Tag Archives: Tax Policy

Commentary

Two ways to conduct a Tea Party revolution against socialism

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GatewayPundit is reporting that the economic news is getting even worse.

Along with raising taxes on businesses, raising taxes on the “rich,” and allowing the Bush tax cuts to expire…
President Obama will also announce the implementation of an expensive cap and trade energy policy this week to battle pretend global warming.

He cites Human Events’ report that we will lose between between $444 billion and $1.308 trillion of GDP output, and unemployment would increase 2.7% (= 4 million jobs lost), mostly in the manufacturing sector.

Well, we’re doomed. Or are we? I’ve found a couple of clever ideas for dealing Obama’s plans to plunge the United States into socialism.

The first idea is from Biola University professor Doug Geivett, who is a first-class evangelical Christian scholar. I met Doug at a philosophy conference on Providence and Open Theism at Wheaton College, IL in 2000. I remember asking him whether investments were a form of gambling. He explained that investing was not gambling, because investments fund the creation of new products and services that grow the economy.

Doug starts by noting Rick Santelli’s rant against Obama’s socialist policies which involve wealth redistribution from those who produce to those who consume. (Note: there is now a new rant up, with supply-sider Larry Kudlow).

In his post, Geivett enumerates the points made by Santelli:

First, fiscally responsible Americans don’t want to pay the bill for borrowers who can’t keep up with their mortgages.

Second, fiscally responsible Americans shouldn’t have to pay the bill for borrowers who can’t make their payments.

Third, this plan doesn’t rob the rich to give to the poor. It takes from every tax-paying American and turns it over as free cash to people who can afford to rent but can’t afford to buy.

Fourth, there are ways to get the federal government to pay attention, ways the government is totally unprepared for.

Santelli suggests that responsible, productive Americans may want to consider a revolution – a kind of Chicago Tea Party. Right now, the banks are being more careful about who they give credit to. This is not a problem for responsible people with good credit history. The government is giving out bailouts to banks in order to ease credit for irresponsible consumers – the same ones that got us into this mess in the first place.

Geivett describes what he thinks this Chicago Tea Party might look like:

For example, what do you think would happen if 30% of all Americans with an income of $50,000 or more organized to do the following two things:

  1. Convert all of their assets held in the stock market and at banks and credit unions into cold, hard cash (or gold bars holed up in their bank’s safe deposit boxes)?
  2. Refused to pay income tax for 18 months (or indefinitely)?

This would remove the money that banks use for consumer loans. If no one can get credit, then no one can default, and there is no need for bailouts to these delinquents. By refusing to pay income taxes for a period of time, the government would have no funds available for bailing out their favorite special interest groups. People might finally have to stop spending and start working and saving again.

Geivett goes on to describe how this plan should incorporate reduced consumer spending, which I agree with. Somehow, America has gone terribly wrong. We use to be a nation of workers and savers. But the progress of left-wing socialism, with all the redistributing of wealth from producers to free-riders, has caused us to drift into an irresponsible, immature, hedonistic culture.

Geivett’s plan made me think of a post I read before on “Going Galt”. What if all the people who produced wealth just stopped producing?

Do you ever wonder after dealing with all that is going on with the economy and the upcoming election if it’s getting to be time to “go John Galt”? For those of you who have never read Ayn Rand’s Atlas Shrugged, the basic theme is that John Galt and his allies take actions that include withdrawing their talents, “stopping the motor of the world,” and leading the “strikers” (those who refuse to be exploited) against the “looters” (the exploiters, backed by the government).

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Obama talks about taking from those who are productive and redistributing to those who are not — or who are not as successful. If success and productivity is to be punished, why bother? Perhaps it is time for those of us who make the money and pay the taxes to take it easy, live on less, and let the looters of the world find their own way.

The National Taxpayers Union explains who pays the taxes that Democrats are redistributing to their freeloading constituents. The top 50% pays 97% of all income taxes collected! The lazy half the country is freeloading off of the productive half.

