Tag Archives: taxation

D-Day for Obamacare

     Last week Judge Vinson gave the Obama administration a one week stay to produce a valid argument against his ruling that Obamacare is illegal under the U. S. Constitution. D-day is now here and we have yet to hear a peep out of  the President or his lapdog over at the Justice department, Eric Holder. Make no mistake folks, Obama and company are on the ropes here, and our founding fathers surely must be smiling  from above, seeing how the proper Rule of law and Constitutional interpretation are being carried out to a tee  in this situation.

   Judge Vinson is teaching Constitutional law 101 to the whole bunch of Liberal academics and misfits trying to rewrite our Constitution to fit their Socialist agenda today, and he is not backing down. Judge Vinson has made several clear statements on his ruling as a direct answer to the Obama administration trying to label him as *extreme*, which is the usual Alinsky tactic deployed by the left today when anyone disagrees with their Socialistic, Nanny-Stateagenda. Here are Judge Vinson’s most clarifying statements on why Obamacare in unconstitutional, and also about the three branches of government and their separate authorities, which Obama seems to need reminding of here, from Newsmax.com;*

“Vinson clarified his ruling on March 3, warning the president’s lawyers that it was “not just a bit of friendly advice.” The administration suggests “that a single federal judge” cannot halt an entire regulatory scheme. Wrong, said Vinson. A court’s judgment is binding.

The delay may have been calculated, Vinson said. “It could be argued that the executive branch seeks to continue the implementation, in part, for the very reason that the implemented provisions will be hard to undo once they are fully in place.”

     Just like the situation where Obama put an illegal moratoriam on drilling for oil in the Gulf of Mexico and ignored the Judges ruling several times that resulted in irreversible damage to the oil industry, Obama and Company are trying to denounce and delay Judge Vinson’s ruling  so that Obamacare can pass the point of no return once they spend the initial money to start implementing it. Throughout history we have seen these types of programs become impossible to derail once they get rolling, and Judge Vinson has shown he is well aware of that gimmickry being used here.

  Judge Vinson called for the expedited ruling from the U. S. Supreme Court when he stated:

” The sooner this issue is finally decided by the Supreme Court, the better off the entire nation will be,” he said, repeating what Marshall had said two centuries ago: The court is the final interpreter of the law, and Congress and the president must obey.”

  Yes Sir, D-Day for Obamacare is staring down Obama and his self-proclaimed, *Historic piece of Legislation”  Lets hope it gets thrown on top of the scrapheap of attempted and failed Socialistic, freedom-robbing, tyrannical legislation against the people’s will in a very historical manner ! Better yet, let’s build a giant toilet like pictured above, flush all 2500 pages one at a time, and put it on National TV for all to see. Now THAT’S what I would call historic !

      As an afterthought, make it a pay per view event, and pay off the $1.6 Trillion dollar deficit we face for this year alone from these irresponsible corrupto-crats and the teleprompter in chief !

* http://www.newsmax.com/McCaughey/McCaughey-Obamacare-Court-ruling/2011/03/08/id/388744

 

The Laffer Curve of Slavery

Laffer-Curve

Arthur Laffer presented his now famous principle of taxation as a graph representing the general relationship between tax rates and tax revenue.

This graph has generated a long-standing debate over the “Laffer curve” and its applicability to taxation policy. Sometimes heated, the debate reveals various opposing viewpoints but little about the motivations of its participants, especially the sophisticates who habitually hide motivations. At first it may appear bombastic, but motivations frequently ignored in the debate relate to freedom versus slavery. While von Hayek’s influential work “The Road to Serfdom” argued that centralized economic planning naturally leads to enslavement by the state, the relationship of the Laffer curve to such thought sees little discussion. If you were a slave in any age, would not your master optimize you for what he can take from you economically? Is that not the whole point of enslavement, that the master can do this? Notwithstanding this obvious fact, the debate generally does not question the notion that the “optimum” is where the maximum amount can be taken from us in taxes, as though the maximum possible taxation level is unquestionably good and virtuous. To the extent that we accept this, we have already conceded our own slavery. The sometimes-complex thought of von Hayek is no longer required to see the eventual outcome; we are already there. Those who seek taxation at the level of the Laffer maximum are progressing toward more perfect slavery for us all, regardless of where each may think we are on that curve. Unfortunately, our current taxation levels are beyond that. From where we are now, honestly seeking the Laffer “optimum” would be a step toward sanity–but freedom lies even further away.

