Commentary

Who pays the cost of raising taxes on imported goods?

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The Heritage Foundation explains the consequences of tariffs for all the groups who are affected.

Excerpt:

“Over a thousand Americans are working today because we stopped a surge in Chinese tires,” asserted President Obama in his State of the Union Address. President Obama referred to steep tariffs that his Administration imposed on tires imported from China.Not everyone sees it that way. According to the Tire Industry Association (TIA):

TIA believes this was a politically motivated decision that will end up costing more jobs than it saves. These tariffs will not bring back the jobs that the union claims have been lost; it will not create any new tire manufacturing jobs, and it will most likely result in the loss of thousands of retail tire industry jobs here in the U.S., affecting everyone from the shop that services your tire to the tire wholesalers—many of whom are small businesspeople struggling to stay afloat in this economy. This, all during a time when we can ill afford to be losing more U.S. jobs.

The Association pointed out that there is more at stake than dollars and cents:

This tariff will price these tires out of reach of many consumers, and will lead to a tightening in the remaining supply of lower-cost tires. Also, given that the lower-cost tires imported from China help those most vulnerable in this current economy—working-class citizens—we are deeply concerned that many consumers may delay or even defer replacing their tires when necessary, thus creating a potential safety hazard on America’s roads.

When you put a tax of lower-priced goods, the people who are hurt the most are working class workers. During a recession, people have even less money to spend and they need to be able to have the option of buying cheaper foreign goods. Tariffs take away that option, and force families to pay higher prices for the things they need.

Commentary

Why does Warren Buffett pay less in taxes than his secretary?

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Let’s take a look at this article from the libertarian Cato Institute.

Excerpt:

In 2007, Buffett said that he paid a 17.7 percent tax rate. Alan Reynolds notes that Buffett earns large amounts of capital gains, which are taxed at a maximum federal rate of 15 percent. People in the top income groups do report a lot of capital gains, which reduces their overall effective tax rate. However, capital gains are included in chart 1, above, and you can see that the top income groups still pay much higher tax rates than others on average. One reason is that a large amount of income at the top is small business income, which is hit by ordinary income tax rates of up to 35 percent.

You have to go to the extreme top end of the income spectrum in order for capital gains realizations to really push down overall effective tax rates. The IRS publishes data for the 400 highest-income taxpayers. For these taxpayers, the average effective income tax rate in 2008 was 18.1 percent.

Since the beginning of the income tax, we have nearly always had special treatment of capital gains for some very good reasons, as I discuss here. I point out that virtually all high-income nations recognize that capital gains are different and that special rules are needed. A number of OECD nations have long-term capital gains tax rates of zero, including New Zealand and the Netherlands.

Another important aspect to this debate regards the link between capital gains and dynamism in the economy and dynamism in tax payments. The political left makes it seem as if there were a permanent aristocracy at the top end of the income spectrum in America. However, IRS data show the exact opposite—the top 400 are a highly dynamic group. Notice first in IRS Table 1 that 57 percent of AGI for these taxpayers is capital gains. That is a key reason why the people in this group are constantly changing—large capital gains realizations are occasional events that rocket people to the top of the AGI heap. One example is when an entrepreneur sells her successful and longstanding business and retires.

The last table in the IRS document reveals the dynamism. The IRS traced the identities of all taxpayers who showed up in the top 400 anytime between 1992 and 2008. The IRS found that there were a huge 3,672 different taxpayers who appeared during that timeframe. Of these 3,672, fully 73 percent only appeared once in the top 400! And 85 percent appeared only once or twice.

So at the top end of our capitalist system is a continual generation of new wealth and new wealthy people, and that dynamism reflects the still-energetic and free-wheeling nature of our economy.

Another thing to keep in mind is that Warren Buffett is a big hypocrite.

Excerpt:

Two weeks ago, when billionaire Warren Buffett called for higher taxes on rich people like him, the liberal media predictably gushed and fawned.

Yet when Americans for Limited Government revealed last week that Buffett’s company Berkshire Hathaway has been in an almost decade-long dispute with the IRS over how much taxes it owes, these same press members couldn’t care less:

According to Berkshire Hathaway’s own annual report — see Note 15 on pp. 54-56 — the company has been in a years-long dispute over its federal tax bills.

According to the report, “We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months. The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”

Americans for Limited Government researcher Richard McCarty, who was alerted to the controversy by a federal government lawyer, said, “The company has been short-changing the tax collection agency for much of the past decade.   Mr. Buffett’s company has not fully settled its tax bills from 2002-2009.  Yet he says he’d happily pay more.  Except the IRS has apparently been asking him to pay more going on nine years.”

