Something to Think About
“Taxation: how the sheep are shorn.”
~ Edward Abbey
“Taxation: how the sheep are shorn.”
~ Edward Abbey
The short answer to the question of how much the rich pay in federal income taxes is . . . a lot! And the data for that assertion comes from the IRS.
Scott Hodge, president of the Tax Foundation, writes at their Tax Policy Blog that “(n)ewly released data from the IRS clearly debunks the conventional Beltway rhetoric that the "rich" are not paying their fair share of taxes.” He then continues:
“Indeed, the IRS data shows that in 2007—the most recent data available—the top 1 percent of taxpayers paid 40.4 percent of the total income taxes collected by the federal government. This is the highest percentage in modern history. By contrast, the top 1 percent paid 24.8 percent of the income tax burden in 1987, the year following the 1986 tax reform act.
“Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined. In 2007, the bottom 95 percent paid 39.4 percent of the income tax burden. This is down from the 58 percent of the total income tax burden they paid twenty years ago.
“To put this in perspective, the top 1 percent is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined.”
Below is a chart that Hodge included with his post. The complete study, Fiscal Facts 183, contains the supporting data as well as several charts. The Heritage Foundation has additional comments at their blog, The Foundry.
UPDATE (7/31/09) At American Thinker, citing the the same Tax Foundation study, Rick Moran also notes the "war on successful people continues unabated," and cites "Nancy Pelosi's choice comments yesterday referring to insurance companies as 'villains' is only the lates in in series of statements."
The Tax Foundation published a new Fiscal Facts today, authored by Robert Carroll, that should be required reading by every member of Congress. Carroll explains that high tax rates come with an economic cost, introducing the study thus:
“President Obama appears intent on carrying out his campaign promise to raise tax rates on high-income households, but the surtax proposal that passed the Ways and Means Committee to finance health care expansion goes much further than most had anticipated. This is a policy to be wary of.
“High tax rates come with a high economic cost, they raise less revenue than the casual observer might think, and they fall heavily on the entrepreneurial sector. Moreover, they do little to address the more fundamental explanation for the widening gap between rich and poor: the globalization of labor markets.”
Carroll goes on to discuss in further detail just how high tax rates are likely to go; the economic effects of high tax rates; how the federal tax base will shrink; the effect of high rates on the entrepreneurial sector; and the widening gap between rich and poor. For liberals who partake in class warfare and think the “rich” should pay their "fair share," consider what Carroll has to say about higher tax rates shrinking the tax base:
“What is critically important from the government's perspective is that while it collects an extra 10 cents for every dollar subject to the higher rates, it loses over 45 cents for every dollar by which reported income falls due to taxpayers working less or otherwise reporting less income.”
The conclusion in Carroll’s study should be repeated by every policy maker each and every morning -- similar to school kids saying the Pledge of Allegiance every morning. It reads:
“High tax rates carry economic consequences. They cause taxpayers to base decisions more on tax considerations and less on economic merit. They also can be expected to shrink the size of the tax base and raise less revenue than the casual observer might assume. Another important consideration is the substantial effect the higher tax rates will have on the entrepreneurial sector, whose business income tends to be subject primarily to the individual income tax.”
The Heritage Foundation released their 2009 version of “Federal Spending by the Numbers” yesterday, which “shows spending and deficits surging at a pace not seen since World War II.” Authored by Brian Riedl, he writes:
“Washington will spend $33,932 per household in 2009--$8,000 per household more than last year. While much of this spending is a temporary result of the recession and financial crisis, President Obama's 2010 budget would replace this temporary spending with permanent new programs.”
Riedl also reports that: “Since 2001, spending has grown across the board. Discretionary spending has expanded 74 percent faster than inflation as a result of large defense and domestic spending hikes. Entitlement spending has reached a record 13 percent of GDP--not even counting the additional 5 percent of GDP spent on financial bailouts this year.”
The report is accompanied by a “Book of Charts,” containing a wide array of charts depicting federal revenue and spending. Below is just one that breaks down the proportion of federal income taxes paid by income group, and shows the top 10% of income earners paid 71% of federal income taxes. If you take a look at one of the “interactive” charts, you will note that the percentage has been growing since 1980 when the top 10% of income earners paid less than 50% of all federal income taxes.
In a Policy Analysis released today, Michael Cannon, director of health policy studies at the Cato Institute explains “Why a ‘public option’ is hazardous to your health.” Following is the executive summary:
“President Obama and other leading Democrats have proposed creating a new government health insurance program as an option for Americans under the age of 65, within the context of a new, federally regulated market — typically described as a "National Health Insurance Exchange." Supporters claim that a new government program could deliver higher-quality health care at a lower cost than private insurance, and that competition from a government program would force private insurers to improve.
“A full accounting shows that government programs cost more and deliver lower-quality care than private insurance. The central problem with proposals to create a new government program, however, is not that government is less efficient than private insurers, but that government can hide its inefficiencies and draw consumers away from private insurance, despite offering an inferior product.
“A health insurance "exchange," where consumers choose between private health plans with artificially high premiums and a government program with artificially low premiums, would not increase competition. Instead, it would reduce competition by driving lower-cost private health plans out of business. President Obama's vision of a health insurance exchange is not a market, but a prelude to a government takeover of the health care sector. In the process, millions of Americans would be ousted from their existing health plans.
“If Congress wants to make health care more efficient and increase competition in health insurance markets, there are far better options.
“Congress should reject proposals to create a new government health insurance program — not for the sake of private insurers, who would be subject to unfair competition, but for the sake of American patients, who would be subject to unnecessary morbidity and mortality.”
