Obama and the Incredible Shrinking Tax Base

Like I was sayin… soon there will be a new minority.

Both candidates are pitching major changes to the tax code.  Both candidates paint each others tax plans as bad.  However, the devil is often in the details.

One thing that I have always believed is that taxes need to be fair.  The very poor shouldn’t be overly taxed, but neither should anybody else.  Senator Obama and the democrats believe otherwise.

Senator Obama continues to push that he is cutting taxes for 95% of Americans.  Firstly, only 62% of Americans actually pay income and payroll taxes.  Take out the evil top 5% and you are left with tax cuts for only 57% of Americans.  Secondly, the Obama plan doesn’t cut anybodies taxes.  His plan only increases tax credits and refundable items.  Tax credits are different than cutting the rates.

Tax credits work like this: suppose based on my income I owe $10,000 in taxes.  With kids and other exemptions, I might have $6,000 in tax credits.  That means that I end up only owing $4,000.  If my with-holding from my paycheck totals to $7,000, then I get a refund of $3,000.

Now lets say that I make a lot less and everything else is the same.  I owe $0 in taxes based upon my income, but I still have $6,000 in credits.  The IRS then sends me a check for $6,000 (plus anything that might have been withheld.  If the government took $2,000 out of my paycheck, then I get a check back for $8,000.  There are many people in America who pay no income or payroll taxes, but get tax refunds under the current plan.  Under Obama’s plan, those who pay no taxes will get more back.  In effect, they are taxing me to give it to somebody else.  That’s what’s called “spreading the wealth around”.

In addition, Chuck Rangle the chairman of the house Ways and Means commitee is proposing an additional “surtax” on those making over $200k.  That would push marginal tax rates on those making over $250k close to 50%.  That means on that 250,001st dollar, you get to bring home 50 cents.

I hate to have to say in addition again here, but Obama also wants to eliminate the cap on social security taxes.  Anybody making over $102,000 will see their payroll taxes go up.  This will change social security from an insurance program to a massive retirement plan that further “spreads the wealth around”.

Lastly, according to the Tax Policy Center, under the Obama plan the number of Americans paying income taxes will be reduced to 52%.  That means that only 52% of us, will be paying all the income taxes.  Soon, the majority of Americans will pay no income taxes at all.  America is moving to an erie place where a minority of Americans will be taxed so that checks can be sent to the majority of Americans.  All this coming from Obama who made several millions from books and gives almost nothing to charity.  Chuck Rangle is a gem too as he wants to raise taxes, but has been caught not paying all of his.

Americans need to decide if they want to be a nation with some with their hands out and others with their pockets turned out or a nation where hard work and success is celebrated.

A windfall vote tax?

Like I was sayin… if you can’t earn ‘em, buy ‘em.

The windfall profit tax has been making the rounds again recently.  If you are not aware, a windfall profit tax is a tax on profits that are “just too big”.

The dems have been pushing a windfall profit tax on “big oil” again recently.  I have had a lot of conversations around the watercooler lately and am amazed on how unfamiliar many people are with the facts.  For instance, the biggest evil out there, Exxon, has been earning record profits lately.  Huge numbers like 11 billion make headlines.  However, most people don’t know that the profit margin, what is left over after Exxon pays all it’s expenses, is only 10%.  That means for every dollar they earn in revenue, Exxon keeps roughly 10 cents.  The other 90 cents go to pay expenses.  That is above the average for other oil companies, but below the average for Computer, electronic, and pharma.  It is also worthy to note that of that 10 cents, Exxon gives 2 cents to the shareholders via dividends.

The scary thing is how do the dems define a windfall profit.  Earlier this year, dems supported a tax on oil companies that had profits that grew by more than 10% for any one year.  That is far below profit growth for many successful companies.  If I switch jobs and get a 10% increase in income, am I in danger for some some future “too successful tax”?

The American people have been somewhat luke-warm to the idea.  However, that may change.  According to some reports, Sen. Obama will make a windfall profit tax part of his energy plan.  To help make this more popular, he proposes giving $1,000 dollars to families ($500 for individuals) and having “big oil” pay for it with their “outrageous profits” through a new tax.  Wouldn’t it be better for the government to give us some of the billions of dollars they get from the oil companies via the taxes they already collect?

It will be interesting to see how many people support the “vote for me and I will give you $1,000″ candidate.  Yet another example of the “politics of change”.  He says that he doesn’t look like past presidents, but he sure sounds like past politicians.

It’s Time to Soak the Rich

Like I was sayin… sometimes less is more.

You have been hearing it all the time lately.  John Edwards spoke of two Americas and Barack Obama is promising to make the rich “pay their fair share” of taxes.

Recent data from the IRS shows an interesting way to make this happen.  In 1990, long before the dreaded Bush tax cuts that allowed millions of Americans pay less in taxes to a bloated government, the top 1% of earners only paid 25% of the taxes.  Since the Bush tax cuts, what do you think they pay now?  21%? 19%? 15%?  In 2005, the total share of the tax burden on the evil 1% has changed from 25% in 1990 to 39% in 2005.  That’s right, since the tax cuts, the top 1% has seen their tax burden increase.

Ah, but surely the tax breaks must have gone to the rich as we hear our democrat leaders declare all the time.  Perhaps the top 5% got all the tax break…  Well, in 1990, the top 5% paid 44% of the total tax burden and in 2005, they paid 60%.  You are reading that correctly.  The top 5% of earners pay 60% of the taxes.

Surely the poor got soaked in all this because the media and the democrats keep telling us that is what happened.  However, the bottom 50% of earners paid only 2.9% of the taxes which is the lowest percentage ever.  That means that the top 50% of earners pay 97.1% of the taxes.

