Tag Archives: Raise Taxes

Obama’s $1.5 trillion in taxes on the rich will hurt the middle class most

Sen. Jim Demint
Sen. Jim Demint

Consider this editorial from senator Jim DeMint.

Excerpt:

Here are the facts.

Americans who make $200,000 or more a year make up about 3 percent of the country. Those 3 percent earn roughly 30 percent of our national income and pay 52 percent of all income taxes.

Raising taxes on these top brackets would mean that nearly 40 percent of all new tax revenue would be taken from hundreds of thousands of small businesses. About half of the top 3 percent, around 750,000 Americans, report business income on their personal returns.

The president talks about Warren Buffett, but his planned tax hikes would hit Mom & Pop businesses that employ your friends and family.

It boils down to simple economics. If we want the millions of jobs that small businesses create, then we cannot confiscate an even greater share of the incomes that generate those jobs.

When politicians talk about “the rich,” they want to conjure an image in your mind of an idle, entitled elite somehow exploiting the rest of us.  (That actually sounds more like the U.S. Senate.)

But the real picture is more like that of a man or woman who owns a small, local business, who started with little but has done well, and who now has a handful of employees with decent incomes and health insurance.

The fiction behind the “tax the rich” ideology is that these folks have extra money just lying around, and that the government can take a big chunk of it without harming anyone.

What the liberals fail to recognize is that the money isn’t just lying around, stuffed in a mattress.  It’s out in the world, growing the economy.  Rich people, like everyone else, put their money to productive use.

The top 5 percent of American earners account for 37 percent of all consumer spending, about as much as the bottom 80 percent put together.

The top 10 percent of families hold 64 percent of all major investment assets. Those making over $200,000 give 36 percent of all charitable contributions.

This is the heart of the liberals’ misunderstanding.  Raising taxes on America’s job creators who spend, invest and donate will punish  the middle class, not the rich.  It will hurt the local businesses they patronize, the companies they invest in, and the charities they support.

Money that used to create jobs, wealth, and opportunity will instead be sucked into the economic black hole of the federal bureaucracy, never to return.

The Bureau of Labor Statistics estimates that it costs businesses about $63,000 to create one job.  Put another way, every $63,000 in new taxes risks an American job.  And every $100 billion in tax increases – on the rich or anyone else – could threaten nearly 1.6 million jobs.

Now, who do you think loses those jobs?  Will it be “the rich,” or will it be the clerk at their grocery store, the mechanic at their gas station, and the receptionist at their dentist’s office?

Make no mistake: When the taxman aims at “the rich,” he ends up hitting everyone else instead.

Obama keeps talking about making people pay “their fair share”, so he has plenty of money to hand out hundreds of millions of bailout dollars to solar power companies linked to his Democrat fundraisers. But nearly half the people in this country don’t pay federal taxes. Are they paying their fair share? Why isn’t Obama going after them? Well, if what DeMint says is true, he will be going after them – but most of them don’t realize it.

There’s a reason why companies are not hiring domestically, but are instead expanding operations abroad, where corporate taxes are lower and regulations are less of a burden. Companies create jobs where they can make a profit. If the Obama administration attacks their profit-making ability, they will stop creating jobs here and move their production and capital elsewhere. Obama’s rhetoric isn’t going to change the way the world works.

Obama flip-flops on health care mandates – now it IS a tax

Here’s the deal. In order to get the health care bill to pass, Obama had to trick people into thinking that it was not going to result in higher taxes.

So, you would see him on ABC News before the bill was passed saying that forcing people to buy things they don’t want is not a tax:

OBAMA: No. That’s not true, George. The — for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase.

OBAMA: My critics say everything is a tax increase. My critics say that I’m taking over every sector of the economy. You know that. Look, we can have a legitimate debate about whether or not we’re going to have an individual mandate or not, but…

STEPHANOPOULOS: But you reject that it’s a tax increase?

OBAMA: I absolutely reject that notion.

