginal rate since Jimmy Carter.
The Wall Street Journal today has a bizarre outcome of their latest poll. Two-thirds of self-identified Republicans think that free trade has harmed American competitiveness. At the same time, 60% want the next President to keep cutting taxes.
Put those two things together, and you have a base that wants to raise tarrifs and use the money to cut taxes. Very weird stuff.
Carrie Lukas has a good piece in NRO today detailing the lack of leadership Democrats have shown on Social Security. From her article:
The only change [Obama] recommends considering for Social Security is to raise taxes. Specifically, he proposes eliminating the cap on the amount of income taxed for Social Security. He claims: “If we kept the payroll tax rate exactly the same but applied it to all earnings and not just the first $97,500, we could virtually eliminate the entire Social Security shortfall.” Yet this massive tax increase would not, in reality, eliminate Social Security’s deficit.
There's an interesting commentary piece in the Washington Times this morning lamenting the fact that the federal tax burden has eclipsed the forty-year moving average. This has been a harbinger of five of the last six recessions.
John Stossel has a good article on Real Clear Politics about HSAs and how more widespread use of them would hold down the cost of health care in America:
If people paid their own bills, they would likely buy high-deductible insurance (roughly $1,000 for individuals, $2,100 for families) because on average, the premium is $1,300 cheaper. But people are so conditioned to expect others to pay their medical bills that they hate high deductibles: They feel ripped off if they must pay a thousand dollars before the insurance company starts paying.
Just when you think it can't get any weirder, the Dems come out with a new idea for a White House "mortgage czar."
That idea is just silly. Why can't the Dems simply let market forces fix this? Lenders who issued shaky loans should be punished by having those loans default. Lenders who took on too much debt should have to cut costs, find renters, or sell at a loss.
To coddle and subsidize bad behavior will only yield more bad behavior.
Thankfully, the President today vetoed the S-CHIP expansion bill, a.k.a. "HillaryCare 2.0." Below is an excerpt of the White House statement:
This bill would shift SCHIP away from its original purpose and turn it into a program that would cover children from some families of four earning almost $83,000 a year. In addition, under this bill, government coverage would displace private health insurance for many children. If this bill were enacted, one out of every three children moving onto government coverage would be moving from private coverage. The bill also does not fully fund all its new spending, obscuring the true cost of the bill's expansion of SCHIP, and it raises taxes on working Americans.
Congress will take a couple of weeks to try to muster the two-thirds margin to overturn the veto. That margin almost certainly exists in the Senate, but probably not in the House.
There was a good profile in the Washington Post today about the Tax Relief Coalition, a largely-business community alliance of organizations committed to preserving the 2001 and 2003 tax cuts.
According to published reports, House Democrats will be pushing a surtax to pay for the War on Terror. It's not exactly clear what the revised brackets would look like, but from the sound of the report the lowest bracket would rise from 10% to 12%, and the highest bracket would rise from 35% to 47%.
This new call for higher taxes comes at a time when revenues are surging (tax revenue growth has been in the double digits for several years), and the deficit is falling (best guess for the last fiscal year is $155 billion, or a little over 1% of GDP).
Every few days, it seems, the Democrats release another plan to raise taxes, and are making no bones about sending bigger spending bills to President Bush. Tax and spend is alive and well in the United States Congress.
The Wall Street Journal today reminded everyone that giving unions gobs of cash is not the best idea in the world for shareholders. Besides the obvious skimming off the top, unions have a tendency to leverage this cash in corporate campaigns and other types of gamesmanship.
That's why it's so disappointing that General Motors last week allowed the union to run the company health care via a voluntary employee benefit administration, or VEBA. This $35 billion slush fund will no doubt be used in the same way that unions "manage" multiemployer pension plans.
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