Tag Archives: taxation

What Don’t Liberals Understand About Prosperity And Taxation? Plenty!

The kerfuffle several months ago about Burger King moving its headquarters to Canada in order to avoid the astronomical taxation rate in the U.S. illuminated the mental attitude of liberals.  Instead of understanding that businesses voluntarily established themselves in, or relocated to, the United States during the 20th century when taxes were low and prosperity was the norm, thereby correctly deciding that lower taxes lead to a more prosperous country and a higher standard of living for its citizens, liberals would rather heap shame on Burger King and similar companies and call them unpatriotic for moving their headquarters to a foreign country with a lower tax rate. The charge of non-patriotism goes to the heart of what big-government liberals don’t understand about a corporation and its fiduciary duty to its employees, customers and stakeholders: to make as much profit as possible via the sale of the company’s products or services.

 

Directly related to a corporation’s fiduciary responsibility to conduct business responsibly is the government’s Constitutional responsibility to assure its citizens’ liberty and security. Thus, it’s as obvious as the next gaff on Joe Biden’s lips, that Obama and his liberal cohort in Congress and the EPA don’t understand their own duty to protect American citizens (examples: Obama was surprised by the military might of  ISIS and  admitted that he had, and apparently still has, no strategy or plan to eliminate them after a year of daily security briefings in which their threat was clearly described to him; consider also the threat to America’s economy and its physical and fiscal health presented by Obama’s open border along the southern United States; denying Americans the right to select their own healthcare and forcing Obamacare on us) and to assure an ecomony that allows our citizens to work, save and prosper.

 

America is being ruled by fools who are horribly wrong for the intentional destruction they are doing to the greatest nation on earth. Maybe it’s a divine gift that Obama is now forced to deal with ISIS by using the military force he despises, and should have exerted months ago as a real commander in chief would have, and in so doing he is now, hopefully, limited in the next series of steps he intended to take in his “fundamental transformation of America” and making the United States just another socialist basket case.

Yes, budget cuts can help the economy

The left tells us that there is no way to keep the economy going if federal spending is reduced – they are wrong.

On a simplistic and illogical level sure, taking any money out of the economy might shrink it, but that is the same short-term thinking that has led to a non-recovery from the prior recession, lackluster employment and seeing manufacturing output in the tank.

In more realistic terms, there are only two things that will allow us to cut the overall taxation of American workers and corporations: 1) broadening the tax base and 2) Cutting federal spending.

As it stands, many Americans have far too little exposure to income tax rates to feel the pain of allowing their government to spend more than it makes. This makes the class warfare rhetoric from the Obama campaign seem attractive. Also, there are not enough wealthy people, by Obama’s definition, in the U.S. to tax at even 100% to cove0r entitlement spending. Spending is the issue, taxes are the symptom – fix the issue, and taxes will follow.

You see, we only need to raise taxes so that Congress can spend more. If we decided that they cannot spend more, they will have no need to increase taxes.

The United States currently has the highest corporate tax rate in the world. Companies like GM are making a large number of their products overseas because it’s financially advantageous to do so. The tax advantage for not manufacturing in the United States is far too great at this time.

Obama would enact penalties for not producing in the U.S. – which could also lead to the trade wars of past Democrat administrations. Romney would lower the overall corporate rate so that company accountants could inform their CFOs that it makes sense to manufacture in the United States again. That’s an actual conversation – unlike Obama’s dream-world scenario.

If federal spending is cut, the government can responsibly cut tax rates. Ergo – if we don’t spend so much, businesses can invest and grow the economy with the money that they used to send to the federal government.

If the base is broadened so that we all share in the cost of the things the government provides, tax rates can be cut. If tax rates are cut, American businesses can again compete in the global economy and we can all get the jobs we need and want. Trickle-down economics isn’t about money flowing from the wealthy to the poor as the left would have American voters believe – it’s about money flowing from employers to employees, businesses to other businesses. That is how an economy is re-ignited.

Healthcare ‘Tax’ Constitutional?- The Founders Might Say Otherwise

In today’s completely stunning decision, the Supreme Court upheld the constitutionality of the Affordable Care Act’s individual mandate. Chief Justice Roberts joined the liberal justices, creating a 5-4 majority that declared the individual mandate  a ‘tax’ and therefore constitutional.

Unbelievable though it may be, because of Chief Justice Roberts, the federal government can now essentially force you to do whatever it sees fit through the power of taxation. For example, let’s suppose the federal government institutes a law stating you must maintain a certain healthy weight and have to work out an hour every day to maintain that weight. Don’t want to? Fine, just pay a tax. According to the Supreme Court’s ruling, that’s completely constitutional.

This is so obviously not constitutional, you can almost hear James Madison and the rest of the Founders weeping. After all, wasn’t one of the primary reasons the Founders declared independence because of ‘taxation without representation’? The Stamp Act, the Sugar Act, the Tea Act which led to the Boston Tea Party- all of these were heavy taxes imposed on the colonists that vastly affected trade in the Colonies. The Founders maintained it was tyrannical for a distant government to impose such heavy, burdensome taxes on its people.

How is this any different?  The Supreme Court has ruled that the individual mandate is Constitutional as a tax- a tax you have no say in. You must either have health care, or pay a tax. Your objection means nothing to the federal government. How is this not tyranny- the tyranny of a government over a voiceless people, of the same sort the Founders objected to?

It is not constitutional as a tax. The federal government’s taxing power is limited to three specific purposes- paying debts, national defense and guarding the nation’s Welfare (interests). An individual purchase ‘tax’ meets none of these requirements.

But you don’t even have to be familiar with the language of the taxing power to know that the Founders would be inherently opposed to this, and would never have given the federal government this type of absolute power over the people. In fact, they rebelled against it. History is repeating itself. The question is, what are We the People going to do about it? Lie down and let the government seize more power? Or let our voices be heard?

Harry Reid: Increase Taxes to Reduce Them?

As the debt limit fight comes to a head, Democrat Senate Majority Leader Harry Reid seems confused – he is requiring tax increases in order to discuss tax cuts.

The CBO reported to Congress that if they allow the Bush tax cuts to expire and implement the defense cuts resulting from the Reid’s failure to negotiate on spending, the economy would drop into recession in 2013.