Laffer CurveLaffer’s graph begins with no tax revenue at 0% tax rates. Revenues rise to a maximum as tax rates increase. As tax rates increase beyond that point, revenues diminish until, at the 100% tax rate, there is again no revenue. It looks like an inverted U, having only one maximum. The maximum occurs somewhere between the extremes, and defines the rate of taxation that produces the maximum revenues. (See http://www.reference.com/browse/Laffer+curve)

Mathematician Martin Gardner wrote a satirical treatment of Laffer’s theories and introduced the neo-Laffer curve, loosely based on empirical evidence. The neo-Laffer curve only looks like the Laffer curve near 0 and 100 percent taxation; in a wide middle range the curve is a chaotic “snarl”. When in the middle range, revenues can go up or down and do so unpredictably.  Here revenue change cannot be predicted based on changes in tax rates. The neo-Laffer curve is generally used to rebut arguments that lowering tax rates will increase revenues. Perhaps deliberately unnoticed by Gardner’s sophisticate readers, the neo-Laffer curve also rebuts notions that raising tax rates will increase revenues. To whatever extent Gardner is correct in his theory and however wide or narrow his mid-range snarl may be, in recent historical experience significant lowering of tax rates has increased revenues. This implies that our tax rates for these many years have been beyond any possible chaotic mid-range and well into a predictable over-taxed zone.

A government that relies on Gardner’s thinking to justify increasing taxes is saying that we might as well raise taxes. After all, according to Gardner no one can prove that raising taxes will reduce revenues and it might in fact raise them. However, the taxpayers can say with equal accuracy that we might as well lower taxes; after all, according to Gardner no one can prove that lowering taxes will reduce revenues and it might in fact raise them.

Lower taxes result in more economic activity and growth: producers retain more and with fewer resources there is less government to interfere. This should be taken into account when reviewing tax policy but is often ignored by those who justify their policies through economic theories like those of Gardner. Contrary to Gardener’s conclusions, we should not have rates that put us into the unpredictable snarl at all; tax rates should instead be below the beginning of the snarl. Above that level, higher rates cannot be relied upon to increase revenues and could lower them. Regardless of where we are on the Laffer/Gardener curve, lower rates positively affect economic growth. If tax rates are above the initial predictable zone in either the Laffer or Gardner curves,  we might as well lower tax rates and get the reliable benefit of economic growth. Such simple farmer logic falls on deaf ears among those who privately shun prosperity and freedom, the most notable of whom are social-justice sophisticates.

At the extreme right of the Laffer curve is 100% taxation, which is loosely taken to mean that revenues are 100% of the Gross Domestic Product (GDP). The whole pie is generally taken to be the GDP. According to Laffer’s theory, the pie ( GDP) is relatively near zero at 100% taxation; i.e., there is nothing to tax because there is nothing to be gained from work if the government takes everything.  As the tax rates go up, revenues and size of the pie go down together.  As the tax rates go down, revenues and size of the pie go up together. Interestingly, the government’s percentage of the whole pie (GDP) has stayed relatively constant for decades in spite of widely ranging tax rates (see the Laffer Curve link above for a short synopsis). This fact is construed by some as a contradiction of Laffer’s principle ideas. On the contrary, this supports a conclusion that we are already operating well into the overtaxed zone where Laffer’s theory allows the ratio of revenues to the whole pie to be constant. Higher tax rates diminish the size of the pie.

The idea that growth of the economy is affected by taxes and tax rates is not difficult to understand and ought to be obvious. When taxes are lowered, the increased revenues come from increased economic activity. An honest reader of Laffer’s theories should be able to reconcile constant revenue relative to the size of the pie.

Other research purports to show that if our government lowers taxes according to Laffer’s theories, it will not make up the difference for decades. This is taken as evidence that the government should not lower taxes. The almost immediate effects on revenue observed after past tax reductions belie these claims. But even if it would take decades to recover “lost revenue”, their derived conclusion  could only make sense if the government is in a zero-sum game against its slaves, and a dollar spent by government is infinitely better than any dollar used in any other way. This would include any potential use by the slave who earned it. This kind of thinking has crept into the everyday discussion of tax policy; when any of us keeps a dollar that we earned, it is counted as a “cost” to the government.

