Tag Archives: Revenue

What happened to the economy of North Carolina when Republicans cut taxes?

This story is from The Wall Street Journal.

Excerpt:

Four years ago, North Carolina’s unemployment rate was above 10 percent and the state still bore the effects of its battering in the recession. Many rural towns faced jobless rates of more than 20 percent.

But in 2013, a combination of the biggest tax rate reductions in the state’s history and a gutsy but controversial unemployment insurance reform supercharged the state’s economy and has even helped finance budget surpluses.

As Wells Fargo’s Economics Group recently put it: “North Carolina’s economy has shifted into high gear. Hiring has picked up across nearly every industry.”

The tax cut slashed the state’s top personal income tax rate to 5.75 percent, near the regional average, from 7.75 percent, which had been the highest in the South. The corporate tax rate was cut to 5 percent from 6.9 percent. The estate tax was eliminated.

Next came the novel tough-love unemployment insurance reforms. The state became the first in the nation to reject “free” federal payments for extended unemployment benefits and reduce the weeks of benefits to 20 from 26. The maximum weekly dollar amount of payments, $535, which had been among the highest in the nation, was trimmed to a maximum of $350 a week. As a result, tens of thousands of Carolinians left the unemployment rolls.

[…]After a few months, the unemployment rate started to decline rapidly and job growth climbed. Not just a little. Nearly 200,000 jobs have been added since 2013 and the unemployment rate has fallen to 5.5 percent from 7.9 percent.

[…]Even with lower rates, tax revenues are up about 6 percent this year according to the state budget office. On May 6, Gov. McCrory announced that the state has a budget surplus of $400 million while many other states are scrambling to fill gaps.

[…]Because North Carolina built in a trigger mechanism that applies excess revenues to corporate rate cuts, the business tax has fallen to 5 percent from 6.9 percent, and next year it drops to 4 percent.

Although North Carolina is too liberal for me, it is nice to see them turning their economy around with tax cuts on job creators, and benefit cuts to those who choose not to work.

At the end of the day, the only real security that any of us has comes from the skills we have developed by working and the work experience we put on our resumes. The economy is in for some harsh conditions going forward. The more we can get Americans working, the better they will be able to weather the coming storm. A little kick in the ass might hurt, but in the long-term, it’s for the best.

Wisconsin House passes Scott Walker’s tax cut bill, headed to governor’s desk

Wisconsin Gov. Scott Walker: All He Does Is Win
Wisconsin Governor Scott Walker: All He Does Is Win

The leftist Milwaukee Journal-Sentinel reluctantly reports on another victor for Governor Scott Walker.

Excerpt:

Gov. Scott Walker’s $541 million tax cut proposal ended its trek through the Legislature on Tuesday with a final vote in the Assembly, clearing the way for the governor to sign it by next week.

The Assembly voted, 61-35, in support of the bill, with three Democrats joining all Republicans in favor of the proposal. It now goes to the Republican governor for his approval.

“That’s exactly what taxpayers want — giving their money back to them rather than keep their dollars here in Madison,” Assembly Speaker Robin Vos (R-Rochester) said, urging lawmakers, “Let’s give it back.”

[…]With growing tax collections now expected to give the state a $1 billion budget surplus in June 2015, Walker’s tax proposal will cut property and income taxes for families and businesses, and zero out all income taxes for manufacturers in the state.

Though the state’s tax revenues are increasing, GOP lawmakers and Walker will use that growth as an occasion to trim overall state spending slightly for the next three years rather than increase it.

Rep. Jim Steineke (R-Kaukauna), a Realtor, said the state’s property taxes are a considerable barrier to people buying a home and staying in it into their old age.

“What we’re doing today does move us back in the right direction, lowering the property tax,” he said.

[…]Under Walker’s bill, the average income tax filer would receive a tax cut of $46 in April 2015 and the typical homeowner would save $131 over the existing law on this December’s bills, according to the Legislature’s nonpartisan budget office.

Also, the governor has separately had his administration alter income tax withholding rates so workers have less taken out of each paycheck — about $520 a year for a married couple making a total of $80,000 a year — starting in April.

The bill also would lower income taxes for factory and farm owners by $36.8 million over the current two-year budget and $91.3 million over the following two years.

GOP supporters of the manufacturing tax cut in the bill see it as fuel for one of the state’s main economic engines. Democratic opponents see it as a giveaway with a dubious payback to some of the richest people in the state, averaging about $800 for roughly 30,000 tax filers in 2015.

The Christian Post had a story about Scott Walker as well.

Excerpt:

A Wisconsin-based atheist organization has demanded that that Governor Scott Walker remove a posting on the social media website Twitter that is religious in nature.