Congress is looking at the butt end of a car they drove into a ditch by following Obama’s lead and putting it firmly into “D for Drive” even though that muck-filled crevasse was but a short distance ahead. Now the Democrats are willing to drag that car through the ditch on the way to a cliff.

Arguments of austerity vs. taxation are nothing new, but now Harry Reid is waging taxation against itself in a highly-circular argument.

Reid (D-NV) signaled Tuesday that he will allow the automatic spending cuts and tax increases called for in last year’s debt deal to go into effect unless Republicans agree to tax increases. Reid said that if Republicans want to walk away from the deal made last year by extending the Bush tax cuts, “they will have to work with Democrats to replace them with a balanced deficit-reduction package that asks millionaires to pay their fair share.”

Reid is basically saying that he will allow the tax increase to happen unless Republicans agree to raise taxes. There is no situation in which Reid seems to be ready to negotiate – it’s tax increases or nothing for the failing leader of a non-productive Senate.

Taxing the Sunlight

An ever growing government must by necessity grow in expanding its revenue (called taxing to the uninformed) and therefore can be very creative in methods for taxing and names for said taxes. Since the phrase “cut spending” is not found in any dictionary or book owned by politicians, the only recourse is to increase revenue. Government makes Robin Hood look like an amateur. Frederic Bastiat was correct when he called taxation legalized plunder.

Of the more than 50 different taxes that exist today on federal, state and local levels, here are a few more familiar and common taxes. Federal income tax, sales tax, bridge tolls, sales tax, commuter tax, dog license tax, gasoline tax, Social Security tax, seven different taxes on telephone usage, and the list continues.

We jokingly talk about how politicians would tax the air if they could. Water is already taxed. If only they could contrive a way to tax the sunlight. Wait…believe it or not…..it’s been done! In 1696, the window tax was enacted in England and it lived into the 1800’s. At the time, the people opposed an income tax because it would require the government knowing everyone’s income. This was considered an intrusive invasion of privacy and a personal attack on liberty (imagine that). Finally someone hit on the idea of taxing based on the number of windows in a house. The larger the house, the more windows the house would, which coincidentally meant the larger the house, the more income the person would have. And after all, the rich should pay more because they have more, right?

So was it a window tax or a sunlight tax? Windows let in the light and to close a window, was to not be able to enjoy the use of light. Even today, some buildings from this period have bricked up windows, a reminder of an early home owner who used the only loophole available at the time to avoid taxes.

Listen to a description from this unlikely source on this subject, the prince of preachers Charles Spurgeon. In reminiscing about his childhood in his autobiography, Spurgeon describes the manse of his Grandfather, James Spurgeon.

“Some of us can remember the window tax, which seemed to regard light as a Latin commodity-lux, and therefore a luxury, and as such to be taxed. So much was paid on each aperture for the admission of light, but the minister’s small income forced economy upon him and so room after room of the manse was left in darkness….What a queer mind his must have been who first invented taxing the light of the sun! It was, no doubt, meant to be a fair way of estimating the size of a house, and thus getting at the wealth of the inhabitant; but, incidentally, it led occupiers of large houses to shut out the light for which they were too poor to pay.” (C. H. Spurgeon Autobiography, Volume I, 1897).

So there you have it. If it can possibly be taxed, politicians have no conscience when it comes to extracting. Water, air, sunlight, who would have thought it. Remember the words of Ronald Reagan concerning governments view of the economy: “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.”

Joseph Harris, [email protected] has been a college professor and pastor since 1987 and his writings have appeared on stupidpoliticians.com, WND, Sword of the Lord, Intellectual Conservative, Conservative Daily News, Canada Free Press, Land of the Free, The Post Chronicle and News America Daily.

The “Personal Energy Subsidy” No One Talks About

Members of Congress have recently been embroiled in a battle to stop what many have termed “Big Oil Company Subsidies.” These government-sponsored subsidies come in many forms, such as corporate tax breaks for common expense tax write-offs, and for depletion of equipment costs. Keep in mind, that these same tax breaks are also given to every other manufacturer in America, not just Big Oil Companies. Randall Hoven outlines the situation precisely in an article titled About Those Oil Subsidies.

The Big Oil subsidy outcry is just another ploy by the American left to bash the very fossil fuel that has been the main producer of affordable energy in America ever since the invention of the various versions of electricity generators and the subsequent evolution of the energy industry. As with any production company, the free market energy system is based on competition-driven cost controls, where affordability is job one. Allow big government to completely control the energy industry and the results will be higher prices for everyone who can afford to pay, while also using it as a tool for stealth wealth redistribution and vote-buying to stay in power. Now that the big government myth about the big oil companies not paying their fair share has been busted wide open, and some of the reasons behind that power grab have been theorized, let’s take a look at one of the biggest energy subsidies ever handed out by the U.S. Government. Personal, welfare-dependence-driven energy subsidies that cost U.S taxpayers billions of dollars every year.

In a democratic society, fairness, and equality are supposed to be the cornerstone of the system. When certain groups or sectors of society are given preference over another one by a government through the usage of tax dollars, this becomes a blatant example of taxation without representation. ( of ALL people not just some of them) Other words that may be used to describe this scenario may include Fascism, tyranny, socialism, and political oppression.  So how can big government manipulators explain why one sector of American society has to pay for their utility usage, while another very large sector receives a personal energy subsidy from the U.S. Government that the rest of society is made to pay for?

While the oil companies “subsidies,” which are in fact tax breaks, have been put at around $4 billion dollars a year, how much do the personal energy subsidies cost the taxpayer each year?   All states have their own personal energy subsidy programs, which are at least partly funded by federal tax dollars. The website Welfare Info is a good place to explore the current welfare system, and just what government “subsidies” the career welfare class receives.

[Note: There is a big difference between an American tax-paying, energy producing company getting legal tax breaks (unjustly termed “subsidies” by the leftists and enviro-terrorists) and a non-producing, non-taxpaying career welfare sector receiving personal energy subsidies to pay their utility bills at the expense of the working class in America.]