In addition to the above Policy Analysis, watch Cannon and Sally Pipes, president and CEO of the Pacific Research Institute, discuss “What Government-Run Health Care Really Means" in a Cato policy forum on July 15, 2009.
Seems some members of Congress just can’t help stuffing pork into every last piece of legislation. This time it’s “lifestyle pork” in the Kennedy-Dodd healthcare bill, according to the Council for Citizens Against Government Waste (CCAGW). The press release says:
“According to reporter Michael Kranish of The Boston Globe, both the House and Senate versions contain language that would fund billions of dollars in pork-barrel items such as walking paths, streetlights, jungle gyms, and farmers’ markets, which proponents are describing as an attempt to upgrade “health infrastructure” and transform communities.
“It is appalling that members of Congress have withheld critical details related to some of the most important and costly aspects of this bill, grossly misrepresented the economic assumptions underlying their cost estimates, and refused to commit to giving taxpayers a reasonable amount of time to review a new law that could disrupt 18 percent of the economy,” said CCAGW President Tom Schatz. “Yet they found time to cram the bill with billions of dollars in self-serving pork-barrel items for boondoggles such walking paths and farmers’ markets.”
“According to The Boston Globe article, the language to fund these pork-barrel items “was inserted at the urging of a nonprofit, nonpartisan group called Trust for America’s Health.” The Senate bill, commonly referred to as the Kennedy-Dodd bill, contains the most explicit descriptions of these projects, including a section which matches, word-for-word, language that was provided by the group, calling for the creation of an “infrastructure to support active living and access to nutritious foods in a safe environment.’’ In December 10, 2008 congressional testimony before the Senate Health, Education, Labor and Pensions (HELP) Committee, Trust for America’s Health provided detailed examples of the kind of taxpayer-funded healthcare infrastructure they support, including grants for bike paths, jungle gyms, and lighting. The group has also lobbied Congress to establish a “Community Makeover Program,” which apparently entails spending money to beautify streets.
“During the June 23, 2009 HELP Committee markup of the bill, Sens. Michael Enzi (R-Wyoming) and Tom Coburn (R-Okla.) offered several amendments to prohibit taxpayer dollars from being spent on such wasteful projects but their amendments were defeated.
“The healthiest thing that Congress could do for the American people would be to reject the bloated, wasteful, unaffordable Kennedy-Dodd bill and any similar plans. Instead, healthcare reform should be aimed at creating an authentic, robust market in which consumers and patients control their healthcare dollars, force new efficiencies and squeeze the fat out of the system, and push for higher quality care and better health outcomes,” concluded Schatz.”
"Lifestyle pork." Another way to waste taxpayer money. Sheesh!
The Center for Freedom and Prosperity provides a link to a “thorough new study, (which) shows America’s tax system (is) getting worse” and is “ranked in (the) bottom half of industrialized nations.”
The study, “Tax burden and individual rights in the OECD: an international comparison (requires Adobe Reader),” by Pierre Bessard of the Institut Constant de Rebecque in Lausanne, Switzerland. In a forward to the study, Pascal Salin, professor emeritus of economics at the Universite` Paris Dauphine, writes:
“(W)hen a private producer sees the arrival of a competitor likely to offer better products at lower prices he fears that he might lose clients and that this competition will be “harmful” for him. He might be tempted, against all logic and any moral sense, to denounce this competition – a competition that will perhaps be called “unfair” – and call for the intervention of state coercion in order to put an end to the other producers’ freedom to produce and sell. Of course, if his complaints are heard and if a state sets the protections necessary to allow him to continue offering products that are less satisfactory for his clients than his competitors’ products, there will be victims. Namely, the consumers deprived of potential gains and the other private producers deprived of their normal markets. It is therefore not competition that is harmful, but the lack thereof.
“The very same holds true for public policies, in particular tax policies. By trying to prevent tax competition, OECD or EU member states wish to deprive the world’s citizens of their freedom to choose for themselves or for some of their activities the tax environment that they deem best . . .
“By restricting tax competition, for instance by trying to harmonize tax policies or by fighting “tax havens”, high-tax states – tax hells – deprive their citizens of one of the great benefits of competition, experimentation. As Friedrich Hayek often pointed out, competition is a “discovery process”. In a purely imaginary world of perfect knowledge, competition would surely be unnecessary, for everyone would know what the best solutions to any problem are. But we are not in a world of this kind. Yet that is precisely what the high-tax states fighting against tax competition would like to make us believe. They assume that their tax policies are the best possible and that any competition would lead to a “race to the bottom”. But if the tax rates applied in the tax hells – for instance for the taxation of capital – were optimal, capital would not flee. For a long time, drastic foreign exchange controls have allowed many states to despoil capital. They cannot tolerate that their “tax slaves” can flee to more favorable areas. And yet, as this study so opportunely underscores, the whole world benefits from the existence of low-tax areas. For these areas not only lead to capital movement, but also create incentives to accumulate more capital.”
The study presents a “tax oppression index,” which “is based on 18 representative criteria measuring fiscal attractiveness, public governance and financial privacy in the 30 member states of the OECD. In the study, “Switzerland appears as the country with the lowest tax oppression – due to a relatively low tax burden and a more liberal institutional order, including its citizens’ right to veto legislation, political decentralization, and protection of financial privacy. Germany and France, on the other hand, whose governments have supported the OECD’s efforts, are among the most questionable states in terms of safeguarding their residents’ individual rights.”
