Tag Archives: Tax Hikes

News

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

Leave a comment

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.

News

Obama budget is a ten-year, $1.5 trillion tax hike over present law

Leave a comment

Here’s the analysis of Obama’s budget. (H/T The Blog Prof)

Excerpt:

President Obama released his budget this morning.  Rather than focusing on Washington’s over-spending problem, the budget calls for higher taxes on families and small businesses to pay for even more government spending.  Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021.  By comparison, the historical average is only 18% of GDP.

Tax hike lowlights include:

  • Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%.  This is a $709 billion/10 year tax hike
  • Raising the capital gains and dividends rate from 15% to 20%
  • Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million.  This is a $98 billion/ten year tax hike
  • Capping the value of itemized deductions at the 28% bracket rate.  This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses.  A new means-tested phaseout of itemized deductions limits them even more.  This is a $321 billion/ten year tax hike
  • New bank taxes totaling $33 billion over ten years
  • New international corporate tax hikes totaling $129 billion over ten years
  • New life insurance company taxes totaling $14 billion over ten years
  • Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years
  • Increasing unemployment payroll taxes by $15 billion over ten years
  • Taxing management capital gains in an investment partnership (“carried interest”) as ordinary income.  This is a tax hike of $15 billion over ten years
  • A giveaway to the trial lawyers—not letting companies deduct the cost of punitive damages from a lawsuit settlement.  This is a tax hike of $300 million over ten years
  • Increasing tax penalties, information reporting, and IRS information sharing.  This is a ten-year tax hike of $20 billion.

Add it all together, and this budget is a ten-year, $1.5 trillion tax hike over present law. That’s $1.5 trillion taken out of the economy and spent on government instead of being used to create jobs.

The “tax relief” in the budget is mostly just an extension of present law, and also some refundable credit outlay spending in the tax code.  There is virtually no new tax relief relative to present law in the President’s budget.

So then how can the Obama administration claim that they are being fiscally responsible? Let’s see how. (H/T Hyscience)

Excerpt:

The Obama administration’s statement that the government will not be adding to the debt by the middle of the decade clashes hard against the facts, Republicans say, leaving officials straining to justify the budget claim they’ve pushed repeatedly over the past few days.

As it turns out, the administration is not counting interest payments. That means the budget team plans to have enough money to pay for ordinary spending programs by the middle of the decade. But it won’t have the money to pay off those pesky — rather, gargantuan — interest payments. So it will have to borrow some more, in turn increasing the debt and increasing the size of future interest payments year after year.

So how then, visibly agitated Republicans asked, can the administration claim that its 2012 spending plan sets the country on a course to “pay for what we spend” in just a few years?

Hyscience also linked to this McClatchy news article.

Excerpt:

He overlooks the fact that the government still would have to borrow to pay interest on the debt, much of it run up on his watch. Despite achieving “primary balance” in fiscal 2017, the government would have to borrow $627 billion to pay $627 billion in interest. Interest payments would rise annually through 2021.

Debt would rise as well, according to Obama’s proposed budget. Despite the budget reaching “primary balance,” the total gross government debt would rise from $21.9 trillion in fiscal 2017 to $22.9 trillion in 2018, $24 trillion in 2019, $25.2 trillion in 2020 and $26.3 trillion in 2021.

In all, the debt would jump by nearly $4.5 trillion in the four years after the government supposedly would stop adding to the debt because it had achieved “primary balance” – and that’s according to his own budget.

And a non-partisan fact-checking organization has found that Obama is lying about the budget. You can bet that the mainstream media will be backing him up, though.

Videos

Can Michele Bachmann give the mid-term voters what they want?

4 Comments
Michele Bachmann

Well, this left-wing Washington Post article explains what the mid-term voters voted for when they elected so many Republicans. (H/T ECM)

Excerpt:

Americans’ agenda is simple. In broad terms, they want the government to spur job growth, but not by subsidizing more government jobs with taxpayer dollars. They want Washington to balance the budget and reverse the growing influence of government on daily life. They want the government to encourage success, allow failure, punish those who break the law – and then get out of the way. And above all, they want politicians to follow through on their promises, even if that means tempering those promises in the first place.

They also show clear support for the following five ideas:

  1. Balance the budget as quickly as possible through meaningful spending reductions, a hard spending cap and a constitutional amendment so that it never gets unbalanced again.
  2. Eliminate all earmarks until the budget is balanced, then require a two-thirds vote by Congress for future earmark legislation.
  3. Keep taxes down by requiring supermajorities for increases, and eventually enact tax reform with a simple, low, fair rate that drastically reduces the length of the IRS code.
  4. Create a blue-ribbon task force that engages in a complete, line-by-line forensic audit of federal agencies and programs to end waste and reduce red tape and bureaucracy.
  5. And require Congress to provide specific constitutional authorization for every bill it passes so that the government stays within the boundaries imagined by the founders.

One more thing: Voters want their representatives home in their districts and holding monthly town halls. The worst strategic mistake House Democrats made this year was canceling scores of public meetings, denying their constituents the chance to be heard. Hell hath no fury like a voter silenced, so the voters spoke in unison on Election Day.

I’ve found that each of these policies has at least 60 percent public support, so if you agree with most of them, it means you’re in the American mainstream. It also means that – wait for it – you agree with the tea party.

These points come directly from the tea-party-backed “Contract From America,” a document compiled from and voted on by the various tea party organizations and promoted by FreedomWorks, a conservative advocacy group. This governing agenda is supported not only by conservatives, but also by largely nonideological, anti-political voters in the middle.

Now let’s see what Michele has to say about it:

You can see a much sharper version of the video at Gateway Pundit.