Tag Archives: Income taxes
It’s that time of the year again. Tax time. What better time to be reminded that taxes are still going up in America? Sad to say, there is a trend of state and local tax hikes, from Rhode Island to California, from Kentucky to Washington state. The trend is so strong, in fact, that we might almost call it a silent epidemic.
Let’s take a tour around the country and see for ourselves. We begin in California where the Sacramento Bee recently relayed the following lament about tax evasion:
As Californians put the finishing touches on their income tax returns, tax collectors say the state’s $9.2 billion deficit would drop to zero if all taxpayers submitted what they owe. … In a new estimate, the Franchise Tax Board says that $10 billion in state income taxes go unpaid each year, often when workers receive payments under the table, businesses skirt reporting requirements or people take deductions for which they do not qualify. The state Board of Equalization says an additional $2.3 billion in sales and use taxes go unpaid.
We should always pay the taxes we owe, and I acknowledge that tax evasion distorts competition between compliant and non-compliant businesses. However, at some point our politicians might want to stop vilifying those who pay less than they owe and consider the rational reasons behind a lot of the tax evasion.
But high taxes don’t just inspire tax evasion – they also lead to tax competition. High-tax jurisdictions lose jobs and investments to low-tax jurisdictions. Oregon has already felt the squeeze from tax competition,as it is losing residents and jobs to Washington state. However, as reported by the Portland-based Oregonian, this has not deterred big-government advocates in the Beaver State from campaigning for higher taxes:
A union-backed group is deciding whether to move forward on proposed ballot measures that would raise taxes on corporations and the wealthy — and that would certainly re-ignite the bitter tax wars that split the state two years ago. The group, Our Oregon, this week received ballot titles on five tax measures that in many respects resemble the controversial tax package that Oregonians approved in January 2010 after an expensive campaign that gained national attention. Like the latest proposals, the earlier measures also raised taxes on wealthier individuals and on corporations.
Oregon already has some of the most punitive taxes in the country. The Tax Foundation reports that the marginal income tax rate for a couple in Oregon is 9 percent from $15,500 in annual income. At $250,000 it rises to 10.8 percent and at $500,000 to 11 percent flat.
Not one of Oregon’s neighbors punishes its most productive citizens to that level. Predictably, the CNBC State Business Climate Study for 2011 reports that in overall state economic performance Oregon places 48th of all states.
According to the Bureau of Labor Statistics, Oregon lost 1.5 times as many private sector jobs as Washington state, its neighbor to the north. Washington has no state income tax.
Next stop on our Taxed-in-the-USA tour is New England. From NBC Connecticut:
Downloading music, movies, e-books and Apps could soon cost Connecticut residents more as lawmakers consider a tax on digital downloads. The bill, proposed by the General Assembly’s Finance, Review and Bonding Committee, would have consumers pay the 6.35% sales tax on any electronic transfer. Supporters say the bill would level the playing field for brick-and-mortar retailers in the state who are already required to charge Connecticut sales tax to consumers who purchase these products in their stores.
The Tax Foundation’s latest business tax climate study places Connecticut 40th among the 50 states, with property taxes ranking worst in the country. Tax Freedom Day is May 2, latest in the nation. In the 2009 American Community Survey Connecticut ranked in the top third for population loss.
Some of the U-Hauls leaving Connecticut are headed for Rhode Island. This is a bit surprising, given the fact that The Ocean State’s tax burden ranks just a couple of spots below The Constitution State. However, while the business tax climate is even worse in Rhode Island than in Connecticut, property taxes are marginally less oppressive.
If you have spent the winter in Fairbanks, Alaska, spending the next winter in Anchorage may not be much better, but it is better…
It remains to be seen, though, how long Rhode Island can keep its edge over Connecticut. That edge is as tiny as the state, and Governor Chafee is pursuing his own package of higher taxes.
In Wyoming there is a campaign under way to raise both the state and county sales taxes. In 2010 yours truly was instrumental in successfully educating the public on the detriments of a proposed ten-cent gasoline tax increase. As a direct consequence of the death of that proposal, state and local legislators are now hard at work to jack up the sales tax. According to economic model simulations by the Wyoming Liberty Group, the tax hikes would cost 6,000 private sector jobs per year.
Over now to Austin, Texas and a recent report from the KXAN news station:
One of the issues City Council could decide Thursday is whether or not to ban plastic bags in the city. … If this ordinance passes it would mean starting in January 2013, shoppers will be charged 10 cents per bag or $1 per transaction if they need a bag from the store. That would last a year to allow for a smooth transition to a complete ban, one that activists say needs to happen.