Such ideas were debunked millennia ago; ancient Roman writings declare that such “optimization” is counter-productive purely in terms of the economic self-interest of slave owners. This Roman analysis of slave optimization accounted for slaves as a wasting asset; slaves grow old or are injured and become progressively less useful over time.

Similarly the Laffer curve has a different shape for populations in different stages of life. Laffer style optimization of a sufficiently old or decrepit population cannot be achieved, as they are incapable of producing enough to replenish the resources they consume. Only reassignment of their assets to others can increase the overall efficiency of the economy. The optimum is to reassign all resources in the hands of old people to younger producers. With nothing at all the old will of course die, but  the sooner this happens more remains for the government to take.

Though a modern slave may have been part of a taxation-optimization program all his life, he may have secreted away assets that he then mis-applies to something that has become economically useless—himself. If a slave were to actually have property rights and own something, then he could choose to use that property to support himself in his old age when he is of no economic benefit to his owner. It more efficient if all property belongs to the slave’s owner and is merely assigned to a slave while his economic usefulness justifies it. While this principle has been applied in modern times partially through death taxes, in this age of advancing medicine the assets are often gone by the time slaves die. The ancient Romans avoided such problems by reassigning resources as slaves approached economic uselessness. America recently adopted a more modern solution already in effect in several other nations: medical assets are now honestly controlled by the state and are becoming inaccessible other than through the state. In Hillarycare it would have been illegal for a physician to provide private care. However, the single-payer concept is equivalent and appears to be the goal of Obamacare.

Perhaps it is not worth mentioning, but in America there is a lingering notion that we ought to be and by right are free people. We especially long for freedom and the prosperity that comes with it. How can this be, that a government of the people, by the people, and for the people would optimize us like this?

President Obama promotes social-justice sophisticate policies that we know will fail. We have repeatedly learned this through mass suffering when social-justice acolytes impose their core belief systems on populations around the globe. Social-justice sophisticates never seem to tire of the predictable suffering, yet his state of the Union Speech last week spoke of a vibrant future. He enumerated as many desirable outcomes as would fit, and promised that they are all coming to a theatre near you, and you, and you. Like old Soviet 5 year plans, it gave us glowing descriptions of progress somewhere in the future brought to you by the biggest impediments to achieving progress or freedom—its social-justice sophisticate authors and the nature of the plan.

Given where we are, any course towards freedom requires lowering taxes, and lowering them again and again. We should successively lower them until we are well into that zone where raising taxes would reliably raise revenues. Such a level must be well below Gardner’s snarl, if there is such a thing. Once in this zone of freedom, lowering of taxes increases freedom further and necessarily lowers the government’s take in absolute and relative terms; our freedom as a people can only exist to the extent that we are in the freedom-zone. American imperatives for freedom demand reduction of the government’s portion of the pie. From where we are now this will of course increase revenues, actually and honestly grow the economy, and do much to restore competitive American prosperity as well as freedom.

Takers and Makers: Class Division as a Weapon

Those selfish rich people.  They just take and take and take.. when will they have taken enough from America?  If we give credence to progressive leaders like Senator Bernie Sanders, this is the sentiment of America.  During a 8 1/2 hour rant.. er .. filibuster, Senator Sanders tore apart Conservatives and the successful in America.  Here, Bernie is assaulting the tax compromise as he believes that everyone except small businesses and the wealthy should have their tax rates remain the same as in 2010:

The rich have it all right now–the top 1 percent earns 23 1/2 percent of all income, more than the bottom 50 percent–and it is absurd that we continue to bail out people who do not need any help and who are doing just fine.

Don’t get me wrong. I do not like the tax compromise one bit, but since when is not raising ones taxes a bail out?  This bill does not decrease the amount that anyone will pay, it only says that they will not suffer a tax increase.  These highly-successful  Americans are not asking for a bail out, they are asking to be left alone.  They are asking for you, Senator Sanders, to get your grubby, greedy, selfish mitts off of their personal and private property.  That property protected by the Constitution you so easily disregard when convenient.

The Senator also points to a pillar of progressive philosophy to continue his assault on the biggest investors, job creators and producers in our society.

In 2007, the top 1 percent of all income earners made 23.5 percent of all income. Let me repeat that: The top 1 percent earned over 23 percent of all income; that is, more than the bottom 50 percent.

