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Tax
You’ve heard of the “October surprise,” when politicians pull some stunt right before an election to try and salvage it. Well, this year we may see a “Christmas surprise.”
The Wall Street Journal’s John Fund recently explained that Democrats are considering an ambitious lame-duck session when Congress returns after the November elections.
If Democrats lose control of the House and maybe even the Senate, their congressional leaders could return in early December with plans to tax and spend like there’s no tomorrow -- which, for them, there wouldn’t be.
If a number of Democratic incumbents has been defeated, why not “go for the gold” -- your gold, that is -- and ram through their Christmas wish list? New taxes, new spending, maybe “card check” for the unions.
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President Obama and the Democratic leadership, as well as many of the Washington chattering class, seem to agree: Failure to throw even more money at the economy will prove disastrous for Democrats in November.
Politico quotes Howard Gleckman of the Urban Institute as saying, “The question is, can [Democrats] create the perception that they have done all these things to create jobs, or that they tried but the dastardly Republicans prevented them from creating jobs?”
Rather than blaming Republicans, Democrats ought to thank them. Had Republicans been able to stop the Democrats’ uber-spending spree even earlier, the economy might have come back quicker and unemployment might be trending down.
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After President Obama’s election, conservatives were afraid he would drag the U.S. down into European socialism. We underestimated his vision.
A mere 18 months later not even the European socialists want to go where the president wants to lead—ever more government spending. Indeed, most of Europe is headed in the opposite direction.
- The U.K. has announced new austerity measures, including 25 percent budget cuts and a two-year public-sector pay freeze. Even the queen’s allotment will be frozen next year.
- Germany has said it will cut its budget by nearly $100 billion over the next four years.
- And France wants to cut its budget deficit from 8 percent of GDP this year to 3 percent by 2013.
By contrast, Obama tried to convince countries at the G-20 meeting to, lemming like, follow us off the economic cliff. They declined en masse. Read More...
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When a child wastes his allowance on foolish things, wise and prudent parents will be reluctant to hand over more money if that child comes begging. And that’s just how taxpayers should feel about a new effort to bailout labor union pensions.
Pennsylvania Senator Bob Casey has introduced the “Create Jobs and Save Benefits Act,” otherwise known as the “Buy Union Votes and Boost My 2012 Reelection Chances” bill. In essence, the bill would transfer billions of dollars in unfunded pension liabilities from mostly union-managed multi-employer pension plans to the Pension Benefit Guaranty Corporation (PBGC), which is backed by taxpayers.
But even as unions push for taxpayers to fill the gap in their underfunded and mismanaged pension plans, they drop millions of dollars in union dues on political causes.
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It’s not that often we get to praise the Obama administration, so when we get a chance we take it—which is what we’re doing here … sort of.
Anyone who knows Washington knows there is a fundamental flaw in the budget process. If an agency or department doesn’t spend all of its budget, the excess funds go back to the federal government.
Moreover, that agency may see its future budget cut by a similar amount, as the money gets redirected in the next budget cycle to the squeakier wheels. So agencies, reacting to the established economic incentives, routinely find ways to spend their allotments, whether they really need the funds or not.
Back in the 1990s, stories emerged that one of the defense department agencies found it had some $900,000 left at the end of the year and wasted it all on magazine subscriptions. That problem was fixed; the Pentagon can now shift leftover dollars around to other agencies.
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Republicans have kicked off their ObamaCare “repeal and replace” campaign, but there will likely be neither repeal nor replace unless Republicans control both Congress and the White House, and that’s 2012 at best — if then. However, by taking over only one house of Congress opponents can dramatically lower the unsustainable cost of ObamaCare by refusing to fund its worst elements. Here’s a few suggestions.
Reduce Medicaid eligibility. Historically, states have varied widely on Medicaid eligibility, with some setting the threshold significantly below the federal poverty level (FPL). ObamaCare sets a nationwide eligibility threshold at 133 percent, which increases the number of people in the government-run program by an additional estimated 15 million by 2019. Funding Medicaid eligibility only up to 100 percent of FPL would dramatically lower its cost. Read More...
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So you’re 62 years old and have been downsized, laid off or forced into early retirement because of the struggling economy. And you think to yourself, “I’ll take early retirement under Social Security, which will provide a small but reliable (let’s hope!) income, and get a job that will pay maybe $20,000 or $25,000 a year to make ends meet.”
In a word: fugetaboutit!
That’s because Social Security will withhold one dollar for every two you make above $14,160 this year. It’s called the Social Security earnings limit, and it exists to discourage older Americans from taking early retirement under Social Security.
The original earnings limit was created with the passage of Social Security in 1935 to fulfill social policy, not economic policy. Read More...
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The House Republican leadership has just announced You Cut (http://republicanwhip.house.gov/YouCut/) where, along with a greeting by House Republican Whip Eric Cantor explaining the need to get federal spending under control, the public can “vote” on several potential cuts in the federal budget. Votes can be rendered either on the website or from a cell phone.
This week’s choices include, among other options:
- $260 million for the presidential election fund. After singing the praises of government-financed elections, President Obama refused to take federal money because it would limit what he could raise. Eliminating this program would mean all presidential elections would be funded by private contributions.
- $600 million for taxpayer subsidized union activities. Read More...
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On Fox News Sunday, anchor Chris Wallace asked Florida U.S. Senate candidate Marco Rubio, a Republican, if he still stood behind a statement he had made on the program a month earlier that he would support Social Security benefit cuts for people under the age of 55.
Rubio confirmed that he did, and went on to add that he believed all serious observers agreed that benefits would need to be cut.
We disagree, but more about that in a minute.
If we lived in a “post-partisan” political world, where ideas could be proposed and discussed in an intelligent manner, then we could have a rational discussion about benefits cuts.
But Washington’s political divisiveness has become a national embarrassment, with name calling, and scoldings and massive pieces of legislation being forced through without one single vote from the minority party.
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The phrase “free at last” is associated with spirituals and the emancipation movement. Today, physical slavery isn’t a threat; but economic slavery looms. And the economic shackles are growing heavier and tighter.
The Tax Foundation says that Friday, April 9, will be Tax Freedom Day. The organization defines Tax Freedom Day as “the date on which Americans will have worked long enough to have earned enough money to pay this year’s tax obligations at the federal, state and local levels.”
The Tax Foundation also tracks Tax Freedom Day by state. For Texas it was yesterday, April 5. It could be worse—and in a few years it WILL be a lot worse. It could also be a lot better.
Alaska was the first state to reach the goal this year, March 26. And Connecticut will be dead last, on April 27.
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I predict that one of the most common phrases in the American vocabulary over the next few years will be, “I didn’t know the health care bill would do that.” And Democrats will be saying it most.
Even as the president traveled to Iowa City to let everyone know Armageddon hadn’t happened, several large companies declared they would start health-reform-related write downs--AT&T for $1 billion.
Here’s the back-story. In 2003, Congress passed the Medicare prescription drug benefit. There was a concern among legislators that including that benefit might encourage large employers that provided retiree coverage to phase it out.
Republicans, who controlled Congress, decided to provide those companies with a subsidy, spending about $665 per retiree to subsidize the employer’s plan, but saving $1,209 if the retiree had been dumped into Medicare. Read More...
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Even as they force through massive new tax and spending increases, Democrats are trying to demonstrate their fiscal responsibility by proposing to eliminate congressional earmarks, except for nonprofit organizations (which is the majority of earmarks).
Their efforts would be more believable had they not pushed through, with zero Republican support, a pay-as-you-go, or "paygo," provision last February that requires Congress to pay for any new spending increases. Because just three weeks later they completely ignored their paygo rule to pass a $10 billion jobs bill--without a "payfor."
Actions belie words.
House Republicans have countered by proposing a moratorium on all earmarks.
Then Republican Senator Jim Inhofe of Oklahoma piped up in The Wall Street Journal claiming earmark control was much ado about nothing. Earmarks only amounted to 1.5 percent of discretionary spending.
So who's right?
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| So how did Social Security get tied up in health care reform? It’s kind of complicated so stay with me. The Senate version of the health care reform bill that the House is supposed to vote on this week—um, let me correct. Despite weeks of Democrats calling for an “up or down vote,” the House isn’t actually going to vote on the bill. It’s going to vote on amendments to the bill and, if they pass, the Senate version will be “deemed” to have passed—without an actual vote on the bill. Anyway, in the Senate bill is the “Cadillac tax” that makes employer-provided health insurance subject to taxation above a certain level. That means that employees with high-cost health insurance will, at some point after 2018, start paying more taxes—including Social Security taxes. Read More...
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Members of Congress say they are concerned about the exploding budget deficit, though not so concerned, it seems, to stop all the spending that’s actually causing the deficit explosion—up to about 24.7 percent of gross domestic product (GDP).
President Obama’s solution has been to appoint, by executive order—because the Senate wouldn’t pass it—a bipartisan group to explore what the government can do to reign in the spending.
It’s like an alcoholic convening a meeting of other heavy drinkers to discuss how the alcoholic can cut back on his drinking—and having the meeting at a bar at happy hour.
Of course, everyone knows the committee will recommend some minor spending cuts and some major tax increases. The tax increases would pass and the spending cuts would be postponed until later—because spendaholics don’t really want to cut spending, they just want to say that they do.
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| Senator Jim Bunning could probably use a hug. The retiring Kentucky Republican has been trying to get Congress to live up to its fiscal promises. And for that good deed he’s getting pummeled by Democrats, barraged by reporters and largely ignored by Republicans. This is not a good sign for all that promised future austerity by either party. Congress passed a new version of “pay as you go,” or “paygo,” legislation in February when it increased the government’s borrowing limit to $1.9 trillion. The goal of paygo is to force the government to find ways to offset any new spending. Democrats included the provision to help deflect criticism for their explosion in deficit spending. President Obama showered it with praise: "PAYGO would hold us to a simple but bedrock principle: Congress can only spend a dollar if it saves a dollar elsewhere. Read More...
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World markets have been worried about the financial disaster threatening Greece. And well they should.
The European Union member country recently revealed that it had been hiding its debt. Greece’s total debt is 113 percent of GDP for 2009, and expected to rise to 125 percent by 2010. E.U. rules require that total debt not be higher than 60 percent of GDP, according E.U. Business.
And so the markets stumbled for several days over the prospect of a Greek failure, until other E.U. countries hinted they might help out.
But looking at the mounting debt facing the U.S., we have to wonder if we’ll be the new Greece.
Veronique de Rugy of the Mercatus Center has just put together a chart highlighting our own challenges. It shows gross U.S. federal debt for 2010 at $11.9 trillion. That’s 94.3 percent of GDP. Not quite Greece yet, but heading that way quickly.
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Our thanks to FedEx Chairman Fred Smith for dredging up a 2001 IPI study and resurrecting its recommendations in a Wall Street Journal op/ed this past Saturday.
In his op-ed, Mr. Smith rightly touts accelerated depreciation as a powerful tool through which the federal government could stimulate real job creation in the private sector through tax policy.
He’s right—in 2001 IPI found that for every $1 in tax reductions through accelerated depreciation, the economy would reap $9 in increased GDP.
But depreciation fixes are not the only tax tools available to the feds to stimulate economic growth. Read More...
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President Obama introduced his budget this week amid lots of calls for Republicans to support the president’s laundry list of new and expanded spending programs, along with a minimal spending freeze and some tax cuts.
For example, Politico cites White House Communications Director Dan Pfeiffer saying that Republicans “have a responsibility now to partner with the President, to try to get things done for the American people.”
In short, Pfeiffer wants Republicans to quit being the party of “no.”
But bipartisanship is only good when the proposed legislation is good. And frankly, most of the president’s proposals have been stinkers.
Take the administration’s proposal to try accused 9/11 planner Khalid Sheikh Mohammed in downtown New York City. Republicans opposed the plan, as did most of the public. Read More...
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Would the REAL Obama agenda please stand up!
On Monday morning the White House released a plan for:
- Doubling the Child and Dependant Care Tax Credit for families making under $85,000;
- Limiting student federal loan payments;
- Expanding tax credits to match retirement savings; and
- Expanding assistance to families caring for elderly relatives.
All of which cost money.
But by Monday evening, the New York Times reported that President Obama wants to freeze spending on many domestic programs for three years, then tie future program growth to the inflation rate.
Talk about trying to have it both ways. So which is it?
Is the economy so bad that we need new or expanded spending programs? Or was last year’s spending spree so massive and irresponsible that we have to freeze the budget?
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What Will the President Say in His State of the Union? The Institute for Policy Innovation’s Dr. Merrill Matthews says he has some explaining to do.
Washington is all atwitter over President Obama’s upcoming State of the Union address. And understandably so, because the president has some serious explaining to do, like:
- How he plans to get control of the $1.4 trillion federal deficit, more than three times the deficit Obama was so critical of under George Bush.
- And how he intends to pay for all the Democrats’ new federal spending. Yes, he could raise taxes, but he already has several new taxes in his health care bill.
- And maybe the president can explain why his much-boasted stimulus bill has had little impact on creating new jobs.
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 Fate of the Union |
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Immigration—next to imitation—being the sincerest form of flattery, it’s no wonder new Census Bureau figures show Americans moving to Texas as fast as they can. They like what they see here.
The federal nose-counters say new Texans in 2008-09 numbered nearly half a million—18 percent of all the population growth in the country. Only Wyoming and Utah, with smaller populations, drew larger percentages of newcomers.
We’re not talking just about the foreign-born. Domestic migrants to Texas—from New York, California, wherever—outnumbered international border-crossers two to one.
How come? A good climate would be part of it, and we’re talking both weather and the business climate. Whereas the policies of many other states don’t exactly encourage hard work, savings and investment, Texas pours rewards on workers and entrepreneurs.
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Presidential elections are expensive—something liberals never tire of reminding us every four years when they push for some way to nationalize the cost of presidential elections.
Except, of course, in 2008. Liberals were remarkably quiet when then-candidate Barack Obama spent money like there was no tomorrow—$741 million, more than the Bush and Kerry campaigns combined in 2004—a mindset the president seems to have carried over into the presidency.
But as expensive as presidential campaigns can be, that’s only a fraction of the true cost taxpayers must pay after the candidate is elected.
And we are only now beginning to discover just how much the election of Barack H. Obama will cost. For example:
- There’s the president’s $3.5 trillion budget for 2010 that passed last April, by far the largest in history.
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Is It Time for Some Congressional New Year’s Resolutions? Dr. Merrill Matthews of the Institute for Policy Innovation says yes, before Congress bankrupts the country.
It’s time once again to encourage Congress to make some New Year’s resolutions.
First, with the national debt limit being pushed up to about $14 trillion and no end in sight, members of Congress must resolve to get federal spending under control.
The second resolution should be a commitment to more bipartisanship. This is the most partisan and polarized administration in recent history, barely able to get one or two Republicans to vote for a bill.
Third, Congress needs to be more transparent. Democrats are ramming through major legislation without letting Republicans or the public even see the bill, much less read it, until they’re ready to pass it.
Folks, this is no way to run a country. Read More...
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President Obama keeps claiming he’s willing to “make the hard choices.”
But so far his administration has been characterized by a lack of said hard choices—except perhaps for his choice in dog breeds.
Congress finally got around to passing the 2009 fiscal budget in February, which should have been passed in the fall of 2008. The Democratic-led Congress preferred to wait for a Democratic president who would sign the fiscally irresponsible budget. That budget contained some 10,000 earmarks, which Obama campaigned against.
Did President Hard Choices send it back demanding a bill clean of earmarks? No, Obama signed it. And his press secretary defended the decision saying it was “last year’s business.”
How about the $787 billion stimulus bill, which was this year’s business? Did the president make any hard choices? Maybe, but only because he would have liked one even bigger.
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President Obama’s claim that health care costs are growing so fast that “doing nothing is not an option” would be a little more believable if he could point to a country that has been able to “bend the curve” on health care spending.
Health care reform advocates constantly remind us that all the other industrialized nations spend less that the U.S. on health care, both in the aggregate and on a per-person basis. But that’s not because those countries are more efficient. Most simply limit the amount of funds available to the system.
The problem with those arbitrary health care spending caps is that they are usually much lower than the economically desirable level. And so there is constant upward pressure to raise the cap.
Germany—one of the oft cited models for U.S. reform—is experiencing that pressure. Created by Bismarck in 1883, it’s the oldest publicly sponsored model.
