Taxation
Changing Tune, Administration Defends Insurance Mandate as a Tax – NYTimes.com
Brian Riedl: The Bush Tax Cuts and the Deficit Myth – WSJ.com
Class Warfare’s Next Target: 401k Savings
You did the responsible thing. You saved in your IRA or 401(k) to support your retirement, when you could have spent that money on another vacation, or an upscale car, or fancier clothes and jewelry. But now Washington is developing plans for your retirement savings.
BusinessWeek reports that the Treasury and Labor departments are asking for public comment on “the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams.”
In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.
They will tell you that you are “investing” your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.
Read the rest here…
N.J. loses $70B in wealth during five years as residents depart (for lower taxes)
“The wealth is not being replaced,” said John Havens, who directed the study. “It’s above and beyond the general trend that is affecting the rest of the northeast.”
This was not always the case. The study – the first on interstate wealth migration in the country — noted the state actually saw an influx of $98 billion in the five years preceding 2004. The exodus of wealth, then, local experts and economists concluded, was a reaction to a series of changes in the state’s tax structure — including increases in the income, sales, property and “millionaire” taxes.
“This study makes it crystal clear that New Jersey’s tax policies are resulting in a significant decline in the state’s wealth,” said Dennis Bone, chairman of the New Jersey Chamber of Commerce and president of Verizon New Jersey.
via N.J. loses $70B in wealth during five years as residents depart | New Jersey Business – – NJ.com.
Senate health care bill creates new marriage penalty – Washington Times
Senate Democrats’ health care bill would create a new marriage penalty by imposing a tax on individuals who make $200,000 annually but hitting married couples making just $50,000 more.
That’s one of 17 new taxes imposed by the bill, which also creates a levy on elective plastic surgery – some call it “botax” – and places a 40 percent excise tax on those who have generous health care plans.
“If you have insurance, you get taxed. If you don’t have insurance, you get taxed. If you need a life-saving medical device, you get taxed. If you need prescription medicines, you get taxed,” said Senate Minority Leader Mitch McConnell, Kentucky Republican, who is leading the fight against the bill.
read the rest here… Senate health care bill creates new marriage penalty – Washington Times.
The 0% Tax Rate Solution – WSJ.com
The federal income tax code is now so mangled that we can probably increase federal revenues with a 0% income tax rate for a majority of Americans.
Long before President Barack Obama took office, the bottom 40% of income earners paid no federal income taxes. Because of refundable income tax credits like the Earned Income Tax Credit (EITC), in 2006 these bottom 40% as a group actually received net payments equal to 3.6% of total income tax revenues, according to the latest Congressional Budget Office data. The actual middle class, the middle 20% of income earners, pay only 4.4% of total federal income tax revenues. That means the bottom 60% together pay less than 1% of income tax revenues.
This actually resulted from Republican tax policy going all the way back to the EITC, which was first proposed by Ronald Reagan in his historic 1972 testimony before the Senate Finance Committee on the success of his welfare reforms as governor of California. Besides calling for workfare, Reagan proposed the EITC to offset the burden of Social Security payroll taxes on the poor. As president, Reagan cut and indexed income tax rates across the board and doubled the personal exemption. The Republican majority Congress, led by former House Speaker Newt Gingrich, adopted a child tax credit that President George W. Bush later expanded and made refundable, while also reducing the bottom tax rate by 33% to 10%.
read the rest here… The 0% Tax Rate Solution – WSJ.com.
The Ant and The Grasshopper, Old and New
OLD VERSION (from AESOP’S FABLES):
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter. The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away. Come winter, the ant is warm and well fed. But the grasshopper has no food or shelter, so he dies out in the cold.
MORAL OF THE STORY: Be responsible/accountable for yourself!
MODERN VERSION (from Barry Obama and Nancy Pelosi):
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter. The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away. Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while others are cold and starving.
CBS, NBC, PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. America is stunned by the sharp contrast. How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?
Kermit the Frog appears on Oprah with the grasshopper and everybody cries when they sing, ‘It’s Not Easy Being Green.’ ACORN stages a demonstration in front of the ant’s house where the news stations film the group singing, ‘We shall overcome.’ Rev. Jeremiah Wright then has the group kneel down to pray to God for the grasshopper’s sake.
Nancy Pelosi & Harry Reid exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share. Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer. The ant is fined for failing to hire a proportionate number of green bugs and having nothing left to pay his retroactive taxes, his home is confiscated by the Government Green Czar.
The story ends as we see the grasshopper finishing up the last bits of the ants food while the government house he is in, which just happens to be the ant’s old house, crumbles around him because he doesn’t maintain it.
The ant has now disappeared in the snow.
Later, the grasshopper is found dead in a drug related incident and the house, now abandoned, is taken over by a gang of spiders who terrorize the once peaceful neighborhood.
Ain’t Socialism grand?
Ari Fleischer Says It’s Bad for Our Democracy to Exempt Half the Country From Income Taxes – WSJ.com
Atlas Shrugged: A Must Read for Every American
I’ve been telling Tickler for months now that we are beginning to see Ayn Rand’s novel Atlas Shrugged come to life. It’s horrifying. Ayn Rand defected from communist Russia in 1926 and wrote Atlas Shrugged in 1957. Needless to say she was not a fan of socialism. Noted economist Stephen Moore wrote a piece in the Wall Street Journal in January pointing out this same similarity between the world of Atlas Shrugged and our current political and economic climate. Highlights are below, see the full article here.
For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.
In the book, these relentless wealth redistributionists and their programs are disparaged as “the looters and their laws.” Every new act of government futility and stupidity carries with it a benevolent-sounding title. These include the “Anti-Greed Act” to redistribute income (sounds like Charlie Rangel’s promises soak-the-rich tax bill) and the “Equalization of Opportunity Act” to prevent people from starting more than one business (to give other people a chance). My personal favorite, the “Anti Dog-Eat-Dog Act,” aims to restrict cut-throat competition between firms and thus slow the wave of business bankruptcies. Why didn’t Hank Paulson think of that?
Ultimately, “Atlas Shrugged” is a celebration of the entrepreneur, the risk taker and the cultivator of wealth through human intellect. Critics dismissed the novel as simple-minded, and even some of Rand’s political admirers complained that she lacked compassion. Yet one pertinent warning resounds throughout the book: When profits and wealth and creativity are denigrated in society, they start to disappear — leaving everyone the poorer.
One memorable moment in “Atlas” occurs near the very end, when the economy has been rendered comatose by all the great economic minds in Washington. Finally, and out of desperation, the politicians come to the heroic businessman John Galt (who has resisted their assault on capitalism) and beg him to help them get the economy back on track. The discussion sounds much like what would happen today:
Galt: “You want me to be Economic Dictator?”
Mr. Thompson: “Yes!”
“And you’ll obey any order I give?”
“Implicitly!”
“Then start by abolishing all income taxes.”
“Oh no!” screamed Mr. Thompson, leaping to his feet. “We couldn’t do that . . . How would we pay government employees?”
“Fire your government employees.”
“Oh, no!”
Abolishing the income tax. Now that really would be a genuine economic stimulus. But Mr. Obama and the Democrats in Washington want to do the opposite: to raise the income tax “for purposes of fairness” as Barack Obama puts it.
I couldn’t have said it better myself.