Using the tax oppression index, the 30 OECD (Organization for Economic Cooperation and Development) countries are ranked from the most oppressive (Italy and Turkey with indices of 6.0) to the least oppressive (Switzerland with an index of 2.0). The United States index is 5.3 (tied for 10th most oppresive with the United Kingdom).
Gee, one might think that with the current economic conditions in the United States, e.g., unemployment at 9.5% and expected to increase to over 10%, the President and Congress would be working to reduce tax oppression rather than increasing tax oppression through burdening America with universal health care.
Wait a minute, lower taxes and letting Americans have the freedom to choose where and how they receive their medical care would mean more liberty and less tyranny.What a concept!
“The worst crime against working people is a company which fails to operate at a profit.”
~ Samuel Gompers, American Labor Leader
HT On Power
The Congressional franking privilege (free postage for members of Congress) has a history that goes back to the English House of Commons while the first U.S. Congress enacted a franking law in 1789, according to the website of the the Committee on House Administration. Further:
“As a result of the Legislative Branch Appropriations Act for FY 1991, Members are required to submit all mass mailings (unsolicited mailings of 500 or more pieces of the same matter) for an advisory opinion prior to mailing.”
Fast forward to July 2009. Roll Call reports on the kerfuffle that has erupted over the right of House Republicans to use the franking privilege to send a mailer critical of Democratic health care plans. According to Roll Call:
“The dispute centers on a chart created by Rep. Kevin Brady (R-Texas) and Republican staff of the Joint Economic Committee to illustrate the organization of the Democratic health care plan. (the chart, from the website of Rep. Kevin Brady (R-Texas) appears below)
“At first glance, Brady’s chart resembles a board game: a colorful collection of shapes and images with a web of lines connecting them.”
Roll Call also reports, “The dispute over Brady’s chart is being reviewed by the franking commission, which must approve any mail before it can be sent. No decision had been made on the matter by press time.” Stay tuned! But that flow chart sure looks like reason enough to start over with healthcare reform.
HT: Hot Air. Worth a read since "DafyDD Ab Hugh" thinks that "Brer Republican managed to trick Brer Democrat into flinging the Brady flowchart into the briar patch."
James Sherk and Robert Book of the Heritage Foundation posted a “WebMemo” yesterday that points out that low-income workers will end up paying for the employer mandates that are part of the House version of healthcare reform (HR 3200). They conclude the essay with:
“President Obama promised not to raise taxes on workers earning less than $250,000 a year, and supporters of an employer mandate claim that they will not make low- and middle-income workers bear the burden of paying for it. The focus on the surcharge on those earning over a million dollars a year reinforces this impression.
“However, low-income workers will bear much of the cost, paying higher taxes indirectly through reduced wages. The House bill imposes what is effectively an 8 percent surtax that applies only to workers who do not already have health insurance, most of whom are already in the lower-income strata and can least afford to pay higher taxes.”
As Thomas Sowell wrote in his "Medical Care Confusion" column yesterday: “An old advertising slogan said, ‘Progress is our most important product.’ With politicians, confusion is their most important product.”
"And yet, the Statist has an insatiable appetite for control. His sights are set on his next meal even before he has fully digested his last. He is constantly agitating for government action. And in furtherance of that purpose, the Statist speaks in the tongue of the demagogue, concocting one pretext and grievance after another to manipulate public perceptions and build popular momentum for the divestiture of liberty and tyranny from its rightful possessors. The industrious, earnest and successful are demonized as perpetrators of various offenses against the public good, which justifies governmental intervention on behalf of an endless parade of "victims." In this way, the perpetrator and the victim are subordinated to the government's authority -- the former by outright theft, the latter by a dependent existence. In truth, both are made victims by the real perpetrators, the Statist."
~ Mark Levin, page 8, "Liberty and Tyranny: A Conservative Manifesto"
The Tax Foundation released a “Fiscal Facts” (No. 180) last Friday, which said the “new surtax and expiring tax cuts could hit business income simultaneously.” More specifically, they wrote:
“Business income may be in for a significant tax hike in 2011. The Ways and Means Committee has approved a new 5.4 percent surtax on income over $1 million and two smaller surtaxes on other high income people. These may become law at the same time as the current top tax rate on wages (35%) reverts to 39.6% (end of 2010).”
The “fiscal facts” includes several charts and tables, but includes two interesting paragraphs:
“Many seemingly contradictory statistics are cited on this issue, depending on the author's opinion of higher tax rates. If an author favors higher tax rates, he is likely to cite a statistic similar to this: only 4.8% of all tax returns with business income will face a tax increase. That's true because so many mom-and-pop businesses do not earn enough to pay the coming tax rates on high income.
“If worried about the economic damage of higher tax rates (which we are), an author will cite this statistic: 62.6% of all business income is earned by tax returns facing a tax increase. That's true because those 4.8% of businesses that make enough to pay the new tax rates are large and profitable, and taxes on them hit much more income, potentially hurting many more workers.”
As the saying goes, “There are lies, damn lies -- and statistics.” And then there are taxes.
Chris Edwards and Tad DeHaven of the Cato Institute provide evidence the amount of fraud in government health care programs such as Medicare and Medicaid is larger than you may think, and even makes Bernie Madoff seem like a piker, in a column last week in National Review Online. They write:
“Government fraud has been in the news lately because analysts are expecting major abuses of the Obama administration’s $787 billion stimulus plan. One Deloitte expert argued that “swindlers, con men, and thieves could siphon off as much as $50 billion” of stimulus funds, which are vulnerable because policymakers are under pressure to shovel it out the door quickly.
