Tag Archives: Stimulus

How Obama’s tax increases affect private charity and non-profit organizations

The Washington Examiner takes a closer look at President Obama’s latest stimulus bill.

Excerpt:

A significant portion – $400 billion over 10 years – of President Obama’s jobs bill is apparently funded through the limitation of itemized deductions for the “wealthy.”

This proposal would create a perfecta of unintended public policy consequences.

First, taxes for wealthy philanthropists would go up while taxes for wealthy Scrooges, those who make no charitable contributions, would remain virtually the same.

Second, if the philanthropists decide to reduce their philanthropy because of the additional taxes due, charities would have less revenues and would need to contract their charitable missions. Not good.

Over the years, the Internal Revenue Code has been amended and amended again. These amendments have severely reduced or eliminated the availability of most itemized deductions for the “wealthy.”

The article explains how the current tax code limits the wealthy from claiming most tax credits that are available to lower and middle income earners. The only tax credits that the wealthy can use are the mortgage interest deduction and the charity deduction. Whatever taxes that Obama wants to raise before he can raise the income tax brackets will have to come out of those two credits.

The article continues:

The home mortgage deduction is currently limited to the interest on a $1 million mortgage. With interest rates at 5% or so, the maximum tax increase related to home interest for any individual taxpayer from the proposed limitation on itemized deductions would approximate only $3500.

Therefore, the expected increase of $40 billion dollars a year in federal revenues for the next decade must be funded from “wealthy” individuals losing a portion of their itemized tax deduction resulting from their charitable contributions.

Consequently, we get to this unusual social result. If a “wealthy” philanthropist donates $1 million dollars to the Red Cross in 2012 and then does so again in 2013, his or her taxes would increase by $70,000 in 2013 over 2012.

If the “wealthy” next-door neighbor, Scrooge, made no charitable donations in 2012 and continued that pattern in 2013, Scrooge’s taxes would not increase in 2013. Now there is a piece of public policy – let’s raise taxes only on the good guys!

Most ‘wealthy’ individuals donate to charity only after determining how much they can afford in after-tax dollars. One has to think that the practical result here is that many, if not most, “wealthy” taxpayers would reduce their contributions to achieve the same after-tax cost of their charity.

So, by raising the taxes on the “wealthy” philanthropist, the proposed bill would very likely punish the poor by reducing the funds received by the local food bank etc. as large charitable donations decline. It is odd public policy, in troubled times, to propose a jobs bill that would hurt charities and therefore the poor.

This policy of Obama’s will result in a massive cut in funding for private charities and non-profits, including churches. Including churches. But that is exactly what a secular leftist like Obama wants. The state has to be everything, and all rivals to the state must fade away. The family has to be destroyed, and the church, too.

Solyndra CEO and CFO will refuse to answer questions in Congressional hearing

Does Obama give taxpayer money millionaires and billionaires?
Obama gave $535 million taxpayer dollars to Solyndra, a company backed by a billionaire Obama-supporter

The Washington Examiner has the story. (H/T ECM)

Excerpt:

Two members leading the Congressional investigation into bankrupt solar energy firm Solyndra said the company’s executives broke their promise to testify openly during a hearing scheduled for this Friday, instead electing to exercise their Fifth amendment rights not to answer questions.

In a statement released moments ago, House Energy and Commerce Chairman Rep. Fred Upton, R-Mich., and oversight subcommittee chairman Rep. Cliff Stearns, R-Fla., said:

“Our investigation has gotten this far without much cooperation from Solyndra, and it will continue with or without their voluntary testimony. It’s disappointing that the officials who canvassed the halls of Congress in mid-July and misled our members about the financial state of their company are now unwilling to answer direct questions, but any effort to cover up the truth will ultimately not succeed. We will not allow stonewalling by DOE, OMB, Committee Democrats, Solyndra, or anyone else to stop this investigation into what happened to half a billion dollars of the taxpayers’ money.

