Senate Republicans Take a Stand Against Tax Hikes

Senate Republicans appear to be resolute in their stand against any tax hikes for Americans who make more than $250,000 per year.

"President Barack Obama's plan to raise taxes on wealthier people while preserving cuts for everyone else appears increasingly likely to founder before Election Day.

Senate GOP leaders declared on Monday that Republicans are, to a person, opposed to legislation that would extend only middle-class tax relief — which Obama has repeatedly promised to deliver — if Democrats follow through on plans to let tax rates rise for the wealthiest Americans. The GOP senators forcefully made their case one day after House Republican leader John Boehner suggested he might vote for Obama's plan if that ends up the only option.

Both Republicans and Democrats are using the looming expiration of Bush-era tax cuts as a defining battle in elections to determine control of Congress.

It would take numerous Democratic defectors to pass the Republicans' version — extending all the Bush tax cuts — or the issue could be left for a postelection congressional session if Republicans block the measure with a filibuster. Obama last week declined to say whether he would veto a bill that preserved the tax breaks for the wealthy.

On Sunday, Boehner said he would support renewing tax cuts for the middle class but not the wealthy if that was his only choice. Though Boehner was clear that he supports extending the full range of tax cuts, the White House jumped on his remarks as a possible change of heart."

There's simply no reason to raise taxes on anyone in the midst of a recession. Frankly, even if we weren't in the midst of a recession, the government's haul of each person's income and property in the form of taxes is already high enough and wouldn't warrant a further increase.

It's also interesting to note the media's portrayal of this issue as being about the "wealthy".

Sure, a sizable portion of those who make over $250,000 per year can probably be rightly characterized as "wealthy". But surely there are plenty of those who make that much who aren't "wealthy" in terms of the amount of assets they own less their own personal liabilities, due to a high-cost lifestyle, having just entered that income bracket for the first time, etc.

Anyway, what's wrong with treating Americans the same regardless of their income amount, by applying the same (low) percentage of tax on everyone's income?

Failing to do that suggests we are embracing at least one of Karl Marx's famous slogans, "from each according to his ability, to each according to his needs".

NJ Governor Christie Impresses Again

New Jersey Republican Governor Chris Christie once again demonstrated excellent fiscal sanity, by rejecting a "millionaires tax" that had been proposed by New Jersey lawmakers.

The vote came within minutes of the Democratic Assembly passing a bill that they projected would raise over $500m, but be immediately spent on various items.

"The Assembly voted 46-32 to pass a bill that would raise taxes on income over $1 million to pay for property tax rebates and prescription drug benefits for seniors and the disabled."

Christie's response while vetoing the bill was priceless:

"While I have little doubt that the sponsors and supporters of this bill sincerely believe that the state can tax its way out of this financial crisis, I believe that this bill does nothing more than repeat the failed, irresponsible and unsustainable fiscal policies of the past," wrote Christie in his veto statement. "Now is not the time for more of the same. Ultimately, another tax increase will punish the state’s struggling small businesses and set our economy further back from recovery."

Why are there so few Chris Christie's (i.e., elected men and women with some fiscal sense and a backbone) in statewide and national office around the country?

Every state needs a Chris Christie running it, to stand up to special interest unions, corporations and citizens demanding more and more handouts and sweetheart deals from government.

Another Writer Complains About Taxes - That They're Too Low!

David North, an 81 year old resident of the state of Virginia, penned an article in the Washington Post in which he contrasts his state tax bill with someone with the same amount of income but who is much younger.

"As it cuts back drastically on services, Virginia is overlooking the foolishly generous income tax break it gives its affluent elderly. My wife and I had a federal adjusted gross income of $92,000, but our state income tax bill came to only $474, about one-half of 1 percent, compared with the $7,529 we paid to the feds.

With a total income of almost $100,000 a year, we pay all of $1.30 a day in state income taxes. But a 40-year-old couple with my income would pay the state $3,716 in taxes, about eight times what my wife and I pay.

I am neither an economist nor a tax-policy specialist, but I do know something about how tax systems work. U.S. taxes are much lower than those in other modern democracies, and Virginia's taxes are much lower than those in most other states. Further, Virginia's tax system, with a marginal tax of only 5.75 percent on income over $17,000, and no tax on estates, is rigged for the rich and against the middle class."

A few items worth noting on Mr. North's comments:

1) It's commendable that someone of his age is productive enough to bring in $92k of income (even if $32k of it comes from Social Security).

2) Although Mr. North complains about the exemption the state of Virginia provides him for his income from Social Security, he should keep in mind that for most people, Social Security payment represent a return of taxes previously paid. Even if in nominal dollars he has now received from Social Security more than he originally paid in, the effects of inflation mean that he more than likely has not been paid back in full in real dollars.

3) His complaint that Virginia's 5.75% marginal tax rate is "rigged for the rich" rings false. Considering the highest federal tax rate on individuals is 35%, putting the total federal plus state marginal tax rate for Virginia residents over 40%, is that combined rate somehow too low? If so, perhaps Mr. North should enlighten us as to what he believes the highest all-in marginal rate should be?