So Senator Sanders remakes the same point (one he uses repeatedly in the filibuster) but here is saying that 50% of Americans haven’t started their own businesses and been highly successful?  Why not?  Are the 50% being held back by the 1%?  Of course not.  Just because one person is savvy enough to create a business plan and execute it does not somehow make it harder for another person to create their own plan.  Why should the effective entrepreneur be held back by the ineffective one?  Sounds a lot like our lowest common denominator education system.  Coincidence?

So while Bernie makes the point that the top 1% make 23% of income (and pay an even higher percentage in income taxes), he then demonstrates the already highly-progressive tax system we have.

Let us be very clear: This tax applies only–only–to the top three-tenths of 1 percent of American families; 99.7 percent of American families will not pay one nickel in an estate tax. This is not a tax on the rich, this is a tax on the very, very, very rich.

If my Republican friends had been successful in doing what they want to do, which is eliminate this estate tax completely, it would have cost our Treasury–raised the national debt by $1 trillion over a 10-year period. Families such as the Walton family, of Wal-Mart fame, would have received, just this one family, about a $30 billion tax break.

That’s right, 3 tenths of one percent of tax payers are responsible for $1 trillion in tax revenue!!   That only takes into account the death tax.  The money used to purchase these assets was possibly once taxed as income and the asset purchase was probably taxed with sales tax (and an unknown number of federal fees, levies, and other taxes).  So this is possibly the third time those dollars were taxed.

So who are progressive liberals like Senator Sanders helping?  Who are those that need so much government because they cannot help themselves?  Oh, who could forget these takers of Obama stimulus money?

Now, how many jobs do you think those people are going to make with that stimulus cash?

Class warfare is a necessity if the liberal philosophy is to survive.  The most productive, the makers, must be constantly assaulted as if their gains have all been made on the backs of the poor.  The takers must be held on-high so that they can continue their dependence, and therefor allegiance, to the almighty government.

As if to add an exclamation point to the Senator’s diatribe, he made the clearly uninformed point that America supports his point-of-view.

The vast majority of people are behind us on this issue, but they have to make their voices heard to their Senators, to their Congressmen. When they do, I believe we can come forward with an agreement which protects the middle-class and working families and is not a boondoggle for the wealthiest people.

Really?  Polling data and the November election suggests otherwise oh tone deaf warrior for the far-left agenda.  This is their weapon.  Takers take more, makers give more.  If the makers won’t give, they must be evil.  If the takers don’t get more, the wealthy are being stingy.  The only winners in this are the political elite whose power arises on the backs of the poor and blaming their troubles on the successful in our society.  They have their weapon – a massive, ever-growing army of takers rushing headlong against the few remaining makers.  50% vs 1%, the numbers look bleak.

For Every Dollar of Tax Increases – Reagan Awaits His Just Deserts

Tax compromise is all win for progressivesThe tax hike vs. spending debate is getting much attention in the media, but the battle is nothing new.  The progressive Democrats are suddenly concerned about the reduction in revenue that keeping tax rates at their current levels represents – yeah, I know .. maintaining the current tax rates doesn’t reduce anything.  True Conservatives are concerned about the spending increases in the Omnibus bill.  Middle-of-the-road Republicans and Democrats aren’t concerned at all and have had a hay-day putting billions of dollars of earmarks in to the $1 trillion spending bill.

The RINO’s and DINO’s are all thrilled with the tax compromise that was made between the GOP and White House.  What compromise?  To figure that out, let’s first show what each side gave in order to mend the tax rate fence:

According to the Congressional Joint Committee on Taxation’s December 10th report, Conservatives gave up:

  • A 35% increase in the “death tax” that will hit family businesses hardest and double-tax money that has already been taxed (increases revenues by an estimated $67 Billion/year)
  • Another 1 year increase in unemployment entitlement spending (increase in spending of an estimated $65 Billion)
  • Biodiesel subsidy continuation – estimated $2 Billion/year in spending
  • Energy efficient home subsidy – about $124 Million/year in spending
  • Alternative fuel subisidy (does not include ethanol) – $202 Million/year in spending
  • Ethanol subsidy – $4.8 Billion/year in spending
  • Energy efficient appliance subsidy – $596 Million/year in spending

Progressives gave up:

  • A tax increase  on everyone, especially on small businesses and the wealthy

What Conservatives picked-up

  • Status quo tax rates (including the marriage penalty)

What Progressives picked-up

  • Massive increase in the “death tax”
  • Status quo on Billions in government subsidies
  • $65 Billion increase in spending on unemployment benefits

Some compromise.  this agreement will cost the citizens of the United States of America an additional $892 Billion/year through 2015 due to run-away spending.  There is a tax increase in this bill and I there are absolutely no spending cuts.  If the left-wing extremists had actually given up something, subsidies on ethanol, biodiesel or other ineffective government spending would have been reduced.  A compromise might have been as simple as a one-for-one spending cut for tax increase.  To put it in historic terms, Reagan once agreed to tax increases only if each dollar of tax increase would be matched by three dollars in spending cuts.