The Freedom From Religion Foundation stated Tuesday that they took exception to Walker’s official account, including a tweet posted Sunday that simply read, “Philippians 4:13.”

As rendered by the New King James Version, Philippians 4:13 states, “I can do all things through Christ who strengthens me.”

On Sunday, Walker tweeted “Phillipians 4:13″ on the @GovWalker twitter handle. This is noted as being the “Official Twitter Account of the 45th Governor of the State of Wisconsin, Scott Walker.” Walker has another twitter handle, @ScottWalker.

The @GovWalker tweet of the verse citation received as of Tuesday evening 52 retweets and 76 favorites. It also received diverse responses from other Twitter accounts.

As of Wednesday, the tweet was still up. So I re-tweeted it and favorited it.

I think that in 2016 we should be looking at candidates who will take the fight to the Democrats. We don’t need another Mitt Romney. I want to see a candidate who sticks his neck out for what he believes in and comes out on top. Real accomplishments, this time. Not rhetoric. Why do we always have to care what our opponents think of us? Why not just beat them up and then be magnanimous in victory? If he runs for President on the platform of zeroing out manufacturing income tax, he will win. Every union worker will vote for him.

During the Christmas vacation, I read governor Walker’s new book, which was a Christmas present from my friend ECM. If you want to learn more about governor Walker, I recommend picking that up. I actually got the audio version, and it’s read by governor Walker himself.

Related posts

Wisconsin Governor Scott Walker cuts taxes again, expects $1 billion surplus in 2015

Wisconsin Governor Scott Walker
Wisconsin Governor Scott Walker (Republican)

Walker has actually cut taxes three times in less than a year.

I know what you’re thinking, (if you’re a Democrat). You’re thinking “how can a governor cut taxes three times and have a surplus?”.

When the government cuts taxes, people in the private sector who either create jobs or work at jobs get to keep more of their own money. They either spend or invest their money. Spending money is OK, but the magic really happens when people invest money. Even something as simple as putting money into a savings account can achieve magic, because banks lend that money to job creating businesses. What is the magic? The magic is that when people invest or save their money, the money makes its way to job-creating individuals and businesses, so that they can develop new products and services. For example, if Samsung keeps more of it’s own money, it can hire more and better employees to to develop the S5 smartphone – a new product that performs better than the previous S4 model, even though it will probably cost less than the previous S4 model.

What happens when consumers can get more functionality for less money? It means that they can do more in their own lives using the better products and services, but also means that they have more money to save or spend somewhere else. So what really drives the economy is not government handing out food stamps or government giving money to companies linked to their campaign fundraisers (e.g. – Solyndra). What really drives the economy is the private sector. That’s where new innovative products and services are made. When you thinking of government, you should think of the people with degrees in Marxist studies and women’s studies who take money away from Samsung, so they have less money to innovate with. Government takes money from Samsung and gives it to Brigham and Women’s hospital to study why lesbians are often overweight. (It’s purely a coincidence that this is where Obama’s Surgeon General nominee Vivek Murphy works, and purely a coincidence that he founded “Doctors for America” to market Obamacare to the voters).

When you keep the money in the private sector, you get new products and services that people actually want to buy. The more money that businesses keep, the more they higher workers, and the more the state collects in payroll and income taxes. The more that consumers spend to buy better products and services, the more the state collects in sales tax. The key to economic growth is to have businesses produce better products for less money. When consumers can do more and have more money left over, there is economic growth, which boosts tax revenues. Government rarely spends money as efficiently and effectively as job creators and workers can.

With that in mind, let’s see what happened when Governor Scott Walker cut taxes and let job creators and workers keep more of their own money.

The ultra-leftist Milwaukee Journal-Sentinel reluctantly reports.

Excerpt:

Senate Republicans Tuesday narrowly passed Gov. Scott Walker’s $541 million tax cut proposal in a vote that guaranteed the cuts will become law.

The tax decreases — the third round of cuts by Republicans in less than a year — passed 17-15 with GOP Sen. Dale Schultz of Richland Center joining all Democrats in voting against the proposal. The proposal now goes to the Assembly, which passed a different version of the tax cuts last month with two Democrats joining all Republicans in supporting it.

With growing tax collections now expected to give the state a $1billion budget surplus in June 2015, Walker’s bill will cut property and income taxes for families and businesses, and zero out all income taxes for manufacturers in the state.

GOP lawmakers and Walker will use the windfall for the state as an occasion to trim overall state spending slightly for the next three years rather than increase it.