The second idea that I found for responding to Obama’s socialist bailouts is to move to Canada. Captain Capitalism had this post in which he compares the two economies and concludes that Canada has a better future than the United States. Canada has a smaller deficit, a smaller debt, and is not facing a meltdown from entitlement programs like Medicare and Social Security, like we are.

Investor’s Business Daily reports that:

By 2041, Social Security will be essentially broke, having exhausted its trust fund, those dollars amassed through decades of surplus payroll tax revenues that Congress will have already squandered on general budget expenditures. Medicare’s future is just as bleak. It is already spending more than it is receiving in payroll taxes.

The prime minister of Canada right now is economist Stephen Harper, a strong fiscal conservative in the mold of F.A. Hayek.

UPDATE 1: Michelle Malkin has even more ideas on what to do here.


News

Michele Bachmann explains why we need to cut corporate tax rates

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Representative Michele Bachmann
Representative Michele Bachmann

Michele Bachmann is by far my favorite House Representative. In a post dated 2/17/2009, she draws attention to the little-known fact that the combined corporate tax rate of the United States is the fourth highest in the world. This is important because the higher to corporate tax rate, the more likely it is that a corporation will move overseas and lay off all of its American workers. Also, a lower corporate tax rate attracts the best and brightest from abroad to move here to start their businesses, powered by American workers.

This might come as a surprise to you, but the United States is near the top of the list of industrialized countries with the highest corporate tax rates.

You may be asking yourself “so what,” or “who cares,” but it’s important to recognize that lower corporate tax rates result in attracting more investment capital. A reduction of the federal corporate tax rate would increase firms’ productivity and investment incentives, and ultimately stimulate our nation’s long-term competitiveness by enhancing economic freedom.  The end result would be a boon to your family budget.

The problem gets even worse when you realize that many eastern European nations are slashing their corporate tax rates and even imposing flat taxes, leading to astonishing economic growth. This growth attracts foreign investments away from the USA, because investors can get a better return wherever there are lower corporate tax rates.

Bachmann post cites a study from KPMG showing just how bad the USA is compared to other nations.

“U.S. corporate income tax rate is higher than all other global regions—14 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations. Of the 106 countries surveyed, only the United Arab Emirates, Kuwait, and Japan impose a higher corporate tax rate than the combined rate of 40 percent. The United Arab Emirates and Kuwait each have a staggering tax rate of 55 percent; Japan’s rate is 40.69 percent.”

She also cites alarming figures from Heritage Foundation.

“Even Europe’s old welfare states have joined the aggressive tax cut parade: Sweden has cut its corporate tax rate to 28 percent from 60 percent; Norway’s rate has dropped over 50 percent to 28 percent; and Denmark’s corporate tax rate is now 25 percent.”

Is it any wonder that American firms are laying off workers and shipping jobs overseas? Cutting corporate tax rates creates jobs, increases economic growth and, eventually, increases consumer spending. If you don’t believe me, believe the 69-page research paper published by the Congressional Budget Office. The Tax Foundation summarizes their findings here.

A new study from three prominent economists finds that employees suffer most when their corporate employers must pay high corporate taxes. That contradicts the theory that has prevailed for decades — that corporate taxes mainly hurt investors — but it supports a recent CBO study by Randolph that found workers bearing 70 percent of the burden of corporate income taxes.

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They find that the workers’ share of the corporate tax burden ranges from 45 to 75 percent.

The Tax Foundation has a complete study of corporate tax rates across the world. We are not winning. We are losing. Badly.

On a positive note, I find it charming and delightful when women speak passionately about how fiscal conservatism supports marriage, family and charity. Bachmann and her husband Markus run their own business. She’s worked as a tax lawyer and an elected legislator, but she still found time for a period of home-schooling. And not only did she raise her own 5 children, but also 23 foster children.

In her speech at the Republican National Convention in 2008, (video, transcript), Bachmann makes the connection between fiscal conservatism, small government, a strong family and private charity.

