Tag Archives: taxes

Energy Wealth Redistribution

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Your tax dollars at work. Exposed by UC Berkeley, yet. This is the Abstract from their working paper The Distributional Effects of U.S. Clean Energy Tax Credits [emphasis added]:

Since 2006, US households have received more than $18 billion in federal income tax credits for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles, and other “clean energy” investments. We use tax return data to examine the socioeconomic characteristics of program recipients. We find that these tax expenditures have gone predominantly to higher-income Americans. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits. By comparing to previous work on the distributional consequences of pricing greenhouse gas emissions, we conclude that tax credits are likely to be much less attractive on distributional grounds than market mechanisms to reduce GHGs.

Of course, the top quintile aren’t only the cronies; they’re also the folks rich enough to install these things and/or buy the expensive battery-operated cars—which are horribly expensive, even after the “tax credits,” and in the case of those solar panels, have payback periods measured in generations rather than years.

From the body of the paper [citation omitted]:

If these tax credits are successful in inducing changes in behavior, then we should expect to see increased purchases during years in which the subsidies are particularly generous. Conversely, if credits do not induce additional sales, then the primary effect is just to transfer rents to participants in transactions that would have taken place anyway.

In other words, if there are no additional sales, then the sales that would have occurred anyway would see wealth redistribution from the lower income strata to the higher income strata in addition to the basic price paid for the goody bought.

How did that work out? Taking, for example, hybrid car sales,

There does not appear to be much of a decrease in hybrid sales when the AMVC [Alternative Motor Vehicle (Tax) Credit] was ended for all hybrids at the end of 2010. Moreover, since 2010, hybrid sales have increased significantly without the benefit of the AMVC.

Hmm….

From the paper’s conclusion:

Since 2006, these credits have provided more than $18 billion in subsidies for households who make clean energy investments. Using rich data from tax returns we show that over the last decade US clean energy tax credits have gone predominantly to higher-income Americans. Taxpayers with AGI in excess of $75,000 have received about 60% of all credit dollars aimed at energy-efficiency, residential solar, and hybrid vehicles, and about 90% of all credit dollars aimed at electric cars.

Again, hmm….

Free College

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Hillary wants to rein in the rising cost of a college education.

States would have to increase their own spending on higher education, and universities would be required to control spending[.]

With those strings, Clinton would send an additional $350 billion of your tax money (including your higher taxes she’s proposing to pay for some of this) over the next 10 years to the states for their public universities and community colleges.

And

…new rules would ensure a certain portion of total spending is directed to instruction….

How like a Progressive to think the answer to stopping a rise in the cost of a thing is to spend more money on the thing. And then to add to the cost of the thing with compliance cost imposition.

Can our nation really afford another four or eight years of this lack of understanding about how a free economy works?

Medicare Funding

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The fund Medicare uses to pay hospitals will run out in the next 15 years, and experts say there are no easy answers to solve it.

Certainly not politically easy answers, and that does matter. However, the practical answer is quite simple, if expensive in the transition.

Keep everyone 55 and older in the current Medicare system, with the individual option to leave that system in favor of the one I’ve proposed many times and summarize here. It’s important to note also that the “experts” are referring only to Medicare Part A, the hospitalization part. My reform is broader and applies to Medicare Parts B, payments to physicians, and D, drug coverage.

Rescind the payroll taxes from both the employer and younger-than-55 employee, while requiring the employee to put his payroll tax equivalent into what would be essentially a Health Savings Account. This New Model HSA would contain investment vehicles of the account owner’s choosing—including stocks, bonds, mutual funds for the same, bank savings accounts, etc—and be held for the benefit of the account holder. Unlike the Old Model HSA, with its shameful limits, the NMHSA would have no income limits on contributions, no annual limits on contributions, no requirement to have a High Deductible Health Coverage Policy, none of those government-mandated limits.

Of course, this can’t happen in a vacuum. In conjunction with this, the bankrupt* Social Security system needs to be similarly privatized, also, and the overly expensive Medicare system blocked granted, on a declining-to-zero schedule, to the States. These need to be done, too, with significant tax rate reductions and Federal spending cuts (and not just one-time gimmicks or reductions in spending growth).