[…]Also Tuesday, the Senate voted unanimously to pass a second bill to increase spending on worker training by $35.4 million through June 2015.

[…]Under Walker’s bill, the average income tax filer would receive a tax cut of $46 in April 2015 and the typical homeowner would save $131 over the existing law on this December’s bills, according to the Legislature’s nonpartisan budget office.

Also, the governor has separately had his administration alter income tax withholding rates so workers have less taken out of each paycheck — about $520 a year for a married couple making a total of $80,000 a year — starting in April.

“The more money that we give back to the taxpayers, the more money they can spend or save as they wish and the more our economy will grow,” said Sen. Alberta Darling (R-River Hills), co-chairwoman of the Legislature’s budget committee.

The bill would also lower income taxes for factory and farm owners by $36.8 million over the current two-year budget and $91.3 million over the following two years.

GOP supporters of this manufacturing tax cut in the bill see it as fuel for one of the state’s main economic engines.

Now the nice thing about Walker is that he is no Wall Street Republican. The man has been plowing money into worker re-training programs and manufacturing, which is exactly how you draw votes from working Democrats. Working Democrats tend to prefer working to collecting welfare, so Walker is out there competing for their votes by making sure that everyone who wants a job can get a job, and that those jobs pay well. Walker knows that if he can cut taxes on manufacturing, that it will cause manufacturers in his state to hire more people in order to develop cheaper and better products. That’s going to cause them to invest more in his state, and some manufacturers will even leave other Democrat-run states (e.g. – Illinois) to move to Wisconsin.

When Democrats were running Wisconsin, they created a huge $3.6 billion dollar deficit that Walker inherited. Everything has been turned around under Scott Walker, but neighboring states like Illinois continue to decline. What a resume this guy is going to have in 2016 when he runs for President. Walker bet the farm on his pro-growth policies in a blue state, and guess what? He is reaping the rewards. He knows what he is doing, and the left can’t stand him. All he does is win.

Will raising taxes on the rich help the economy and create more jobs?

The presidents of my two favorite think tanks, Arthur Brooks (AEI) and Edwin Feulner (Heritage) explain in this USA Today editorial.

Excerpt: (links removed)

First, there is no evidence that tax increases will actually solve our troubles. On the contrary, years of data from around the world show that when nations try to solve a fiscal crisis primarily by raising tax revenues, they tend to fail. In contrast, fiscal approaches based on entitlement reform and spending cuts tend to succeed.

American Enterprise Institute economists Kevin Hassett, Andrew Biggs and Matthew Jensen examined the experiences of 21 Organization for Economic Cooperation and Development (OECD) countries between 1970 and 2007. They found that countries with successful fiscal reforms, on average, closed 85% of their budget gaps with spending cuts. The countries with failed reforms, on average, relied at least 50% on tax increases. President Obama’s strategy falls firmly in the latter camp. After discounting the accounting tricks that create fictitious spending cuts, the president’s plan would impose about $3 in tax hikes for every $1 in spending cuts.

That is, his approach would probably land America in the “failed attempt” column. Five years down the line, we would be in the same fiscal mess we are in today, just with higher taxes and a bigger government.

Second, tax hikes aimed at small segments of the population wouldn’t raise much in revenues. Consider the “Buffett Rule” that the president spent many months promoting. According to the Joint Committee on Taxation, it would raise about $47 billion over a decade. The federal government currently spends about $4 billion more per day than it takes in. The Buffett Rule, then, would raise about enough next year to cover 28 hours of government overspending. Heritage Foundation economist Curtis Dubay finds that closing the deficit solely by raising the two highest tax brackets would require hiking them to 159% and 166%, respectively.

Third, as economists and business executives have noted repeatedly, raising taxes on families earning over $250,000 per year is effectively a massive tax hike on small businesses. Most small businesses today organize as S-corporations or other pass-through entities; their income is taxed as personal income. A study by Ernst and Young shows that Obama’s proposed tax hike would force these small businesses to eliminate about 710,000 jobs. Moreover, these households already bear a great deal of tax liability. According to the most recent Internal Revenue Service data, those earning $250,000 and above — roughly 2% of all taxpayers — earn 22% of income, but pay 45% of all federal income taxes.

Simply put, increasing tax rates on the wealthy is not a serious approach to solving America’s fiscal woes. The problem is purely one of excessive spending, not inadequate taxing.

Revenues haven’t changed substantially over the last decade, but government spending is way, way up. That’s what’s causing us to go into debt – massive government spending on turtle tunnels and Solyndra. We can do better than socialism.

Mark Steyn: Americans must choose between low taxes and big government

I noticed that John Hawkins at Right Wing News had come up with his list of the top conservative commentators, and guess who is at the top of the list? Canadian writer Mark Steyn.