From the above welfare info site, the following personal energy subsidies are outlined as follows: (emphasis added)

Another of the welfare programs is the energy or utility assistance program which is intended to help those who cannot afford to pay for basic utility needs, such as heat, electricity and/or gas and water. Like the child support program, it will supplement part of or provide 100% of the monthly utility costs.

Although the state by state personal energy subsidy programs are unique, they all contain on commonality: One sector of American society is being made to pay for another sector’s energy bills through government programs, many of them consisting of utility companies forming “partnership programs” with state and local governments. So who qualifies for  these taxpayer-funded personal energy subsidies? Can a non-U.S. citizen have their utility bill paid by U.S. taxpayers, or receive other welfare payments ?

Again from Welfare Info: (emphasis added) “You must be a citizen of the United States or a qualified non-citizen legal resident, (restrictions apply).” So, not only are U.S. taxpayers being made to subsidize career welfare people’s personal energy bills, they are also being made to subsidize what amounts to payments to criminal illegal aliens who broke the law while entering the United States.

Again, how much do these personal energy subsidies cost the U.S. taxpayer?  The fact is, that the big government bureaucracy now has so many personal energy subsidy programs that it is all but impossible to put a total cost to the taxpayers on it, which appears to be have done by design over decades of nanny-state planning and dependency program creation. Utibility Bill Assistance  has a complete rundown of state by state personal energy subsidy programs, along with this explanation about another pair of federal personal energy subsidy programs:

There is also a federal program to provide utility bill assistance. The National Energy Assistance Directors’ Association is a primary educational & policy organization for the state and other organizations of the Low-Income Home Energy Assistance Program, which is often referred to as LIHEAP. LIHEAP is a federal government program that provides grants to states to help struggling with assistance on their their electric, heating and cooling utility bills.

In addition to LIHEAP, another program available is the weatherization program, which over 5 million Americans have taking advantage of, and which can save over $300 per year in utility bill costs. ( several spelling corrections made)

When discussing taxpayer-funded “subsidies” and entitlement programs, the Liberal nanny-state worshipers have proven incapable of seperating retired, career-taxpaying Senior citizens receiving SSI payments ( and in some cases personal energy subsidies) from the non-producing, non-taxpaying career welfare sector of society. This is done to obscure the facts that tax dollars have been used to create a welfare dependency in America in exchange for the welfare class vote, which is the base of today’s Liberal Democratic party. Liberal political operatives disgustingly disrespect working-class Seniors by lumping them in with the non-producing welfare class, in an attempt to falsely paint themselves as champions of the poor.

In summary, should America end all energy subsidies, as Democrats have been demanding in Congress recently? That would have to include ending the above-explained personal energy subsidies, along with the Democrat-sponsored green energy fraud and power-mongering usage of taxpayer dollars to spread misinformation designed to keep them in power by enriching their crony-capitalists and tax dollar thieves as was seen in the Solyndra scandal.  To end all energy subsidies would in fact crush the base of today’s fake Democrats, their environmental green energy fear-mongering, and their welfare-dependent vote begging fraud they have hoisted upon the American people under the guise of “helping them.”

Footnote: While several personal energy subsidy programs do indeed help deserving people cope with today’s skyrocketing energy prices, as Barack Obama promised America during his 2008 election campaign, the creation of the welfare class dependency in America has deteriorated family values, work ethics and the very foundation of American exceptional-ism, personal responsibility and the idea of working for what you want out of life. For a very serious look at some of the results of this systemic destruction of American values, please see The Ugly truth of America’s Welfare Class.

 

 

 

 

 

Tilting at Giants

Just like a modern-day Don Quixote, President Barack Obama is traversing his presidency tilting his lance at imaginary foes – the successful, corporations, private property and liberty. Unfortunately, his efforts are much more dangerous than Quixote’s ineffective attacks on windmills.

Don Quixote: Dost not see? A monstrous giant of infamous repute whom I intend to encounter.
Sancho Panza: It’s a windmill.
Don Quixote: A giant. Canst thou not see the four great arms whirling at his back?
Sancho Panza: A giant?
Don Quixote: Exactly.

Just as Quixote tried to convince his faithful companion of the imaginary monster, Obama has spent the entirety of his Presidency trying to convince Americans that successful business-owners and corporations are the monstrous giants of infamous repute that must be felled at the earliest opportunity and by any means necessary. Notions that would have been thought crazy, un-American and oppressive are now courses of action from the Administration and the Democrat party.

While the roughly 50% of us that pay any appreciable taxes at all are being asked to pay an increasing amount of money for a broken public education system, unsustainable entitlement programs, planned parenthood’s activities and more almost half of Americans pay no or near zero income taxes to support these failing progressive dreams. The administration is focused on making those who pay the most the monster, in hopes of getting voters to tilt their lances at the evil successful people although they are no more harmful and even more productive than the windmills they actually represent.

The Obama administration has taken fairness into the realm of class warfare. Where fair isn’t actually about equal, but instead, an almost religious obsession with a false equality – a Marxist kind of equality.

The Constitution does not promise equality of condition. Americans are not guaranteed success – only the right to pursue it at their own risk. Great risk for great reward, ultimate reward for ultimate risk and the possibility that the risks don’t pay off at all. Those willing to take the greatest risk cannot continue to also bear the brunt of the costs for the progressive Utopia. Too much more “fairness” out of the government and no one will be willing to take the risks necessary to start new companies if the rewards are distributed to those that take no risk at all.

Obama’s FY2013 budget is the latest salvo against real equality. It asks the 10% that already pay 70% of all income taxes to pay more, while allowing those that pay nothing to continue freeloading. Will it be when the top 10% are paying 80% of all income taxes and 60% are paying none that the successful give in, give up and join the 60%? Who will then create the jobs?

There is no monster here. Business owners do not have a civic responsibility to feed the masses, provide a retirement or healthcare. They should be allowed to make products and perform services that will in-turn employ people who can then make those things happen. There is nothing evil about creating a business, making a profit and deciding how to spend the wealth gained.

Then again, in “The Man from La Mancha” this interchange leads me to believe that perhaps the Governor is more of Obama’s ilk:

The Governor: We generally fine a prisoner all his possessions.
Miguel de Cervantes: All of them?
The Governor: It’s not practical to take more.