As Republicans, we recognize that service is an innately personal characteristic. It is best achieved by individuals and community groups, faith-based organizations and charities. And, service thrives best in an environment of freedom. Government fosters service best when government binds it least.

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As Republicans, we recognize that when you keep more of your hard-earned dollars, you are free to spend it as you choose on the charities that touch your heart and make a difference in your community.

Bachmann believes in marriage, family and charity. My favorite quote from her is from her profile in World Magazine.

Bachmann says for her one thread ties all the day’s obligations together: “radical abandonment to God’s call.”

For more on big-government socialism and its conflict with marriage, family and charity, see this video lecture, by the eminent economist Jennifer Roback Morse.

News

Porkulus bill reverses welfare reform and nationalizes health care

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This post is just a quick summary of what the spendulus bill actually does. The Heritage Foundation notes that the bill reverses welfare reform, threatens religious liberty and effectively federalizes health care.

Against the recommendations of the Congressional Budget Office, he will sign this bill. Despite returning the nation to a sea of dependency by completely reversing President Clinton’s welfare reform in 1996, he will sign this bill. Despite the threat to religious freedom cleverly disguised in the small print, he will sign this bill. Standing steps from the federal agencies he plans on doubling in size through cherry-picked liberal programs, he will sign this bill. Using an economic emergency to shield the liberal goal of federalizing your health care, he will sign this bill. And despite the overwhelming majority of Americans in poll after poll saying ‘no’ to this bill, he will say ‘yes’.

The National Review has more on the reversal of the welfare reform, which was passed by Newt Gingrich and signed by Clinton. Porkulus actually makes the welfare problem worse than before 1996.

Under the provisions in the stimulus bill, states will once again be paid a bounty for expanding their welfare rolls. As reported by Robert Rector of the Heritage Foundation, the federal government will now pay states 80 percent of the cost for each new family they sign up for welfare. That means that states will get $4 for every $1 they spend. This will leave the main welfare program, Temporary Assistance to Needy Families (TANF), with a funding mechanism similar to the one that supports Medicaid. As Brian Blase argues here, Medicaid’s funding ratio, which gives states $1 to $3 for every dollar they spend, has caused state Medicaid spending to skyrocket. If Medicaid’s dollar-for-dollar model has proved ruinous, Obama’s new $4-to-$1 ratio for welfare will prove, in all likelihood, four times so.

The Cato Institute’s blog explains how porkulus will balloon the budget deficit, and also how it is full of pork. According to the Tax Foundation’s Joseph Henchman, only about 24% of the bill is “tax cuts”, and not the good kind. Arnold Kling, speaking at a Heritage Foundation/Club for Growth event, argues that the right thing to do would have been to cut payroll taxes. Cutting payroll taxes would stimulate the economy. The Competitive Enterprise Institute notes that Cato assembled 200 economists who opposed the Generational Theft Act. CEI also notes that our current national debt is 11 trillion and that we owe 451 billion in interest per year, before porkulus even passes.

CNS News reports that the Generational Theft Act was passed without a single Republican or Democrat in the House or Senate reading it.

Sen. Frank Lautenberg (D-N.J.) predicted on Thursday that none of his Senate colleagues would “have the chance” to read the entire final version of the $790-billion stimulus bill before the bill comes up for a final vote in Congress.

“No, I don’t think anyone will have the chance to [read the entire bill],” Lautenberg told CNSNews.com.

Or, if you like video, you can see John Boehner’s disgust with the hiddenness of spendulus here. So much for “transparency”. The Democrats also broke their promise to allow the public to see the final version of the bill for 48 hours, before it was voted on. I highly recommend watching this 1 minute clip. At least the Republicans in the House did not provide cover to Obama. He will own the mess he created. Too bad the Democrats aren’t owning Clinton’s Community Reinvestment Act, which caused a lot of this sub-prime lending mess in the first place.

For details on what pork is actually in the porkulus bill, check out Tom Coburn’s list. (This may not reflect the last minute copy from Friday).