As if that wasn’t bad enough, Obama’s cancellation of the Keystone XL pipeline will benefit Buffett.

Excerpt:

Some 20,000 middle-class jobs could have immediately come from Obama’s approval of the Keystone XL pipeline from Canada, with hundreds of thousands more created over the project’s lifetime. Yet he shut it down, even while he claimed in his address that he supported an “all of the above” energy strategy.

As Bosanek might be aware, her boss stands to benefit handsomely from that decision, much as other Obama supporters, like the campaign donors who owned Solyndra and other green enterprises, cleaned up from the diversion of tax dollars from the middle class into green boondoggles.

Keystone XL was designed to transport oil from the Canadian tar sands to the Gulf of Mexico. It apparently also would have enabled oil producers in the booming oil fields of North Dakota to ship their product to Gulf refineries more cheaply.

Keystone XL would help to advance further development of the oilfields in the Bakken Shale formation, which has led to an economic boom in North Dakota.

Plans were under way to tie into Keystone XL and ship increasing amounts of Bakken oil south through the pipeline to Gulf Coast refineries.

Would we rather get our oil from Canada and North Dakota or from the Middle East through the Strait of Hormuz?

Now Bakken producers say they’ll be dependent on railway tank cars — Buffett’s railway tank cars.

Many of the rail shipments from the Bakken fields are being handled by Burlington Northern & Santa Fe Railway Co., which has more than 1,000 miles of track in the region.

Buffett’s holding company, Berkshire Hathaway, has agreed to buy BNSF in a deal valuing the railroad at $34 billion. Berkshire already owns 22% of Burlington Northern and will pay $100 a share in cash and stock for the rest.

It is the American people who should benefit from our government’s energy policies, not just billionaires and friends of Obama like Warren Buffett.

Now, that would be fair.

And finally, Warren Buffett’s secretary pays a lot in taxes because she has a huge income, which is highly taxed. Her annual income is at least $200,000.

News

Public school punishes boy for writing editorial critical of gay adoption

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From Fox News.

Excerpt:

A 15-year-old Wisconsin boy who wrote an op-ed opposing gay adoptions was censored, threatened with suspension and called ignorant by the superintendent of the Shawano School District, according to an attorney representing the child.

[…]Wegner, a student at Shawano High School, was asked to write an op-ed for the school newspaper about whether gays should be allowed to adopt. Wegner, who is a Christian, wrote in opposition. Another student wrote in favor of allowing gays to adopt.

[…]After the op-ed was published, a gay couple whose child attends the high school, complained.

The school immediately issued an apology – stating Wegner’s opinion was a “form of bullying and disrespect.”

“Offensive articles cultivating a negative environment of disrespect are not appropriate or condoned by the Shawano School District,” the statement read. “We sincerely apologize to anyone we may have offended and are taking steps to prevent items of this nature from happening in the future.”

But Staver said what the school system did next was absolutely outrageous. He said the 15-year-old was ordered to the superintendent’s office where he was subjected to hours of meetings and was accused of violating the school’s bullying policy.

“The superintendent called him ignorant and said he had the power to suspend him,” Staver said. “He’s using his position to bully this student. This is absolutely the epitome of intolerance.”

Staver said the boy’s parents were never notified.

At one point, Staver said the superintendent gave him a chance to say he regretted writing the column.

“When Mr. Wegner stated that he did not regret writing it, and that he stood behind his beliefs, Superintendent Carlson told him that he ‘had got to be one of the most ignorant kids to try to argue with him about this topic,’” Staver said.

At that point, Staver said the superintendent told the boy that “we have the power to suspend you if we want to.”

The superintendent allegedly told Wegner that he was personally offended by Wegner’s column.

Thoughtful Christians need to understand that their values are never going to be reflected in a secular public school system. Many public schools are run by unionized teachers and administrators who must support big government, because the bigger the government, the bigger their salaries. Quite often, public schools don’t focus on making children educated so they can get jobs and be independent – they focus on making them favor bigger government.

Christians should not support parents being forced to pay into a failing public school system. Many Christian parents favor homeschooling and private schools. Why should they be forced to pay for failing public schools like the one in the story above? It’s important for Christians to think clearly about education. Christians should favor school choice, a system in which parents get a voucher from the government and then can freely choose any school they want. If parents have the right to choose their school from many options, then schools will have to compete to provide what parents want.