More than likely, the city is going to get so addicted to the revenue from this tax that they will extend the “smooth transition” phase indefinitely.
Now on to Washington, DC where, according to the Washington Examiner, the city wants more money from the city’s food trucks:
The D.C. Council’s Committee on Finance and Revenue unanimously passed a bill Thursday that will force food trucks to charge the same 10 percent sales taxes paid by brick-and-mortar restaurants. The measure is expected to pass the full council and will take effect Oct. 1. … Food truck vendors currently pay a flat $1,500 annual fee ($375 per quarter) — the same fee that street vendors near tourist spots have been paying for more than a decade. But many restaurants owners argue this is no longer a fair deal, due to the surge in street food popularity. … As the bill stands, each licensed food truck operator who collects more than $375 in sales taxes on a quarterly basis will continue paying that sales tax to the city.
If the District of Columbia were just out to level the playing field they would adjust the taxes downward for brick-and-mortar food vendors. This is a new revenue source to them.
Across the border from DC is Maryland, where Governor O’Malley is trying to draw even more blood from his state’s taxpayers. It does not seem to be working very well, though:
One of every five Marylanders would pay an average $274 in extra taxes each year under Gov. Martin O’Malley’s income tax plan, higher than the governor had estimated, according to a new report from state budget analysts. In Montgomery County, where roughly 32 percent of taxpayers would be hit by higher levies, the average annual tax increase would reach $334 for 123,537 taxpayers, the state’s independent Department of Legislative Services reported.
The tax hikes won’t generate as much revenue for the state as he was trying to claim: only $130 million, not $182 million as the governor suggested.
Maryland is an excellent example of what drives government’s insatiable thirst for more tax revenues. In September 2007 the state government had 106,800 employees; in September 2011 its payroll had expanded to 112,500, with the bulk of the increase taking place since 2008 – i.e., during the recession. In the meantime, Maryland has lost 102,400 tax-paying private-sector jobs.
The state government in Maryland has increased its spending by 6.2 percent per year since 2005. In the past three years alone, when both the economy of Maryland and of the country as a whole has been in a recession, the state government in Annapolis has grown its spending by a total of 14.4 percent.
Of course, U.S. Congress does not want to be left behind when their statist buddies around the country throw tax-hike parties. They have managed to come up with a way to tax businesses for not doing the impossible:
When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law. But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist. … Refiners were required to blend 6.6 million gallons into gasoline and diesel in 2011 and face a quota of 8.65 million gallons this year. “It belies logic,” Charles T. Drevna, the president of the National Petrochemicals and Refiners Association, said of the 2011 quota. And raising the quota for 2012 when there is no production makes even less sense, he said.
This brilliant move by Congress has opened a whole new can of tax worms. We can now look forward to endless tax policy innovations. Some ideas for Congress to consider:
- A tax on pedestrians who fail to use all three legs while walking;
- A fine for the blind who fail to pass the test for a driver’s license;
- A tax on McDonald’s for serving food in their restaurants;
This could of course also work the other way, in the form of impossible-to-do tax credits:
- A $10,000 tax credit to each Member of Congress who can prove an IQ above 85.
We better stop our Taxed-in-the-USA tour here. But taxes won’t stop going up, at least not yet. To put an end to higher taxes we need to fundamentally change the role government plays in our lives. We need to refocus it on its essential functions: protection of life, liberty and property. Then, and only then, will there be no more tax hikes.
Every single American will feel some serious financial pain in 2013, [right after the Presidential elections] due to major, stealthily-enacted, and semi-hidden tax increases, along with numerous EPA-mandated regulations that will result in skyrocketing energy prices across the country. All of this will happen because Congress is currently paralyzed against acting responsibly due to it being an election year, where the DC power brokers, lobbyists and campaign spin-masters will threaten to pull the billions of dollars of support they give to current members of Congress if they refuse to allow them and their cronies their daily feeding at the taxpayer-funded cash trough. See the latest debacle called the 2012 tax cut extension for the perfect example of how dysfuntional Congress has become while serving under a President who is too busy campaigning on the taxpayer dime to actually work with Congress for real solutions to this country’s massive debt problems.
