Tag Archives: taxes

Obama’s Debt Ceiling Strategy

Posted on by
Reply

Pass increased spending and give me more tax revenue.  Period.  Oh, and hands off my pet projects.

The House of Representatives will agree to a debt ceiling increase (want to agree, for good or ill), if President Barack Obama will agree to spending reductions equal to, or greater than, the increase in the ceiling.  Obama says he refuses to negotiate at all on the debt ceiling.  Just raise it.  Or he’ll be forced to shut down the government for lack of borrowing authority.

The House of Representatives, along with a bipartisan collection of Senators, want to reform our tax code and use any increases in tax revenue that might result solely to pay down the national debt (and so to mitigate any future need to raise the debt ceiling anew).  Obama says that tax reform must, by design, result in increased tax revenue, with that increase to be committed solely to support increased spending.  Otherwise, he’ll be forced to shut down the government for lack of revenue.

Many Republicans want to pass a budget for the coming fiscal year, or failing that a Continuing Resolution for the coming months, that contains clauses that defund Obamacare—a program that Obama has already admitted isn’t ready for adult use.  Obama has said he’ll veto such a budget, even if it means he must shut down the government for lack of spending authority or income.

Obama is perfectly willing to shut down the government and blow up our economy if he can’t have all of this.  Not one or two of them—all of them.

Wondering Why?

Posted on by
Reply

…your gas prices are as high as they are?  It isn’t only the summer driving season.  It isn’t only limits on gasoline production at our refineries.  It isn’t even that ethanol-laced gasoline doesn’t even store well so that inventories can be built to smooth out the ebbs and flows of supply and demand.  Here’s another reason, alluded to in a Wednesday op-ed by Kimberly Strassel on a related topic.

Last week, the Environmental Protection Agency issued its annual renewable-fuels mandate, telling refineries how much ethanol they must blend into the nation’s gas supply.  This quota, which grows each year, is becoming a horrific financial burden on the industry, forcing many refineries to buy federal ethanol “credits” to satisfy the rules.  The skyrocketing price of those credits is adding hundreds of millions of dollars to refineries’ annual costs.

Those costs are passed on.  To gasoline-buying customers like our neighborhood filling stations—and you and me.

Refiners say that, with declining demand for gasoline, next year (2014—oddly, a mid-term election year), the existing quota for ethanol use will force them to blend in more than 10% of ethanol into their gasoline production, which both adds to gasoline costs and isn’t safe for many of the engines that use gasoline—like some cars that are optimized only for 10% blends, and smaller engines such as those used in our lawnmowers.

Even at that, the mandated ethanol use quotas simply aren’t possible to get to.  The 2013 mandated quota is 6 million gallons (down, incidentally, from the EPA’s original laughable requirement of 1 billion (that’s with a “b”) gallons to be used this year); the nation’s total ethanol production for this year will top out below 50 thousand gallons.  The quota stands, though, so the refiners are required to go onto the EPA’s ethanol credit market that Strassel mentioned, and buy up enough credits to make up for their collective failure to use 950,000 gallons of ethanol.

Costs.

The IRS Sends a Letter

Posted on by
Reply

Thousands of small-business owners have received letters from the Internal Revenue Service questioning whether they are underreporting their business income….

Tax officials say the letters don’t constitute an audit and instead are simply a request for more information.

Sure.  Except that they’re not “requests.”

One typical letter to a small-business owner is headlined, “Notification of Possible Income Underreporting.”  It begins, “Your gross receipts may be underreported.”

The letter instructs the owner to complete a form “to explain why the portion of your gross receipts from non-card payments appears unusually low.”  It says the business owner must respond within 30 days.

No.  Tell me what crime you’re claiming I’m committing or at risk of committing.  Then we can talk about my business model, my decision to emphasize card transactions in my business.  And 30 days is a short deadline for small businesses to investigate their records of individual transactions over the year supposed to be in question.  While you’re about it, explain to me why I’m obligated to do cash transactions at a rate that suits your whim.  Cash imposes additional costs on me, including more accounting effort (card transactions automatically generate their own audit trail for my internal, business use) and greater security costs from having all that cash on hand.

And there’s this example of IRS disingenuousness:

Peter Fleming, a small-business accountant in Carnegie, PA, said a client with a gift and souvenir shop received a letter from the IRS in December saying the revenue she claimed in tax returns the previous year was lower than sales reported in merchant card and third-party payments data.  The retailer reported gross receipts of $243,462, versus $249,994 in the payment data, according to the IRS.  The letter told her to ensure she was “fully reporting receipts from all sources” and gave her 30 days to respond.  Mr Fleming said the discrepancy was because payments data included sales tax, which wasn’t included in revenue claimed in tax returns.  For small retailers, “Sales tax is a liability and is not reported as revenue,” Mr Fleming said.

Of course, the IRS knew a priori this discrepancy was sales tax; the IRS has lots of access to state and community sales tax rates and records.

And a final bit of IRS cynicism:

The IRS has told accountants that a principal aim of its program is to verify the quality of the card-transaction data the agency is getting.

Clearly not.  I if this were true, the IRS would have said so in its dunning letters to those 20,000 small businesses.

Keynesian Stimuli

Posted on by
Reply

If the point of Keynesian spending is to inject money into the economy to make up for diminished private demand, then an equally valid Keynesian stimulus would be to reduce taxes and leave the money in the private economy in the first place.

Which, in fact, Keynesians actually recommend: Galbraith, John K, The Great Crash 1929.  And as that Evil Republican (!?) John Kennedy actually did in the early ’60s, that Evil Republican Ronald Reagan did again in the ’80s, and that Evil Republican George Bush the Younger did yet again in the early 2000s.

Spend more, tax less—either one produces the deficit spending that is actually what Keynes thought appropriate.  Except that taxing less—eliminating the government as (inefficient) middleman in the deficit spending—produces the more efficient stimulus, to the extent that government stimulus can have any beneficial effect at all.  And spending more is how politicians buy votes.

Hmm….

Spend, Spend, and Tax

Posted on by
Reply

President Barack Obama offered, the other day, a “grand bargain” on taxes and spending that only a Progressive could love.  Obama offered to lower corporate tax rates (so long as he got to delete enough non-“green energy” subsidies to get a net increase in Federal revenues), if only he could use that increase to spend more (and not pay down our Federal deficit).

“I’m just going to keep on throwing ideas out there,” Obama told a crowd of supporters, challenging Republicans to offer counterproposals.

Never mind that those Evil Republicans in the House already have passed a large number of…counterproposals…over the last couple of years.  Those jobs bills, among all the other counterproposals, are languishing in the Democrat-controlled Senate.