Tag Archives: taxes

Never Met a Tax Increase

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…he didn’t like, this Progressive. President Barack Obama wants $320 billion in tax increases over the next 10 years in order to give tax credits to his version of “the middle class.”

This is rank, stinking wealth transfer. Nothing else. He doesn’t even intend to use the revenue to pay down the national debt he’s exploded over the last six years. The worst part of this is that Obama and his Democratic Party accomplices actually think this is right. The rich should “pay their fair share,” and government needs to spend the money. Never mind that “the rich” already pay 70% of the US’ income tax bill, while the bottom half(!) pay 3%-4%. Conveniently, these…Democrats…never get around to specifying what a “fair” share might be. Meanwhile, the debt keeps growing.

And

Obama also wants to close what the administration is calling the “Trust Fund Loophole,” a change that would require estates to pay capital gains taxes on securities at the time they’re inherited.

Here’s a thought. Work with me on this, it’s a hard concept for some to get: lower all income taxes to a single flat rate with no deductions, subsidies, credits, what-have-yous, and with no special treatments for this or that source of the income. Lose the death tax altogether; government should quit trying to profit from a citizen’s tragedy.

Stop using the tax code for social engineering. Have all Americans pay the flat rate, and leave in the hands of the heirs their loved one’s accumulations.

Now there’s no need for tax credits for some, which necessarily comes at the expense of others. The money inherited isn’t the government’s money, either; the government has no legitimate claim on it, and pecuniarily, it has no need of it.

Removing the tax code from the social engineering business eliminates the influence of a lot of special interests and lobbyists, too. ‘Course, that’s a problem for all politicians….

A Tax Cut

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The Wall Street Journal had a thought on one. Our gas tax should go away. Completely.

The gas tax began in 1956 as a 3¢/gal tax that was intended to fund, via the Highway Trust Fund, building…highways and bridges. Today, that tax stands at 18.4¢/gal (and 24.4¢/gal on diesel). The gas tax has roughly matched inflation over those 58 years.

However, HTF spending has not, nor has it been kept to building highways and bridges. Today, that money also gets spent on

mass transit in merely six metro areas and sundry other programs for street cars, ferries, sidewalks, bike lanes, hiking trails, urban planning and even landscaping nationwide.

None of whose riders or users pay a single red cent to the HTF.

WSJ‘s alternative?

Simply using the taxes that are supposed to pay for highways to, well, pay for highways makes the HTF 98% solvent for the next decade, no tax increase necessary.

More than that, with more than 70% of highway spending already done by the states and not the Federal government, the States can allocate their own funds (a related example: who’s paying for California’s “high speed” train boondoggle? Not just Californians), make their own decisions regarding spending priorities, without freeloading off their neighboring states’ citizens’ tax money. The Federal gas (and diesel) tax can be done away with once the HTF’s spending is refocused.

Where are the Republicans on this? The WSJ had a thought on that, too, in the same article.

Tax Reform

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…with a Republican Congress and a Democrat President.

[W]ith Barack Obama in the White House and enough Democrats in the Senate to uphold a filibuster, Republican lawmakers are quietly playing down any hope of comprehensive tax reform and instead have set their sights on just the corporate portion of the tax code.

The GOP favors a simplified tax code with a lower, but broader, tax base.

That proposal is a nonstarter with Democrats because while it would reduce taxes overall, it would draw tax revenue from more people on the lower end of the income spectrum.

Never mind that with skin in the game, “people on the lower end of the income spectrum” would take their political responsibilities more seriously, which, far from leaving them their current Democrat rubber stamps, would work to the good of the nation.

The tax cut deal Congress passed “doesn’t have the shelf life of a carton of eggs,” [Senator Ron, D-OR] Wyden lamented before the Senate adjourned.

Wyden is right to lament this, though perhaps not for the reason he thinks: temporary fiscal measures do not have any effect on businesses or the economy other than suppressing both as the businesses await the uncertain outcome of the end of temporary measures.

Congressional Republicans have come to realize that even though they will control both the House and Senate in 2015, they won’t get far on tax reform unless they do so in concert with the president.

In other words, the GOP isn’t planning on passing its own bill for Obama to reject.