Never mind that America is currently drowning in $15,386,147,538,129 dollars of national debt the minute that total was written down here. The average American can not even compute what a trillion dollars of debt looks like, let alone the repercussions of the U.S debt to GDP ratio exceeding 100% for the first time in history. ( check out the chart in that link)
President Obama wants the American people to believe that he is holding true to his promises he made back in the 2008 campaign that he has refused to raise taxes on the middle class, and therefor he deserves another four years in the White House. He constantly spews the Socialist-designed rhetoric about folks needing to pay their fair share, while denying the fact that almost 50% of Americans pay no income taxes whatsoever. The problem inherent in Obama’s false campaign rhetoric can be found in the truth about the stealth tax increases that will hurt every single working and non-working American starting Jan. 1st, 2013. Isn’t that an amazing coincidence that the bulk of the Obama administration’s middle-class-crushing tax increases and vastly- expensive-to-businesses regulatory policies will go into effect after the 2012 presidential elections?
According to the article, The Coming Crash of 2013, written by Peter Ferrara back in the summer of last year, Americans are going to get a very harsh lesson in the reality of Obama-nomics and feel some very serious financial pain starting in the year 2013. For example:
Already scheduled now under current law in 2013 is the expiration of those Bush tax cuts, which President Obama has refused to renew for single workers making over $200,000 a year, and couples making over $250,000. Also scheduled to go into effect in 2013 under current law are all the tax increases of Obama-care. Together, these job killing tax policies would result in a sharp increase in the tax rates on the nation’s small businesses, job creators, and investors for virtually every major federal tax. (emphasis added)
Many of the hidden tax increases in Obama-care have been put on the shelf during 2011/2012 by the granting of temporary “special waivers” due to the proven cost increases to businesses that were written right into Obama-care. Those waivers are temporary, and without major changes to the new health care law, they will result in the tax man coming to collect major tax increases from all businesses small and large due to the tax hikes in Obama-care in… 2013. For a complete look into the tax increases inherent in Obama-care please see the Comprehensive List of Tax Hikes in Obamacare.
Mr. Ferrara further explains some of the other economy-crushing tax increases implemented by Obama and his Liberal Democrats that are sneaking up on Americans in 2013:
Taxpayers would see their income tax rates jump by nearly 20%, the capital gains tax rate increase by nearly 60%, the total tax rate on corporate dividends increase by nearly three times, their Medicare payroll tax rate increase by 62%, and the death tax rise from the grave with a 55% rate. This would go way beyond the outdated Obama talking point about returning to the Clinton tax rates, adding up to a top federal tax rate of 44.8% on wage income alone, besides all the tax increases on capital income, on the way up to a 62% top federal tax rate.
Can Americans consider the U.S.A. to be a free Republic when the tax man can lift a whopping 55% of a person’s entire life’s savings [through the estate tax, which is more aptly called the death tax] out of their family wallet simply because a family member has passed away? Yes they can, starting in 2013, unless people wake up to the realities that the Death Tax Man is coming in 2013 and he means business. Meanwhile Congress and Barack Obama have also reduced the revenue of the Social Security program by billions of dollars a year to score reelection points,while also adding to the national debt by refusing to offset the recent tax cut extension. Do Americans not understand what that means to anyone currently, or soon to be relying on SSI checks to survive? How about the young and middle-aged Americans who can look forward to paying into SSI for decades without any chance of ever getting a dime back out of it? That spells taxation without representation, any way you slice it.
Mr. Ferrara further explains the hidden taxes that will drive up the cost of everything due to unconstitutional laws being passed by executive branch fiat under the guise of “rules changes.” (emphasis added)
Besides this tax tsunami, President Obama is implementing another trillion dollar plus cost burden on the economy through the EPA’s cap and trade tax policy. That is one central feature of President Obama’s war on production of traditional, low cost, energy, shutting down drilling, extraction and pipelines from the northern tip of Alaska, down through Canada, to the energy rich Western states, through Texas, to the Gulf of Mexico. Obama keeps issuing statements that he is opening drilling or permitting or exploration here and there, only to have it shut down by his bureaucracy soon thereafter. All of this will only raise energy prices higher and higher through to 2013, squelching the economy still further.
How many Americans know about the Cross-State Pollution law/money grab/tax hike that was passed by the EPA? That illegally-implemented tax increase on “certain states” went into effect this year. Check it out here. In that Democratic party/ EPA extremist-mandated new “rule” California, the most polluting [and Democratic party stronghold] state in the country isn’t included in the Cross State Pollution law, as can be seen in the map of affected “certain states” in that article. How tyrannical and ludicrous is that? The Cross-State pollution tax man is already implementing that money grab right now in 2012. In 2013, all of the States under that new “rule” will feel the pain, one way or another.