“Even more troubling is the potential for fraud and abuse created by President Obama’s other big spending proposals — particularly his giant health-care plan. Obama wants to inject hundreds of billions more tax dollars into federal health care instead of fundamentally reforming Medicare and Medicaid — broken programs that are already subject to Madoff-sized larceny. That is incredibly unfair to those of us paying the bills.
“Take Medicare. The Government Accountability Office reports that the program makes about $17 billion in improper payments each year. And that doesn’t include problems in the new $60-billion-per-year prescription-drug plan, which is a juicy target for criminals. Harvard University’s Malcolm Sparrow, a specialist in health-care fraud, recently testified to Congress that official estimates are “lacking in rigor,” are “comfortingly low and quite misleading,” and exclude many kinds of fraud and abuse. He thinks that as much as 20 percent of the federal health-care budget is consumed by fraud, which would be $85 billion a year for Medicare.”
The ease of the fraud is unbelievable, however. Read this:
“Medicare makes a staggering 1.2 billion electronic payments each year, making it highly vulnerable to cheating by health-care providers and organized-crime rings. Criminals need only fill out the government forms carefully and the “claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all,” according to Sparrow. A perfect example is the recent case of a high-school dropout in Miami who was able to single-handedly bilk Medicare out of $105 million from her laptop by submitting 140,000 separate claims for equipment and services. ”
Guess our Congressional grandees prefer spending more money to buy more votes rather than provide oversight over existing programs. Sheesh!
Earlier today, the director of the Congressional Budget Office (CBO) posted a summary of the “preliminary analysis of the House Democrats health reform proposal on his Director’s Blog with a link to the more detailed 10-page analysis. Following is from the blog:
“Yesterday CBO released a preliminary analysis, conducted with the staff of the Joint Committee on Taxation (JCT), of H.R. 3200, the America’s Affordable Health Choices Act of 2009, as introduced by several House committees on July 14. Earlier this week, CBO released a preliminary report on the health insurance coverage provisions of the bill; this latest report added analysis of the other provisions.
“According to CBO’s and JCT’s assessment, enacting H.R. 3200 would result in a net increase in the federal budget deficit of $239 billion over the 2010-2019 period. That estimate reflects a projected 10-year cost of the bill’s insurance coverage provisions of $1,042 billion, partly offset by net spending changes that CBO estimates would save $219 billion over the same period, and by revenue provisions that JCT estimates would increase federal revenues by about $583 billion over those 10 years.
“By the end of the 10-year period, in 2019, the coverage provisions would add $202 billion to the federal deficit, CBO and JCT estimate. That increase would be partially offset by net cost savings of $50 billion and additional revenues of $86 billion, resulting in a net increase in the deficit of an estimated $65 billion.
“The figures released yesterday do not represent a complete cost estimate for the legislation. In particular, the estimated impact of the provisions related to health insurance coverage is based on specifications provided by the committee staff, rather than on a detailed analysis of the legislative language. (The estimates for other spending provisions reflect the specific legislative language. JCT has separately published its estimates of the effects of revenue provisions contained in H.R. 3200.) In addition, the figures do not include certain costs that the government would incur to administer the proposed changes and the impact of the bill’s provisions on other federal programs, and they do not reflect any modifications or amendments made after the bill was introduced. Nevertheless, this analysis reflects the major net budgetary effects of H.R. 3200.”
On Tuesday of this week, Pete Sepp, Vice President of Policy and Communications for the National Taxpayers Union said a preliminary analysis of the healthcare reform proposal showed the plan “suffers from rosy revenue assumptions and stale savings provisions.” In addition, Sepp said:
“With their new health care plan House Democratic leaders seem to have abandoned the 'borrow now, spend now, pay later' philosophy for a mantra that is just as dangerous to our economy: 'tax now, spend now, and tax again.' Aside from the disastrous impact of the new income surtaxes, more may be in store for America's small businesses and entrepreneurs if the savings from the health care bill don't materialize. The two initial rates of surtax will double if savings targets aren't met.
“Whatever else happens, the maximum combined federal tax rate in the U.S. will surpass those in France, Ireland, Italy, Switzerland, and the United Kingdom. Our rate will tie or even exceed that which burdens citizens in the People's Republic of China. The highest rate on dividend income would triple once the Bush tax cuts expire, and the rate on capital gains would reach a 15-year high. Forget about a bull market anytime soon.
[ . . . ]
“Never before have five innocuous words strung together -- 'America's Affordable Health Choices Act' -- meant something so contradictory. George Orwell is spinning in his grave.”
Dr. David Gratzer, a senior fellow at the Manhattan Institute, writes that "a Medicare-style public option in healthcare would kill private insurance," which is posted at U.S. News & World Report. Also at USN&WR, Mary Kate Cary writes the "White House (is) talking out of both sides of its mouth in blind rush for healthcare reform." Finally, Diane Furchgott-Roth, an adjunct fellow at the Manhattan Institute, writes about "a very unhealthy health bill" for Real Clear Markets on Thursday, July 16.
“A government that is big enough to give you all you want is big enough to take it all away.”
~ Barry Goldwater
The director of the Congressional Budget Office testified today before the Senate Budget Committee concerning the CBO’s recent analysis of the long-term budget outlook. Following is the opening paragraph of testimony that is posted on the CBO Director’s Blog (complete testimony and podcast available):
“Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy. The following chart shows our projection of federal debt relative to GDP under the two scenarios we modeled.” (emphasis added)
And the concluding paragraph:
“The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.” (emphasis added)
The following graph is from the Director’s Blog, and shows the “Federal Debt Held by the Public Under CBO’s Long-Term Budget Scenarios (Percentage of GDP):
And you thought I was pessimistic yesterday when I growled? Read the remainder of the director's post; it's that important.
