Tag Archives: taxes

Quit Whining, and Lead

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Quit crying about the lack of leadership, Republicans; you’re not providing any, either, with that.  Step up and lead.  Where are your proposals?  Talk about what you’ve passed that the Democrats are ignoring.  Pass a bill that substitutes targeted cuts for the sequester, and put the onus on the Democrats.

Louisiana Governor Bobby Jindal (R):

The president needs to step up to the plate.  There is never enough taxes for this administration.

Senator Tom Coburn (R, OK):

…told Fox News that the cuts will happen but put the blame on President Obama, saying he has provided “no leadership” on averting the cuts, known as sequester.

And he added,

The reason there is no agreement is because there’s no leadership from the president on actually recognizing what the problem is.

Senator John McCain (R, AZ) had this:

I won’t put all the blame all on the president of the United States.  But the president leads.  The president should be calling us over somewhere—Camp David, the White House, somewhere—and us sitting down and trying to avert these cuts.

Do.  Stop bleating.

Sequester Extortion

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Last week, President Barack Obama granted a public appearance with suitable props—emergency medical personnel carefully arrayed behind him as he gave his appearance—wherein he said what he would do if he didn’t get his way on canceling his sequester.

He said he’d fire those very emergency medical personnel, along with cops and firemen, if he didn’t get his precious tax increases.  They’d be the first to go in the spending cuts he’d enact under the sequester.

This is dishonest on two fronts.  For one thing, those folks are paid by local jurisdictions; they’re not Federal employees—they’re not his to fire.

For another, the sequester represents the enormous sum of $85 billion in spending cuts this year, or 5% of the collective budget of his Executive Branch’s non-defense Departments and agencies and 7% of his DoD budget.  The leader of the party of great savings through eliminating fraud, waste, and abuse now is saying he can’t find a trivial 5% of fraud, waste, and abuse in any of his Cabinet Departments or any of his programs.  Or he’s refusing to look.

It’s going to be an ugly four years.

A Foreign Tax on American Investors in America

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The European Commission earlier this month proposed a new financial-transaction tax for 11 participating states, including Germany, France, Italy, Spain, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, and Estonia.  These produce roughly two-thirds of the EU’s economy.

It’s an enormous tax, too, in a market where spreads are on the order of pennies, even fractions of pennies: 0.1% for trades in bonds and shares, and 0.01% for derivatives transactions, and it would apply to both buyers and sellers

as long as either of them is based in one of the participating states, or if the financial instrument being traded was issued in any of these countries.

As damaging as this tax is, they’re not done.  The tax is intended to suppress trading:

[The European Commission’s] own impact assessment estimates that the number and volume of trades in shares and bonds could drop by around 15%, while derivatives transactions may drop by as much as 75%.

Never mind that this activity—especially its volume—contributes to the liquidity of the instruments and so contributes to holding down their price to buyers.  Which facilitates more general investing in companies—their source of funds for R&D, plant expansion, even hiring.

But wait, there’s more: they’re claiming the right to tax folks outside their jurisdiction—we Americans, investing here in the US, for example, as a result of those domiciliary and passing-through aspects.

This tax will hurt us: Paul Jiganti, Managing Director of Market Structure and Routing Strategy at TD Ameritrade Holding Corp, estimates that

a typical [American] customer who pays $9.99 to buy 1,000 shares priced around $35 apiece could see that charge rise sevenfold, to around $70 on the trade.

Which will have the EU’s desired outcome.  Jiganti was caught by surprise by all of this:

To be honest, I thought that cooler heads would prevail.  I thought the US government would take care of it before it really became an issue.

For all of Treasury’s sharp words about the tax, though, don’t expect any real action.  President Barack Obama, Treasury’s boss, has never met a tax he didn’t like.  He’s not going to oppose this one in any meaningful way.

Return of Taxation without Representation

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As John Smith writes at BIZPAC Review,

Aggressive prosecuting [of regulation violations] is the newest form of taxation, a money tree for government.

This is only part of the problem, though (eliding the legitimacy of the regulations).  The regulations themselves exist as a form of taxation in the fees they require, and the regulations and their fee structures are enacted by appointed, functionally anonymous bureaucrats, not by our elected representatives.