Said one top GOP aide close to the Senate talks, “There is only so much that can be done without the White House involved.”

Simply giving up, though, would be a mistake, and it would play into the hands of critics who say the Republican Party has gotten too used to losing and no longer knows how to win in Congress. “Needing” the President’s cooperation and that of enough Democrats to pass a cloture vote, though, actually is good for Republicans: it would help them emphasize the differences between them and Democrats, and it (re)identify the Republican Party as the party of low taxes and the Democratic Party as the party of big spending, the party of you can’t have anything if I can’t have my big taxes, the party of No.

“Only so much that can be done” is true, and passing lesser reform is a fine fallback. However, Republicans need to force votes—even if they’re failed cloture votes in the Senate—on full, wide-ranging, complete tax reform in order to put the Democrats, individually and collectively, on the voting record: either those Democrat Senators are for reform, or they’re for the Party of No. Either Obama signs, or he vetoes as a leading member of the Party of No.

In fine: pass the broad reform bills, anyway: force the votes, and if it gets far enough, force Obama to veto. Then bring the failed bills up again the next year, and force and force the votes and the veto again—in an election year. Some Republican staffers worry that this year is it because in an election year, too many politicians will be worrying about their election campaigns. These staffers corroborate the criticism regarding not knowing how to win. Election years, especially the one coming up, is when the Republicans will have the most leverage—if they can find the courage to apply the pressure.

Taxes and Congress

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The 113th Congress, in its last days, has passed and sent to President Barack Obama for signature (or veto) a bill extending expired tax breaks through the end of this year. It’s retroactive because the expiration occurred at the end of last year. And the extension is good only for a couple more weeks. The breaks are an amalgam of exemptions that

benefit big corporations and small businesses, as well as struggling homeowners and people who live in states without a state income tax.

A couple things about this. First, notice that phrase “tax breaks.” These represent special carve outs for selected businesses and selected individual Americans, and they’re a mix of crony capitalism and social engineering.

The other thing is the end-of-year decision making regarding the tax code. This isn’t unique to this Congress; Congresses have been pulling this stunt for decades.

If we had real tax reform, say a tax code that eschewed social engineering, that had a single, low, flat rate without loopholes, carve outs, subsidies, credits, and so on, and that everyone with an income paid, there’d be no need—no opportunity—for this late year, late night, wrangling. And there’d be no need for tax breaks, loopholes, carve outs, subsidies, credits, and so on.

This also would both reduce the breadth of influence of special interests and reduce the availability of our tax code—and our tax money—for government-determined social engineering.

This is a thing the 114th Congress should take up with some urgency—”on day one.” It’s highly likely that Obama would veto real tax reform, but that in itself would be not so bad. At worst, that would help shape the 2016 elections and clarify differences between those who understand and respect the wisdom of American citizens and those who think government must be involved in our lives for our own good.

This is a test of both camps.

More Thoughts on European Taxation

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This time British Prime Minister David Cameron (he of the possible immigration awakening) and British Chancellor George Osborne have them. They’re touting a

diverted-profits tax, would hit multinational companies with a 25% tax rate on any profits earned from activity in Britain that the company attributes to a subsidiary based in a lower-tax jurisdiction. Since the rate is higher than Britain’s normal 21% corporate tax rate, Mr Osborne clearly is hoping companies will stop so-called revenue shifting and pay regular taxes instead.

As The Wall Street Journal put it in their op-ed at the link above,

[i]t’s a strange move because not so long ago the Tories understood the stimulative power of tax cuts. Messrs Cameron and Osborne have cut the top corporate tax rate to 21% from 28%, and have reduced personal income-tax rates and adjusted the tax brackets so that fewer earners pay the higher rates. By keeping more cash in the productive private economy and improving incentives for saving, investment and work, these moves have contributed to a growth rate now expected to hit 3% for this year.

The WSJ claims mystification over the “Google tax,” the nom de guerre of diverted profits tax, but they misapprehend the…thinking…of Messrs Cameron and Osborne. If fact, those fine gentlemen are operating from the false premise that corporate profits actually are the government’s money in the first place, and/or from that premise’s close associate, that the government needs that money.