 

The FairTax Series: America's Road To Prosperity Part 2

In this installment of the FairTax series I want to cover the cost of compliance and enforcement with today’s tax codes. Before I go into the complexities of compliance and enforcement I want to spend a few minutes dispelling the favorite myth of the anti-FairTax crowd. One of the things that put me off the FairTax at first was the pooh-poohing of the plan by those who don’t want to see it implemented. I bought into the lies and distortions because I did not have enough knowledge of the FairTax to dispel these negative stories. This part of the issue is covered a little further into the book but I want to get this cleared up before I go any farther. I want you to understand the plan clearly, without the distortions thrown at me early in my exposure to the FairTax.

There have been some in Congress, along with the “tax the rich more” crowd, who have suggested a Value Added Tax or VAT. This would be a national sales tax added on to the cost of everything we buy today. This tax, proposed to begin at about 2%, would eventually be up in the 16% or higher range as it is now in some European countries. THE FAIRTAX IS NOT THE SAME PLAN. Those who do not want to see the FairTax implemented deliberately confuse the two plans to scare people like me, and you, away from the FairTax. This worked for quite some time as I was not knowledgeable enough to discern the difference. Be assured that when you hear VAT used in the same sentence as the FairTax it is a red herring designed to put you off the most intelligent proposal I have heard in my 61 years, The FairTax.
Now to the costs associated with our current system. In the debate about income and employment taxes we seldom hear of the costs involved. I am a simple man with a high school education so it doesn’t take very long for the tax structure to get the best of me. I haven’t been able to find any concrete numbers but the federal income tax code has somewhere between 67,000 pages, as stated in the 2nd FairTax book published in 2008, and 86,000 that I heard a politician mention a little while back. I can’t remember which politician or exactly when he gave that number but I do remember 86,000 pages being mentioned. I really don’t care which number is right, both are absurd. My wife has a college degree in accounting in which she achieved a 4.0 grade point average. She is a very smart lady and extremely good with accounting but even she can’t keep up with yearly changes and the odd nuances of the ever changing tax codes. As a result we have our taxes done by a local Certified Public Accountant who is very good and keeps up with all of the changes from year to year.Let me describe the differences very simply here before I go on to the main subject of this article. The FairTax is instead of, not in addition to, income taxes, employment (Social Security/Medicare) taxes, inheritance (death) taxes, gift taxes, etc. The Value Added Tax (VAT) is in addition to, not instead of, these other taxes. This is a huge difference when it comes to deciding whether to support the FairTax or not. Once I understood the difference in the two plans I could plainly see that the FairTax is a plan that is in my best financial interest.

This year, 2011, the IRS has a $12.633 billion budget. That is $12,633,000,000 of our money going to an agency to insure that everyone, well almost everyone, complies with the tax codes. Even with that amount of money being spent they won’t get all of the money “due” to the government in taxes. The IRS is not the most efficient tax collection system. They can find me if I don’t pay but they have a hard time finding out if members of Congress, congressional staff members, and even the head man at the Treasury Department, Timothy Geithner paid their taxes as they should. As I mentioned in the first segment, they won’t collect these taxes from the local drug dealer, prostitute, illegal alien, or anyone else who gets paid under the table for work.
Now let’s talk about the cost to We the People directly. The last figures I could find on the cost to prepare income taxes were from 2005. That year the U. S. General Accountability Office reported that taxpayers paid between $240 billion and $600 billion to prepare and file their tax forms. That is for 2005, 6 years ago. My costs have almost doubled since then to the $315 my wife and I paid to have our taxes prepared in 2010.

So, let’s take a quick look at what we have for the cost of compliance. The IRS alone will spend $12.633 billion in 2011, at least, to insure that some of us pay our taxes. Those of us who pay our taxes spend as much as $600 billion, at least as of 2005, to have those forms prepared. The GAO also stated that taxpayers can expect to pay as much as 20% of the cost of their taxes to have the forms prepared by professional tax preparers. That is another 20% in addition to the amount of the taxes owed (ours isn’t that high). The figures in this paragraph come from the IRS site itself, not the FairTax book. I guess these numbers are great if you are a CPA or tax lawyer but not so great for those of us who have to spend that money.

For those who say “so what, I don’t pay much in taxes and the rich can afford to pay more” I have a new perspective for you. Every dollar that is spent to prepare tax forms or taken by government is a dollar that those “rich people” can’t use to provide jobs for working class people like myself, or you. Also look at the downstream effects. Corporations and the “rich” who own businesses factor their tax liability into the prices they charge for their products and the wages they pay their employees. One way or the other we all pay for the taxes that are heaped upon those we consider “rich”, and those “evil corporations”. People who own businesses own them to make money for themselves to support their families primarily. They are going to make money regardless of how much they are taxed, or they are going to go out of business and let their employees fend for themselves in the employment lines. When they pass those expenses on to the customer it comes to the point that customers pay the taxes in the end through the cost of the product. The bottom line is that corporations don’t pay taxes, the customer pays the taxes. The corporation just becomes the tax collector for the federal government because that money goes straight to bureaucrats and politicians.

The economists who have studied the tax structure and developed the Fair Tax plan have determined that there is a 22% tax liability built into everything you purchase, above and beyond state and local sales taxes. This is where things get a bit complicated and are difficult to comprehend. For example, let me use the wagon we bought for one of our grandchildren last fall. We paid $99, not including sales taxes, for a small wagon with wood sides. These wood sides were barely stronger than balsa wood, not the hardiest or strongest of woods. That may or may not sound like a lot of money but let me delve into how the price of that wagon was arrived at.

The wagon is made of metal, with rubber tires and wood siding. Each of these materials has a manufacturing process. The ore for the metal has to be mined, processed into steel, stamped into shape, painted, packaged, and shipped to its final destination, the store where we purchased the product. The wood for the sides and the rubber for the tires go through this same process. At each step of the process taxes are assessed for the materials and labor needed to complete the process and those costs are included in the final price of the product. By the time we purchased that wagon, $22 of the cost were the built-in taxes added to the cost of producing that product. This includes evaluating the tax costs of those who provide the machinery that makes the wagon. So I pay roughly 32% of my income to the government and then pay another 22% in federal taxes, not counting state and local sales taxes, to purchase the wagon for my granddaughter. So we have a wagon I could have bought for $77 now costing $99.