Finally, Mr. Ferrara goes on to question just how an increased $2 trillion dollar tax burden will bear down on all Americans in 2013:
This is just the beginning, however, of President Obama’s re-regulation burden on the economy, which is estimated to be rapidly rising towards $2 trillion, or over $8,000 per employee, in annual costs even before EPA’s calamitous cap and trade really begins. That is close to 10 times the corporate tax burden, and double the individual income tax burden. With another 4,225 federal regulations already in the pipeline, and the new regulatory burdens from Obama and the Dodd-Frank financial regulation bill still to come, how high will that burden be by 2013?
After the tax man gets through grabbing a much bigger share of Americans salaries, savings, and cash on hand in 2013, the next biggest thief to reach into their wallets in the very near future, will be The Inflation Man. After all the hidden taxes and regulatory burdens are felt in the wallets of all Americans in 2013, the eventual economic inflation due to the Federal Reserves increased printing of U.S. dollars, [also known as QE2], will hammer American family budgets, as the dollar loses it’s value and therefor buys a lot less than it used to. Do Americans really want Four More Years of Barack Obama’s economy-crippling wealth redistribution, tax increase-inducing, and overbearing regulatory policies?
During the Nevada GOP Presidential debate, we saw Herman Cain’s 9-9-9 plan attacked by everyone else on stage. What might surprise some folks is how supposedly Republican Presidential candidates were apparently using leftist propaganda [posing as non-partisan] from Progressive think tanks as the basis for denouncing Cain’s 9-9-9 plan. A mere two hours before the debate, reports started coming out denouncing Herman Cain’s plan. To wonder about the timing of the release of those reports is a no-brainer: They were put out to denounce front-running GOP candidate Herman Cain, period. Did the establishment GOP, in order to improve Romney’s chance of winning the nomination put out these reports, or did they simply parrot progressive propagandists talking points? You can check out the 9-9-9 plan for yourself here. Note that Herman Cain has some revisions in his 9-9-9 plan that call for an eventual transition to a Fair Tax that ends the IRS and repeals the 16th amendment. Heady stuff there, if you can get it done.
If you were looking for a sober, sensible discussion of tax policy, last night’s GOP debate was not for you. Take Congresswoman Michele Bachmann’s opening criticism of Herman Cain’s 9-9-9 tax plan. “If we give Congress a 9 percent sales tax,” she asked, “how long will it take a liberal president and a liberal Congress to run that up to maybe 90 percent?”
To which he then added:
I feel comfortable suggesting the answer is “until slightly after the end of time.” A 90 percent sales tax will never, ever happen.
Maybe a 90% sales tax will never happen but we have in fact seen a 90% income tax imposed on the American citizenry before, as the chart below shows us. Of course like all progressives, Mr. Klein is quite comfortable with a 90% income tax rate as we saw the original progressive fore-father, FDR had no qualms about it in prior U.S. history.
The father of The New Deal progressive policies, FDR, came into office in 1933 and look at what happened in the chart above! Our government took 90% of folks hard-earned paychecks ! And just like they want to do today, they took it from the supposedly “rich” people. What also isn’t expressed in that chart is that the lower taxed group of people were a very small part of our society, and the fact that most people were put into the “higher earners” category. So when we hear today’s “Progressives” ( such as Ezra Klein) talking about taxation in America, just keep that chart in mind there. Also keep in mind that 47% of ALL Americans pay no Federal income tax today- ZERO. Progressive wealth redistribution hiding behind the “tax the rich” mantra is a fraud that leads to national poverty in the end. Herman Cain’s 9-9-9 plan is not a cure-all and he has shown the willingness to adapt it with the best ideas put forth to avoid another “New Deal Progressive Policy” recession. At least we are talking about getting big government spending under control today, which should be the goal of all concerned Americans. Reforming the tax code is a very important part of our future prosperity and must be discussed. Obama and the Progressives have no plan, except to spend more through higher taxation until we are insolvent, which is simply unacceptable. All these supposed economic wizards of the progressive party criticizing the Republicans in Congress, while they have not even passed a budget in three straight years! That is nothing short of ludicrous hypocricy!
2012 just can’t get here fast enough!