It’s worse, and you don’t need to think that it’s ACTA saying that although we’ve growled about that many times over the past few months.
Rather, it’s Mort Zuckerman, chairman and editor of U.S. News & World Report, saying that the economy is not just bad, but “even worse than you think.” And he said it on the opinion pages of yesterday’s Wall Street Journal. And he provides 10 reasons for saying so. His introduction to those reasons:
“The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
“The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.”
You can read the 10 reasons why he thinks the current economy with its 9.5% unemployment rate is worse than you think. In fact, it may be even worse than described by Mort Zuckerman. For example, Doug Ross included the following explanation that came from a friend of his who is a “mergers & acquisition” specialist at his blog Doug Ross @ Journal on Sunday, July 12:
“My clients are all entrepreneurs having built successful businesses with sales of $5 million to $50 million. My prospective buyers are typically companies with sales of $50 million to $200 million. Every one of these companies (buyers and sellers) today shares these common denominators:
- Their businesses are down 10, 20% or more.
- They have either laid off staff or have reduced hours to 4-day weeks trying to keep key staff.
- They have reduced their own salaries and in many cases have implemented “cross the board” salary reductions.
- They (for the first time in their lives) have no ability to forecast beyond 4 weeks.
- They see nothing good on the horizon that would benefit them re: sales, cost reduction, efficiency, etc.
- In other words, they are experiencing a loss of optimism and any positive outlook on the future.
“My hope is to at the very least to try to sell these 5 businesses [information redacted].
“Prospects are slim. M & A deals are down (depending on the source) anywhere from 60% – 80%. I used to receive 20 – 40 inquiries from buyers every week. I now receive a handful a week.
“For me, the worst part is my favorite part. I love to open up new clients! This is the most enriching and fun part. I stopped trying to “build my pipeline” about 3 months ago. I no longer follow up on prospects. Why? Any private business owner would be insane to sell his business now. He will be hit with excess taxes and so many unknown consequences. Do you know that part of the “Cap and Trade” bill includes a provision that if you sell your house, it must conform to new “green standards” which reportedly could cost a seller many thousands of dollars? How many unknown consequences are built into a 1,300 page bill that no one has read?”
No wonder the economy seems out of control. It is, and adding more taxes and more regulation does nothing but add to the inability for entrepreneurs to plan.
A “legislative alert” (requires Adobe), issued yesterday, by Americans for Tax Reform (ATR) reports that on Friday, July 10, “House Ways and Means Committee Chairman Charlie Rangel (D-NY) announced a new tax increase to pay for government-controlled health care. Under the plan, taxpayers making as little as $280,000 per year will see a surtax of between 1% and 3% of adjusted gross income.” ATR’s “alert” made the following five points (emphases in the original):
"This “surtax” is merely a thinly-veiled way to raise the top marginal tax rate. A 3% surtax on married couples making $1 million or more would raise the top marginal tax rate in 2011 to 42.6%, up from 35% today.
“Raising income taxes at all, and marginal tax rates in particular, is a clear and unambiguous violation of the Taxpayer Protection Pledge. This Pledge has been made by 172 Congressmen and 34 Senators to their constituents and the American people. They promised not to raise income taxes or marginal income tax rates.
“The news is worse for small business owners. Small business profits face taxation on their owners’ 1040 forms. Two-thirds of small business profits pay taxes in households making at least $250,000 per year. Thus, this marginal tax rate increase is a tax hike on $2 out of every $3 small business dollars.
“This marginal tax hike will affect small employers and their employees. One-third of Americans work in firms with 2 to 100 employees. These small businesses, which must have profits to employ workers, will face these marginal tax rate hikes. The cost will be born out in lower wages and less jobs.
“Why raise taxes on job-creating small businesses in the middle of a deep recession with 10% unemployment? It makes no sense to do this economically. When Medicare payroll taxes and state income taxes are added to the mix, a small employer could easily face marginal tax rates approaching 50%, which would be the highest level since the stagflation 1970s.”
In the Victor Davis Hanson column we referenced in yesterday’s growl, we note his comment that with the recovery “we are rewarding unproductive areas of the economy . . . and punishing the engines of the economy.” In short, we’re heading down the road to serfdom.
We often growl about stimulus-nation and big government, most recently on June 29. Three column over the past two days are in the "must read" category, but they are indeed that good. In today’s Washington Post, Robert Samuelson focuses on the question that Americans should be asking as Congress and the Obama Administration push global warming legislation and government healthcare which is: “How big a government do we want?”
Samuelson raises the question in the context of the recent Congressional Budget Office report on the long-term budget outlook, writing:
“For the past half-century, federal spending has averaged about 20 percent of GDP, federal taxes about 18 percent of GDP and the budget deficit 2 percent of GDP. The CBO's projection for 2020 -- which assumes the economy has returned to "full employment" -- puts spending at 26 percent of GDP, taxes at a bit less than 19 percent of GDP and a deficit above 7 percent of GDP. Future spending and deficit figures continue to grow.
“What this means is that balancing the budget in 2020 would require a tax increase of almost 50 percent from the last half-century's average. Remember, that average was 18 percent of GDP. To get from there to 26 percent of GDP (spending in 2020) would require an additional 8 percentage points. In today's dollars, that would be about $1.1 trillion, a 44 percent annual tax increase. Even these figures may be optimistic, because CBO's projections for defense and "nondefense discretionary" spending may be unrealistically low. This last category covers much of what government does: environmental regulation, aid to education, highway construction, law enforcement, homeland security.”