Take out your latest pay stub and look at it. Look at the Gross Pay box, and then look at the Net Pay box. Now go back and look at the various deductions, federal income tax, social security/Medicare tax, miscellaneous federal taxes, and see how much they take from your paycheck each time you get paid. Quite an amount going to Congress to waste on themselves isn’t it? (The FairTax stops the 32% I pay on my income but doesn’t raise the 22% I pay for the wagon.)

If you will stop and think about it for a moment the current system is a can of worms that is so ungainly and complicated even those who write the tax codes can’t comply. Don’t believe me? Do some research on Rep. Charles Rangel (D- NY), the former chairman of the Ways and Means Committee in the House of Representatives. They write the tax laws and he just got pinched, or hand slapped to be more accurate, for evading millions in taxes. He claims he didn’t understand the laws and made a simple error, to the tune of several million dollars. He had the nerve to stand on the floor of the House of Representatives and complain about how complicated the tax codes are. Rangel writes those tax codes. You try to make that excuse fly and see if you find yourself with a finger wagged in your face or you join Wesley Snipes in prison for tax evasion.

The FairTax puts a stop to all of this nonsense. No need for the IRS, no need for complicated forms and CPA’s or tax lawyers, and a full paycheck coming to you every payday. How much would it help if the drug dealers were paying a consumption tax on their fancy cars, boats, airplanes, etc? What about the millions of tourists who visit the United States every year? Under the FairTax plan they would be helping pay the taxes that support Social Security, Medicare, Medicaid, and social welfare systems. Right now almost 50% of American citizens do not pay any income tax at all, not to mention the illegal aliens who use an overly large portion of our “free” services. What if John Kerry had to pay taxes on the $7 million boat I mentioned in the introduction to the series!!!!!!!!

How would you like to get a gross pay check instead of a net pay check? How far would that money go to help you provide for your family? You are paying a 22% tax on everything you buy, food, clothes, a bicycle for your child, a car to get to work in, shoes for your feet, light bulbs, toilet paper, food, everything. Imagine not having to pay the income tax on top of these embedded taxes. And a bonus is that it wouldn’t hurt the “poor” people in our society. Even those paying no income and social security taxes are paying the embedded taxes.
So let me review what we have learned in this installment. We the People are paying millions to have our taxes prepared by professionals because the tax codes are too complicated for us to do it on our own. The IRS will spend billions on auditing and compliance, for those of us who they audit. Those who engage in illegal activity do not pay income and social security taxes while those of us who are honest hard working folks pay through the nose. The “poor” aren’t going to be hurt by this. And best of all, We the People can be rid of the IRS, and take the favoritism and vote buying out of the hands of the politicians. Those who use taxes to increase their power, wealth, and prestige through taxation lose a great deal of that power and give it back to We the People where it belongs in the first place.

In the next installment I will delve into the business and financial aspects of the FairTax, how it would help in bringing business and manufacturing back to our shores from other countries, and why the money being hidden in offshore accounts would be brought back to provide jobs and increased opportunity for American citizens.
I submit this in the name of the Most Holy Trinity, in faith, with the responsibility given to me by Almighty God to honor His work and not let it die from neglect.

Bob Russell
Claremore, Oklahoma
November 25, 2011

The FairTax Series: America's Road To Prosperity, Part 1

This is the first of a 5 part series I am writing based on the book “The FAIRTAX: The Truth”. In the series I take a 300+ page book and condense it down to a virtual “cliff notes” version designed for the novice political reader. I designed the series for those who are not very knowledgeable about politics or the tax structure and how it affects all Americans. I encourage eveyone reading the series to buy the book and get the full effect of the policies in place today and see how the FAIRTAX will change the dynamics of government financing.

A couple of years ago I began hearing about a new concept in taxation. This new concept is called The FairTax. I didn’t pay much attention because I thought “how is any tax fair?”, when some pay and  some don’t. At first I dismissed it as another scam to throw me off the track of an out of control government looking for another way to hoodwink me into paying more of my hard earned money into their grand spending plans.

I have long since grown tired of paying so much of my money into ever growing but useless government programs that pay people to sit on their butts and spend my money. Welfare expenses keep going up as more and more people find ways to game the system by having babies, faking injuries, working for cash under the table, etc. The ultra-rich hide their money in “foundations” or overseas to avoid the taxes I have been paying for 45 years. All of them, rich and poor are getting over on the other working stiffs who are too stupid, too honest, or unwilling, to do these things. These money pits keep growing as the amount of available income to tax drops.

One of my pet peeves with income tax is those who don’t pay any. While I was paying 32% in my working years the local drug dealer was paying nothing. The local prostitutes who hang out on street corners in the bigger cities or work out of high priced hotels were paying nothing. The welfare cheats who sit around finding ways to game the system for their own benefit have no intention of doing anything to benefit society, or themselves for that matter. The illegal aliens who were working for cash were paying nothing. I had noticed the illegal aliens especially. They were everywhere and driving much nicer vehicles than I was, or am now driving (I don’t hang out where the hookers hang out). I was paying a 25% income tax, a 7.5% social security/Medicare tax, plus state taxes, and being told the government couldn’t afford for me to retire while those not paying taxes lived the good life. I struggled, they flourished. That is when The FairTax began to make sense to me.

I heard Neal Boortz one day talking about this new plan on his radio show. I listened with interest and thought it sounded good but never really did any more to learn about The FairTax. In the last election cycle, the 2010 mid-terms, I kept bumping into Carol Chouinard and she kept handing me literature about The Fair Tax. I took the information and looked it over without really spending a lot of time educating myself on this new concept. Interesting but, ehhhh!!!!

One day I was going through a stack of papers that had accumulated over a few months, actually several months, and found the literature Carol had given me. As I read through the brochures and leaflets I began to realize that this was not the run of the mill scam to get more of my money. This was an idea that made sense to me once I really looked at it.