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Some Republicans and Democrats, including Sen. Kent Conrad (D-ND), chairman of the Senate Budget Committee, are proposing a bipartisan committee to consider how to address the exploding federal deficit as a condition for increasing the debt limit beyond its current $12.1 trillion, which the government will exceed around mid-December.
And the Obama administration supports the idea as a way to “bring Republicans and Democrats together to make tough decisions about how to cut costs and raise revenue in areas including Social Security, Medicare and taxes,” according to the Wall Street Journal.
Here’s an idea: If the President is serious about “bringing Republicans and Democrats together”, how about not shutting Republicans out of important negotiations and decisions?
This is the pattern we’ve seen for nearly a year. Obama talks one game while simultaneously doing exactly the opposite. Read More...
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There’s maybe 15 new taxes in Senator Harry Reid’s health care plan, including new taxes on:
- “Cadillac plans” (that is expensive, not necessarily rich-benefit plans);
- Medical devices and cosmetic surgery (oops, there went the Hollywood vote);
- Drug companies, health insurers and insurance executives;
- New limits on contributions to flexible spending accounts and increased penalties on non-qualified health savings account expenses;
- Individuals who don’t buy and employers who don’t provide health insurance;
- And, of course, high-income earners, and much more.
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It’s time to expose the lie that the Blue Dog Democrats—a coalition of 52 supposedly fiscally conservative House Democrats—are concerned about federal spending and the budget.
So far this year, the House has seen four major spending bills. Here’s how the Blue Dogs voted:
- The $787 billion stimulus package. Ten of the 52 Blue Dogs, about 20 percent, voted with every Republican against the unprecedented spending bill.
- President Obama’s 2010 federal budget. In April Congress took a vote on the president’s $3.5 trillion budget for 2010—by far the biggest spending package in history. Again, not one House Republican voted for the bill, but only 14 Blue Dogs (27 percent) joined them in opposition.
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Is the President’s Stimulus a Success? The Institute for Policy Innovation’s Dr. Merrill Matthews says it depends on what one mean’s by success.
President Obama says his $787 billion stimulus package is a huge success.
Even though the economy’s lost more than 2 million jobs, the administration boasts that federal contractors who received $16 billion in stimulus money have created or saved 30,000 jobs.
As the ProPublica website points out, that’s spending more than $500,000 per job.
Hey, where do I sign up?
The administration also claims that for every direct job, an indirect job has been created or saved. So maybe 60,000 jobs.
Democrats now say the first stimulus was such a success they may want to do another. But if the first one had really created jobs, we wouldn’t need a second. Read More...
Stimulus |
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Most politicians would wince at being accused of trying to push the biggest tax increase in U.S. history.
But under President Obama and the Democratic leadership in Congress, the question isn’t whether but which tax increase—the “cap and tax” bill or the health care reform legislation—is the biggest in U.S. history.
At IPI we’ve been trying to decide ourselves, but there are so many variables, moving parts and unknowns it’s hard to know.
The Wall Street Journal said last June: “Americans should know that those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history.”
To support the claim, the Journal cited the Heritage Foundation’s analysis, which found Waxman-Markey, the House version of the cap and trade bill, “would cost the economy $161 billion in 2020, which is $1,870 for a family of four. Read More...
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Money, money, money—all we need right now is a whole lot more of it. To finance, say, congressional Democratic lust for spending more on health care.
The supposedly “moderate” Senate Finance Committee plan for health insurance overhaul figures on Texas picking up an additional $20 billion in Medicaid spending over the next decade. That’s to pay for another 2.5 million program enrollees, on top of the 2.9 million we have right now.
There are places in the U.S. where Medicaid pays for about half of the births. Yet one of Congress’s top solutions to solving the problem of the uninsured is expanding Medicaid to even more people.
Here’s another fun statistic. Texas taxpayers right now pay about 42 percent—$19 billion—of state Medicaid costs, with the feds picking up the rest. In the 2006-07 fiscal biennium it was $13.1 billion.
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Has Smokey the Bear Moved to Washington? The Institute for Policy innovation’s Dr. Merrill Matthews says only you can prevent wasteful government spending.
The country’s forests are a national treasure. That’s why Congress appropriated millions of dollars in the stimulus bill for forest fire management, including $2.8 million for that much-loved national forest known as … Washington, D.C.
Now, Washington has its problems, but forest fires aren’t one of them
Steve Moore of The Wall Street Journal reports that when Senator John Barrasso of Wyoming discovered the funding, he introduced an amendment to reassign it to the U.S. Forest Service. The motion passed unanimously.
Ironically, Wyoming, which has lots of forests, got no forest fire management money.
Smokey the Bear used to say, “Only you can prevent forest fires.” And, I might add, only you can prevent Congre Read More...
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Has Washington completely abandoned any effort to stay within the parameters established by the U.S. Constitution?
Last week we learned that then Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke gave Bank of America CEO Ken Lewis an ultimatum: Go forward with BoA’s proposed merger with faltering Merrill Lynch or the government would fire BoA’s executives.
Excuse me, but under which article of the Constitution did the American people give any administration that power?
Similarly, is there any constitutional authority for Washington bailing out Chrysler and GM, then taking them over when just a bailout didn’t work, firing the executives and implementing its own hand-picked board and executives?
Is there any constitutional authority for gathering email addresses on those who might disagree with the administration, otherwise known as “fishy emails,” and using them for who knows what?
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With all the political tricks flying around Washington this week you’d think it was Halloween, but we still have more than a week to go.
Last week, Senate Finance Committee Chairman Max Baucus (D-MT) passed, to much fanfare, his health care reform bill. Much of the buzz around the bill is that the Congressional Budget Office (CBO) “scored” it as costing only $829 billion over 10 years. Democrats cheered.
(It goes to show you just how much ”change” the president has brought to Washington when you can preface $829 billion with the word “only” and no one laughs you out of town.)
But then it became clear that the only reason it came in under a trillion dollars is that the legislation didn’t include the “doc fix,” which costs some $240 billion or so. Read More...
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The Obama Administration has earned kudos for their vision of using of technology to be a primary part of the solution to policy challenges from improved healthcare to efficient energy usage.
And while considering the application of existing technology to current problems is ahead of typical political thinking, it is still fairly two dimensional. The true promise of an information technology-based health system or of a smart grid for greener energy is the ongoing innovation, the promise of better and better solutions.
The administration and Capitol Hill need to broaden their thinking beyond particular solutions and begin considering ways to foster and empower a solution economy.
What makes up the solution economy?—a society that allows the freedom to innovate and experiment with ideas.
That requires an environment that encourages, or certainly allows, risk by providing reward. Read More...
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Eight months ago, when the Democrats and the administration rammed through the $787 billion stimulus package, the public was lectured that the massive spending bill was needed to “save or create” jobs and stop the rise in unemployment.
Well, unemployment has continued to rise—nearly 2.9 million jobs have been lost since the stimulus bill passed—flummoxing the administration. And unemployment is likely to cross the 10 percent mark soon.
Republicans tried to work with the administration in shaping the legislation. Republican leaders met with the president with a list of tax cuts they thought would leave more money in people’s pockets, encourage investment and economic growth, and would ultimately be more effective in stimulating the economy than a massive spending spree.
President Obama pooh-poohed their proposals. The president pointed out that Democrats won the election and so they got to decide. Read More...
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Here’s another casualty of the economic downturn: Social Security.
The Social Security program operates on a pay-as-you-go basis. Money coming in from workers is neither saved nor invested, but rather pays benefits today for current retirees.
Government officials had predicted that Social Security would take in more than it paid out until 2016, whereupon it would start drawing down surpluses from the Social Security trust fund.
But the severe recession has hurt government revenues, which means the future is here. The Congressional Budget Office now says that Social Security is already short: $10 billion this fiscal year and $9 billion next year.
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It would be hard to imagine an industry today that is more “dynamic” than the wireless industry. In a relatively short time a “cell phone” has become a necessity to virtually everyone, and one of the areas of most rapid technological innovation is in wireless handsets. Every few months one company or another introduces a new, feature-rich handset, which consumers eagerly gobble up.
At the same time, service providers compete fiercely for customers, continually upgrading their networks to provide better and faster service and even
financing consumers’ purchase of sophisticated handsets.
It would seem that this is at least one industry that has succeeded in pleasing consumers, delivering innovation, creating high-paying jobs, and funneling tax revenue to virtually every level of government. You’d think government would be pleased, yet every level of government seems to have the wireless industry in its crosshairs.
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Advocates of the national health care overhaul scrambling to raise the taxes to pay for it have floated the idea of imposing federal excise taxes on soda, fruit juice, and similar drinks. The Center for Science in the Public Interest, a left-leaning advocacy group, wants to include energy drinks, sports drinks (e.g., Gatorade) and ready-to-drink teas as well.
But the tax would cover only a small fraction of any national health care bill. The Congressional Budget Office (CBO) estimates that imposing a tax of 3 cents per 12-ounce serving would raise $6 billion a year. One proposal would increase the price of a 20-ounce soft drink by 15 percent to 20 percent.
Such a tax would be regressive, hitting the poor harder than the rich. The tax may not seem like much to Washington policymakers, but it adds up, especially for hard-pressed families in these difficult economic times.
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Like all of the Democrats trying to push through health care reform with no way of paying for it, Senate Finance Chairman Max Baucus (D-MT) has been on a quest to find new revenue for his plan.
He was considering imposing a tax on employer health insurance contributions above a certain level, say $20,000 for a family. That means that a worker with dependant coverage whose employer spends $25,000 a year on the policy would have to pay normal income taxes on an additional $5,000. The first $20,000 would still be tax free.
Besides raising revenue to pay for the legislation, there was an expectation that employees would opt for higher deductibles in order to stay under the limit and avoid the additional tax, which would eventually help bend the health care cost curve by lowering utilization.
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President George W. Bush had been in office a little more than a year when, on March 5, 2002, he decided to impose temporary tariffs on steel. It was clearly a calculated political move to try and curry favor with steel unions in the rustbelt swing states of Pennsylvania and West Virginia.
As if backtracking on its strong commitment to free trade weren’t enough, the administration pushed economist and presidential advisor Larry Lindsey into writing an op-ed for The Wall Street Journal defending the tariffs.
Conservatives around the country groaned for their friend Lindsey and pitied the fact that he was compelled to defend what he knew was bad policy.
Now President Barack Obama has imposed a 35 percent tariff on Chinese-made tires, and some are lamenting this as a reversal of his stated support for free trade. Read More...
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Can Health Insurers Compete with a Government Plan? Dr. Merrill Matthews of the Institute for Policy Innovation says when the government’s accounting is so dishonest, who knows.
The real problem with a government-run health insurance option is the government would hide the costs, making it look more affordable than it actually is. We know, because that’s what Medicare does.
Medicare’s official administrative costs only count what it takes to process claims checks. Rent, salaries, management, even the numerous fraud investigations all appear in other parts of the federal budget.
Now some Democrats want to create a health insurance co-op with $6 billion of taxpayer seed money. If you were a private insurance company, you’d have to borrow the money and pay interest or sell stock.
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President Obama wants to make some changes to the current 401(k) regulations in an effort to make it easier for people to sign up for the plans and thereby save more for the future.
The fact is that many Americans are reluctant to invest (or save for that matter), and most invest very conservatively when they do.
The president wants 401(k)s and especially IRAs to become a voluntary opt-out program, where employees are automatically enrolled unless they choose otherwise. He also wants to make it easier for individuals to put money for unused vacation or sick-leave into their retirement plan, and to receive tax refunds in U.S. Savings Bonds.
These are largely very good ideas—in fact, ideas that were first proposed by conservative-leaning think tanks. But the president should have gone further to create parity among the various individual retirement options.
Workers are currently allowed to invest up to $16,500 this year in the Read More...
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President Obama says that his health care overhaul plan will reduce costs. But the career estimators at the Congressional Budget Office (CBO) say it will actually increase federal spending by close to $1 trillion. President Obama keeps saying that his health plan will reduce the deficit. But CBO says it will increase the deficit by hundreds of billions.
So now liberals are arguing that the CBO actually has a history of overestimating health costs and underestimating savings. A New York Times op-ed, echoed by the Commonwealth Fund, insists that CBO underestimated the cost savings from reduced reimbursements in the past for hospitals, skilled nursing facilities, and home health services, and from the market competition included in the 2003 Medicare prescription drug plan.
But the government’s official estimators actually have a long history of grossly underestimating the costs of new health programs.
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As most states have watched their coffers dwindle over the last couple years, state revenue authorities have become increasingly creative in finding ways to drain more money from the citizens via fees and taxes.
The healthy way to generate more revenue is to grow the tax base by attracting more businesses or residents to the state.
And attracting more businesses involves having appropriate infrastructure, skilled workers and competitive educational systems, but most of all maintaining a minimal tax and regulatory burden. For some reason, this seems beyond the reach of many state governments these days. Instead, it’s easier to go on a “tax grab,” looking around for easy new sources of cash.
But some sources of new revenue have the downside of also leading to new costs. Read More...
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The late Senator Daniel Patrick Moynihan coined the phrase “defining deviancy down” in a 1993 article for the academic journal The American Scholar. His point was that as deviant behavior expands the public begins to redefine and even accepting it by lowering the standard for acceptable behavior.
That’s pretty much were we are with the term “paid for.”
What most people mean when they say something is paid for is that they own it free and clear. Any money borrowed to buy the item has been paid back. No one who had just borrowed thousands of dollars against future earnings to buy a car or home would say it was “paid for.” Yet that is exactly how President Obama is redefining the term.
Last week he cited four things he had to have in the health care reform bill. One of those requirements was that it had to be “paid for.”
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So Congress ponied up an extra $2 billion last week for the Cash for Clunkers program.
Our elected solons were stunned at how popular the program turned out to be. And they’re apparently eager to placate an increasingly restive public, angered by government overspending, by … spending even more.
There’s a lesson in the Cash for Clunkers program that Congress should learn—but probably won’t—with regard to its massive health care reform effort: When the government hands out free money for something the public wants, it will nearly always underestimate the demand for that money.
Yes, those who have stalked Washington for many years can cite some programs where people didn’t take advantage of free money, but that’s usually because the restrictions and bureaucracy made it difficult to navigate the program. The Cash for Clunkers program wasn’t just free money, it was easy money.
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Is There an Easy Way to Reduce Greenhouse Gases? The Institute for Policy Innovation’s Dr. Merrill Matthews says it’s time for scientists to ask, where’s the beef?
The UN says that cows are responsible for 18 percent of the world’s greenhouse gases. That’s more than trains, planes and cars, combined.
See, a cow’s digestive system produces a lot of methane gas, which causes them to burp. And that methane goes into the atmosphere.
So scientists are working to change cow diets to reduce those gases—and, hopefully, global warming.
If they do, maybe we won’t need those little electric cars the government wants GM to make—but which consumers may not want to buy.
And we certainly won’t need the Democrats’ new “cap and trade” tax that will raise energy costs for every American household.
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Burping Bessie |
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Democrats just can’t seem to get a break on their budget numbers. It seems like every time they try to convince the public that they’re being good stewards of the country’s fiscal future, the Congressional Budget Office (CBO) shoots them down.
First there was the Democratic claim that the various House and Senate health care reform bills would “bend the curve” on health care spending. Not so, said CBO Director Douglas Elmendorf. Health care spending would go up—significantly.
Then, in an effort to get American Medical Association (AMA) buy in for their legislation, Democrats proposed fixing the “sustainable growth rate” (SGR) provision in Medicare that forces doctors’ reimbursement rates down if Medicare spending grows too fast.
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What Is a Monument to Me? The Institute for Policy Innovation’s Dr. Merrill Matthews says it’s a member of Congress who’s forgotten who he serves....
When members of Congress put pork-barrel funding requests in the federal budget, it’s called an “earmark.”
But when that earmark is to build or support some building or project named after that member, it can be referred to as a “Monument to Me.”
Rep. David Obey, a Wisconsin Democrat who controls the appropriations process in the House, has stopped the Monuments to Me—before Republicans ban them out right.
It looks a little too self-indulgent, he thinks, for congressmen to spend millions of taxpayers’ dollars putting their names on buildings and parks and airports. That honor should be reserved for members who have died or left office.
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When Is Congress Like the Film Industry? Dr. Merrill Matthews of the Institute for Policy Innovation says when it releases lousy products and hopes the public won’t notice.
When members of Congress are running for re-election, they want to pass popular legislation shortly before the election so they can campaign on it.