Step-in George Will, who wrote in his column on Sunday about the prospects of a third stimulus bill. He begins by writing:
“Economic policy, which became startling when Washington began buying automobile companies, has become surreal now that disappointment with the results of the second stimulus is stirring talk about the need for a ... second stimulus. Elsewhere, it requires centuries to bleach mankind's memory; in Washington, 17 months suffice: In February 2008, President George W. Bush and Speaker Nancy Pelosi, who normally were at daggers drawn, agreed that a $168 billion stimulus -- this was Stimulus I -- would be the "booster shot" the economy needed. Unemployment then was 4.8 percent.
“In January, the administration, shiny as a new dime and bursting with brains, said that unless another stimulus -- Stimulus II wound up involving $787 billion -- was passed immediately, unemployment, which then was 7.6 percent, would reach 9 percent by 2010. But halfway through 2009, the rate is 9.5. For the first time since the now 16-nation Eurozone was established in 1999, the unemployment rate in America is as high as it is in that region, which Americans once considered a cautionary lesson in the wages of sin, understood as excessive taxation and regulation.”
Victor Davis Hanson gets to the bottom line in his latest Pajamas Media column:
“This recovery cannot work, other than a brief spurt that results from trillions in printed money, because we are rewarding unproductive areas of the economy (federal money for more wind farms, federal hurdles for pumping more known natural gas or nuclear power construction; more of the community-organizing model, less of the productive small business model) and punishing the engines of the economy.
“For Obama to pull this off, an entire sort of new vocabulary, rhetoric, and attitude is necessary. And the model is California: the carpenter and the bricklayer are laid off, and the state snoozes; while the assistant solid waste inspector of Green Acres is on television every night (his union can afford the advertising) to weep, and claim that if he and those like him (retire at 55 with $100,000 for life) are laid off, then Dantesque things follow.
“Remember the logic: the poor Californian voter who works at Starbucks or Target is angry that the grandee social worker is unnecessary and grossly overpaid at $90,000 a year, with lush retirement and benefits, and so is told that if he does not raise taxes to over 10% income and 9% sales, then firemen, police, and water workers will quit/be laid off/furlow and so he will starve, be murdered, and have no sewage.
"That is the model here in California and that is the model we are soon to see in Washington: the government worker and those who receive his largess, are kings; those who pay for them, and who work in private enterprise for far less, are, well, less than fools.
“Whereas thousands are fleeing the natural paradise of California for the arid deserts of no-tax Nevada, there is no Nevada to the United States — the last hope of an otherwise depressing planet.”
Not a pretty picture for future generations. If you agree, call Senators Jim Webb and Mark Warner or Representative Jim Moran; the switchboard number on Capitol Hill is (202) 224-3121.
“Taxes, even when authorized by the public, are a violation of property . . . a theft.”
~ Jean-Baptiste Say, 1767-1832, French Economist
Approval of the cultural center in Rosslyn appears all but certain when the Arlington County Board meets for its recessed meeting Tuesda meeting (agenda item 52.A.-F.). The thought of the Rosslyn cultural center came to mind when we read an editorial in last Sunday's Las Vegas Review-Journal.
Las Vegas is planning a new city hall. However, the editorial notes it's "become more expensive and possibly unaffordable" with the mayor blaming "skittish financial markets" with higher interest rates costing "millions of dollars."
The newspaper begins their editorial thus:
"Watching local governments try to go "on the wagon" and stop spending increasingly scarce tax dollars during tough economic times can be like watching a family member try to "go cold turkey" on his or her own drug of choice."You awaken at 2 a.m. to find the kitchen light on. And there's your loved one, puffing away on old butts recovered from a hidden ash tray."
The taxpayers of Arlington County could say much the same as the Board gets set to approve a cultural center in Rosslyn.
In the June issue of Wastewatcher, a monthly dispatch from Citizens Against Government Waste’s (CAGW), Roger Morse wrote:
“Apparently, the Social Security Administration (SSA) believes that a “shovel ready” project means digging up the dead to hand them a stimulus check.”
Here’s the background:
“In fact, the SSA reported that more than 10,000 stimulus checks were sent to the dead. The new ($787 billion stimulus) law provided a one-time payment of $250 for retirees, disabled individuals, and Supplemental Security Income (SSI) recipients. One would assume that the term “retirees” was meant to describe people retired from the workforce, not people retired from life.
“These are not just the recently deceased of the past few weeks, months, or even a year. The government sent checks to one individual who had been dead for 42 years. That’s exactly what 83 year-old James Hagner of Orchard Beach, Maryland learned in May. He received a check from the U.S. Treasury made out to his mother, Rose, who died in 1967.
“A spokesman for the SSA blamed the problem on the short three-month period they had to get the checks in the mail, claiming it was simply impossible to clean up the agency’s list so quickly . . . “
However, the story doesn’t end there. In fact, it gets worse, as Morse wrote on July 7 at CAGW’s blog, the Swine Line:
“Last week I wrote an article for the June issue of Wastewatcher entitled Stimulating the Dead. Sending stimulus checks to dead people does not help the economy.
“Little did I know that this is not a new practice of the Social Security Administration (SSA). They have been doing this for years. What’s worse is that they have known about it for years, but just can’t seem to fix the problem.
“The Inspector General (IG) of the Social Security Administration just issued a report to the Commissioner of a study that began in January of 2008. That’s right, 18 months ago SSA knew they were sending checks to people that their own files said were deceased.”