Carol is the local guru on The FairTax. She lives in Rogers County, 2nd Congressional District, State of Oklahoma. She travels throughout Eastern Oklahoma, or anywhere else for that matter, presenting The FairTax to any group or person who will give her a chance to enlighten them. I ran into her again the other night and we got to talking about political issues and The FairTax came up. Well, I was complaining about the current debt ceiling debacle and how to deal with it. Carol began to explain some more about how The FairTax was the answer to much of the problem.

As I listened to her a light bulb came on in my head, and the squirrel began to spin the cylinder. The things I had read came back to me and began to make sense. I began to remember about the way our tax system keeps hard working honest people in bondage while those who don’t mind cheating skate by without paying anything, only taking from those of us who do things the right way. Carol gave me a book about The FairTax. It is the second book called FairTax: The Truth. The first book, The FairTax, came out in 2005. This book was published in 2008 so is 3 years old as I start this article. Much of the information I will include in future articles about The FairTax will come from updates from the FairTax web site as I want to give you the most up-to-date information and statistics available.

One solution I see to our fiscal problems in this plan is the title, The FairTax. From everything I have read and the research I am doing, this plan solves many of the financial problems we face as a nation, the issue of money paid in taxes. I find that this plan is aptly named. I often hear Democrat and sometimes Republican politicians, especially those in Washington, cry about how “the rich” get over by not paying enough taxes. Yeah, like the politicians pay “their fair share”. Remember the hullaballoo a few months ago about Senator John Kerry, the one who parked his multi-million dollar yacht, $7 million yacht to be exact, on the far side of the bay because the state taxes on that yacht were cheaper there than on his side of the inlet? $500,000 per year cheaper to be exact. So much for Washington’s multi-millionaire insiders being concerned about paying their fair share of taxes. Hmm, I wonder where I am going to park my $7 million yacht. Oh, never mind, I don’t have one.

I also hear many “poor” people make the same statements, “the rich need to pay more taxes”. The problem with the “poor” complainers is that most of the ones I know don’t pay any taxes at all either. Most of the “the rich need to pay more taxes” crowd, at least the ones I know personally, are on the dole. They are drawing welfare, food stamps, social security disability, state aid, etc. Many of them either don’t work at all or work part time. They pay nothing and spend much of their time complaining that they don’t “get enough help from the government”. They have cell phones for themselves and their children, several have big flat screen HD televisions, complete with the latest game consoles, cable TV service, cigarettes, and are usually well stocked with beer in the fridge. Actually, I need the “rich” people to continue to be “rich”. They are the ones who will hire me, hopefully, so I can make a little money. Poor people never seem to hire me for anything.

In the spirit of “transparency”, my wife and I both have cell phones, we have cable TV service, and one 37 inch flat screen HD television set. Before you say “AHAH!!!” let me offer a caveat to this. We don’t get any help from the government and are not exactly in the “rich folks” category. I am retired but not old enough to draw social security, my wife works a full time job, and we have a small Mom & Pop business that gives me a little work and usually provides us very little in the way of profit. As a matter of fact, if the business doesn’t make a profit in 2011 we are going to have to shut it down. I work part time for a friend when he needs help on a project but the rest of the time I spend working on and around the house. We have a 1976 Chevy pickup that my father-in-law gave to us when he became unable to drive. We have a 1995 Ford Escort that my mother-in-law gave to us when she became unable to drive. We also have a 2004 Dodge PT Cruiser with over 100,000 miles on it (it was a demonstrator model). We don’t owe any money on our cars, and live in a 101 year old house with a $60,000 mortgage. Not exactly Beverly Hills here, closer to Green Acres, but we don’t get any government assistance either.

To get back to the point of this article, our nation cannot keep going the way it is financially. We cannot continue to borrow and spend, drive businesses out of the country, and raise taxes on the “rich”, those making $250,000 per year or so, the small to medium businessman/family who provide the bulk of the jobs in this nation. We have to do something to bring the jobs back to the United States. We need to make it feasible for those who hide their money to use that money to provide jobs so those who desire to work but can’t find a decent job can get back to work. Giving people unlimited unemployment pay is not the answer to prosperity, it is a handout not a hand up. Many of those drawing that unemployment would work if they could find a job. Some of them are lazy bums that are looking for a handout but most, and I do mean MOST, are honest hard working people who just want to provide for their families.

The FairTax is a method to accomplish this task of financial recovery and prosperity. In the next installment of this series I intend to delve into how our current tax structure is designed to inhibit rather than enhance prosperity. I will cover the costs of enforcing and complying with the current tax code and how it affects every person in America, tax payer and non-taxpayer. The FairTax books are a treasure trove of information about how our financial system works, or doesn’t work, and what We the People can do if we will stand up and demand that the politicians change the way they do things. Other installments will cover more aspects of The FairTax plan and how we go about getting it implemented by politicians that are more concerned about themselves than We the People. Elections are only 11 months away, so let’s get to work changing our future. God Bless America!

I submit this in the name of the Most Holy Trinity, in faith, with the responsibility given to me by Almighty God to honor His work and not let it die from neglect.

Bob Russell
Claremore, Oklahoma
November 25, 2011

Throw the Donkey a Bone

I may actually agree with the left on the need for increased revenues. We just differ on how to go about it, why it should happen and on whom should taxes be raised.

Liberals are throwing every bit of class-warfare, eat-the-rich, anti-success hate speech out that they can to get Americans to buy into the idea that it’s those best able to invest in the economy that should be giving their money to the government instead.

Conversely, I believe that we should start looking to those who are largely neither investing in the economy nor paying anything in income taxes – the 47.6% of earners that pay zero income taxes due to loopholes like earned income credit.

What we need, is a broadening of the tax base. Flat tax, fair tax, consumption tax or a combination thereof should replace our current unfair and highly-progressive scheme. Even in China the lowest earners pay a 3% tax rate on income. Why not here?

Increasing the number of tax payers would therefor generate more revenue and would allow other adjustments to be made. If we want corporations to return, it would make sense to lower corporate tax rates from their current 2nd highest in the world behind Japan.

By broadening the tax base so that everyone that votes feels the effects of their generous leaders’ handing out of money – patterns might change. More voters might not choose a candidate promising more gifts from the treasury when they know it’s coming out of their pockets too.