That’s what happened in August of 1996. Both Republicans and Democrats passed a health care reform bill known as HIPAA right before the presidential conventions.
But when congressmen think new legislation will anger voters, they try to pass it as far away from the next election as possible.
That’s why President Obama wants to pass this year both health care reform and the cap and trade energy bill that creates huge new taxes with little effect on global warming.
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Well, who couldn’t have seen this one coming?
Presidential candidate Barack Obama campaigned on ending Washington’s culture of earmarks, where members of Congress specify how much and for which projects federal money will be spent in their respective states.
But President Obama has embraced earmarks, signing the $787 billion stimulus bill and the federal budget, both of which were chock full of earmarks.
Now comes the health care bill and, guess what, it appears the House and Senate versions will both include earmarks.
The Boston Globe reports, “Tucked within [the bill] is a provision that could provide billions of dollars for walking paths, streetlights, jungle gyms and even farmers’ markets.”
There has been a growing support in Washington for more preventive care and wellness programs. Read More...
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Congress has passed a massive “cap and trade” energy bill designed to raise the price of energy in the U.S. in order to reduce the use of fossil fuels by 17 percent by 2020 and by 83 percent by 2050.
President Barack Obama has called the bill a “jobs bill.” But sentencing the U.S. economy to high-cost energy is not a particularly good strategy for creating jobs. Charles River Associates, a Harvard-based economics consulting firm, estimates a net loss of about 2.5 million jobs each year.
During the campaign, candidate Obama also pledged that he would never raise taxes in any form on Americans making less than $250,000 per year. But his cap and trade tax is estimated to cost American families almost $2,000 a year when it becomes effective—due to higher prices for electricity, oil, gasoline, natural gas, home heating oil, coal, food and transportation costs—to almost $7,000 a year for a family of four by 2035.
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President Obama has been taking some political licks for backtracking on his campaign opposition to taxing employee health benefits.
Good. He so demagogued a somewhat similar proposal by his opponent, Sen. John McCain, that the president should be taking some heat for—at least potentially—flip-flopping.
That said, capping the employee health insurance tax exclusion is one of those public policy issues that deserves a serious debate—and it’s not getting it.
The money employers spend on employee health coverage is excluded from employee income. Not taxing that employer-provided income “costs” the federal government nearly $150 billion a year, according to the Joint Tax Committee (for 2007). And those with the richest insurance packages get the biggest tax subsidy.
Now, the tax code is often used to encourage certain behavior (whether it should is a question for another day). Read More...
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Are You Ready for a VAT Tax? The Institute for Policy Innovation’s Dr. Merrill Matthews says Congress is looking for more money.
The Washington Post reports that support is growing for a Value Added Tax, or VAT tax, to pay for Congress’s massive spending projects, like health care reform.
A VAT tax is similar to a sales tax, only the tax is charged at each level of production. So a car manufacturer would pay a tax on all of the raw materials and parts it buys to make cars. And then pass those multiple layers of taxes on to consumers in the form of higher car prices.
Politicians love a VAT tax because voters can’t tell how much they’re being taxed, or when the tax is increased. They only see much higher prices.
That let’s politicians criticize those “greedy” businesses for charging too much, while it’s the government that’s raking in the extra bucks. Read More...
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UPDATE: I found the archived video of the entire hearing. Link is here. (Real Audio) Opposition testimony starts at 1:22:22; my testimony is at 1:25:34
It was a warm and humid morning in Baton Rouge on Wednesday. If it weren't for an air conditioned shuttle van running the 6 blocks between the Capitol Hilton and the state capitol, Louisiana might have become the first state to defy the Internet Tax Freedom Act and implement a discriminatory tax on Internet access . . .
No, I don't think the narrative style is working for this blog entry. I'll go back to a less-dramatic style.
I had the privilege of testifying this morning before the Commerce Committee of the Louisiana Senate on a bill that would have placed a "fee" on Internet access for Louisiana citizens in order to provide additional funding for the Attorney General' Read More...
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Well, whatever else can be said about health care reform, it now seems clear it won’t be cheap.
Rep. Charlie Rangel (D-NY), who heads the House Ways and Means Committee, says he expects to raise $1 trillion for health care reform (over 10 years) by cutting Medicare and Medicaid spending by $400 billion (ouch!) and raising taxes by $600 billion (double ouch!!)
President Obama is putting a little detail in his proposed Medicare cuts.
- He wants to chop $106 billion from the disproportionate share hospital program. Actually, cutting the “DSH” program is reasonable. It’s federal money that reimburses certain hospitals that treat a “disproportionate” number of uninsured. If nearly everyone has coverage—and that’s a big IF—then reducing DSH payments makes sense.
- The president also wants to cut $110 billion by making “productivity adjustments” to Medicare providers. Read More...
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When a politician argues that something is necessary to protect the children, you can almost always guarantee it’s time to hold onto your freedoms, your wallet or both. And so it goes in Louisiana.
Attorney General Buddy Caldwell is pushing for a first-of-its-kind law, now headed to the Senate, to raise taxes—though the AG calls it a fee—by at least $2.4 million a year on Louisiana taxpayers who simply desire being on the Information Superhighway. His reason? To “finance” a division of his office for investigating more sex crimes against children online.
The irony here is stunning. While the federal government is spending billions of stimulus dollars, including Louisiana citizens’ hard-earned money, to promote Internet usage, the AG is fighting the spirit, if not word, of the Internet Tax Freedom Act, designed to promote Internet usage and facilitate wider-spread adoption of broadband.
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How Does Government Handle an Economic Downturn? Dr. Merrill Matthews of the Institute for Policy Innovation says by scaring people into paying higher taxes.
When private sector companies hit economic hard times, they try to make cuts in ways that least affect the customer.
Not so when governments face a downturn. They start with the most visible and unpopular cuts.
Consider California. The state is facing a budget crunch, so Governor Schwarzenegger proposes:
- Cutting $3.6 billion from the public education system;
- Cutting 10 percent of the state firefighting budget; and
- Releasing 40,000 low-risk prison inmates.
California has a huge budget, yet the only place to cut is putting criminals on the streets? Such proposals maximize the shock value so the public will accept higher taxes.
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Both Democrats and Republicans are coming together to support increased transparency in how funds are being distributed through the Troubled Asset Relief Program (TARP).
When TARP was passed under the Bush administration, it gave the Treasury Department, then run by Treasury Secretary Hank Paulson, the power to distribute the funds as Treasury saw fit.
Lots of people, IPI included, were concerned at the time that there was insufficient transparency and accountability in the legislation.
Under our system of checks and balances, it is Congress’ rightful responsibility to control expenditures of taxpayer dollars, and to exercise oversight over how and where funds are spent. Although Congress delegated to the administration of TARP funds to the executive branch, Congress should not give the Treasury Department a free pass.
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The Texas Legislature, which quit and went home last week, might have done better. It also might have done a whole lot worse.
The budget got balanced—without new taxes. That’s more than a lot of states can claim. And a whole lot more than Washington can claim!
Trying to assist small business, lawmakers increased the exemption for the gross margins tax, making it $1 million for the next two years, then $600,000 permanently.
The “rainy day” fund didn’t get raided. Expect it to have nearly $9 billion in spendable funds when legislators next gather in 2011.
A proposal for local option taxes to pay for roads and rail died the death it deserved. More than $1 billion in state transportation revenues right now get sidetracked to non-transportation uses. That needs to stop! Cities and counties should meanwhile remember they’re entitled to deploy local sales tax money for local transportation projects. Read More...
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Is Your Social Security Check Safe? Dr. Merrill Matthews of the Institute for Policy Innovation says yes, but for how long?
When some of us raised concerns about Social Security’s financial soundness, liberals always accused us of being fear mongers.
Well, the fear is here. Steve Moore of the Wall Street Journal reports that President Obama’s budget says this year Social Security will pay out $8 billion more than it’s taking in.
It wasn’t supposed to hit this point for 10 years, but the economic downturn has hurt government revenues.
Defenders claim there’s still a Social Security trust fund to draw from. True, but the government has borrowed all of that money and spent it.
So Social Security is broke in fact, if not on paper. Monthly checks will no doubt still be paid, but it’s borrowed money—and borrowed time. Read More...
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Now we’re beginning to see how President Obama plans to “create or save 3 million jobs.” He’s just going to make government employees out of them.
Trying to get an accurate tally of all of the new government hires isn’t easy; in many cases they are simply part of the beefed-up funding for various departments and agencies.
The Partnership for Public Service, a nonprofit group that promotes government employment, thinks the administration needs to add 200,000 new government jobs. Our bet is that the president’s well on his way to reach that goal—and more. The Wall Street Journal reports that:
• The president’s budget creates 33,600 new defense department jobs by 2015, while it envisions cutting many of its current contractors.
• The Department of labor gets 1,000 new jobs.
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Do You Smell a Foul Odor? The Institute for Policy Innovation’s Dr. Merrill Matthews says that smell may be pork-barrel spending.
In these hard economic times, at least the government is being careful with your tax dollars, right?
Well, Citizens Against Government Waste has released its 19th annual “Pig Book,” which identifies all of the pork-barrel spending projects in the federal budget, some 10,000 of them.
- Like spending $1.8 million for swine odor and manure management research in Iowa.
- And $4.5 million for wood utilization research.
While there’s about 1,500 fewer pork-barrel projects in this year’s budget, spending on them is up by 14 percent.
Yes, there are projects the federal government can and should fund.
But before we spend your tax dollars studying swine odor in Iowa, how about we figure out how to stop the stink from Washington Read More...
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President Obama is proposing a radical restructuring of how the federal government taxes money earned and held by U.S. companies overseas.
U.S. multinational companies often leave their earnings in the countries where they’re earned and taxed by those foreign governments as a means of limiting their tax exposure in the United States, which has the second highest corporate tax rate in the world.
Mr. Obama appears to think companies that leave their funds overseas are unpatriotic for not returning that money to the U.S. and doubling down their tax obligations by paying an exorbitant corporate tax on the repatriated funds, after already paying taxes in the country of origin.
While Obama is using rhetoric about attacking the “tax havens” and other countries that don’t want to play the administration’s game, what he’s really attacking are America’s most globally competitive companies.
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When Texas Governor Rick Perry alluded to secession during an April 15 Tea Party tax protest, the media were all over him like a liberal on a tax increase.
Of course, he was joking, as we in Texas occasionally do about the notion of separating from the union. But there are some less radical and far more reasonable ways of severing our ties with the feds. And Senator Kay Bailey Hutchison has one of them.
The senator has this weird notion that what a state pays into the tax system should closely resemble what it receives. Texas sends about $3 billion annually to Washington in motor fuel taxes. For every one of those dollars, Washington thoughtfully remits to Texas about 92 cents. Some deal: pay more, get less! (Though, we have to say “pay more, get more government” doesn’t sound all that appealing either.)
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It appears that Democrats in Congress have decided to use the budget reconciliation process—which allows the Senate to approve legislation with 51 votes rather than the 60 needed to quash a filibuster—in their effort to pass sweeping health care reform legislation.
For two months some Democratic leaders in the Senate, especially Sens. Kent Conrad (D-ND) and Max Baucus (D-MT) have claimed that health care reform legislation is too costly and important to force it through the reconciliation process. Both senators are from relatively conservative states, and Conrad stands for re-election next year, so they don’t want to rile their constituents.
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Does Congress Deserve a Bonus? Dr. Merrill Matthews of the Institute for Policy Innovation says not if the criterion is successfully managing an organization.
Remember how angry Congress and the country got when we learned that insurer AIG used $165 million of taxpayer money to pay bonuses?
The backlash was from a sense that the company had been horribly managed, and the rest of us would have to pay for it. Bad management doesn’t deserve a bonus.
Well, it seems that members of Congress have also handed out millions of dollars in bonuses—to their staffs. Up to $14,000 a person.
Now, many Hill staff are hard workers and may deserve a bonus.
But if bankrupting an organization and leaving taxpayers with billions of dollars in debt is the hallmark of poor management, that should be condemned, not rewarded, And that sounds almost like a perfect description of … Congress. Read More...
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We have been warning that the budget deficit being pushed through by this administration and Democratic-led Congress is unfathomable. But words don’t quite do it justice.
Thankfully, the nonpartisan Congressional Budget Office, which is charged with estimating the economic impact of all budget-related legislation, has given us a picture of future deficits under the Obama administration.
We take the point that the President inherited some of the financial challenges. But it’s how he’s addressing those challenges that’s the problem.
When President Ronald Reagan was first inaugurated in January 1981, he too was handed a weakened economy—weakened by four years of Carter policies.
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Allow us to make some informed observations about the “Tea Party protests” that have apparently escaped the mainstream media and those currently in political power in our nation’s capital.
(“Informed because IPI Resident Fellow Dr. Merrill Matthews spoke at the Dallas Tea Party event, and IPI president Tom Giovanetti spoke at the Denton County event.)
The Obama administration has dismissed the tea parties with feigned confusion. “We don’t understand what all these people are worked up about? After all, we gave 95% of them a tax cut, didn’t we?”
But people aren’t that stupid, and the tea party protesters aren’t just worked up about taxes. Read More...
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“When in the course of human events it becomes necessary for one people to dissolve the political bands that have connected them with another … a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.”
That’s how our Founding Fathers, with special thanks to Thomas Jefferson, began the Declaration of Independence. You can feel the sense of urgency in their voices. It was time for them to make plain and make public why they could no longer abide by the policies and practices of their rulers.
Tomorrow, April 15, Americans around the country, feeling something of the same urgency, will turnout at town halls and other spots around the country. And they will declare their grievances: that the government is getting too big, too intrusive and spending too much.
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At the annual Cable Show last week in Washington DC, when Neil Cavuto asked News Corporation’s Rupert Murdoch what he thought about the plan to raise taxes in New York City, Murdoch casually replied that he might have to consider moving to Texas.
Mr. Murdoch, consider this an invitation: Come on down. The weather’s better and the taxes are low—and will remain that way if we have anything to say about it.
New York City residents and companies choose to subject themselves to the most onerous taxes in the nation. NYC has 14 separate business income and excise taxes, including a General Corporation tax, computed four different ways, depending on which yields the most revenue. A banking corporation tax can run 9 percent of “entire net income allocated to the city.” The local income tax rate ranges from 2.907 percent to 3.648 percent.
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Should Governors Refuse Part of the Stimulus Money? The Institute for Policy Innovation’s Dr. Merrill Matthews says four governors are … and it’s costing them.
The governors of Texas, South Carolina, Louisiana and Mississippi claim that part of the money from the stimulus package will force them to spend more in unemployment benefits in the future—after the bailout money’s long gone.
So they’re taking a principled stand and turning down part of the funds.
Steve Moore of The Wall Street Journal reports that their refusal has Democrats hopping mad. The Democratic National Committee is running ads in South Carolina criticizing Governor Mark Sanford for not taking “free” money.
Of course, the money isn’t free. Our children and grandchildren will be handed the bill.
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President Barack Obama and the U.S. Congress have gone on a spending and debt spree that the country cannot afford. As a result, a spontaneous grassroots movement is emerging from every corner of the nation with a message for Congress and the president: Stop spending us into an inevitable spiral of debt and higher taxes … now!
To that end, groups of Americans will be meeting in towns and cities across the nation on April 15 for “Tax Day Tea Parties” (think Boston Tea Party, not biscuits and fine English china). These “Ten Tax Facts” are our effort to make sure the American people are well- informed as they gather together to express their concern about the direction Washington is headed.
#1 .Under the Obama budget, the Congressional Budget Office (CBO) projects that the national debt will double over the next five years; and it will triple over the next 10 years to $17.3 trillion.
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So now the Democrat-controlled Congress is pumping money out of Washington in an effort to stem a catastrophe—and lots of bad press. And it turns out this Congress isn’t any better at it than the Republicans were.
When Hurricane Katrina hit New Orleans in 2005, the city’s levees broke and disaster flooded in. President George W. Bush was initially slow to respond.
But once the public outcry rose to a crescendo, the government began churning out so much money so quickly that the normal processes for ensuring the money was spent properly were ignored.
That led to numerous negative news stories about exorbitant spending and shady operators reaping huge profits, making the Bush administration look not only uncaring, but incompetent.
Well, now money is beginning to pour out of Washington to rescue us from the economic downturn.
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Why Is the Stock Market Going Down? The Institute for Policy Innovation says the market knows something the president doesn’t...