“Both Mr. Stover and Mr. Harrison will be sworn in under oath this Friday. We have many questions for Solyndra’s executives on their dealings with the Obama administration, their efforts to secure federal support for a project that appeared doomed from the outset, and why they made certain representations to Congress regarding their dire financial situation just two months ago. We would encourage Mr. Harrison and Mr. Stover to reconsider this effort to dodge questions under oath and hide the truth from those American taxpayers who are now on the hook for their $500 million bust.”

I wonder why the beneficiaries of a $535 million dollar stimulus grant would refuse to answer questions from Congress, now that they’ve declared bankruptcy. I wonder if it’s because of Solyndra’s links to Obama fundraisers?

Excerpt:

A key unanswered question in the Solyndra loan investigation concerns the role George Kaiser, the Oklahoma billionaire and major Obama fundraiser whose Family Foundation owned a large stake in the failed solar-panel company. Kaiser made multiple visits to the White House in the week before the Department of Energy approved a $535 million guaranteed loan to Solyndra on March 20, 2009, and helped arrange 16 separate meetings between top White House officials and Solyndra executives around that time. Yet Kaiser maintains that he “did not participate in any discussions with the U.S. government regarding the loan.”

But as the following video clip reveals, when it comes to steering government funds his way, Kaiser knew exactly what he was doing. Indeed, here he is July 2009 openly boasting about his ability to get his hands on stimulus funding. “There’s never been more money shoved out of the government’s door in world history, and probably never will be again, than in the last few months and in the next 18 months,” he says. “And our selfish parochial goal is to get as much as it for Tulsa and Oklahoma as we possibly can.”

Kaiser cites his “multiple trips to Washington” and his ability to secure meetings with “all the key players in the West Wing of the White House.” He also touts his “almost unique advantage,” through his foundation, of being able to match public dollars with private funding. That way, Kaiser says, the Obama administration will know “we’ll watch over it because we don’t want to be embarrassed with the way our money is spent and so we won’t make you be embarrassed with the way your money is spent either.” Sure, what could possibly go wrong?

Here’s the video:

And more from that National Review article:

While Solyndra’s failure is an embarrassment for both parties, Kaiser’s foundation still stands to recoup a large chunk of its investment in the company, whereas taxpayers will recoup very little, if any, of the $535 million investment the White House made on our behalf. That’s because once Solyndra’s financial troubles became too obvious to ignore, the DOE negotiated a loan restructuring that gave priority status to private investors over taxpayers with respect to the first $75 million recovered in the event of Solyndra’s collapse. As Republicans on the House Energy and Commerce Subcommittee on Oversight and Investigations pointed out last week, this appears to be a blatant violation of federal law.

Obama may take issue with the fact that “millionaires and billionaires” like Kaiser make too much money, but he obviously has no qualms about showering them with taxpayer dollars.

Remember, it’s not just one Obama fundraiser who has been linked to Solyndra.

How many jobs have wind and solar power produced in Spain and Denmark?

The problem with the Obama administration is that they keep making policy based on their intentions, instead of known results. They’ve allocated nearly 39 billion for green energy subsidies – that’s as much money as the entire annual Minnesota state budget. That’s a lot of money being taken away from job creators in the private sector.

So what can we learn about “green energy” from other countries? Is it good value for the money?

Well, we know that in Spain, the green jobs programs failed.

Excerpt:

Subsidizing renewable energy in the U.S. may destroy two jobs for every one created if Spain’s experience with windmills and solar farms is any guide.

For every new position that depends on energy price supports, at least 2.2 jobs in other industries will disappear, according to a study from King Juan Carlos University in Madrid.

U.S. President Barack Obama’s 2010 budget proposal contains about $20 billion in tax incentives for clean-energy programs. In Spain, where wind turbines provided 11 percent of power demand last year, generators earn rates as much as 11 times more for renewable energy compared with burning fossil fuels.