A large portion of our current electorate is living by the words of the late Senator Russel Long, ““Don’t tax you, don’t tax me, tax that man behind the tree.” when they cry “tax the rich”, “tax the corporate jet owners”, “tax the oil companies”. While eventually, higher taxation harms everyone as those costs get passed down, it isn’t direct enough for most to realize that their voting choices are to blame for oppressive prices at the pump or in the grocery store.

Spending cuts are the right medicine for what ails us today, but it won’t change the behavior of the voters and therefor the politicians if everyone that votes doesn’t feel the impact of their choices. It is far too easy for someone to vote in a Senator or Representative that promises only to raise taxes on someone else. If every tax increase is money off the table for every American, the mentality in Washington would have to change – or get changed.

Revolution

Egyptian Protests 2011This past spring we witnessed the flames of revolution across the face of the Arab nations. Old leaders were thrown out and new leaders are taking over. But who are these new leaders and what is their intent? Some believe that the Muslim Brotherhood, a radical group, will be organizing and winning elections in those countries where elections will be allowed. But what is the Muslim Brotherhood? And what is its aim for the Middle East? Were the Revolutions about freedom?

We have heard reports from Egypt that women who participated in the protests have been tested for virginity. We have heard that there have been murders of Christians in Egypt. We have listened to, and read about an American female reporter who was molested, virtually hand raped by Egyptian men in the crowds because the men thought she was Jewish.

These actions are not about freedom, they are about abuse and tyranny.

Our so-called leaders in Washington have decided to contribute to the 40 billion dollars pledged to these Arab nations at the G-8 Summit in France. We cannot afford this, or any other expenditure that is not directly for the American People.

We, the people, will be paying for this and many other “necessary” programs that have been set up (Harry Reid included the Cowboy Poetry Convention in this genre) by Congresses and Presidents in the past as well as during this administration. Our children, grand children and, reaching into the future to our great grand children, will be paying in taxes for all of the frivolous expenditures that they have forced on the American People.

The American Revolution is said to have been based on a Tax Revolt, but it entailed more than just the taxes being imposed on the Colonists. But let’s leave the cause at the taxes for now.

Americans banded together to declare Independence from Britain and upon that action, they created the Articles of Confederation which were used to govern the colonies until the writing of the Constitution was enjoined due to the inadequacies of the Articles. The Bill of Rights is prominent in our Constitution. The United States of America is the first totally free country in the history of the world. You can reach back into the past, but you’ll not find a country that has the rights of the people spelled out more clearly and concisely than in our Constitution.

One of our most precious rights is the Right to Assembly, covered by the First Amendment of the Bill of Rights. American people started to wake up and began to assemble in protest against the spending being done by Congress in 2009. We are organized into Tea Parties which are a grass roots movement to tell Washington D.C. that we’re tired of their flippant spending and shoving down our throats legislation that we don’t want.

Symbol of the Tea PartyThe Tea Parties are a new Revolution in this country, one that is peaceful and powerful at the ballot box. We must continue to send the message to the Congress-Critters in the Swamp of Washington D.C. that we’re tired of over taxation, over spending and having unconstitutional legislation thrown at us.

The question we must now ask is, are they listening to us?

And if they are not listening, what is our next move?

Gang of Six Plan .. or Not [Full Text]

Senator Tom Coburn rejoined the deficit panel known as the “Gang of Six” just in time to help sell a non-balancing, non-binding piece of not legislation that the President pointed to as a possible solution to the budget crisis.

The proposal is not legislation. It’s a set of guidelines for Congressional committees to then take back and come up with ideas on how to implement the guidelines. There is little hope of all of that coming together in a bill and garnering the necessary votes by August 2nd.

File:US Federal Debt as Percent of GDP Color Coded Congress Control and Presidents Highlighted.pngThe proposal promises to reduce publicly-held debt to around 70% of GDP by 2021. That is precisely the ratio of debt-to-GDP that Obama started with in 2009. Since then, the Democrat-controlled Congress and White House have skyrocketed that to almost 100% of GDP. That means that the proposal will never balance the budget – ever.

All but a tiny portion of the plan is typical can-kicking. Only $500 billion will be cut from the budget immediately. The rest is over time, totally relying on committees to suggest ways to hit the guidelines – which they won’t. Even if they did, the plan will likely only reduce the deficit by about $4 trillion over ten years.

The immediate cuts are achieved by changing the method by which cost-of-living increases are calculated and by implementing some temporary discretionary spending caps.

The proposal also eliminates the alternative minimum tax and restructures the tax code to 3 tax brackets instead of the 6 it now has. Loopholes and deductions will be reduced and the rates will be lowered in all of the brackets. This should lead to a broader tax base, but due to the failure to eliminate the earned income tax credit and other lower-end tax loopholes, the middle class will bear the brunt of this broadening. The plan would also leave Obama without his tax hikes on businesses, jets and the wealthy.

Entitlement reform is not concretely dealt with in the plan. The cost of living increase is not significant enough to make Social Security and Medicare solvent. That single reform will simply slow the annual increases to payees by 0.25%. It does nothing to stem the tide of baby boomers soon to flood the programs. Without a change to means testing and an increase in the eligibility ages, no significant improvement to these entitlement programs outlook can be expected.

$500 billion in cuts while approving $2.4 trillion in new debt. The math doesn’t work. By failing to come up with a solution to balance the budget, Sens. Conrad and Coburn have failed to take hold of an historic opportunity. The 112th Congress will not be the ones to finally set America on a fiscally-sound course.

Conrad Budget Executive Summary

What if Corporations Paid No Taxes?

The United States is home to the second highest corporate taxes in the world. In 2009 many other countries decided to cut their corporate tax rates in order to foster more hiring and economic growth.

According to the Organization for Economic Coordination and Development, the United State’s Corporate tax rate is more than 50% higher than the next highest – Japan. A 2009 OECD study also points out that corporate taxes are the most harmful to economic growth.

President Obama is pressing for higher taxes on Corporations. If a company experiences increased expenses for any reason, that leaves less money to hire new employees or for the salaries of existing employees. It’s common sense. A company is going to try to make a profit, no matter what. If the government takes more out of their bottom line, the company is going to look for other places to cut or will take their business overseas.