There are reasons why the stock market’s been tanking this year. It’s pricing in President Obama’s policies. For example, he wants to:
- Raise the income tax rate on higher-income workers from 35 to 39.6 percent;
- Lower their ability to write off charitable contributions;
- And raise the capital gains tax from 15 to 20 percent. That’s the tax people pay on investments like the stock market.
Higher-income people will have less to invest in the market, and will get to keep less when they do.
Those lower returns mean demand for stocks will fall—and so does their price.
While not everyone invests in the stock market, we all have an interest in it doing well. Read More...
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The New York Times reports that the Obama administration is open to the idea of taxing some employee health insurance benefits.
The Times continues by noting that such a tax might create some political difficulties for the president, since he ran campaign commercials criticizing his Republican opponent John McCain for proposing exactly the same thing.
Of course, there was one teeny, weenie little difference: McCain also proposed a $5,000 per-family refundable tax credit intended to offset the increase in taxable income. The Obama administration apparently would use the increased tax revenue to pay for its health care reform goal of providing universal coverage.
The current tax break for employer-provided coverage is unlimited; every penny the employer spends on coverage is excluded from an employee’s income.
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Here’s the answer to the earmark controversy still raging in Washington, D. C.: good old-fashioned sunshine.
“Earmarks” are those pesky little tags on federal spending. Texas Rep. Ron Paul likes to say that earmarks aren’t new spending. He’s right. When Congress passes a budget, it often includes money for states.
The question is who decides how to divvy up the spoils: members of Congress or state-level elected officials and bureaucrats. Members of Congress say it’s better to let them make those decisions.
Dallas Congresswoman Eddie Bernice Johnson claims, “I’ve never asked for anything that didn’t benefit my district.” Well, ma’am, how do we know? Should we take such affirmations on faith? Don’t believe so: not with Congress and the White House playing around with trillions of our dollars.
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Should We Fear Another Great Depression? Dr. Merrill Matthews of the Institute for Policy Innovation says the real threat comes from government policies...
Economic times are tough, but are things as bad as the Great Depression of the 1930s?
President Obama used the fear of another Great Depression to rally support for his economic stimulus package.
But economist Bradley Schiller, writing in the Wall Street Journal, disagrees.
- While unemployment is at 7.6 percent now, it peaked at 25 percent in 1932.
- The economy may decline about 2 percent this year, but from 1930 to ‘32 it declined between 8 and13 percent each year.
- Finally, auto production declined 25 percent last year, but 90 percent in 1932.
It was government policies that turned the 1929 recession into a decade-long depression. The real fear is that government policies will do it again. Read More...
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So Tuesday night I'm watching a bit of Kudlow, and Larry is talking with a screen full of people about some of Treasury Secretary Tim Geithner's recent moves and statements. (this is the video)
Kudlow says something like this to Don Luskin (who is a fellow supply-sider but with whom I've had a minor run-in in the past): "I don't understand how this guy [Geithner] thinks. He's a bright guy. He's not stupid, right?"
To which Don Luskin replies "I don't think we can rule out that he's [Geithner] stupid."
Funny line, but tragic if true.
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The election of Barack Obama has sometimes been characterized as a return of John F. Kennedy’s “Camelot.” Both Obama and JFK were young, attractive, articulate senators, with accomplished wives with young children.
Both Kennedy and Obama came to office amidst economic concerns. But when Kennedy became President, higher-income people paid significantly higher rates on their taxes than middle-income workers. Sound familiar? That’s exactly what President Obama wants.
But not President Kennedy. He thought tax rates on high-income earners were too high and stifled investment. And Kennedy’s push for lower tax rates resulted in a burst of economic growth and economic recovery.
Kennedy began a trend moving tax rates in the right direction—down. President Obama is taking tax rates the other direction.
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Nope, no such thing as a free lunch. No such thing as free federal money, either—as Texas and other states are learning.
Under the just-passed $787 billion stimulus law, Texas is due nearly $17 billion—$555 million of it for increased benefits to the unemployed. Hold on, though. It appears that to get the latter sum, the state has to change some eligibility requirements in current law, making benefits available to thousands of temporary and part-time workers. Permanently. Forever.
Of course, when the stimulus money runs out in about two years, the Legislature could, technically, say to these newly covered workers: That’s it; see you around.
We all have a big picture of that happening, don’t we?
No wonder Gov. Rick Perry and several other governors—from Mississippi, Georgia, Louisiana, Idaho, South Carolina and Alaska—grumbled last week that they might steer clear of some of the stimulus money. Read More...
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In Sunday’s edition of The Washington Times, IPI senior fellow George Pieler writes:
“President Barack Obama says now that he has inflated the federal budget deficit beyond the level of human comprehension, he's ready to start cutting it, and he won't let anyone (Republican governors, especially) stand in his way.
But the president has no hope of making a dent on his massive deficits unless, somehow, the U.S. economy gets back on a reasonable growth path.
Reasonable people can disagree about whether the Obama-Pelosi-Reid stimulus package will help revive the economy or, as the Congressional Budget Office warns, drag down long-term growth enough to wipe out any short-term benefit.
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In a desperate scramble to balance their state budgets, state legislators in many states have seized upon the idea of “increasing revenue” (read: raising taxes) rather than taking actions to live within their means. Whether it’s:
- Expanding communications taxes in California;
- Arguing in New York that a store does not have to be in the state at all to levy taxes; or,
- Florida urging the passage of federal legislation to “enable states to collect Internet sales taxes” before the state does its assigned work.
The goal of all is to get more money to spend—and they want it now.
Let’s take Florida. Years ago the U.S. Supreme Court said that states are able to force merchants to collect and remit sales taxes for goods sold to state residents (as they do today for purchases made in the state). Read More...
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Can’t Figure Out Your Taxes? Dr. Merrill Matthews of the Institute for Policy Innovation says you’re apparently not alone...
Rep. Charlie Rangel, who heads Congress’ tax-writing committee, was recently exposed for not paying $11,000 in taxes on rental income from his Caribbean resort home.
The new Treasury secretary, Timothy Geithner, just paid the payroll taxes on past income that he had ignored for years.
And the former leader of Senate Democrats, Tom Daschle, recently forked over $140,000 in taxes and interest for using a donated car he never claimed as income.
All of these men claim it’s just an innocent oversight or mistake. But even if that’s true, doesn’t it mean it’s time to simplify our tax system? If the people who sit over the rest of us can’t get their taxes right, how can we expect average Americans to? Read More...
Paying Taxes |
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We thought we should highlight a recent USA Today story because, well, the public needs to know … and the politicians are trying to ignore it.
Millions of Americans are already concerned about the future of Social Security and Medicare—as well they should. According to the Social Security and Medicare Trustees Reports, Social Security’s unfunded liabilities was an estimated $15.8 trillion in 2008, and $86 trillion for Medicare. That’s a total of $101.7 trillion (in today’s dollars) for both programs.
Yes, that’s “trillion” with a “T.”
Now USA Today tells us that states have retiree health care obligations totaling about $445 billion. Not all states, however. Read More...
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It is now officially President Barack Obama’s economy.
In his first press conference, the president made it clear that the economic slowdown wasn’t his doing. He inherited it from President Bush. Fair enough.
But Mr. Obama’s $787 billion economic stimulus bill—which received only three Republican votes, all in the Senate—is his doing.
He set up markers to determine whether he would support the bill. For example, it had to save or create 3 million new jobs. And it had to provide an immediate boost to the economy.
And while some in the media have noted that most members of Congress didn’t know what was actually in the bill, the more important issue is that no one knows whether the stimulus package will help, or even hurt, the economy.
Read More...
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Are CEOs Wasting Their Bailout Money? Dr. Merrill Matthews of the Institute for Policy Innovation says some are, but they’re amateurs when compared to Congress...
Senator Claire McCaskill of Missouri has introduced legislation that would limit CEO pay to $400,000 if that company is getting federal bailout money.
Referring to some of the huge bonuses being paid by bailed-out CEOs, the senator said, “I don’t get it. These people are idiots.”
But CEOs aren’t the only ones wasting taxpayer money. The economic stimulus package is filled with expenditures that do nothing for the economy, like:
$50 million for the National Endowment for the Arts, and
$2.5 billion for the National Science Foundation.
Maybe Senator McCaskill should instead introduce legislation that limits congressional pay every time Congress wastes taxpayers’ money. Read More...
Bailout Money |
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In 2001 the federal estate tax, more accurately dubbed the “death tax,” assessed a levy of 55 percent on savings left at death over $1 million.
The 2001 Bush tax-cuts phased out this tax, reducing it to zero in 2010. Under the scheduled phase out, the assessment this year declines to 45 percent on savings over $3.5 million for individuals, $7 million for married couples.
Now President Barack Obama and congressional Democrats want to freeze the tax at this year’s levels, and eliminate the complete phase-out scheduled for next year.
But every dollar left behind at death has already been subject to federal taxes at least once, under the income tax, and/or the corporate tax, and/or the capital gains tax, and more. It is unfair, harsh and discriminatory for the government to take another big bite out of those funds at death.
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In his 1981 inaugural speech Ronald Reagan famously said “In the present crisis, government is not the solution to our problem; government is the problem.”
During the debate over how to get the economy going again, we are witnessing a case study in Reagan’s observation.
Consider that government created the problem in the first place through too loose money (Federal Reserve), and purposely distorting the mortgage markets for social engineering purposes (Fannie Mae, Community Reinvestment Act).
Now to fix their mess, our political leaders propose to borrow enormous sums of money that future generations will have to repay. But is it possible that in this crisis, government is again the problem rather than the solution?
Read More...
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In a brand new op/ed featured on Forbes.com, IPI director of entitlement and budget policy Peter Ferrara explains why President Obama's $825 billion-plus stimulus plan won’t bring economic recovery to the nation. Instead, Ferrara prescribes a comprehensive plan of income and corporate tax cuts to revive the U.S.
Ferrara writes:
“…For the U.S. economy to remain internationally competitive, the federal corporate rate should be slashed to 20%. The heavily burdensome federal corporate capital gains rate should also be cut from 35% to the current individual rate of 15%, and that individual rate and the dividends tax rate of 15% should be made permanent…
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Defenders of the economic stimulus package have shifted from being disingenuous to just plain crazy talk.
President Barack Obama, along with others, claims the stimulus package will boost total gross domestic product (GDP) by $1.50 for every $1.00 the government spends. The justification for the claim is what economists call the “multiplier effect.”
Assume Jones invests $10 million in a new factory. He hires contractors to get his new business ready, and he hires new employees. Those individuals will spend that new income on things they need, and they may put some of it in a bank, which can then loan part of it to others.
These transactions tend to expand the original $10 million, although no one is sure by exactly how much. Most economists think it’s in the range of 1.5 or 2.0 times the original amount. Thus, a $10 million initial investment could ultimately add $15 million to $20 million to the economy.
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These days it seems that almost every discussion includes the word “stimulus.”
But about all most of the proposals coming out of Washington would stimulate is higher taxes in the future. They aren’t what most economists consider “economic stimulus,” much less have the ability to produce any jobs and grow the economy.
There is, however, at least one available option with a track record of success that so far has been excluded from consideration: allowing companies to bring capital from abroad back to the U.S.
Many U.S. companies, especially those in the pharmaceutical or technology industries, have significant financial assets overseas. Why? Because in our global marketplace companies need to grow and compete in those markets with the greatest opportunities … wherever they are located. Many companies earn more than 50 percent of their revenue, and sometimes as high as 80 percent, outside the U.S.
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Out of the $825 billion House version of the proposed economic stimulus package, $157 billion is tagged for health care. But roughly 75 percent of that spending really does nothing for the uninsured. Rather, it goes to projects like:
- $20 billion to improve health information technology (HIT);
- $1 billion for the Agency for Healthcare Research and Quality to create a comparative effectiveness research program that’s supposed to compare different medical devices, prescription drugs and specified medical procedures to see which are the most effective, including the issue of cost;
- $2 billion for renovations at NIH facilities and new agency research grants and $1.5 billion for renovations at university laboratories that conduct research sponsored by the agency;
There is $30 billion to help workers losing their jobs pay their COBRA premiums, but is that a good thing?
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The cost of Obama’s stimulus package is now approaching $1 trillion. The entire budget adopted for fiscal 2008 was $3 trillion, so Obama is proposing a massive increase in Federal spending of one-third in just his first two months in office! In a couple of weeks, Obama’s proposed budget for the next fiscal year will be released. I expect it to show a budget deficit of about $1.5 trillion, which is half as large as the entire federal budget for 2008!
This should have been expected from electing the most liberal member of the U.S. Senate as President, a man with a very left wing intellectual history. But during the campaign, many people bought off on the Obama spin that those old labels don’t matter any more. These people have now been exposed as suckers.
But even after Obama was elected, many commentators soon started saying he was chartering a moderate course. The numbers cited above show he is no moderate.
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In a brand new op/ed featured today in the Fort Worth Star-Telegram, IPI president Tom Giovanetti tells taxpayers there’s still time to fight against the misnomered “economic recovery” plan.
Giovanetti writes:
“In the last six months the productive, taxpaying sector of the U.S. economy has been bullied and intimidated by its government as never before. Government mistakes, ranging from bad decisions about the money supply and lack of oversight of Fannie Mae and Freddie Mac to purposely distorting the housing and credit markets for political purposes, were responsible for the economic crisis.
But has anyone in the federal government yet apologized or accepted at least fractional responsibility for the disaster? Not that I’m aware of. Read More...
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Have You Gotten Your Farm Subsidy Yet? The Institute for Policy Innovation’s Dr. Merrill Matthews says just get in line … behind the Saudis.
The great thing about farm subsidies is they help so many people, like millionaires in Saudi Arabia, Hong Kong and the United Kingdom.
The Associated Press reports that a recent government study found that between 2003 and 2006, some 2,700 millionaires got farm-subsidy money, and some of them were Saudis.
Even though they don’t do a lot of farming in the sands of Saudi Arabia, U.S. taxpayers are apparently helping them out.
Back in the U.S., people are eligible for a farm subsidy if their average adjusted gross income doesn’t exceed $2.5 million.
So if you have been unsuccessful in getting a bailout from the federal government, you might try for a farm subsidy. If it’s good enough for a desert sheik, it’s good enough for us. Read More...
Farm Subsidy |
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The new Congress has a housewarming present ready for President Obama—a whopping $825 billion spending package that reflects the majority’s spending priorities and also helps the new president fulfill some of his campaign promises.
At any other time and under any other administration, this would be called the largest pork-barrel spending bill ever to emerge from Congress. But in some sort of Orwellian “newspeak,” the spending package is being referred to as a “stimulus bill.”
Most economists believe there are certain actions the government can take to stimulate the economy in the short term. But this bill includes few of them, instead focusing on enormous increases in spending on education, experimental energy programs, mass transit, airports, lakes and parks, and a number of provisions that would probably embarrass even Keynes.
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With anticipated state revenues falling, more than a few fans of bigger Texas government are whispering about the need for a state income tax.
The Center on Budget and Policy Priorities, a liberal policy study group with tentacles in Texas and other states, says, “Texas needs to address its antiquated tax system.” The center suggests in another essay considering “new sources of revenue as part of a balanced approach to our budget.”
Expect more of the same if voters come to embrace Keynesian-Obamanomics responses to the economic crisis: that is to say, spend, spend, spend.
Odd. Texas, despite a recent jump in joblessness, isn’t having a “crisis.” The state government’s budget isn’t in the red, unlike the budgets of income-tax-levying states like New York ($15.4 billion) and California ($40 billion). Indeed, it’s been in the black for a while.
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Why Is Congress so Upset with Bernie Madoff? Dr. Merrill Matthews of the Institute for Policy Innovation says Congress has its own scam going...
Congress is upset with Wall Street investor Bernard Madoff for scamming thousands of trusting investors out of perhaps $50 billion.
But Congress has been doing the same thing for 70 years. It’s called Social Security.
Ponzi schemes like Madoff’s take money from current investors and hand it out to others. There are no real assets because the money is never invested.
That’s pretty much how Social Security works. The government takes current workers’ 12.4 percent payroll tax and immediately hands it over to current retirees. But Madoff’s $50 billion scam is chump change compared to the $2.2 trillion Social Security is supposed to have, but doesn’t.
Of course, most of those who trusted Madoff will lose their money. Read More...
Madoff |
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The media reports that President-elect Barack Obama plans to propose a whopping $310 billion in tax cuts as part of his overall $775 billion stimulus package. But the “tax cuts” Obama is considering are not going to stimulate anything, much like the rest of his stimulus package.