So forcing people to buy health insurance and fining them if they don’t is NOT A TAX, he says.

And so the bill was passed.

But the thing is, the government can’t legally force people to buy health care coverage – it’s unconstitutional! And people are suing them for having passed an unconstitutional law. So now the Obama regime has to argue in court that it really is a tax in order to escape court challenges that they overstepped their bounds by passing a health care mandate.

The American Spectator explains. (H/T Hot Air)

Excerpt:

In order to protect the new national health care law from legal challenges, the Obama administration has been forced to argue that the individual mandate represents a tax — even though Obama himself argued the exact opposite while campaigning to pass the legislation.

Late last night, the Obama Department of Justice filed a motion to dismiss the Florida-based lawsuit against the health care law, arguing that the court lacks jurisdiction and that the State of Florida and fellow plaintiffs haven’t presented a claim for which the court can grant relief. To bolster its case, the DOJ cited the Anti-Injunction Act, which restricts courts from interfering with the government’s ability to collect taxes.

The Act, according to a DOJ memo supporting the motion to dismiss, says that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” The memo goes on to say that it makes no difference whether the disputed payment it is called a “tax” or “penalty,” because either way, it’s “assessed and collected in the same manner” by the Internal Revenue Service.

It actually is a tax, and just another one of the many ways that Obama broke his campaign promise not to tax the middle class. How else is he going to pay for the trillion-dollar deficits he is creating? He has to raise taxes – or devalue our savings with inflation. There is no third way. The money has to come from somewhere – and if you tax the rich you just end up losing jobs.

Business leaders blame Obama for high unemployment rate

Story from Reuters about a recent jobs summit. (H/T American Spectator via ECM)

Excerpt:

At a recent symposium, Intel boss Paul Otellini, a contributor to both parties, expressed concern about the “amount of variability in the system” created by the state of policy flux in healthcare, energy and tax policy. “It is very difficult to make a hiring decision,” he said. General Electric chief executive Jeffery Immelt, a strong supporter of Obama’s cap-and-trade proposal, added he would just like to “know what the rules are.”

All in all, a disturbing replay of the 1930s when FDR’s big changes left business reeling with uncertainty and confusion. The “devil you don’t know” and all that.

Small business is certainly with Big Business on this, particularly regarding the mercurial nature of healthcare reform. The substance of ObamaCare continues to morph daily — from the state of the public option to employer mandates to financing expanded coverage – as Senate leader Harry Reid scrounges for votes. On energy, the president will make big promises at Copenhagen even though cap-and-trade looks stillborn in the Senate.

As for financial reform, Senate banking committee chair Chris Dodd has proposed sweeping changes, while the Tim Geithner-Barney Frank version in the House seems beamed in from a universe where the credit crisis never happened. Compromise could prove elusive. Even Obama’s tax reform panel has delayed releasing its findings.

The thing you have to understand about business is that finding and hiring an employee is an expensive process. If this employee has to be laid off later because of government increasing tax rates or regulations, then that layoff poisons the atmosphere in the entire company. If you want businesses to feel comfortable about hiring, you need to convince them that you aren’t going to raise their taxes or expenses, unionize their work force, fine them for hurting the environment, or pass laws that encourage their employees to sue them for being offended, etc.

Legislative initiatives like card-check, health care mandates, cap-and-trade, ENDA, increased government spending, tariffs, “pay equity” laws, restrictions on executive salaries, capital gains tax hikes, etc., make businesses very risk-averse about hiring decisions. If Obama wants to attack businesses, these businesses may just leave the USA and set up shop elsewhere. But more likely they will just stay here and avoid hiring any new employees until the 2012 election.

Why Obama’s public option health care plan is a bad deal for young adults

This podcast explains how Obama’s health care reform bill would require young people to buy insurance, while simultaneously preventing medical insurers from reducing their premium amounts in accordance with the lower health risks of young people.

The MP3 file is here.

The guest being interviewed is Aaron Yelowitz.