4) Mr. North's comment that "U.S. taxes are much lower than those in other modern democracies" is demonstrably false. The U.S. federal government and its states collect more taxes (whether in the form of income taxes, state taxes, sales taxes, social security, you name it) than ANY other government in the world. Perhaps Mr. North was referring to tax rates.

Although he personally seems to prefer higher tax rates, the reality is that most Americans do not share his thinking. If Mr. North wishes to transfer more of his own personal assets to fund Big Government, perhaps he should take a few moments today to write a check to the bureaucrats in Richmond or Washington DC. However, he should stop insisting that other Americans be required to follow his own personal wishes and pay more in taxes.

Group of Wealthy Individuals Demands Tax Hikes

Wealth for the Common Good, a self-described "network of business leaders advocating for shared prosperity and fair taxation", issued a report today designed to convince Americans that we actually aren't being taxed quite enough!

"Over the last half-century, America’s wealthiest taxpayers have seen their tax outlays, as a share of income, drop enormously, by as much as two-thirds for the highest-income grouping the IRS tracks. Meanwhile, the share of their household income that middle class Americans pay in federal taxes has increased slightly."

The fact that people get to keep more of their hard-earned money is a problem in exactly which way?

Of course, one has to balance their spin on events with a story from the AP that talks about how the tax burden today actually falls:

"Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.”

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization."

It's apparent that higher-income people are the only ones paying any income taxes, and so the point being made by this organization lacks clarity and purpose, and raises the specter of another agenda being at work.

Maybe Wealth for the Common Good can disclose the net worth of their individual members, so the public can better judge whether their appeal to raise tax rates on high-income people is truly as self-sacrificial as they want others to believe. For example, if the better part of their membership is already wealthy, then any increase in tax rates will not affect them nearly as much as other high-income people who don't quite have their amount of wealth.

The members of Wealth for the Common Good need to be reminded that there is no reason they can't already pay as much in extra taxes as they wish to the US Treasury. If they feels that would be especially patriotic or will somehow be invested wisely by the US Government, they should do so. But in the meantime, leave the rest of us out of their quixotic cause.

Small Businesses Face SkyrocketingTax Costs

The ability of the federal and state government to continue to force small businesses to pay more and more in taxes for their social utopia is increasingly in question.

"America's jobs growth engine is being choked to death.

A record 25 percent increase in the taxes against US small businesses -- from costs associated with new health care law, to an increased Medicare tax, increased capital gains taxes and higher state and city taxes -- is repealing any ability of these entrepreneurs to add jobs to their payroll.

And the numbers for New York's small- to medium-sized business are just as harrowing."

It's complete and total hubris for the elected clowns in Washington DC to increasingly burden small businesses with higher taxes, and then expect those same businesses to be able to hire more workers.

The first order of business for sane-thinking Americans is to throw those bums out of office, elect politicians who don't expect hard-working Americans to pay for the existence of other Americans, and move our economy squarely over to free-market, low-taxed principles.

In order to emerge from the current recession, it's becoming increasingly clear that we are going to need a 2010 version of the 1980's Ronald Reagan.

Article Parses "Tax Myths"

An interesting recent article in the Washington Post by Roberton Williams and Rosanne Altshuler of the Tax Policy Institute addresses five of what the authors perceive as "tax myths".

Some of the myths the authors discuss are complete canards, while others have real merit.

"Myth #1 - The poorest and the richest Americans pay no taxes."

Here the authors argue that the poor pay significant amounts of tax in the form of Medicare, Social Security, use taxes, etc. However, I'm not aware of any observer who thinks the poor pay "no taxes". Rather, the argument is that they pay no income taxes, which in many ways allows them to vote en masse for various tax benefits at the federal and state level without actually have to contribute in any real manner to the costs themselves.

"Myth #2 - Americans are overtaxed."

The authors contend "that other developed countries collect even more" taxes than the U.S. The authors are clearly wrong on this point, but in fairness they appear to be arguing that other countries collect taxes at higher rates than the U.S. or as a higher percentage of GDP, even if their total tax haul is actually far less than what the U.S. federal brings in annually.

Bottom line: the fact that other countries choose to tax themselves to death is not evidence that the U.S. itself is not similarly over-taxed; rather it just proves that other countries seemingly want to tax themselves into Socialist oblivion.

"Myth #3 - Higher taxes could eliminate the federal deficit."

On this point I have no argument with the authors. It's apparent that imposing more and more taxes on Americans will result in less economic activity overall, which would have the effect of decreasing total tax receipts, not increasing them.

"Myth #4 - Most people's tax returns are way too complicated."

Again, the author's resort to a straw-man argument. The U.S. tax code is too complicated, with too much social engineering being run through it in the form of tax credits, exemptions, etc. The surging business at H&R Block, Liberty Tax Service, as well as independent CPA firms, attests to the fact that for a lot of Americans, tax returns are too complicated to complete on your own.

"Myth #5 - You should aim for a big tax refund."

The authors argue that the prevailing myth that looks favorably on a big refund from Uncle Sam come tax return filing time is a more or less a scam. I agree completely. Better to owe the government a little money when you file your return, so that you know you had access to every last dollar you were entitled to throughout the prior year, than to get a big refund which means you lent your hard-earned money out on an interest-free basis.