Tax cuts stimulate the economy when they involve reductions in tax rates. The reduction in rates encourages savings, investment, business creation and expansion, job creation, entrepreneurship, and work by allowing people to keep a greater percentage of the reward produced by these activities.
These types of cuts improve the economy not just by the dollar amount of the tax cut. When they occur at the margin, the improved incentives affect every economic decision and every dollar in the entire economy. Read More...
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IPI’s Peter Ferrara will appear as a guest today on “The Tara Servatius Show,” heard on Charlotte, NC’s WBT 1110 AM.
Peter will join Tara live at 4:00 pm EST to discuss President-elect Obama’s stimulus package and tax cut plan.
To listen live, visit WBT online. Read More...
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IPI director of entitlement and budget policy Peter Ferrara will be featured on talk radio today across the country discussing President-elect Obama’s tax cut and economic stimulus proposals.
4:05 pm ET: “Let’s Talk Frank” with hosts Lee and Terry Frank.
5:09 pm ET: “The Vicki McKenna Show” with host Vicki McKenna.
6:20 pm ET: “The Lars Larson National Show” with host Lars Larson. Click here to to find a station near you.
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In a brand new piece appearing today in American Spectator, IPI director of entitlement and budget policy Peter Ferrara says Obama’s $310 billion tax cut plan is a mere “tax cut mirage,” and the key to real economic stimulus is to cut tax rates.
Ferrara writes:
"Obama Eyes $310 Billion in Tax Cuts" the headline blares. The Obama team comes to town to start the new year, and the run-up to his inauguration, with this announcement.
How sly.
This Obama tax cut package is to be part of the broader stimulus package now estimated to cost $775 billion. The problem is that there are tax cuts and there are tax cuts, and there are other things Obama calls tax cuts that are not even tax cuts. Read More...
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How many times this past year did you hear some expert make some variation of the following statement: “We’ll never see gas prices below $X again.”
And yet, over the Christmas holidays, prices as low as $1.34 per gallon were spotted, and prices around $1.50 per gallon are typical at the time of this writing.
Ain’t a functioning market wonderful?
Back in August when gas prices were in excess of $4.00 per gallon, the cries were loud for government intervention.
The most popular among these proposals were windfall profits taxes on the oil companies and anti-gouging or caps on the price of retail sales. And it is remarkable how many otherwise intelligent people climbed on board. But whether by good sense, political reality or just plain dumb luck, these price-distorting policies were not enacted.
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During the presidential campaign Barack Obama claimed that under his tax plan 95 percent of working Americans would get a tax cut.
But given where President-elect Obama’s health care reform initiative is likely heading, it would be more accurate to say that every American will see a tax increase.
Obama was very careful to say during the campaign that he did not want to require every American to buy health insurance—known as an individual mandate—or pay a fine, as his Democratic challenger Hillary Clinton wanted to do.
Rather, he claimed he would only impose a health insurance mandate on children. Of course, that’s a distinction with only a minor difference—since children don’t buy their own health insurance, their parents do.
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Many people are bemoaning the current financial crisis facing most states.
We at IPI, on the other hand, tend to view it as an opportunity … for states to get their fiscal house in order.
The Kaiser Foundation recently published a Center on Budget and Policy Priorities assessment of each states’ fiscal plight. As you cans see here, 37 states plus Washington DC, are facing a total 2009 budget gap of $72 billion.
Not that you’d notice from some of the states’ recent fiscal actions. It was just over a year ago that several of the states were demanding that the Bush administration allow them to increase eligibility for the State Children’s Health Insurance Program (SCHIP) up to 400 percent of the federal poverty level.
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| Peter Ferrara will appear on Fox News Channel’s “Your World with Neil Cavuto” to discuss why Obama’s tax credit won’t help the economy. To catch the discussion, tune in to the Fox News Channel at 4:30 pm EST. Read More...
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| Catch Peter Ferrara live on “The Greg Knapp Experience” this afternoon discussing his latest op/ed in today’s Wall Street Journal on why President-elect Barack Obama’s tax credits won’t stimulate the economy. To listen live, tune in online at 5:30 pm EST at http://www.gregknapp.us/. Read More...
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IPI director of entitlement and budget policy Peter Ferrara is featured today in American Spectator with a brand new op/ed entitled, “Take the Tax Debate to Obama.”
Ferrara writes:
“The election may be over, but the same is not true for the tax debate. The tax debate is just beginning, with Congress soon to be considering sweeping tax legislation proposed by President Obama. …The debate for Obama and the Democrats begins with a smear of the tax policies adopted by Reagan and the Republicans going back 30 years. A good example of this is found in Obama's discussion with Joe the Plumber. During that discussion, Obama said, "We've cut taxes a lot for folks like me who make a lot more, but we haven't given a break to folks who make less." That was not an offhand remark. That was a central theme of Obama and the Democrats all year. Read More...
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IPI director of entitlement and budget policy Peter Ferrara is featured today in The Wall Street Journal with Newt Gingrich in brand new op/ed discussing why President-elect Obama’s tax credits won’t stimulate the economy.
In “Let's Have a Real Middle-Class Tax Cut,” Ferrara and Gingrich write:
“President-elect Barack Obama is right: America needs a real and meaningful middle-class tax cut. Unfortunately, despite the rhetoric, that is not what his proposals offer. Mr. Obama's tax plan includes creating or expanding nine or more federal income tax credits mostly focused on low- and moderate-income earners, with an estimated cost of $1.3 trillion over 10 years. These tax credits are provided for certain social purposes, such as child care, health care, education, housing and retirement. Read More...
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While the conventional wisdom among most Democrats and many pundits is that the Big Three auto manufacturers are too big to fail, we wonder if they are too big not to fail.
It’s time to say hello to Chapter 11 and goodbye to those suffocating contracts with labor, dealers and suppliers.
We need to stress here that the U.S. auto industry is not in trouble, just the unionized auto industry.The Big Three have huge legacy costs (including retiree pension and health care benefits). While foreign manufacturers on U.S. soil pay about the same in wages, the U.S. manufacturers have much higher benefits packages. And the companies have been slow to adopt quality and design enhancements.
The result has been declining U.S. sales for years—not just in the past few months, which might be forgivable. Read More...
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“The State Video Tax Fairness Act” was introduced in Congress with underlying goals which are laudable—ending discriminatory tax treatment, creating a competitive level playing field for all video providers, and increasing consumer benefit.
In fact, our friends who support the legislation are exactly right when they argue that consumers should not be taxed differently for video service merely based on how it is provided—whether by satellite, cable, fiber optic wire or wirelessly. Discriminatory tax treatment for the same product leads to market distortions and deprives consumers of the best service at the best price.
But to do so, the Act would strip states of their right to enact revenue policies according to the will of the states’ elected representatives. Federal preemption of the states’ right to enact their own tax policies strikes us as a gross violation of our Federalist system of government.
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On Oct. 21 the leftist government of Argentina announced its plans to nationalize the country’s private pension plans.
In 1994, the then-conservative government set up 10 private pension plans, which currently have about $30 billion in assets, and take in $4 billion to $5 billion annually.
That’s a lot of money, and socialist President Cristina Kirchner—it’s OK to use that term for HER, isn’t it? —needs a lot of money because tax revenues are dropping while government largesse is rising.
But, you say, what does that have to do with you and your 401(k)?
Well, no good money-grab goes unnoticed by a big-spending Congress that also needs new revenue streams. Recently, Rep. George Miller, Democratic chairman of the House Education and Labor Committee, heard testimony from economist Teresa Ghilarducci of the New School for Social Research in New York.
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Singer and gay activist Melissa Manchester predictably didn't like the outcome of California's Proposition 8, which reversed state policy on gay marriage through constitutional amendment.
But here's what's interesting--she says she's going to refuse to pay taxes to the State of California because she doesn't agree with the state's policies.
Okay, cool I don't mean to get too personal here but there is a lot I can do with the extra half a million dollars that I will be keeping instead of handing it over to the state of California. Oh, and I am sure Ellen will be a little excited to keep her bazillion bucks that she pays in taxes too. Wow, come to think of it, there are quite a few of us fortunate gay folks that will be having some extra cash this year.
What a novel idea--you don't have to pay taxes unless you agree with a state's policies! There may be some potential here . . . Read More...
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IPI director of entitlement Peter Ferrara and Jack Kemp are featured today in Human Events discussing how Barack Obama’s tax hike plans are already adversely affecting the U.S. economy.
Ferrara and Kemp write:
“Are Barack Obama’s proposed tax increases adversely affecting our financial markets? We say yes, unambiguously. The senator has done a masterful job detracting attention from his tax increases with his $500-per-worker tax credit supposedly for 95 percent of Americans.
Obama has set forth more than half a dozen refundable income tax credits targeted to low- and moderate-income workers for child care, education, housing, welfare, retirement, health care and other social purposes.
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For years the Institute for Policy Innovation has supported fundamental tax reform, such as the suggested “flat” income tax. There are, of course, other tax reform plans as well that accomplish the goals of a tax code that is low, flat, broad-based, simple, neutral, and rewards investment without trying to manipulate taxpayer behavior.
But we increasingly wonder whether it remains possible for the country to move to such a system, even with favorable political winds. The issue is the growing progressivity of our current income tax system, and the trend toward using the tax code for redistribution.
Notwithstanding all the liberals’ and Barack Obama’s claims to the contrary—that only the rich get the tax breaks—the bottom 40 percent of workers pay no—zero, nada, zilch—income tax. And that 40 percent is trending higher.
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Barack Obama wants to raise taxes on higher-income workers because he thinks they’re getting off too easy.
But according to the Tax Policy Center, in 2008:
- The bottom 40 percent of workers—that’s four out of every 10 workers—will pay only 3 percent of all federal taxes.
- The next 40 percent—that’s the middle class—will pay a little more than 25 percent.
- And those in the top 20 percent of earners will pay nearly 70 percent of all federal taxes.
Thus the top 20 percent of income earners will pay about 22 times in federal taxes what the bottom 40 percent pays.
Folks, the only ones getting off easy here are the politicians making these silly claims. Read More...
Tax Brackets |
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Peter Ferrara is featured today in Townhall.com with a comprehensive analysis of Barack Obama’s tax plan proposals, which Ferrara calls ‘the new tax welfare.’
Ferrara writes:
Barack Obama’s supposed tax cut for 95% of American workers is meant to draw attention from the real core of the Obama tax plan – proposed increases in every major federal tax: --Obama proposes to raise the top two individual income tax rates by 25% or more, both through explicit rate increases, and the phaseout of personal exemptions and all itemized deductions for these upper income earners; --Obama proposes to increase the capital gains tax rate by 33%; --Obama proposes to increase the tax rate on dividends by 33%; --Obama proposes to raise the top payroll tax rate by between 16%--32%; --Obama proposes a new payroll tax on employers to help pay for national health insurance, estimated at around 7%; Read More...
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IPI director of entitlement and budget policy Peter Ferrara is live today at noon EST on the G. Gordon Liddy national radio show to discuss how the U.S. landscape will change under the policies of an Obama administration, and how the Democratic candidate misled Joe the Plumber on tax cuts for the working and middle classes.
To listen live, visit Radio America online. Read More...
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| Peter Ferrara joins Jack Kemp in a new op/ed featured in the Washington Times discussing the Democratic presidential candidates’ tax policies, ‘Obama’s Perils to Prosperity.’ Ferrara and Kemp write: ”Are Barack Obama's proposed tax increases adversely affecting our financial markets? We say yes, unambiguously. The senator has done a masterful job distracting attention from his tax increases with his $500-per-worker tax credit supposedly for 95 percent of Americans.
Mr. Obama has also set forth more than a half-dozen additional refundable income tax credits targeted to low- and moderate-income workers for child care, education, housing, welfare, retirement, health care and other social purposes. These tax credits are devised to phase out based on income, which will ultimately increase marginal income tax rates for middle-class workers. Read More...
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| Peter Ferrara will join Lee and Terry Frank on ‘Let’s Talk Frank’ live today at 3:30 am EST to discuss the economic landscape under the policies of an Obama administration. Listen live online at leeandterryfrank.com. Read More...
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| IPI resident scholar Dr. Merrill Matthews appears in the Nov. 17th edition of Forbes magazine discussing the Congressional spending records of John McCain and Barack Obama. Matthews writes in ‘Other Comments’: “The National Taxpayers Union Foundation recently looked at the spending records of presidential candidates Barack Obama and John McCain. During the first session of the 110th Congress John McCain sponsored or cosponsored 22 bills, which would have increased federal spending by $8 billion annually. Barack Obama, by contrast, sponsored or cosponsored 114 bills, increasing federal spending $75 billion annually. That's a little more than $9 of government spending for Obama for every $1 for McCain.” Read ‘Other Comments’ in Forbes magazine, or at Forbes.com. Read More...
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IPI director of entitlement and budget policy Peter Ferrara will appear this morning on Utah’s “Mark Maxon Show” at 11 a.m. EST to discuss how Barack Obama’s tax plan will affect the average family.
Listen live online at http://www.k-talk.com/default.asp. Read More...
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| IPI director of entitlement and budget policy Peter Ferrara joins Jack Kemp in a new op/ed, "The Treats to Our Markets," saying the real change we need in our markets is not Obama’s tax plan. Ferrara and Kemp write: "Are Barack Obama's proposed tax increases adversely affecting our financial markets? We say yes, unambiguously. The senator has done a masterful job detracting attention from his tax increases with his $500-per-worker tax credit supposedly for 95 percent of Americans. Obama has also set forth more than half a dozen additional refundable income tax credits targeted to low- and moderate-income workers for child care, education, housing, welfare, retirement, health care and other social purposes. These tax credits are devised to phase out based on income, which will ultimately increase marginal income tax rates for middle-class workers. Read More...
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So what do you do if you’re Barack Obama and you’ve just been elected president of the United States and you’ve promised to spend a gazillion dollars to improve education and health care and the infrastructure and to hand out “tax cuts” (many of which will actually be income transfers) to 95 percent of the public?
And you’re fiscally constrained because the government is bailing out or buying out banks left and right?
What you need is some serious new inflows of cash, you need it fast, and, contrary to everything you’ve claimed on the campaign trail, you know you can’t get it all by dinging the people making over $250k.
Fortunately—for a President Obama, that is—Senator Edward Kennedy (D-MA) is pushing legislation that would create that government income stream. And a really BIG stream at that.
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Peter Ferrara will appear on the Lou Dobbs radio show this afternoon at 4:15 pm EST to reveal Barack Obama’s huge misstatement on taxes for the working and middle classes during his recent conversation with Joe the Plumber.
To listen live, please visit http://loudobbsradio.com/. Read More...
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In a brand new op/ed just featured this afternoon on Forbes.com, Peter Ferrara discusses the numerous successful efforts by Reagan and other fiscal conservatives to not only just "give a break" to the middle and working classes, but also to completely eliminate federal income taxes for the working class.
Ferrara writes: In his recent conversation with Joe the Plumber, Barack Obama said, "We've cut taxes a lot for folks like me who make a lot more than 250 [thousand], but we haven't given a break to folks who make less." This statement completely misrepresents our nation's tax policy. The latest numbers from the IRS and the Congressional Budget Office show that the top 1% of income earners now pay 40% of all federal income taxes, almost twice their share of income. Read More...
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"The American democratic experiment will succeed until the people realize they can vote themselves money from the public treasury. Then it will collapse." - Alexis de Tocqueville, 1848
Among the policy informed public, it's fairly well known that for the last several decades we've been on a tax policy path that has slowly been removing low-and even lower-middle class taxpayers from the federal income tax rolls.
In fact, it's commonly understood that the bottom 40% of Americans do not pay any federal income tax at all, and that the next 20% pay little or no federal income tax. That means that 60% of Americans today pay almost nothing in federal income taxes.
Many of us over the years have been concerned about this trend. The obvious concern is that, at some point, the majority of voters are no longer payers into the system, but are simply recipients of benefits. This is the real "class warfare," when you reach the point when you reach the point that only the rich and fairly well-off pay taxes. Read More...
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In a brand new op/ed featured today in National Review Online, IPI director of entitlement and budget policy Peter Ferrara goes behind the 95 to explain Obama’s new tax welfare.