It should be obvious what would happen if the marginal corporate tax rate was changed to 100%. The companies would fire all of their U.S. employees and head for another country. But, what would happen if the marginal, or even effective, corporate tax rate were zero?

Progressives would cry fowl, siting the “free ride” that companies are getting and the lost income for the government. But would that income actual be lost?

If a company paid no taxes, it would have more money to hire and pay its employees and more to invest in itself. Those investments might be more copiers, new tractors or fork lifts, office furniture, a new building – all things that would put more money in the hands of more tax payers. Cutting corporate taxes will create more and wealthier tax payers and would yield a multiple of what the original corporate taxation would have.

The opposite is also true.By hiking corporate taxes, companies will have smaller margins and will have to do something to re-balance the books. A study done by the EU found that a 1 percent increase in marginal corporate tax rates led to an almost 1% decrease in real wages.They will quit investing in equipment, quit training employees, may be forced to layoff staff and/or sell-off buildings into a terrible real estate market. All of that will reduce the amount of money the government takes in. So why would Obama keep demanding that we increase these job-killing taxes?

Perhaps the answer to fixing the economy is right before us. What if Corporations paid no taxes?

What’s wrong With the Rich

The rich are the least understood minority.  That fact lends them to be vilified by the very politicians at the root of our serious economic problems.

The facts are:

The rich take risks with their money.  When they invest their expendable income, they are risking the loss of that income.  Often the rich loose a great deal of money in failed businesses.  Most middle and lower income people would not take that kind of risk, even if they could.  Generally the greater the risk, the greater the potential reward as well as the potential loss.  There is nothing unfair about that equation.

The rich employ people.  They hire people to do a multitude of tasks for businesses.  This adds to the risk.  The wrong people can quickly destroy an investment.  They depend on effective employees and reward them accordingly.  Those who do not, suffer the consequences.  Basically, you get what you pay for.  As President Reagan pointed out, “nobody ever got a job from a poor man.”  Conversely the rich must not overcompensate.  Overcompensation easily leads to the demise of a business for the owner and eventual loss of employment.  Unions were originally designed to fairly compensate employees, and ensure unsafe working conditions.  However many unions have overstepped their principles and done harm to many businesses thus harming the very employees they supposedly intend to help.

The rich provide benefits, give to charities, and help employees save for retirement.  Monetary compensation alone has evolved to group insurance plans, 401K’s, other matching plans, and other perks and benefits.  The employer can provide group benefits far more efficiently than individuals can.  Choosing and managing these are another responsibility that the rich take on.  It is in their best interest to maximize what they can provide in order to draw and maintain effective workers.

The rich have to compete.  No business is without competitors who wish to capture a greater market share.  In order to do so, the business owner must run the business as efficiently and effectively as possible or risk reduced demand, thus a reduced workforce.  Basically the rich look out for their workers by looking out for the business.

The rich have headaches.  That’s a general expression for all that a business owner has to think about to make ends meet in his/her business.  These headaches come in the form of the economy, market fluctuations, suppliers, connected services, fashion or technical trends, political changes, taxes (many kinds), accounting, making changes, growth, retooling, human resources, discipline, establishing a corporate culture, advertising, etc, etc, to include balancing the priorities of all the above and more.  If the rich don’t address these carefully, they quickly suffer greater headaches.

The rich make large charitable contributions.  Often contributions provide tax breaks, but a tax break doesn’t exceed the contribution.

The rich hoard very little money, (percentage wise).  They understand that simply saving does not produce what investing can.  Therefore the money that the rich earn is recycled to do more of the same, employ more people, boost the economy, provide benefits, etc.  Most of their money creates more employment.  To blame the rich for having too much money is like blaming your heart for having more blood in it than any other organ.  The rich are the most effective stimulus to the economy.

When the rich stimulate the economy it is done effectively and efficiently for all the reasons above.  When the government attempts to stimulate the economy it is neither efficient nor effective because the government is not accountable.  Furthermore Government “stimulus money” is first removed from the economy through taxes, not earned by adding value to anything.  Government stimulation is like opening the refrigerator door in an attempt to cool a room.  The result is a net heating of the room because the heat expelled out the back of the refrigerator is always greater than the refrigeration it creates.

The rich spend their money.  Yes, they live extravagant lives; possess tremendous homes; and own luxurious yachts.  Consider all who are employed servicing those lives, building those homes, making and maintaining the yachts.  All that the rich spend is returned to the economy.

The rich pay taxes.  We hear of the huge tax shelters and deductions that “fat cats” get.  However it is their businesses that have such tax breaks not the individuals.  In fact due to our “graduated tax” system, the rich pay a much greater percentage of personal income.  Tax breaks are government incentives to influence how a business operates.  If there is any unfairness, it is the government (politicians) who are at fault, not the businesses who use such breaks wisely or else fail.

The rich sometimes fail.  With some wrongful exceptions of late, the rich run the risk of  “loosing everything.”   Safety nets such as the FDIC only insure losses up to a certain amount.  The rich do business that far exceeds those amounts; thus they often “work without a net.”  When a business fails, the rich often become devastated.  Interestingly enough, they often find their way back to wealth because once they have traveled the road to success they understand how to do it again, often with better results.  It is not money that creates money; it is knowing how to venture.

The rich are responsible.  When a poor man breaks something expensive, he walk away because he can not compensate the loss and there is no recourse.  When a person of means financially harms someone, they make restitution.  If not, they may find themselves paying court fees as well.

The rich are vulnerable.  No one files suit against a poor man.  However people take advantage of the rich in every way imaginable.  Because the rich have “deep pockets” they risk carrying the brunt of any conflict.  It is not uncommon for the rich to be found 1% at fault, yet assigned 99% of the financial burden for no other reason than the ability to pay.  So, do you still want to be rich?

How is a failing economy the fault of the rich not being taxed enough? First they are taxed more.  What they aren’t taxed, they reinvest, thus stimulating the economy more effectively than through the government.  What they don’t invest, they spend, which is also good for the economy.  There is almost nothing the rich can do with their money that isn’t good for everyone.  Even if they store it away in a bank, it provides liquidity for the bank to invest.

God bless the rich man because he carries the real burden of our economy.

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