Here’s Mark Steyn writing in Investors Business Daily.

Excerpt:

According to the most recent (2009) OECD statistics: Government expenditures per person in France, $18,866.00; in the U.S., $19,266.00. That’s adjusted for purchasing-power parity, and yes, no comparison is perfect, but did you ever think the difference between America and the cheese-eating surrender monkeys would come down to quibbling over the fine print?

In that sense, the federal debt might be better understood as an American Self-Delusion Index, measuring the ever-widening gap between the national mythology (a republic of limited government and self-reliant citizens) and the reality (a 21st century cradle-to-grave nanny state in which Democrats boast,  “Government is the only thing we do together”).

Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1% of GDP, and tax revenues are 27.1%. Likewise, government spending in Norway is 46.4% and revenues are 41% — a shortfall, but in the ballpark. Government spending in the U.S. is 42.2%, but revenues are 24% — the widest spending/taxing gulf in any major economy.

So the agonizing over our annual trillion-plus deficits overlooks the obvious solution: Given that we’re spending like Norwegians, why don’t we just pay Norwegian tax rates? No danger of that. If Jews earn like Episcopalians but vote like Puerto Ricans, Americans are taxed like Puerto Ricans but vote like Scandinavians.

We already have a more severely redistributive taxation system than Europe in which the wealthiest 20% of Americans pay 70% of income tax while the poorest 20% shoulder just three-fifths of 1%. By comparison, the Norwegian tax burden is relatively equitably distributed.

Yet Obama now wishes “the rich” to pay their “fair share” — presumably 80% or 90%. After all, as Warren Buffett pointed out in the New York Times last week, the Forbes 400 richest Americans have a combined wealth of $1.7 trillion. That sounds a lot, and once upon a time it was. But today, if you confiscated every penny the Forbes 400 have, it would be enough to cover just over one year’s federal deficit. And after that you’re back to square one.

It’s not that “the rich” aren’t paying their “fair share,” it’s that America isn’t. A majority of the electorate has voted itself a size of government it’s not willing to pay for.

[…]So given that the ruling party will not permit spending cuts, what should Republicans do? If I were John Boehner, I’d say: “Clearly there’s no mandate for small government in the election results. So, if you milquetoast pantywaist sad-sack excuses for the sorriest bunch of so-called Americans who ever lived want to vote for Swede-sized statism, it’s time to pony up.”

And this view is shared by many conservative commentators.

Marc Thiessen wants the Republicans to let the Bush tax cuts expire for everyone:

During the campaign, President Obama repeatedly told us how he wants to “go back to the income tax rates we were paying under Bill Clinton — back when our economy created nearly 23 million new jobs, the biggest budget surplus in history, and plenty of millionaires to boot.” Well if the Clinton tax rates were so great, let’s go back to all of the Clinton rates and relive the booming ’90s.

At least going back to the Clinton rates would put more people on the tax rolls, and give more Americans a stake in constraining government spending. It would also force all Americans — including the middle class — to pay for growing government services, instead of borrowing the money from China and passing the costs on to the next generation.

Americans had a choice this November, and they voted for bigger government. Rather shielding voters from the consequences of their decisions, let them pay for it.

And now he’s being backed up by Charles Krauthammer:

Why are the Republicans playing along? Because it is assumed that Obama has the upper hand. Unless Republicans acquiesce and get the best deal they can right now, tax rates will rise across the board on Jan. 1, and the GOP will be left without any bargaining chips.

But what about Obama? If we all cliff-dive, he gets to preside over yet another recession. It will wreck his second term. Sure, Republicans will get blamed. But Obama is never running again. He cares about his legacy. You think he wants a second term with a double-dip recession, 9 percent unemployment and a totally gridlocked Congress? Republicans have to stop playing as if they have no cards.

Obama is claiming an electoral mandate to raise taxes on the top 2 percent. Perhaps, but remember those incessant campaign ads promising a return to the economic nirvana of the Clinton years? Well, George W. Bush cut rates across the board, not just for the top 2 percent. Going back to the Clinton rates means middle-class tax hikes that yield four times the revenue that you get from just the rich.

So give Obama the full Clinton. Let him live with that. And with what also lies on the other side of the cliff: 28 million Americans newly subject to the ruinous alternative minimum tax.

Republicans must stop acting like supplicants. If Obama so loves those Clinton rates, Republicans should say: Then go over the cliff and have them all.

That’s my view as well. Americans voted for big government, and now we must pay for it. Maybe next time, we will put the remote control down and pay attention to the issues.