Tag Archives: Taxes

Do secretaries usually pay more in taxes than their rich bosses?

From ABC News.

Excerpt:

Treasury Secretary Geithner yesterday declined to answer a key question about the president’s proposed “Buffett Rule”:  How many millionaires and billionaires pay lower tax rates than middle-income families?

The answer: not that many.

The nonpartisan Tax Policy Center has crunched the numbers and found that Warren Buffett and his secretary are the exception to the rule.  For the most part, the wealthy pay a significantly higher percentage of their income in taxes than middle-income workers.

The key numbers:  this year those earning over $1 million will pay, on average, 29.1 percent on federal taxes.  Those earning between $50,000 and $75,000 will pay 15 percent.

That’s not to say that there aren’t wealthy people who are even better than Buffett at avoiding taxes.  In 2009, 1,470 people with incomes over $1 million a year paid absolutely no taxes.  But that represents less than 1 percent of those earning over $1 million a year.  Raising their taxes may be the fair thing to do, but it will not bring in much revenue.

The Cato Institute has a lovely graph of income tax rates by income earned.

Well, how much revenue can we generate if we take 100% of everything that people making over earn? (Assuming that they keep working solely for the government, of course, which Democrats would assume)

The Tax Foundation explains.

Excerpt:

So taking half of the yearly income from every person making between one and ten million dollars would only decrease the nation’s debt by 1%.  Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent.  There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand.

Finally, to put everything in perspective, think about what would need to be done to erase the federal deficit this year:  After everyone making more than $200,000/year has paid taxes, the IRS would need to take every single penny of disposable income they have left.  Such an act would raise approximately $1.53 trillion.

George W. Bush’s last deficit, with a Republican House and Senate, was 160 billion. But Obama’s deficits are about TEN TIMES that amount.

See:

Obama Budget Deficit 2011
Obama Budget Deficit 2011

But Obama’s current annual budget deficits exceed 1.53 trillion. So taxing the rich at 100% isn’t enough to pay for All of Obama’s spending. That’s how big a hole Barack Obama has got us into.

By the way, Warren Buffett’s blathering about wanting to pay more taxes is a load of garbage. His company is currently in a dispute with the IRS to avoid paying as much as ONE BILLION DOLLARS in back taxes. You would not have heard of this if all you watched was Jon Stewart and Stephen Colbert on the Comedy Channel, or Chris Matthews and Rachel Maddow on MSNBC.

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.

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.