Here are the “Results of Review” from the IG’s audit report (Adobe required):
“SSA made payments to more than 6,000 beneficiaries for months or even years after receiving notification the beneficiaries were deceased. SSA received death reports for these beneficiaries and recorded dates of death on the Numident. However, SSA did not record the death information on the beneficiary’s payment record or terminate benefit payments to these individuals. Our audit results indicated that a large percentage of these beneficiaries were actually alive, and that death entries recorded on their Numidents were erroneous. However, our audit results also indicated that a number of these beneficiaries were deceased, and that dates of death recorded on their Numidents were accurate.
In January 2008, we identified 305 beneficiaries7 who received OASDI and/or SSI payments at the same time their Numident record indicated they were deceased. During our review, we verified the living status of 228 of these 305 beneficiaries. Our review found that 88 of the 228 beneficiaries were, in fact, deceased, and that death information appearing on the Numident was accurate. In these cases, SSA issued payments to the beneficiaries 2 to 366 months after receiving notification the beneficiary as deceased. SSA improperly paid these 88 deceased beneficiaries approximately $2.0 million. We also confirmed that 140 of the 228 beneficiaries were alive, and the death entries on the Numident were erroneous. The addition of erroneous death entries can lead to benefit termination, cause severe financial hardship and distress to affected individuals, and result in the publication of living individuals’ PII in the DMF.
“Based on our results, we estimate that as of January 2008, about 6,100 beneficiaries in current payment status had a date of death recorded on their Numident record.10 We estimate that approximately 1,760 of the 6,100 beneficiaries were actually deceased, and that SSA made approximately $40.3 million in improper payments to the deceased beneficiaries after recording their date of death in SSA’s records. Further, we estimate SSA would make approximately $6.9 million in additional improper payments over the next 12 months if these discrepancies were not corrected. See Appendix C for a discussion of our Case Results and Estimates.” (emphasis added)
And Americans want Congress and the Administration to impose universal health care? Sheesh!
Glenn Foden has a great cartoon, labelled “The Asylum,” posted at CNSNews.com today. On the left panel, a cigar-chomping politician says, “Insanity is doing the same thing over and over, and expecting different results.” On the right, coming out of the U.S. Capitol, is a balloon with the words, “Let’s try another stimulus bill.”
For a bit of background, Investor’s Business Daily (IBD) wrote in an editorial posted yesterday:
“Those who pushed through this year's $787 billion fiscal "stimulus" seem to be counting on the American people's short memory. Wasn't it just last year that we were told, repeatedly and with stark emphasis, that this economy was the "worst" since the Great Depression?
“That was the pretense for not only the stimulus, but for the federal takeover of the U.S. auto industry and the quasi-takeover of the U.S. financial industry. It's also the underlying premise for both nationalized health care and massive new taxes to cut CO2 emissions.
“If the stimulus passed, the White House vowed, unemployment would peak at 8%. Today, it's 9.5% — and rising.
"The truth is, we and everyone else misread the economy," said Biden. He used that phrase — "the truth is," or something similar — at least three times in a talk with ABC's George Stephanopolous. But the "truth is" something quite different.”
A Google search for “second” and “stimulus” produced over 16,000 “hits,” including:
Now comes a report from the GAO (U.S. General Accountability Office) that was mandated by the stimulus bill, the “American Recovery and Reinvestment Act of 2009,” which addresses states and localities uses, accountability and impact of stimulus funds.” (GAO report requires Adobe)
GAO found that as of June 19, “Treasury had outlayed about $29 billion of the estimated $49 billion in Recovery Act funds projected for use in states and localities in fiscal year 2009. More than 90 percent of the $29 billion in federal outlays has been provided through the increased Medicaid Federal Medical Assistance Percentage (FMAP) and the State Fiscal Stabilization Fund (SFSF) administered by the Department of Education.”
In the editorial’s conclusion, IBD wrote:
“Those who argue doing nothing wasn't an option are wrong. We would now be emerging from this recession if the government had left well enough alone. The Fed's interest-rate cuts to zero last December would have been plenty.
“Instead, we're facing the worst recovery since the Depression, and the entrepreneurs who fuel job growth are hunkering down to weather planned tax hikes in the trillions of dollars.”
While we don’t know for certain that the economy would now be “emerging from this recession,” it’s difficult to argue with one of IBD’s conclusions, i.e., “the stimulus has been the most inept public waste of money in history.”
It’s amazing how the government shills whine about falling revenues. The New York Times is the latest, writing in the lede paragraph on Sunday.
“Homeowners across the country are challenging their property tax bills in droves as the value of their homes drop, threatening local governments with another big drain on their budgets.”
The Times reports that property tax revenue is falling in some states “for the first time since World War II.” In addition:
“The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust.”
In Arlington County, the Board of Equalization of Real Estate Assessments (BoE) is the second-level review of the assessed value of your real property although there can be a first-level, or administrative, review. Property owners not satisfied with the decision of the BoE can appeal the BoE’s judgement to the Circuit Court.
As of this evening, the agendas (but not the decisions of the BoE) for the June 10 and June 17 meetings have been posted. BoE meetings are open to property owners and taxpayers.
Need assistance in fighting property taxes? The National Taxpayers Union publishes “How to Fight Property Taxes,” a “step-by-step booklet.”
HT: Jeff Dircksen blogging at NTU's Government Bytes.
Glenn Reynolds at Instapundit links to reports of tea parties in New Jersy, Austin and Dallas, Texas, Nevada, Massachusetts, South Carolina, Indiana, Idaho, Arkansas, Michigan, Minnesoa, Florida, New Mexico, and Conneticut.
CNN+Politics reports on the tea party outside the U.S. Capitol.