Ferrara writes:
"Barack Obama says he plans to cut taxes for 95 percent of American workers. That sounds terrific, but there are three problems. One, it is meant to draw attention from the real core of the Obama tax plan: proposed increases in every major federal tax. Two, the structure of the cuts will create perverse incentives. And three, many of the people receiving ‘tax cuts’ don’t pay taxes to begin with, meaning they’ll be in effect getting welfare.
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As best we can tell, the free market had little or nothing to do with the banking crisis that has caused panic throughout the world.
That blame can, to varying degrees, be handed to: the Community Reinvestment Act; the efforts of Congress and several administrations to expand low-income families’ access to home loans; a prolonged period of low interest rates; political protection from several members of Congress who were feeding at the trough of Fannie Mae and Freddie Mac; the mark-to-market accounting requirement; some innovative new credit vehicles; and possibly some corruption among private and perhaps public figures.
How any of that is the fault of the free market is a mystery, especially given the already high levels of regulatory control. As The Economist recently pointed out, “After all, the American mortgage market is one of the most regulated parts of finance anywhere.…”
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| IPI director of entitlement and budget policy Peter Ferrara is featured today with a new op/ed discussing McCain’s middle class health tax cut versus Obama’s ‘socialized medicine’ in American Spectator online. Ferrara writes: “Under the McCain plan, if your employer pays for your health insurance, what the employer spends would be included in your taxable income. But then your family would get the $5,000 tax credit to offset any resulting tax. Suppose you are a middle class family in the 25% income tax bracket, and your employer pays $1,000 a month for your health insurance, $12,000 for the year. The resulting tax would be only $3,000, which would be more than covered by the $5,000 tax credit. So there would be no tax coming out of your paycheck due to the McCain plan. Read More...
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Because so many members of Congress have drunk deeply from the big-spending troughs of Washington—especially after many of them campaigned as fiscal hawks—we think it’s time for them to step forward, confess their failures and get right with the U.S. Constitution. In an effort to help them mend their big-spending ways, we offer this “12-Step Plan for Congressional Spendaholics.”
- I admit that I have become powerless over spending taxpayers’ money—and so my political promises have become meaningless.
- I have come to believe that only a power greater than myself—the U.S. Constitution, and maybe voter rebellion—can restore me to sanity.
- I have made a decision to turn my life over to the guidance of sound economic and fiscal principles. Read More...
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In a brand new op/ed published today in The American Spectator online, IPI director of entitlement and budget policy Peter Ferrara discusses a prescription for a “fatal economic heart attack for America.”
Ferrara writes:
“Obama promises across the board tax increases, America's corporate tax rates are already the second highest in the industrialized world, prices are already rising and the dollar is declining, America is turning its back on free trade, the federal budget is already spiraling out of control and entitlements threaten far worse, regulations already strangle energy production, producing high energy costs for the economy, cap and trade global warming regulations threaten to shut the economy down, unions calling for legal powers to force unionization, the left campaigns for costly but low quality socialized medicine, these are all indicators of a fatal Read More...
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In a brand new op/ed published today in The Wall Street Journal, IPI director of entitlement and budget policy Peter Ferrara joins with Jack Kemp discussing a vital solution to achieve economic growth—the alternative flat tax.
Ferrara and Kemp write:
“Under this proposal, Americans could file their income taxes under the existing tax code or they could choose instead to pay taxes under a simpler code with fewer deductions but lower tax rates. Building on work already done by Steve Forbes and House Budget Committee member Paul Ryan, a Wisconsin Republican, Mr. McCain could propose an optional tax system with just two rates, 10% and 25%, compared to the six rates of the current code ranging from 10% to 35%.
What's more, such a proposal would include a cut in income taxes, and tax rates, for every American who pays taxes. Read More...
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Who’s the Big Spender: Obama or McCain? The Institute for Policy Innovation’s Dr. Merrill Matthews says just look at their Senate records...
The National Taxpayers Union Foundation recently looked at the spending records of presidential candidates Barack Obama and John McCain.
During the first session of the 110th Congress:
• John McCain sponsored or cosponsored 22 bills, which would have increased federal spending by $8 billion annually.
• Barack Obama, by contrast, sponsored or cosponsored 114 bills, increasing federal spending $75 billion annually. And vice presidential candidate Joe Biden wasn’t far behind.
That’s a little more than $9 of government spending for Obama for every $1 for McCain.
Read More...
Big Spenders |
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The U.S. Treasury's bailout of the banking industry has dominated the news for the past month, and will probably be the dominant factor in public policy decisions for at least the next four-year presidential term.
The bailout will affect regulatory policy, tax policy and the funds available for any number of other programs, to say nothing of affecting our ability to deal with any future crisis that might arise.
Americans are rightly concerned not only about the cost of the bailout, but of the precedent of letting actors in the market make enormous profits while having the risk backstopped by taxpayers. And taxpayers are disturbed by the fact that elected officials were repeatedly warned about these risks and problems, but did nothing.
But if you think this one is bad, we've got news for you—this mortgage bailout is only the first, and the smallest, of a series of bailouts that are going to be necessary in the future. Read More...
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Catch Peter Ferrara on talk radio today discussing Obama’s tax hike proposals.
In a brand new op/ed published in Human Events, IPI’s Peter says: “With the credit crisis threatening our economy, there couldn’t be a worse time for these comprehensive marginal tax rate increases," and explains just what the fallout would be for the average family.
(All times eastern)
At 11:35 am: Peter live on the ‘G. Gordon Liddy Show’
At 5:15 pm: Peter will be interviewed by Don Kroah of Washington DC’s WAVA FM and take listener call-in questions.
Read More...
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In a brand new op/ed published in Human Events, IPI’s Peter Ferrara discusses presidential candidate Barack Obama’s proposed tax hikes.
“With the credit crisis threatening our economy, there couldn’t be a worse time for these comprehensive marginal tax rate increases,” says Ferrara.
An excerpt:
”Most jobs in America are created by small businesses. Let’s look at the impact of Obama’s tax increases on a small business family. The husband has a steady job of his own, but the wife runs an unincorporated small business that stumbles for several years then starts doing quite well, employing five people. Together their family income reaches just over $250,000.
Under the Obama tax plan, their marginal income tax rate alone climbs to 39.5%. The payroll tax increase would add as much as 4 percentage points more, raising the total to 43.5%. Read More...
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When it comes to insurance premiums, Texas has a system of price controls lite. In theory, if insurance companies find it necessary to raise premiums under the Texas “file-and-use system,” the company may raise rates immediately once they have notified the state. While the state regulator may disapprove the rate increase and force the company to roll it back, the burden is upon the insurance department to justify its price fixing. In fact, the situation is much worse than it appears on paper. Although Texas is a “file-and-use” state, it actually operates more like a de facto prior-approval system much of the time.
Even on paper, this system is far from ideal. Read More...
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"If you came here because you believe in limited government and the freedom of the American marketplace, vote in accordance with those convictions. Duty is ours, outcomes belong to God," said Rep. Mike Pence (R-IN) as he implored his fellow members of Congress to place a priority on solving a problem rather than just passing legislation.
Vote in accordance with convictions they did, demonstrating true leadership, and perhaps saved the country from a terrible deal.
Political opportunism led Speaker Nancy Pelosi (D-CA) to bash not only Mr. Pence and others like him for opposing the bail out plan, but also the last decade of pro-growth policies.
But the real reason for the "no" votes is that many recognized a bad deal for the American taxpayer—confirmed by the flood of calls from their constituents who don’t like the deal.
Call it representative democracy.
Read More...
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IPI resident scholar and the voice of IPI's SoundBytes, Dr. Merrill Matthews, is featured in the October 6 edition of Forbes magazine.
Matthews writes: "Taxed to the Max" "Massachusetts is often referred to as 'Taxachusetts' because the state's taxes are so high. Now the Committee for Small Government wants to change that image by pushing legislation called the Small Government Act, which Bay Staters will vote on in November. The legislation repeals the state income, wage and capital gains taxes. That's a $12.5 billion state revenue cut--with no other revenue to replace it. That reduction would force state legislators to seriously rethink their financial priorities. But it would also leave that money in the hands of families, where it will surely be better spent. Bostonians were once brave enough to tell England--and the world--that taxes were too high. Read More...
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In a prior TaxByte, we saw that Obama’s tax plan would increase marginal tax rates for just about every major federal tax. So how is it he claims to be a tax-cutter?
Obama combines these comprehensive tax increases with a slew of refundable tax credits primarily for low- and moderate-income workers, which he calls middle-class tax cuts.
“Refundable” means that if the worker doesn’t have enough tax liability to take advantage of the credit, the government sends the worker a check to cover the full amount of the credit. So if the tax credit is $1,000, but the taxpayer would otherwise only pay $200 in income taxes, the credit covers the $200 tax bill and the government sends the taxpayer a check for the remaining $800.
If the taxpayer pays nothing in federal income taxes, the government would send him a check for the whole $1,000.
Read More...
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When things go wrong, politicians revert to form, not reform. Incumbents claim things are not nearly as bad as they feel and blame people for whining. Challengers claim things are a whole lot worse than they appear and blame incumbents for not doing enough to fix them. Both incumbents and challengers offer up new interventions, redistribution schemes, more government spending, taxing and regulating to make everything better.
Government intervention creates problems worse than those it seeks to correct, and it stimulates heightened political demands, which call forth more government intervention to “fix” the problems and satisfy the political demands the interventions create. The more government fails, the bigger it grows; the bigger it grows, the more it fails. Read More...
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Will Barack Obama Cut Most Americans’ Taxes? Dr. Merrill Matthews of the Institute for Policy Innovation says he’s really just expanding welfare...
Democratic presidential candidate Barack Obama says that under his tax plan, 95 percent of Americans will get a tax cut.
But is it really a tax cut?
Currently, workers in the bottom 40 percent of income pay little or no income taxes. So how does a worker pay less tax than zero? Obama’s answer is a “refundable” tax credit.
For example, if the government gives workers, say, a $1,000 refundable tax credit, those who owe no income taxes will actually get a check for $1,000. Those who owe, say, $600 in taxes won’t pay any tax and will get a check for the $400 difference.
In other words, Obama would take money from some taxpayers and hand it out to others. Folks, that’s not a tax cut; that’s welfare. Read More...
Tax Cuts |
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Read IPI director of entitlement and budget policy Peter Ferrara’s brand new op/ed featured in National Review Online, “The American Association of Never Retiring Taxes and Spending.”
An excerpt:
“During both the Democrat and Republican conventions, the American Association of Retired Persons (AARP) spent a fortune running ads over and over with very troubling personal stories of individuals who were bankrupted with medical bills even though they thought they had health insurance. Some apparently even lost their houses as a result. The ads didn’t offer a solution. Their theme was simply “something needs to be done about it.”
Not enough details were given to understand exactly what happened in these cases. Generally, the individuals involved seemed not to understand the insurance coverage they had, or thought they had. Read More...
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Is This a Do-Nothing Congress? Dr. Merrill Matthews of the Institute for Policy Innovation says yes, and that may be the good news....
The Wall Street Journal says this Democratic-led Congress has passed 294 bills, fewer than any Congress in the last 20 years.
But it’s also passed the largest number of resolutions—1,932.
Resolutions are usually expressions of support for something and don’t do much harm—or good. Taxpayers for Common Sense has identified its top 10 list. They include:
- Designating July as National Watermelon Month;
- Recognizing the 70th anniversary of the Idaho Potato Commission;
- And naming June 30 National Corvette Day.
Democrats want to postpone passing real laws because they think a new President Obama will sign whatever they pass.
Read More...
Resolutions |
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In a brand new op/ed published today in the Washington Times, Jack Kemp and IPI director of entitlement Peter Ferrara spell out the economic implications of the starkly contrasted Barack Obama and John McCain tax policies.
An excerpt:
"Barack Obama says he supports a tax cut for 95 percent of all Americans. He refers here to his proposal for a $500 refundable income tax credit for all workers, except those in the top 5 percent of income earners. These folks, for some reason, are to be singled out for "special treatment" - i.e., tax increases - unless, as he told ABC anchor George Stephanopoulos last week, "the economy remains weak." So apparently even Mr. Obama recognizes his tax increases would be economically harmful.
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Treasury Secretary Henry Paulson finally got one right.
According to news accounts, the secretary had a looooong weekend.
It started Friday when he and Federal Reserve Bank Chairman Ben Bernanke apparently called in the “sages” of Wall Street to inform them that there would be no more bailout money.
They were told, “There is no political will for a federal bailout,” according to The Wall Street Journal, and that they would need to come back Saturday morning and figure out what they were going to do—with the administration’s assistance, but without the taxpayers’ money.
For our part, we wish Paulson had taken this stand last March with Bear Stearns, or even last month with Fannie Mae and Freddie Mac. But better late than never. Read More...
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Listen live online to 'The Scott Hennen Show' this morning at 10:30 am ET as Peter Ferrara discusses his latest op/ed, "Tax Cuts: Real and Imaginary" recently featured in The Weekly Standard and co-authored with Newt Gingrich.
Click here to listen live online.
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Check out IPI senior research fellow Bill Murchison’s new op/ed in the Washington Times discussing a fast-growing trend throughout the nation keeping government accountable of spending taxpayers’ dollars.
Excerpt:
"Well, you know, it is our money - or at least it was, before government helped itself to a sizable portion and called it revenue.
That we've rarely, as taxpayers, had a clear idea just what those guys in government were doing with all that tax money isn't one of the nicer things to be said about democratic governance.
Let's look on the bright side, even so. Light is starting to shine in the recesses where all those billions lie, waiting to be spent. The transparency movement in government finance is spreading fast. There's finally a way to see how government spends our money - just by going online. Read More...
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Are You Pumped Up? The Institute for Policy Innovation’s Dr. Merrill Matthews says more drilling means lower taxes.....
The country’s facing a whopping $400 billion budget deficit next year.
That’s prompting Democrats to say we need to raise taxes.
But there’s a better way: in the words of Newt Gingrich, “Drill here, drill now.”
The country makes money from oil production. The Wall Street Journal estimates that drilling for oil offshore and in Alaska could yield about $2 trillion for the government over 30 years.
And U.S. oil companies pay taxes on the money they make. Exxon paid $65 billion in taxes over the past five years—more than it made in profits.
Drilling here reduces the money we give to other oil-producing countries and keeps those royalties, taxes and jobs in the U.S.
In short, we don’t need to pump more taxes, just more oil. Read More...
Drilling |
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IPI director of entitlement and budget policy Peter Ferrara is featured with Newt Gingrich in the Weekly Standard authoring a new op/ed entitled, “Tax Cuts, Real and Imaginary.”
An excerpt:
“Thirty years of Republican tax policy have now completely eliminated federal income taxes on the poor and lower middle-income Americans, and almost eliminated them on middle America. The latest data from the Congressional Budget Office and the Internal Revenue Service show that the lowest 40 percent of income earners as a group actually receive net payments from the federal income tax system. (They get 3.8 percent of total federal income tax revenues instead of paying any income taxes.) The middle 20 percent of income earners pay 4.4 percent of federal income taxes. Read More...
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Once again this year, a continuous late-summer news barrage about the devastation wreaked by hurricanes and tropical storms reminds us how vulnerable people living in coastal areas are to Mother Nature’s vagaries. The only thing that stands between people living there and the risk of financial ruin is their homeowners insurance, and that protection is threatened by the vagaries of bureaucracies state government have created to fix prices and regulate the insurance industry in America today.
Because state insurance regulators in coastal states like Florida insist on fixing insurance premiums below actuarially sound levels, insurance companies are having to cancel old policies and must refuse to write new policies in particularly vulnerable areas. This perfectly rational economic response to irrational government policies creates thousands of homeowners-insurance refugees.
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Is the Spirit of the Boston Tea Party Alive and Well? Dr. Merrill Matthews of the Institute for Policy Innovation says something’s brewing in the Bay State.......
Massachusetts is often referred to as “Taxachusetts” because the state’s taxes are so high.
Now the Committee for Small Government wants to change that image by pushing legislation called the Small Government Act, which Bay Staters will vote on in November.
The legislation repeals the state income, wage and capital gains taxes. That’s a $12.5 billion state revenue cut—with no other revenue to replace it.
That reduction would force state legislators to seriously rethink their financial priorities. But it would also leave that money in the hands of families, where it will surely be better spent.
Read More...
Bostonians |
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IPI director of entitlement and budget policy Peter Ferrara has a brand new op/ed featured today in the American Spectator online. In the piece, "Morning in America," Ferrara discusses the tax and fiscal policies of the McCain-Palin ticket.