The premiums paid for solar, biomass, wave and wind power – – which are charged to consumers in their bills — translated into a $774,000 cost for each Spanish “green job” created since 2000, said Gabriel Calzada, an economics professor at the university and author of the report.

“The loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices,” he said in an interview.

The Heritage Foundation cites a study from Denmark, which shows that wind power has also failed.

Excerpt:

But according to a new study from the Danish Centre for Political Studies (CEPOS), commissioned by the Institute for Energy Research, the road to increased wind power is less traveled for a reason. The study refutes the claim that Denmark generates 20 percent of its power from wind stating that its high intermittency not only leads to new challenges to balance the supply and demand of electricity, but also provides less electricity consumption than assumed. The new study says, “wind power has recently (2006) met as little as 5% of Denmark’s annual electricity consumption with an average over the last five years of 9.7%.” Furthermore, the wind energy Denmark exports to its northern neighbors, Sweden and Norway, does little to reduce carbon dioxide emissions because the energy it replaces is carbon neutral.

The study goes on to say that the only reason wind power exists in Denmark is “through substantial subsidies supporting the wind turbine owners. Exactly how the subsidies have been shared between land, wind turbine owners, labor, capital and its shareholders is opaque, but it is fair to assess that no Danish wind industry to speak of would exist if it had to compete on market terms.”

But there’s a cost involved. When government spends more money, it necessarily diverts labor, capital and materials from the private sector. Just like promises are made in the United States about green jobs creation, the heavily subsidized Danish program created 28,400 jobs. But “this does not, however, constitute the net employment effect of the wind mill subsidy. In the long run, creating additional employment in one sector through subsidies will detract labor from other sectors, resulting in no increase in net employment but only in a shift from the non-subsidized sectors to the subsidized sector.”

And because these resources are being diverted away from more productive uses (in terms of value added, the energy technology underperforms compared to industrial average), “Danish GDP is approximately $270 million lower than it would have been if the wind sector work force was employed elsewhere.”

And the libertarian Cato Institute doesn’t think that any renewal energy program will work.

Excerpt:

A multi-billion-dollar government crusade to promote renewable energy for electricity generation, now in its third decade, has resulted in major economic costs and unintended environmental consequences. Even improved new generation renewable capacity is, on average, twice as expensive as new capacity from the most economical fossil-fuel alternative and triple the cost of surplus electricity. Solar power for bulk generation is substantially more uneconomic than the average; biomass, hydroelectric power, and geothermal projects are less uneconomic. Wind power is the closest to the double-triple rule.

The uncompetitiveness of renewable generation explains the emphasis pro-renewable energy lobbyists on both the state and federal levels put on quota requirements, as well as continued or expanded subsidies. Yet every major renewable energy source has drawn criticism from leading environmental groups: hydro for river habitat destruction, wind for avian mortality, solar for desert overdevelopment, biomass for air emissions, and geothermal for depletion and toxic discharges.

Current state and federal efforts to restructure the electricity industry are being politicized to foist a new round of involuntary commitments on ratepayers and taxpayers for politically favored renewables, particularly wind and solar. Yet new government subsidies for favored renewable technologies are likely to create few environmental benefits; increase electricity-generation overcapacity in most regions of the United States; raise electricity rates; and create new “environmental pressures,” given the extra land and materials (compared with those needed for traditional technologies) it would take to significantly increase the capacity of wind and solar generation.

A recession is not the time to be making policies based on what sounds nice. We need to do what works in a recession.

An all-of-the-above, drill-here-drill-now policy would increase supply at a time when demand for oil is growing in India and China. Increasing domestic supply would create jobs and lower energy prices – an excellent thing to do in a recession. But Obama is busy putting in drilling moratoriums and subsidizing green energy, instead. We elected someone who thought that “climate change” was a justification for raising electricity rates would necessarily skyrocket. He is fine with electricity prices skyrocketing. And that’s what we’ve gotten from him.