Bio excerpt:

  • Ph.D., Massachusetts Institute of Technology, Economics, 1994.
  • B.A., High Honors, University of California, Santa Barbara, Business Economics, 1990.
  • Department of Economics, University of Kentucky, Associate Professor, July 1, 2001-present.
  • Associate Editor, Journal of Public Economics, January 2004-present.

And you can read the paper that is being discussed in the podcast.

Excerpt from the abstract:

One of the most interesting questions about the health care overhaul now moving through Congress is how it would affect young adults. That legislation would force most or all Americans to purchase health insurance (an “individual mandate”) and would impose price controls on health insurance (“community rating”) that would limit insurers’ ability to offer lower premiums to low-risk enrollees.

Those provisions would drive premiums down for 55-year-olds but would drive them up for 25-year-olds—who are then implicitly subsidizing older adults. According to the Urban Institute, many young people could see their premiums double, whereas premiums for older adults could be cut in half.

[…]The irony is that Barack Obama won the presidency with 66 percent of the vote among adults aged 18 to 29. That’s a larger share than any presidential candidate has won in decades. Yet his health care overhaul could impose its greatest burdens on young adults.

This reminds me of young unmarried women voting overwhelmingly against marriage and family by electing big government socialists like Obama. This is not to even mention the 10.2% unemployment rate, which is worse for younger workers, as well as the massive national debt that will have to be paid for by young people. Why is that young people are so ignorant of economics that they vote against their own best interests?

Note: The Obama health care plan is also a bad deal for elderly patients on Medicare, since he is cutting 500 billion dollars from Medicare.

Understanding the real effects of the Democrat health care reform bill

Story from the Wall Street Journal. (H/T ECM)

Excerpt:

The Congressional Budget Office figures the House program will cost $1.055 trillion over a decade, which while far above the $829 billion net cost that

[…]All this is particularly reckless given the unfunded liabilities of Medicare—now north of $37 trillion over 75 years.

[…]As for Medicaid, the House will expand eligibility to everyone below 150% of the poverty level, meaning that some 15 million new people will be added to the rolls as private insurance gets crowded out at a cost of $425 billion. A decade from now more than a quarter of the population will be on a program originally intended for poor women, children and the disabled.

[…]All told, the House favors $572 billion in new taxes, mostly by imposing a 5.4-percentage-point “surcharge” on joint filers earning over $1 million, $500,000 for singles. This tax will raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts expire—not counting state income taxes and the phase-out of certain deductions and exemptions. The burden will mostly fall on the small businesses that have organized as Subchapter S or limited liability corporations, since the truly wealthy won’t have any difficulty sheltering their incomes.

This surtax could hit ever more earners because, like the alternative minimum tax, it isn’t indexed for inflation. Yet it still won’t be nearly enough. Even if Congress had confiscated 100% of the taxable income of people earning over $500,000 in the boom year of 2006, it would have only raised $1.3 trillion. When Democrats end up soaking the middle class, perhaps via the European-style value-added tax that Mrs. Pelosi has endorsed, they’ll claim the deficits that they created made them do it.

Under another new tax, businesses would have to surrender 8% of their payroll to government if they don’t offer insurance or pay at least 72.5% of their workers’ premiums, which eat into wages. Such “play or pay” taxes always become “pay or pay” and will rise over time, with severe consequences for hiring, job creation and ultimately growth. While the U.S. already has one of the highest corporate income tax rates in the world, Democrats are on the way to creating a high structural unemployment rate, much as Europe has done by expanding its welfare states.

Meanwhile, a tax equal to 2.5% of adjusted gross income will also be imposed on some 18 million people who CBO expects still won’t buy insurance in 2019. Democrats could make this penalty even higher, but that is politically unacceptable, or they could make the subsidies even higher, but that would expose the (already ludicrous) illusion that ObamaCare will reduce the deficit.

Click here to read the rest of the article. It’s quite comprehensive and yet concise.