Sometimes Reagan went along with a pragamatist like chief of staff James Baker, who persuaded the president to accept the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), which turned out to be the great tax increase of 1982 — $98 billion over the next three years. That was too much for eighty-nine House Republicans (including second-term Congressman Newt Gingrich of Georgia) or for prominent conservative organizations from the American Conservative Union like the Conservative Caucus and the U.S. Chamber of Commerce, which all opposed the measure.

Baker assured his boss that Congress would approve three dollars in spending cuts for every dollar of tax increase. To Reagan, TEFRA looked like a pretty good “70 percent” deal. But Congress wound up cutting less than twenty-seven cents for every new tax dollar. What had seemed to be an acceptable 70-30 compromise turned out to be a 30-70 surrender. Ed Meese described TEFRA as “the greatest domestic error of the Reagan administration,” although it did leave untouched the individual tax rate reductions approved the previous year. (TEFRA was built on a series of business and excise taxes plus the removal of business tax deductions.)

Some things never change.  If we strip away the status quos, this “compromise” increases taxes by $67 Billion/year and increases (not decreases) spending by$65 Billion a year.  To be a Conservative win, this compromise should have resulted in $201 Billion in spending reductions ($3 spending cuts for each $1 of tax increases).  Does anyone really think that if we give Washington D.C. more money, it will somehow result in deficit relief?

Reagan would like his $3 dollars now.

Get ready for Obama’s Taxes

“Spectacles, testicles, watch and wallet.” – Yeah, that’s it! That’s a pretty good interpretation of the opening verse of Michelle Obama’s prayer to the spirits as she is busy cleaning them up. I can’t argue with that verbiage – it expresses the very essence of redistributive change. They cover it all; up top, down below, up front, and backside. They’ve got you coming and going. Talk about a pickpocket’s prayer!

No wonder Obama considers himself a Christian. Uncle Sam - Pay your taxes!Yes, it is true, and he specifically proclaims allegiance to the First United Church of the Kingdom – Youth Outreach Universal. Think about it – a lot. Services begin January 1, 2011. A special dedicatory prayer circle is planned for April 15th with special high Holy days scheduled throughout the year.

Speaking of Michelle, something Wiccan this way comes! And I’m not talking Christine O’Donnell! No, this is better. Personal income tax rates are scheduled to rise in 2011. Why, you ask? Simple, Nancy Pelosi just couldn’t bring herself to bring up a vote on extending the Bush tax cuts. Therefore, personal income tax rates will rise come January 1, 2011. Now, I seem to remember Barack Obama claiming that nobody earning less than $250,000 a year was going to see any tax increases at all. And I believed that? Sheesh! Here’s the lowdown:

  • The 10% bracket rises to an expanded 15%
  • The 25% bracket rises to 28%
  • The 28% bracket rises to 31%
  • The 33% bracket rises to 36%
  • The 35% bracket rises to 39.6%

This next one is something both gays and straights will come to appreciate. There are going to be higher taxes on marriage and families.  The “marriage penalty” (narrower tax brackets for married couples) is set to return from the first dollar of income. What’s more, the child tax credit will be cut in half from $1,000 to $500 per child. Compounding the fun is that the standard deduction will no longer be doubled for married couples relative to the single level. Finally, both the dependent care and adoption tax credits will be cut. Feel better now?

You think the Democrats got you by the cajones while you are alive? Try death, instead. Beginning January 1, 2011 a 55 percent top death tax rate will be assessed on all estates valued in excess of $1 million. Leave behind too large of an estate and instead of your heirs receiving your estate they will instead inherit a tax bill. Thanks Barack! Halleluiah!

They even carved out the Charlie Crist Memorial Tax Increase for those orange people who prefer to catch some rays down at the local tanning salon. What, pray tell is that? I’ll tell you! It is a brand spanking new 10% excise tax on getting your hide tanned at your local salon. Sure to make sure you share in the experience, there is no exemption from this tax for those unfortunate crispy critters earning less than $250,000 per year. And just to make sure you felt the love, this tax is already in effect. You’re been paying for it since last July 1st. We’re not worthy, Obama! Our legs are all tingly and stuff. Must be Christ Matthews syndrome.