An excerpt:
"With one bold masterstroke, everything that was so wrong with American politics has been made right. It is as if Frodo just dropped the Ring of Power in the lake of fire at Mount Doom, and, as the third book of The Lord of the Rings reports, "There was a roar and a great confusion of noise...Towers fell and mountains slid, walls crumbled and melted, crashing down....Then all the Captains of the West cried aloud, for their hearts were filled with a new hope in the midst of the darkness."
Read More...
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Democratic presidential nominee Barack Obama doesn’t just pledge to raise taxes; he proposes to raise the most economically damaging marginal tax rates of every major federal tax:
Obamanomics would: - Raise individual income taxes, increasing the top two income tax rates, with the top rate climbing by 13 percent, to almost 40 percent. This tax increase particularly hits small business—which creates the most new jobs in America—as small businesses often pay taxes under the individual rather than corporate income tax.
- Raise the top capital gains tax rate by 33 percent, to 20 percent.
- Raise the top dividends tax rate by 33 percent, to 20 percent.
- Increase Social Security payroll taxes by 16 percent, to 32 percent, for families earning over $250,000 a year. Read More...
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In a new op/ed published in Forbes digital, IPI director of entitlement and budget policy Peter Ferrara offers a comprehensive discussion on John McCain’s tax policy proposals.
An excerpt: The best components of John McCain's campaign are his tax and budget proposals. These are crafted to counter our currently wobbly economy and restore economic growth. So why on earth doesn't he talk about them more? On taxes, America suffers from the second-highest corporate tax rate in the industrialized world. American corporations face a 35% federal tax rate, averaging 40% with state income taxes. In contrast, the average corporate tax rate in the European Union has been slashed from 38% in 1996 to 24% today. Read More...
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In a new op/ed by IPI's Peter Ferrara featured today in American Spectator entitled "Obama's New Tax Welfare," Ferrara says:
In 1984, Walter Mondale ran for President promising to raise taxes if elected. He consequently made it to the dustbin of history even before the Soviets, averting a 50 state shutout by just 1,200 votes in his home state of Minnesota.
The recently released details of Barack Obama's tax plan, published on his campaign website, along with an article by his top economic advisers in the Wall Street Journal, confirm that Obama makes Mondale look like a moderate. For Obama pledges not just to raise taxes. He proposes to raise every major federal tax. The recently released details confirm that:
Read More...
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IPI director of entitlement and budget policy Peter Ferrara will appear live today at 4:10 pm CT on the Dave Elswick Show to discuss Barack Obama’s “tax welfare” program.
To catch the discussion, tune in to Little Rock talker KARN on 102.9 FM or 920 AM.
Read More...
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Why do some companies move offshore?
The Institute for Policy Innovation’s Dr. Merrill Matthews says Congress should learn a lesson from them.
Senator Hillary Clinton is mad—that is, angry.
She claims a growing number of companies are flocking to places like the Caymen Islands to avoid paying U.S. taxes. And she wants to punish them by denying them any government contracts.
But she never addresses why some companies move offshore. The U.S. has one of the highest corporate tax rates in the world. And some Democrats want to raise them even higher.
Clinton says she wants to reward “responsible companies” that stay inland.
Of course, Exxon does just that, yet many Democrats want to punish it and other oil companies with a huge “windfall profits tax.”
Read More...
Tax Breaks |
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This can’t be good!
The Detroit Free Press reported August 5 that the country’s top three automakers are looking for a bailout from Washington. So, you ask, what else is new?
Answer: the money and the likelihood.
Apparently, the “asking price” just a few months ago was about $20 billion, but now insiders say it may need to be closer to $40 billion. By the time the election rolls around, who knows? $80 billion? $100 billion?
And with Washington in a bailout mood these days, there’s little reason to hope for restraint.
Read More...
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| Catch Peter Ferrara, IPI director of entitlement and budget policy, live today discussing more economic policy differences between presidential hopefuls Barack Obama and John McCain. Tune in to Seattle-Tacoma’s “The David Boze Show” on 770 AM KTTH at 7:30 pm Eastern/4:30 pm Pacific. To read Peter’s new op/ed co-authored by Jack Kemp on National Review Online, “Which Way To Prosperity?” click here. Read More...
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Jack Kemp and IPI’s Peter Ferrara co-author a new op/ed featured today in National Review Online building on their discussion regarding the differences between McCain’s and Obama’s economic policies.
”The central question in this election is, Which candidate can most improve our wobbly economy? Here, the McCain-Obama contrast could not be sharper. Obama has proposed increases in every major federal tax. He has proposed to increase individual income taxes, with the top rate to rise to almost 40 percent. He has proposed to increase the top capital-gains tax rate by 33 percent. He has proposed the same for the top tax rate on dividends. He has proposed to increase payroll taxes, with a rate increase of 16 percent to 32 percent for workers earning over $250,000 a year. Read More...
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Those famous lyrics from “New York, New York” just might have to be changed, at least for online retailers.
“Start spreading the news
I'm leaving today
I [don’t] want to be a part of it, New York, New York
These vagabond shoes
Are longing to stray
And make a brand new start of it
[anywhere but] New York, New York”
A new law from the state of New York thumbs its nose at the Supreme Court’s Quill decision, which held that for a state to require sales tax collections from a retailer that retailer must have some physical connection with the state.
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Listen live online Thursday morning at 8:33 am CT/9:33 am ET as IPI director of entitlement and budget policy Peter Ferrara discusses Obama’s tax policy with radio host Lynn Woolley.
In a new op/ed featured this week in the Wall Street Journal, Ferrara explains how Barack Obama’s tax-cut policies are just a new form of welfare.
To listen live online at 9:33 am ET, click here. Read More...
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Catch IPI director of entitlement and budget policy Peter Ferrara live this morning with Greg Allen on “The Right Balance.”
Peter will be discussing presidential hopeful Barack Obama’s tax policy, what Ferrara calls not a tax-cut plan at all, but rather a welfare plan.
Read More...
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| IPI director of entitlement and budget policy Peter Ferrara will be a guest on the Fox News Channel’s “Your World with Neil Cavuto” today at 4:20 pm ET to discuss presidential hopeful Barack Obama’s tax plan. In a brand new op/ed published today in the Wall Street Journal, Ferrara discusses how “Obama’s Tax Plan is Really a Welfare Plan.” "Barack Obama's tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities. Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits "refundable." Read More...
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IPI's Peter Ferrara has a compelling op/ed in the Wall Street Journal today which explodes the fact that Obama's tax policy outline is misleading, and is focused on promoting welfare, not economic growth.
We'll have much more to say about Peter's op/ed and subsequent media appearances shortly.
Reinforcing Peter's point is another piece in the WSJ today by William McGurn, which points out that Obama is fully aware that raising the capital gains tax rate will lower the amount of money that comes into the federal government--that raising the tax RATE results in reducing the tax REVENUE. In other words, a tax rate hike on taxpayers is actually a tax revenue cut to the federal government.
But that doesn't trouble Obama, because for Obama, taxes aren't about revenue--they are purely social policy. Read More...
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Jim Frogue, the state project director for Newt Gingrich’s Center for Health Transformation, has proposed an idea that worth’s considering.
In recent testimony before the House Energy and Commerce Committee’s Subcommittee on Health, Frogue suggested a way to bring the transparency movement to Medicaid.
Transparency in government—which we discussed in the last TaxByte in relation to state budgets—is the notion that the public should have access to information about what politicians and others who spend taxpayer money are doing with those funds.
The federal-state Medicaid program provides health coverage for some 52 million Americans at a cost of about $330 billion (for 2007). And we know Medicaid is fraught with sub-quality care and fraud.
Read More...
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The Institute for Policy Innovation’s Dr. Merrill Matthews says no, it’s time to increase economic growth.
Grover Norquist of Americans for Tax Reform says that Congress hasn’t passed a federal tax increase in 15 years.
The last one was in 1993 under President Bill Clinton, and it was a whopper. Under President Bush, there has actually been a tax cut every year.
But that doesn’t mean federal revenues have gone down. Federal revenue in 1990 was about $1 trillion; in 2007 it was $2.5 trillion.
There’s an important lesson here: a tax increase doesn’t mean a revenue increase. And a tax cut doesn’t necessarily mean a revenue cut.
Federal revenues depend on economic growth. When the economy is growing, both family and government revenues rise.
That means we need politicians who will grow the economy, not our taxes.
Read More...
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| Finally—a trend that works for us taxpayers instead of against us! Government is giving us a close, careful and woefully overdue look at what happens with our tax dollars. No kidding. The Federal Funding Accountability and Transparency Act of 2006 set up a free, publicly searchable website (www.usaspending.gov). On it the taxpayer can find all federal grants and contracts, as well as data on most payments of more than $25,000. Intentionally or not, by unanimously passing such unconventional legislation Congress kicked off a national movement—in the right direction, for a change. Kansas the following year enacted comprehensive legislation setting up a similar website for state spending. The next state to do so was Missouri. Oklahoma and Texas quickly followed suit. All told, 12 states now have their own where-your-money-goes websites. Read More...
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How does that old saying go? Those who refuse to learn from history are bound to . . . um, run for Congress?
Democrats have decided that since the first economic stimulus provided virtually no economic stimulus, it’s time to double down and do it again!
Having touched the hot stove and gotten burned, they’ve decided the lesson is to hold their hand on the stove even longer.
The New York Times says that many economists agree with the Democrats’ assessment. The story quotes former Clinton Treasury Secretary Larry Summers, who attended a meeting of Democratic congressional leaders to devise a plan. Summers is quoted as saying, “This is a serious situation. We are in much more danger of responding inefficiently than in responding excessively.”
There goes any respect we might have had for Larry Summers.
The story says that Speaker of the House Nancy Pelosi (D-CA) and other Dems wa Read More...
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In a new op/ed featured this weekend in California’s Press-Enterprise, IPI Director of Technology Freedom Bartlett Cleland and IPI senior fellow Barry M. Aarons discuss how consumers are fighting back against high communications taxes.
An excerpt: “There are signs that consumers have had it with government's addiction to high communications taxes. Consumers are now taxed, in many cases, more than twice as much on wireless services as they are on other competitive goods and services, as Scott Mackey makes clear in his recent State Tax Notes paper, "Excessive Taxes and Fees on Wireless Services: Recent Trends." But consumers, who in some places pay as much as a 22 percent tax on wireless, are beginning to fight back. Read More...
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Sen. Tom Coburn (R-OK) is apparently making Senate Majority Leader Harry Reid’s (D-NV) life miserable.
That’s the good news.
The better news is that, apart from a few of his like-minded cohorts like Sen. Jim deMint (R-SC), he’s making a number of Republicans’ lives miserable also.
Reid is putting together a package of nearly 40 bills in order to avoid Coburn’s relentless efforts to stop—or at least reduce—pork-barrel spending. Such bills are usually referred to as an “omnibus,” but the Associated Press says this one is being unofficially called the “Coburn omnibus.”
Note: Wouldn’t it be nice if it were being called the “Republican omnibus” because so many Republicans were opposing those nearly 40-bill pork fests?
Coburn has taken it on himself to change the way the Senate—and by extension, Washington—does business. Read More...
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So, after promising not to raise taxes, John McCain now says that "nothing is off the table" when it comes to fixing Social Security.
Here's the quote:
"There is nothing that's off the table. I have my positions, and I'll articulate them. But nothing's off the table," McCain said. "I don't want tax increases. But that doesn't mean that anything is off the table."
This "nothing is off the table" business is getting to me. It's a politician's way of saying "I have an open mind, and I'm a reasonable person."
But, in fact, for people of integrity, there is always a whole list of things that are "off the table," and there's no reason why a conservative politician shouldn't be able to say that certain policy positions, such as raising taxes to fix Social Security, are also "off the table."
Read More...
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The Institute for Policy Innovation’s Dr. Merrill Matthews says they are in one California town.
There is a widespread perception that people who work for the government make a sacrifice because they get paid less than the private sector.
Well, not in Vallejo, California.
The city of Vallejo is filing for bankruptcy, and the reason is the city’s salaries:
- Nearly three-fourths of city employees make more than $100,000 a year.
- The city manager makes $317,000, and a police captain makes $306,000 in salary and benefits.
According to National Journal, city wages and benefits take up more than 75 percent of the general revenues. Now the city’s broke.
But it’s indicative of many government programs, including Social Security, which promise more than they can pay.
The politicians take the credit for being generous, while taxpayers are stuck with the bill. Read More...
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Peter Ferrara, IPI director of entitlement and budget policy, will appear live today on the “Let’s Talk Frank” radio show with hosts Lee and Terry Frank to discuss his recent American Spectator op/ed: “Barack’s Left Wing Extremism.”
To listen in live in North Carolina, Tennessee, and Kentucky, tune in to WKVL Knoxville, WLOD Loudon, WGAP Maryville, or WATO Oak Ridge today at 4:30 pm ET. Read More...
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It’s fun spending other people’s money—at least until the money starts running low. That’s pretty much the position a lot of state lawmakers are in.
While the good times rolled, right up through most of 2007, states had no trouble finding ways to spend the revenues that came their way: on schools, roads, health care, jobs, tax breaks and the like.
Unfortunately, good times don’t roll on forever. The National Conference of State Legislatures (NCSL) predicts that 23 states face budget shortfalls—nearly $50 billion—in 2009.
It’s easy enough to understand why revenues quit soaring: subprime mortages, gasoline prices, food prices and layoffs, all leading to a slowing economy.
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The government determines how much it pays doctors for seeing Medicare patients, so you know that’s going to create problems.
For several years now, doctors have faced a cut in how much Medicare pays them, with the current scheduled cut at 10.6 percent. But the Congress always manages to come up with a temporary bipartisan fix to postpone the pay cuts.
This time, however, Democrats are claiming that Senate Republicans are blocking legislation that would postpone the scheduled pay cut—and they are, by one vote in the Senate. But there’s a reason.
Democrats want to “pay” for the pay-cut postponement by cutting the Medicare Advantage program, and a handful of Republican senators have said no.
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IPI senior fellow Barry Aarons is featured in the Fort Worth Star-Telegram with a new op/ed entitled “Time to Start Hanging Up On Phone Service Program.”
In the piece, Aarons writes:
"Ronald Reagan used to quip that the closest thing to immortality in this life is a government program. And although government provides us with numerous validations of Reagan’s observation, perhaps there’s never been a better example than the Universal Service Fund. Created in 1934, the UFS was designed to enable national connection of the so-called nationwide wire-line network. And by the 1970s the system worked pretty well, connecting more than 95 percent of America in a switched-access wire-line system of telecommunications. It did so by taxing all users of telephone service and using those funds to subsidize telephone service in rural areas. Read More...
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IPI director of entitlement and budget policy Peter Ferrara will appear today on the Twin Cities’ based “Jason Lewis Show,” live from 6:05 pm to 7:00 pm CT on KTLK-FM. He will be discussing his recent op/ed, “The Strategy of the Smart Surrender,” featured in the American Spectator.
To listen online, follow the link here. Read More...
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What’s That Ticking Sound You Hear?
Dr. Merrill Matthews of the Institute for Policy Innovation says that’s a financial time bomb—that’s about to go off.
By the end of this one-minute commentary, the federal government will owe an additional $4,800 because our politicians refuse to address the big entitlement programs like Social Security and Medicare.
USA Today reports that last year the government’s financial obligations grew by $2.5 trillion. That’s $4,800 a minute—every minute.
And that’s on top of the $57 trillion the government already needs, but doesn’t have, to pay our lifetime benefits when we retire.
And the problem will only get worse as the baby boomers start retiring in just three years.
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What Happens When Tobacco Taxes Are Too High?
Dr. Merrill Matthews of the Institute for Policy Innovation says government sometimes encourages a life of crime.
Come July 1, residents of New York City will be paying on average about $9.00 for a pack of cigarettes, according to the Wall Street Journal. And nearly half of that $9.00 dollars will be state and city taxes.
It seems more and more state legislatures think they can pay for their spending whims by taxing tobacco.
But New York won’t take in nearly the new revenue it anticipates from its tobacco tax hike. That’s because more New Yorkers will buy cigarettes on the black market, where criminals and even terrorists—known as “buttleggers”—reap huge profits and ignore the taxes.
There’s a lesson here: Americans will pay taxes when they’re fair.
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Well, it’s June, which marks the beginning of the hurricane season and (this year) the end of the Democratic primaries. And you know what that means!