Most, if not all of the cost of the transition can be covered by that spending and taxing reform.

 

*Bankrupt: not strictly so because in a few short years, while the Social Security Trust Fund will be emptied of money, current payroll taxes still will be available to make the payouts, requiring the payouts to drop to 75% of their presently scheduled values.

Update: Corrected an empty reference to Part C to the correct reference to Part D.

Democrats and Unions

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Illinois’ Democrat-controlled legislature—both houses—passed a budget earlier this year that spent $4 billion more than it intended to collect in revenue: a $36 billion spending bill against a $32 billion revenue bill. Never mind the rank dishonesty of this—bankrupt Illinois has no hope of raising those $4 billion except by borrowing, and these Democrat legislaturists know that. They have no intention, then, of repaying the borrowing, and that’s the dishonesty.

But leave that aside for a moment, and consider the following.

Governor Bruce Rauner (R) vetoed the bill because of that deficit, so the State is operating without a budget. Nevertheless, Rauner said the State would keep paying its government employees; as AFSCME said in support of Rauner’s decision,

public service workers in state government are on the job despite the lack of a state budget…and they should be paid for their work on time and in full.

Well, not so fast. Illinois’ Democrat Attorney General Lisa Madigan (just by happenstance, she’s also the daughter of the State’s Democrat Speaker of the House, Michael Madigan, whose own father was a New Deal pusher), with the full backing of her Democrat legislaturists, went into Illinois’ courts to block payment for those same “public service workers.”

Strictly to make a political point for their own benefit, these legislaturist Democrats are trying to prevent their employees from being paid, and they’re using their (erstwhile?) union allies as speed cushions for their bus. The Democratic Party of Illinois is typical of the national Democratic Party.

An Excess Profits Tax

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In 1917, Progressive icon Woodrow Wilson instigated an excess profits tax running from 20%-60% because, of course, the Progressive knew better how American business owners should spend their money than did the Americans who’d actually earned it through their businesses.

During the Great Depression, Democrat (and Progressive) icon Franklin Roosevelt instigated two excess profits taxes while openly slandering American businessmen as being on a capital strike: Roosevelt actually accused businesses of refusing to spend—at rates satisfactory to the Democrat (and Progressive)—the profits they’d earned.

Now we get the proud early 20th Century Progressive, Hillary Clinton, with her proposal for a “tax credit…to encourage more businesses to offer profit-sharing to their workers.”

Progressives still claim to Know Better what American business owners should do with their money than those business owners who did the work to earn that money. Progressives now also claim to Know Better what labor agreements are fit to be negotiated between employee and employer than those employees and employers—American citizens.

Now, the Progressive wants to foist tax credit onto us, to “encourage” businesses to spend their excess profits—her definition—because, of course, she Knows Better.

She also knows full well that with a tax credit, she’s intends to force all of us to pay a tax on a business’ “excess profits.” She knows full well where the money must come from in order to pay that “credit:” from higher taxes or more borrowing.

She closed her proposal with this bit:

I really think our corporations are missing a big bet. Because credible studies prove that profit-sharing with your employees is good for the employees, good for the businesses, good for the economy. I want to incentivize more companies to do just that.

Never mind that businesses are in the business to make money, not to serve as privately funded, government mandated jobs welfare programs. Never mind that in a competitive—that is to say, a free—market economy, businesses have to compete for employees as well as for customers. Never mind that the incentives are present in a free market economy for businesses to get the most out of their employees.

And so never mind that to the extent “credible studies” are right about the efficacy of profit sharing, in a competitive, free market economy businesses already would have profit-sharing plans.

Oh, wait, they’re just not set up in a way that suits this Progressive. The businesses are missing her bet. And so she demands that we all pay.

As an aside, some homework: crunch some numbers, and see whether a $750 credit for a $5,000 profit-sharing payout makes any sort of sense for a company laboring under the US’ highest corporate tax rate in the world—35%—on all profit, “excess” or not. See whether Clinton has any clue at all.