Still feel left out? No need to worry! If you save or invest part of your income you’re going to be slapped with yet another tax – This time for being thrifty. Obama, in his wisdom, has decreed that the capital gains tax will rise from 15 percent in 2010 to 20 percent in 2011. And just in time for the recession, how thoughtful of our glorious leader, all blessings are upon his name! And not to be outdone, the dividends tax is zooming all the way from 15 percent in 2010 to 39.6 percent in 2011. But wait, there’s more! Those rates aren’t high enough. In 2013 they are scheduled to increase yet another 3.8 percent. Oh, blessed art thou, most benevolent and wise Barry. May the very angels in Heaven shout for joy at the mere thought of your graciousness!

Thanks to the good folks over at ObamaCare come January 1, 2011 you will no longer be able to purchase non-prescription, over-the-counter medicines (except for insulin) without a prescription (makes sense, huh?) and pay for it with your Health Savings Account (HSA), Flexible Spending Account (FSA), or Health Reimbursement Account (HRA) pre-tax dollars. Thank you Barry!

But wait, there’s more! Don’t get the idea that you can withdraw funds early from an HSA account because the tax penalty for doing that is being doubled from 10 percent to 20 percent. This puts HSA accounts at a disadvantage to IRAs and other tax-advantaged accounts, which will remain at 10 percent.

Think you’re getting off easy? Think again! Starting January 1, 2011 ObamaCare imposes a Brand Name Drug Tax. This will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers. Hope you don’t need prescriptions next year, because you are going to pay through the nose for each and every pill.

And let us not think that the IRS has to play by the same rules you do. The IRS is being empowered to disallow legal tax deductions simply on the basis that your claim to a deduction lacks “economic substance.” Think of it as redistribution of wealth. Now the government, via the IRS, is going to ensure you get screwed, even if you follow their rules to the letter. How thoughtful!

And, yet another little goodie has been slipped into your 2011 tax year W-2 form just for giggles. There will be a new box on that form in which employers will be required to report their costs incurred in providing you with your health insurance. Okay, this isn’t a tax…drum roll please…yet! It will be extremely easy for the IRS to slam you with a health insurance benefit tax now that they have the numbers. Oh, yeah, remember the “economic substance” policy. They are going to get you one way or another.

Think we’re done listing all the new taxes yet? Au Contraire! Here are a few more precious little gems awaiting you in 2011:

  • You will no longer be allowed to make charitable contributions from your IRA.
  • Tax benefits for Education and Teaching will be trimmed. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers won’t be able to deduct classroom expenses. The Coverdell Education Savings Accounts will be cut. Employer-provided education assistance is curtailed. And the student loan interest deduction will be disallowed for hundreds of thousands of families.
  • Business taxes are going up. There are scads of new taxes being levied on businesses. The biggest hit is in the loss of the Research and Experimentation Tax Credit – but there are a lot of other ones too.
  • Small business expensing will be slashed and 50% expensing will disappear. Small businesses currently can expense equipment purchases up to $250,000. Not any more – the new limit in 2011 is only $25,000.  For larger businesses, they will no longer be able to expense anything…they will have no choice but to depreciate those types of expenses.
  • The Alternative Minimum Tax (AMT) is going to ensnare a lot more families. Last year it trapped 4 million families. The estimate for 2011 (estimate provided by the left-leaning Tax Policy Center) is that 28 million families will now be subjected to the AMT.

A certain congressman seems to have gotten it right earlier this year at the State of the Union address. Obama, you lie! The only consolation is that when these new taxes smack the taxpayers upside the head that the Tea Party Movement is going to gather steam and roll right into the 2012 elections. Then it will be time for the taxpayers to get even with Obama and his socialist henchmen and slap THEM upside the head. Amen to that!

Estate Tax to Return – Right to Property Threatened

Obama and his liberal cronies in Congress are bringing back the Estate tax.  This tax does most of it’s damage to family farms and businesses – it may very much threaten a key to Americas economic strength and what is certainly the last natural right that progressives have been unable to deface – the individual right to property.