The presidential candidates are looking for some way to win votes in the battleground state of Florida; and Florida is looking for a bailout—or at least the promise of a bailout when the next big hurricane hits.
Florida-backed legislation, which has passed the U.S. House of Representatives but not the Senate, seeks to have the federal government become the national “reinsurer” in cases of catastrophic property losses, such as, oh, a major hurricane.
In essence, the federal government would pick up the tab in case of a huge disaster.
Florida is backing the legislation for two reasons. Read More...
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Peter Ferrara will appear this morning on the 'Lynn Woolley Show' to discuss the Senate cap and trade bill.
To catch the interview live at 10:15 am CT, visit the Lynn Woolley Show online at http://www.belogical.com/. Read More...
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IPI Director of Entitlement and Budget Policy Peter Ferrara will appear this morning on “The Right Balance” with host Greg Allen to discuss ‘the strategy of the smart surrender,’ the AMT, and more.
Catch the discussion this morning at 10:50 ET by listening live online here: http://www.therightbalance.org/ Read More...
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Massive government spending and entitlement programs create opportunities for fraud. Nevertheless, never underestimate the ability of politicians to claim against all evidence that their new entitlement will be the exception.
A perfect example is Barack Obama’s claim that once president, his sweeping health care reform proposal will save billions of dollars, in part by getting rid of “waste, fraud and abuse.”
If only it were so.
Just last week Attorney General Michael Mukasey praised federal and state law enforcement efforts in trying to stem the wave of Medicare fraud, especially in medical devices.
It’s a really BIG wave.
Since a Medicare anti-fraud strike force began targeting South Florida, 200 people have been arrested responsible for an estimated $638 million in false claims.
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IPI Director of Entitlement and Budget Policy, Peter Ferrara, will appear today on “The Marc Bernier Show” to discuss a theme emerging from many conservatives—“the strategy of the smart surrender.”
Peter featured this discussion recently in an op/ed published in the American Spectator.
Click here to listen live online at 4:35 pm ET. Read More...
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Talk show host Rush Limbaugh quotes IPI director of entitlement and budget policy Peter Ferrara from a new op/ed featured on American Spectator online: “The Strategy of the Smart Surrender.”
During his show, Limbaugh discussed the premise of the piece and how more and more conservatives are yielding to the left in the battle of ideas.
“So what we have here, there was a great piece, Peter Ferrara in the American Spectator last week writing in this case about David Frum, who is a conservative commentator and author, writer, National Review Online. Read More...
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Boston University economists Lawrence J. Kotlikoff and David Rapson have a study for The National Bureau of Economic Research that asserts that our average marginal tax rate, when all taxes are included, is about 40 percent.
Regardless of income!
Dallas Morning News business columnist Scott Burns points out that’s not the average tax rate, but the average marginal rate (i.e., on each additional dollar earned).
And so Burns says, “What we have is a bumpy flat tax.”
To prove his point, he uses the example of a self-employed person with annual income above $31,850 because that person has to pay both the 15.3 Social Security and Medicare payroll tax and a 25 percent federal income tax, for a total of 40.3 percent. And that doesn’t include sales taxes, state income taxes, property taxes and a host of other taxes.
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IPI senior fellow George Pieler is featured today in American Spectator online with a new op/ed: “No New Wireless Taxes.”
In the piece, Pieler writes:
The Wall Street Journal gives credit to Sen. McCain for trying to protect consumers from excessive, confusing, and duplicate taxes on wireless communications, aka mobile phone service. While Mr. McCain must share the credit with Reps. Zoe Lofgren and Chris Cannon, he was indeed the first to press for a halt in the states' shameless milking of your cell phone bill. His Cell Phone Tax Moratorium Act, introduced in January, proposes a three-year moratorium on new cell phone taxes that unduly burden wireless consumers, compared with other communications services.
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Will We Never Be Rid of Jimmy Carter’s Disastrous Policies?
Dr. Merrill Matthews of the Institute for Policy Innovation says bad ideas never seem to die.
The oil companies are making record profits, and both Democratic presidential candidates say they want to take some of those profits away.
Their solution: reviving one of Jimmy Carter’s worst policies—the 1980 windfall profits tax on oil companies.
At the time, the Washington Post correctly said that the windfall profits tax was simply a tax on oil production, not oil companies.
The tax raised the price of American-produced oil, making foreign oil cheaper by comparison. So the U.S. produced less and bought more oil from overseas, which means the new tax never created the revenue politicians had predicted.
Republicans like to vie for the mantle of the Ronald Reagan candidate. Read More...
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In a brand new op/ed published today in American Spectator online, IPI Director of Entitlement and Budget Policy Peter Ferrara writes:
I had a little argument with David Frum about taxes almost two years ago in a series of blog exchanges. He had argued that to pay for abolishing the Alternative Minimum Tax (AMT) we should adopt a carbon tax of equivalent size. The AMT had been adopted in the 1960s as a way of ensuring that a couple of dozen millionaires exploiting loopholes so furiously that they avoided any income tax liability altogether would be forced to pay some reasonable amount of tax.
But the AMT had never been indexed for inflation. So now, 40 years later, the AMT threatens millions of Americans with a punitive tax that would raise close to a trillion dollars over 10 years. It threatens in particular those in higher tax, Democrat states, as the deductions for state and local taxes are disallowed under the AMT. Read More...
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You’ve probably heard of the “No New Taxes” pledge. Well, how about a “No Tech Taxes” pledge.
It looks like that’s where presumptive Republican presidential candidate John McCain is heading.
McCain has fought against (primarily) state efforts to impose Internet access taxes and to illegitimately require vendors to collect sales taxes, much to the chagrin of the states, which see the Internet as a new treasure trove of revenue.
Access taxes are those that would be added to your Internet service provider (ISP) bill that gives you access to the Internet. And the sales taxes would be collected whether appropriate or not when you buy a product or service online. Congress has so far successfully managed to fight off attempts to impose or expand those taxes, but the reprieves have been temporary—and hard to secure.
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While news reports of ExxonMobil's $10 billion first quarter profits sound enormous, for a company the size of ExxonMobil, it's actually not so large a number. In fact, ExxonMobil's profit margins have been falling, which is why Wall Street was disappointed and ExxonMobil's stockprice fell.
But ExxonMobil's falling profit margins are still too much for Washington, it seems, where some Democrats think the company’s making too much.
Massachusetts Democrat Edward Markey said last week, “Big oil is spending their profits to prop up their stock price rather than on discovering and delivering alternatives to $4 gas.”
One “alternative” to $4-per-gallon gas is to increase the domestic supply. But Mr. Markey and most of his Democratic colleagues have opposed virtually all efforts to open up more domestic drilling. Read More...
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Should We Be Giving More to the Poor?
Dr. Merrill Matthews of the Institute for Policy Innovation says liberals should.
Liberals claim the country needs to give more to the poor.
But Syracuse University professor Arthur C. Brooks says that when it comes to charity, conservatives give more.
According to Brooks, liberal families make on average about 6 percent more than conservatives. But conservative families donate about 30 percent more to charity.
Take liberal presidential candidate Barack Obama. His income tax returns show that in 2001 he and his wife made $275,000. And gave away a whopping . . . $1,500.
Bill and Hillary Clinton made $100 million between 2000 and 2007 and gave away $10 million — to the Clinton Foundation, which they controlled.
So don’t be fooled by liberal calls for more charity. The money they really want to give away is yours.
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Would You Like to Pay for Health Insurance with that Hotdog, M’am?
The Institute for Policy Innovation’s Dr. Merrill Matthews says in San Francisco you may not have a choice.
San Francisco is the first city in the country to pass a universal health insurance program to cover the uninsured. Employers with 20 or more employees have to provide coverage.
And who’s going to pay for it? Why, consumers, of course.
The Los Angeles Times reports that some restaurants are raising their prices.
A popular Mexican food restaurant has added a 3.5 percent surcharge to every food bill. Along with a note on the menu saying it’s to cover the health insurance program.
Another restaurant is adding 4 percent to the bill. And one has a flat fee or one or two dollars per person. It’s enough to give you heartburn.
Tony Bennett may have left his heart in San Francisco, but Read More...
SF Healthcare Insurance |
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Tough times lead to bad ideas—and sometimes, really bad ideas.
Consider the tax break being pushed by the National Association of Homebuilders.
They would get to offset their current losses by looking back to previous years and getting a retroactive tax break. The provision is estimated to cost about $6 billion and is part of a larger $15 billion bill that passed the Senate last week.
Now, we’re all for most tax breaks, especially those that cut marginal tax rates and spur economic growth. (We’d be even more supportive of fundamental tax reform that eliminated most breaks, and set a low flat rate in its place.)
But that’s not what this tax break does. It’s meant to bailout homebuilders in the hope that they will keep on building and, consequently, keep construction workers employed.
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Republican Presidential nominee John McCain gave a speech on economic issues this morning, and there is much in the speech that should help cheer conservatives and make them more enthusiastic about the McCain candidacy.
McCain is talking about ideas that appeal directly to the conservative base, but are also in direct contrast with the positions that are being taken by both Obama and Clinton. These are ideas that should appeal to every common sense voter, leaving either Obama or Clinton with only the hardcore leftists, and that's not enough to win an election with.
For one thing, McCain is talking about tax cuts, not tax increases:
In the same way, many in Congress think Americans are under-taxed. They speak as if letting you keep your own earnings were an act of charity, and now they have decided you've had enough. By allowing many of the current low tax rates to expire, they would impose -- overnight -- the single largest tax increase since the Second World War. Among supporters of a tax increase are Senators Obama and Clinton. Both promise big "change." And a trillion dollars in new taxes over the next decade would certainly fit that description. Read More...
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Presumptive Republican presidential nominee Senator John McCain has proposed a radical reform for the tax treatment of health insurance. He would eliminate the current employer tax exclusion (i.e., employees do not count as income the money employers spend on employee health insurance; it is “excluded” from income) and replace it with a refundable tax credit: $2,500 for an individual and $5,000 for a family.
Critics of the McCain proposal—and they are legion—say that a $5,000 tax credit for a family doesn’t come near covering the cost of the average family policy, about $12,000 a year.
But to make that claim is to display a woeful ignorance of how the current tax exclusion affects a family’s income tax bill.
Consider, for example, a family making $60,000 a year, which has an employer-provided policy that costs $12,000 a year.
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I don’t expect the stimulus rebates to be received by taxpayers next month to have any significant lasting effect in boosting the economy. That is because these rebates do not involve marginal tax rate cuts. They are simply old-fashioned Keynesian cash grants, financed by Federal government borrowing. Any stimulus from taxpayers spending that money would be offset by the borrowing drawing the same amount of money out of the private sector.
Maybe the policymakers who dreamed up this outdated policy for President Bush and the Democrats in Congress will be lucky, and the economy will rebound this summer on its own. But maybe not, maybe the economy will deteriorate further this summer, providing an enormous political boost for the Democrats.
I think the election will turn on the economy, not on the war in Iraq. The challenge for McCain is to frame the issue as who has the better plan to turn the economy around and get it booming again.
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Thousands of the nation’s independent truckers are threatening to go on strike this month (April) to protest high fuel prices.
Truckers are being hard hit by the escalating fuel costs. For one thing, diesel fuel costs more than regular gasoline—exceeding $4 a gallon in many parts of the country (remember when diesel fuel cost less than regular gasoline?).
When a long-haul truck holds 250 gallons, well, that’s a serious cost of doing business for people who don’t usually have deep pockets.
One of the truckers’ demands is removing the federal gas tax.
Hey, guys, we’re with you there.
Currently, consumers pay 18.4 cents in federal tax for every gallon (a little more for diesel), and then states tack on their own taxes. A Tax Foundation study a few years ago estimated that federal, state and local gasoline taxes add up to an average of 45.9 cents per gallon.
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Why Do Americans Move to Other States?
Dr. Merrill Matthews of the Institute for Policy Innovation says maybe it’s because of lower taxes.
United Van Lines produces an annual study showing which states are losing and gaining Americans.
The Wall Street Journal says a careful look at that study suggests many people are fleeing high-tax for low-tax states.
Michigan was the biggest loser, with two people leaving for every one who moved in. Michigan also has high taxes and one of the worst state economies in the country.
Other losers were New York, New Jersey, Ohio, Pennsylvania and Illinois.
But the eight states without an income tax were net population gainers. And all except Florida are in the top 12 destination states.
If states really want to attract families, they don’t need flashy ad campaigns. They just need to recognize what most Americans want: lower taxes.
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Maybe, just maybe, Great Britain is finally getting serious about welfare reform.
The country has certainly been talking about welfare reform for years. But talk’s cheap; welfare isn’t.
A recently released government report, the largest of its kind ever done, has quantified the extent of the problem. According to the report, illness and disability claims cost Great Britain more than £100 billion a year.
Currently, some 2.6 million Brits are on “incapacity benefit,” those determined by a doctor to be unfit to work. According to David Freud, the government’s welfare reform advisor, 1.9 million of them have no business being there.
In the Welsh town of Merthyr, just outside of the capitol Cardiff, 20 percent of the working-age population is on incapacity benefit. That’s one out every five adults, unable to work.
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If you like taxes, you should love the wireless phone industry!
One of IPI’s fundamental principles of tax reform is transparency. In a nontransparent system, politicians can slip in lots of taxes and regularly increase the rates without individuals ever knowing they are getting dinged.
And your wireless service is subject to one of the most nontransparent tax systems we know.
According to a new study published in State Tax Notes, the combined federal, state and local taxes and fees (as of July, 2007) on wireless service range from 22.54 percent in Nebraska to 5.85 percent in Oregon.
Do Nebraska wireless-service consumers know that they are paying the highest wireless taxes in the country? Of course not.
Do Oregon consumers know they are paying the lowest rates? Of course not.
No one knows. And trying to wade through all of those tax inputs in the monthly bill is daunting.
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In a new oped featured today in the American Spectator entitled, “Is This What Our Economy Needs?”, IPI Director of Budget and Entitlement Policy Peter Ferrara discusses the "enormous" and "unprecedented" taxing and spending plans Barack Obama and Hillary Clinton are currently promising from the campaign trail.
An Excerpt:
Barack Obama and Hillary Clinton are both campaigning on economic policy platforms promising enormous, unprecedented, historic increases in runaway government spending, to be financed with huge, record setting, historic tax increases. Is this what our economy needs, just when it may be tipping into recession, and facing the stiffest world competition in decades?
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We’ve been trying to keep up with all of the new spending programs Senator Barack Obama promises to implement if he is elected president and, well, it hasn’t been easy. Because there are so many of them.
Here are some of them, taken from his campaign material:
1. “Obama will provide a $500 ‘Making Work Pay’ tax credit to almost every worker in America . . .”
Of course, the government doesn’t make money, it only transfers it. So before you can “give” the vast majority of Americans a $500 tax credit, you have to take it from them first.
2. “The Obama middle class tax plan will also provide 10 million homeowners a new mortgage interest credit that directly lowers the interest rate homeowners pay on their mortgages . . .”
3. “[E]liminate federal income taxes for all seniors making under $50,000 per year.”
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You Do the Math (and You Won’t Like It)
We don’t really know yet how much taxpayers will have to cough up for Democratic presidential candidates Hillary Clinton and Barack Obama to fulfill their promise to get every American covered with health insurance. But it’s possible to do some back-of-the-envelope calculations.
And it appears, well, let’s just say it won’t be cheap.
Both candidates say they would let the uninsured (anyone, actually) join the program that covers some 8 million federal employees and retirees and their dependents—or something similar— known as the Federal Employees Health Benefits Program (FEHBP).
While lots of private sector health insurers offer coverage under the FEHBP, one of the most popular is the Blue Cross Blue Shield “Standard Family” plan, which costs $1,028 a month, or $12,336 for this year.
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"What I try to do every day is figure out how to help somebody. . . But you can try to help somebody every single day. And I’ve tried to do that as a public servant, as an activist, and now as a senator, and that’s what I will do as president.” (Hillary Clinton presidential ad)
Call us old fashioned. Or maybe call us Constitutionalists. But we can’t for the life of us figure out why or when the presidency morphed into the Salvation Army.
The president of the United States is the leader of the free world, not the leader of a charity. The Commander-in-Chief, not Mother Teresa. The one trying to grow the economy, not grow economic dependency.
When he was running for president, Bill Clinton liked to say “I feel your pain”: apparently his wife thinks she feels everyone’s pain.
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Author: Merrill Matthews Jr. || Location: Lewisville, Texas, USA