San Jose Mercury News reports on one of California's tea parties.
From the Los Angeles Times.
Big Spring Herald reports on local conservatives in Big Spring, Texas celebrate; includes picture of a great young conservative with her sign.
Pittsburgh's WTAE. channel 4 reports on "excessive taxation" protest in Schenley Park.
Washington Times has its own round-up here.
And from Small Gov Times. The Visalia Times-Delta reports that over 15,000 attended the Freedom Rally Tea Pary in Tulare. One more, from World Net Daily, another round-up reporting more than 2,000 tea parties nationwide.
The nonpartisan Citizens Against Government Waste (CAGW) has named its latest recipient of the dubious Porker of the Month, naming Rep. Maxine Waters (D-Calif.). CAGW points out:
"Rep. Waters has provoked a tussle with House Appropriations Committee Chairman David Obey (D-Wis.) over her intention to obtain an earmark for the Maxine Waters Employment Preparation Center, a facility within the Los Angeles school system.”
CAGW explains further:
“Rep. Waters’ grandiose gesture is a reminder that Congress still has not banned the practice of earmarking taxpayer funds for pork projects, including monuments, academic facilities, roads, airports and water projects, that are named after themselves. The practice, colloquially tagged as “Monuments to Me,” became the subject of scathing news reports in 2007 when House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.) was exposed for his $2 million earmark for the Charles B. Rangel Center for Public Service, the Rangel Conference Center, and the Charles Rangel Library at the City College of New York. It came up again in the recent weeks, when news stories cropped up questioning how $150 million in earmarks over the last 10 years were secured to fund the construction and maintenance of the nearly-deserted John Murtha Johnstown-Cambria County Airport in Johnstown, Pennsylvania.
“To his credit, Chairman Obey appears to grasp that such narcissistic expenditures fuel the negative image of Congress and is trying to proactively keep them out of the fiscal year 2010 appropriations bills. One reason for his epiphany is that Rep. Michael McCaul (R-Texas) has successfully attached amendments to ban such projects on several appropriations bills. A June 15, 2009 story in Roll Call by Steven T. Dennis and Tory Newmyer reported that Chairman Obey got the full brunt of Rep. Waters’ ire in a closed-door meeting after he announced that he wanted to prohibit the practice except when someone was “dying.” Rep. Waters defended the earmark by saying “the employment center had been named after her before she came to Congress in 1991.” It remains unclear whether Chairman Obey has succeeded in standing up to Rep. Waters and other members that are seeking similar projects.”
Ah yes, recall the words of ancient Chinese philosopher Lao Tzu -- “Why are the people starving? Because the rulers eat up the money in taxes.”
The following is excerpted from an essay by Bruce Walker that was posted earlier today at the American Thinker:
“When we celebrate the Fourth of July, we are celebrating one of the most important political documents in the history of the world. The Declaration is a statement to the world -- the people of the world was the audience -- about the very nature of government and its relationship to men. Sometimes we appreciate what this document was, but perhaps we need even more to appreciate what it was not.”
“It was not a poll-driven summation of current opinion. . . .
“The signers did not even seek a vote of the people . . . .
“The men who signed the Declaration of Independence represented the absolute opposite of "interest group politics" so slavishly worshipped in political science departments. They pledged their lives, their wealth, their liberty, and their honor -- everything -- on a toss of the dice. Often, even if the revolution won, these men personally lost. The game was not about them, their economic interest, or their political ambition. They won if America became a new order of liberty in the world. Interest politics would have led them all to make peace with the Crown. Moral principles led them to what Churchill would later call "blood, toil, sweat, and tears."
~ Bruce Walker, American Thinker essay
Take a few moments this weekend to study the Declaration of Independence. You can find it among the Historic Documents at Patriot Post.
Today’s Wall Street Journal has a front-page article featuring an analysis of the significant rise in the cost of Congressional travel. The reporters write:
“The spending on overseas travel is up almost tenfold since 1995, and has nearly tripled since 2001, according to the Journal analysis of 60,000 travel records. Hundreds of lawmakers traveled overseas in 2008 at a cost of about $13 million. That's a 50% jump since Democrats took control of Congress two years ago.
“The cost of so-called congressional delegations, known among lawmakers as "codels," has risen nearly 70% since 2005, when an influence-peddling scandal led to a ban on travel funded by lobbyists, according to the data.”
The Journal reports on travel to the Paris Air Show and on behalf of homeland security, however, the most outrageous examples involve travel to exotic locale -- one was a two-week trip to Europe by retiring Rep. Bud Cramer (R-Alabama) “to conclude some issues (he) was working on; the second a trip by Rep. Brian Baird (D-Washington) and four other lawmakers to the Galapagos Islands “to learn about global warming.”
Take a few minutes to read the entire article. Outraged? Then call or write Arlington’s Congressional mandarins:
At NewsBusters, Tom Blumer, who “presents workshops on money management, retirement, and investing,” wrote yesterday:
“As we near the end of June, which is supposed to be one of the four biggest months for federal tax collections (January, April, and September are the others), it is clear that the serious receipts shortfalls are not only continuing, but have caused the March 20 projections of the administration and the Congressional Budget Office (CBO) to be outdated.”
Blumer notes that media coverage of this “is minimal at best.” He then presents the chart below, and follows it with this comment:
“As you can see, as we approach the end of the month, June 2009 receipts from economic activity are down 25% from last year. It's clear from last year's results that it would be unreasonable to expect a high level of receipts from other than withholdings in the final two days of this year.”
HT Mark Levin Show. See also our June 29 entry in which we blogged about the nation's long-term economic outlook.