As this post at Heritage.org states:

Estates that consist largely of family-owned businesses are the most vulnerable to the death tax. Family-owned businesses and the families that own and operate them are synonymous for purposes of the death tax. The value of the portion of a business owned by a deceased person, including the business’s assets, such as equipment and property, is included in their estate. The high value of these assets is the cause of the problem for family-owned businesses.

The business’s assets make the estate appear valuable on paper and can raise the value of the estate above the threshold over which the estate is subject to the death tax. Just because the business’s assets are worth enough to push the value of the estate above the threshold does not mean the family has enough cash available to pay the death tax.

First I ask, why tax this at all?  Wouldn’t the IRS reap more benefits from the growth of the business as the heirs take over?  If the dying owner is forced to hide assets (which he will) and preserve cash to prevent his children from taking the hit (which he will), the business will have far fewer resources before and after the hand-over with which to grow.  How does this make sense?

As much as a 55% penalty will be assessed on private property, worth more than $1 Million that is passed down to heirs.  At first glance, this looks like the usual progressive/socialist play to take from the wealthy and give to those they feel deserving.  In reality, it destroys private companies and kills job creation.

The Heritage.org article continues:

The death tax slows economic growth, destroys jobs, and suppresses wages because it is a tax on capital and on entrepreneurship. Capital is any resource that individuals or businesses use to generate income. Like anything else, when the income accruing to capital is taxed, its price rises and less of it is purchased. Less capital means slower productivity growth, lower wages, and fewer jobs. As such, taxes on capital should be minimal or nonexistent. In fact, there is a general consensus among economists that there should be no taxes on capital. The death tax:

  1. (1) Discourages savings and investment. For those Americans who think that their estates may one day be subjected to the federal death tax, the tax sends a signal that it is better to consume today than invest and make more money in the future. Instead of putting their money in the hands of entrepreneurs or investing more in their own economic endeavors, Americans are encouraged to consume it now rather than pay taxes on it later.
  2. (2) Undermines job creation. Because the death tax discourages saving and investing, it also undermines job creation. Resources that otherwise would have been available for businesses to use to expand their operations and add new workers are consumed by people who deem it wiser to spend the money now than invest it knowing their inheritors will have to pay the death tax later. Furthermore, resources that businesses otherwise would have used to add jobs are diverted to protect families from the death tax.
  3. (3) Suppresses wages and productivity. Since the death tax lowers saving and investing, there are fewer resources available for businesses to purchase additional tools and equipment or replace old and worn-out pieces with new ones. That means less capital their workers can use, and therefore the workers’ productivity does not increase as much as it would have in the absence of the death tax. If the business cannot replace worn-out capital, the productivity of its workers declines. Wages are a function of a worker’s productivity, growing more slowly when productivity slows, and declining when productivity decreases.

And to see how this applies in the real world, a fox news blog post demonstrates the absolute destruction of capitalism that this new tax represents:

For generations, Anthony Timberlands, Inc., has been family-owned, but John Ed Anthony says if the estate tax rate is still 55 percent when he dies, his heirs will have to sell off the business. “What the estate tax will do to us at the time of my death is my son will have a visit from an IRS agent who will simply tell him, ‘Your $50 million dollar mill requires $20 million dollars,’” Anthony worries. He says the land where the company’s timber grows and its mills would have to be sold off in order to pay the tax. “When the estate tax strikes the industry in a small town,” Anthony warns, “[that impacts] everyone that’s in the community, everyone that is employed, all the peripheral businesses that make their money off the company.”

While a bi-partisan measure has been put forth, Harry Reid could kill the effort by simply not allowing it to see the Senate floor.  Considering the current socialist-tint to all of dirty Harry’s moves, he may seek to solidify his base by sticking it to those wealthy business owners.    Others in Congress are playing that card already as the blog post reports:

Senator Bernie Sanders, I-Vt., is floating an estate tax proposal that will bring in more revenue to government coffers than the Lincoln-Kyl measure. Sanders says, given the country’s current financial situation, this is no time to give “the rich” a break.

If privately-owned business are forced to pay these oppressive taxes, they will be forced to close down or sell-out.  Imagine owning a family business worth $5.6 Million at the time of your death.  If you hand it to your heirs, they get a $3.1 Million bill from the IRS. Do we want profitable enterprises to have to keep 50% of their assets in cash to handle this eventuality?  No.

This level of taxation will force private companies to conserve cash they would have invested in expansion, purchases, job creation, growth.  This is one more free-market killing idea from an administration and Congress bent on the death of capitalism.  The only one this benefits is the government.