Regulatory costs extant prior to Obamacare, combined with Obamacare’s regulatory fees, will cost Americans in the aggregate $1.8 trillion per year just to comply.  HHS’ regulatory requirements alone cost $184 billion/year.  A couple of others picked at random:

Environmental Protection Agency: $353 billion per year Department of Transportation: $64 billion per year Federal Communications Commission: $142 billion per year

Much of these costs, to be sure, are costs of compliance, and not payments to the Federal government.  But much of these costs are.  Think about the uses you, or private enterprise, have for that money if it were left in your pockets and cash registers.

Look also at the “negotiated” settlements between the SEC and its victim banks.  One example: in 2011 the SEC browbeat Citibank into a $285 million settlement (the money would have come to the government, not to reimbursement of any putative victims) over its involvement in mortgage debt securitization and sale (the practice of which has never been found to be criminal or otherwise illegal).  The deal the SEC forced Citi to take was so egregious that US District Judge Jed Rakoff, who had to approve the deal for it to take effect, rejected it out of hand, ruling that

the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest.

Rakoff founded his ruling in his rejection of a long-standing technique the SEC had been using to…cajole…such settlements: allowing its victims to say they didn’t do the deed, but they’ll pay up anyway.  Absent guilt, what’s the basis of the penalty?  Rakoff didn’t think there was any.  He’s just one judge, taking on one Federal agency, though.  And the SEC isn’t done demanding collections without guilt.

 

H/t The Spirit of Enterprise

Fact Checking the Fact Checker

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The AP has a series of “fact checks” on President Barack Obama’s Tuesday State of the Union claims.  Here’s one of particular interest to me.

OBAMA: “After years of grueling recession, our businesses have created over 6 million new jobs.”
THE FACTS: That’s in the ballpark, as far as it goes.  But Obama starts his count not when he took office, but from the point in his first term when job losses were the highest.  In doing so, he ignores the 5 million or so jobs that were lost on his watch, up to that point.
Private sector jobs have grown by 6.1 million since February 2010.  But since he became president, the gain is a more modest 1.9 million.
And when losses in public sector employment are added to the mix, his overall jobs record is a gain of 1.2 million.

As the checker says, that’s true enough “as far as it goes.”  I wrote just last fall about what our jobs numbers should have been had certain events come to pass as Obama promised they would under his policies.

He promised in 2009 a 5.5% unemployment rate by now.  How many new jobs would have been created had we actually reached his promised number?  In December 2009…the civilian labor force was 153,059,000, of which 137,792,000 Americans were employed, a 10% unemployment rate….

In September 2012…the civilian labor force was larger, at 155,063,000….  There were some 142,974,000 Americans actually employed—that increase of 5,000,000 of which Obama is so proud.

However, a 5.5% unemployment rate corresponds, if my 1st grade arithmetic serves me well, to 94.5% of the civilian labor force actually employed: 146,535,000 Americans.  …there are some 3,561,000 Americans that should be employed but aren’t—because Obama’s proudly proclaimed policies have come up short, and we aren’t anywhere near 5.5% unemployment.

Let’s look at this another way.  ….  A normal recovery coming out of a downturn as deep and steep as was the Panic of 2009 typically sees growth rates of 5%-6% per year, or more.  This Obama recovery has been 6.7% over the entirety of his term in office….  Had we seen a normal recovery (and using a pessimistic 5%/year growth rate), we would have reached today’s unemployment rate after a shade over one year—in 2010—and we would have been back to full employment (in the range of 4.8%-5.5%) in just under 2 years—by [2011].

There’s more to it (and the links there) even than that, though.  Under Obama’s policies, our labor force participation rate has been shrinking rapidly as Americans despair of getting a job and quit looking, with its own impact on Obama’s jobs claims [emphasis in the original].

The labor force participation rate fell to 63.6% from 63.8% in October [2012].  If it had just held steady since then, the unemployment rate would be back over 8%.  Indeed, if the LFP rate was just where it was in November 2011, the unemployment rate would be 8.3%.  Some 542,000 Americans left the labor force just last month.

and

The number of long-term unemployed remains at a sky-high 40.1%, the same as in August.

The following graph tells the tale.