Socialism is the state ownership of means of production.  Tax these entrepreneurs  into a position where the IRS is owed their assets and well, you know.

Estate taxes are nothing more than a tax on assets simply because the owner is changing.  It is a jobs killer, an economy killer, and it threatens the property rights of successful Americans.  It’s time to repeal the death tax permanently.

Remember in  November.

Are Wealthy Americans Leaving the Country?

I thought I would share my process for gathering viewpoint and facts.  Perhaps others would offer to put articles together in the future, but if nothing else, a look into how I brainstorm a publication:

The high-middle and high-earners in America  pay for the majority of social programs implemented by Congress.

With states facing nearly $100 billion in combined budget deficits this year, we’re seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich.

American Senators and Representatives should be thrilled, but instead disparage them for making the money that those Congressmen desperately need to tax.  What happens if they leave?

Perusing democraticUnderground.com, one would find the following comment:

“LEAVE. Take your money and go. America will survive without you… So rather than ruin our country for the other 90% whom you despise. Go away. Take all of your precious money and go elsewhere. Even if it means depression we will be better off in the long run without your manipulation..”

Liberals would love to see anyone with capitalist or free-market ideals leave, but seriously, would they really?  Sure, the populist view is to hate the wealthy – go Robin Hood and such.

Last September, Bob Bauman reported that, “Indeed, the growing trend of Americans voluntarily ending their status as U.S. citizens — the only legal way by which they can escape U.S. taxes and government controls — has reached a new peak and shows no signs of abating.”  Heck, even the radical left site, DailyKOS.com reported that the Bush family bought thousands of acres in Paraguay.  Although Obama doesn’t see what he’s causing, apparently his predecessor and his family did.

How serious are these ex-patriots:

Interestingly, although such a move offshore means departing Americans may have to pay an exit tax that the Democrat Congress and George Bush imposed in 2008, lawyers say this is a price people have become more willing to pay this year, now that recession and decreased asset values has reduced the size of this onerous and unfair tax.

So why do the non-wealthy care?  The top 1% of all earners pay 40 percent of all taxes. Examine the recent health care bill that relies heavily on the wealthy to fund the measure.  If there are not enough wealthy people, the rest of will be left to foot the bill.  A cost the rest cannot afford.

Continuing to hate top-earners for working hard and taking risks is counter-productive.  At some point, the government has to realize that not everyone can work for unions for middle-class wages unless the government is willing to tax middle-class wages at much higher rates.  It is well-known that our legislative branch would never admit such a truth.   Why should they, it would cost them their precious seats.

Wealth Bulletin quotes Jay Krause, a partner at private-client specialist law firm Withers who says he’s seen a rise in those interested in expatriation lately

We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts. -wsj.com

Those who disapprove of tax competition complain that lower state taxes only create a zero-sum competition where states “race to the bottom” and cut services to the poor as taxes fall to zero. They say that tax cutting inevitably means lower quality schools and police protection as lower tax rates mean starvation of public services.

The Live Free or Die State has no income or sales tax, yet it has high-quality schools and excellent public services. Students in New Hampshire public schools achieve the fourth-highest test scores in the nation — even though the state spends about $1,000 a year less per resident on state and local government than the average state and, incredibly, $5,000 less per person than New York. And on the other side of the ledger, California in 2007 had the highest-paid classroom teachers in the nation, and yet the Golden State had the second-lowest test scores.

Christian Kälin, a partner at residence and citizenship planning consultancy Henley Partners, said his firm has had a big rise in such inquiries.
He said: “Tax reasons might be the biggest reason why US citizens will want to drop their passports..” – clubconspiracy.com

Jay Krause, a partner at private-client specialist law firm Withers, said: “The number of inquiries from US citizens wanting to expatriate from their citizenship has increased rapidly in the last year.” – wealth-bulletin.com

To become a resident of Costa Rico for instance only requires proving an income of $50,000 USD per year.  Put $1,000,0000 in the bank and cut a crappy 5% annual and you’re in.   That is nothing serious for a middle-upper earner in their mid-50’s.

*notes:

  1. what would keep the wealthy here
  2. what is the worth of upper-middle income ($200,000) to the American economy
  3. Is the ObamEconomy more about bringing everyone to the same lower-middle class status?
  4. How does Obamacare and the financial reform bill increase Americans worth/income?
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