It seems that when you cut taxes across the board, “the rich” end up paying more of the total tax burden.  I for one say we stick it to them again by another round of tax cuts.  Heck, let’s really show them by cutting taxes across the board AND cutting spending.

Change We Can Ruin the Country With

Like I was sayin… change isn’t always good.  Senator Obama has an ambitious plan to bring change to America.  However, several of those changes will make things much worse.

One of the keys to understand how America will suffer under an Obama administration coupled with a Dem congress is to look back to the debates.  Obama was asked if he supported the raising of the capital gains tax even though raising the tax would bring in less revenue to the government.  He indicated that it was the right thing to do if you look at it through the lens of fairness.  What he is really advocating is that we should take more money away from “rich people” even if it means the government takes in less money.  Apparently it is better for some people to have less even if it means nobody benefits.  This is some sort of insane leftist thinking that will raise taxes to the point that the government takes in less money and sees that as being a good thing.

He is also on record as advocating raising taxes on the evil oil companies.  Many people who are sick of paying “too much” for gasoline nod their heads like lemmings.  Many people don’t understand that there isn’t really any such thing as corporate income tax.  All business taxes are passed on to the consumer.  If you raise taxes on oil companies, you either get higher prices or less oil (and then higher prices).

Obama also likes to push ending the Bush tax cuts (which is really just raising taxes).  One of the things the Bush tax cuts did was to increase the child credit by $500.  I am amazed at the people that support ending the tax cuts, but don’t realize it means they will pay an extra $500 a year per child in taxes.

With the rest of the world getting ready to pass America by, we as Americans need to wake up and become competative in the world.

First, we need an energy policy that makes sense.  America gets around 20% of its energy from nuclear energy.  This ranks America 19th in the world behind the UK, Finland, Spain, Sweden, Belgium, and France to name a few.  We haven’t build a nuclear plant in years and we are beginning to lag behind the rest of the world.

We also have our oil policy totally wrong.  America has enough known oil supplies in the ground to run America for over 60 years without using any foreign sources of oil.  We also haven’t added any new refineries in years.  It has gotten to the point that other countries have started drilling off our coasts to get oil that we refuse to get.  Oil isn’t the solution in the long term, but we need to reduce our dependence on countries that do not support America or worse support those that would do America harm.

America is the greatest country on earth, but will soon find itself somewhere in the top 10 if we do not wake up and start making common sense actions rather than pursue populist policies that do not address short or long term issues.

Yes America needs change, but the change candidate isn’t bringing the change that would build America up, but rather would continue to push America toward its eventual ruin.

Ending the Bush Tax Cuts

(April 9, 2008 ) – Like I was sayin… would a rose by any other name smell as sweet?  Every Democrat member of congress that can get next to a microphone indicates that ending the Bush tax cuts is a top priority for the Democrat lead congress, but what would ending the tax cuts mean to the American people?

First off, you have to determine if you believe that eliminating the tax cuts are a tax increase or not.  Many people would like to pass this off as an “un-lowering” of the taxes.  However, regardless of the definition, the tax rates will rise and all Americans that pay taxes will pay more tax.

In an opinion piece in the WSJ, John F. Cogan and Glenn Hubbard lay out a good case why taxes should not be raised.  Regardless of their case, the facts are staggering.

“The tax code changes enacted in 2001 and 2003 are scheduled to expire at the end of 2010. If they do, statutory marginal tax rates will rise across the board; ranging from a 13% increase for the highest income households to a 50% increase in tax rates faced by lower-income households. The marriage penalty will be reimposed and the child credit cut by $500 per child. The long-term capital gains tax rate will rise by one-third (to 20% from 15%) and the top tax rate on dividends will nearly triple (to 39.6% from 15%). The estate tax will roar back from extinction at the same time, with a top rate of 55% and an exempt amount of only $600,000. Finally, the Alternative Minimum Tax will reach far deeper into the middle class, ensnaring 25 million tax filers in its web.”

Notice some of the details.  A 50% increase in the lowest rates, return of the marriage penalty, and a cut in the child credit of $500.

What this means is that if you are married and you and your spouse make $80,000 combined, you pay more in taxes than a two single people earning $40,000 each.

There is also the reduction of the child credit by $500.  That means that couples that have 2 kids, would owe $1000 more in taxes.

This is often passed off as a way to fix the economy, but does taking more money out of the American people’s pockets boost the economy?  If so, why is congress rushing tax rebates to the American people in May to stimulate the economy?

This is often also passed off as a way to reduce the budget deficit.  However, you can also cut spending and achieve the same result.

Anybody who is for allowing the tax cuts (or tax un-raisings) to expire needs to ask themselves if they really want to pay hundreds or thousands more in taxes.  Many people don’t understand what it means to their finances and will end up hurting themselves in the end.

50 cent a Gallon Gas Tax proposed by Mich. Democrat

(March 20, 2008 ) – Like I was sayin…. you can’t have it both ways.  Democrat Congressman John Dingell wants you to pay MORE at the pump.

With gas prices escalating and the American consumer wondering how to make ends meet, John Dingell, a Mich. Democrat, wants to raise gas taxes by 50 cents a gallon.  The only good news is that he wants to wait until after the 2008 elections to propose the increase.  You see, it is more important to get his party elected that it is to do what he thinks is right.  If he is so sure this is the right thing to do, why is he waiting until after the 2008 elections to push this?

His argument is so full of holes, it is hard to understand why he would propose such a thing.

Here is a link to an article that lays it out.

Firstly, he wants to raise the gas tax as a cure for the “sick” planet.  There is so much information contrary to the global warming hoax, this is almost laughable.  Don’t get me wrong, we need to conserve and find ways to end our oil dependence, but taxing us into oblivion is not the answer.  The fact that the planet has been cooling for the last 10 years doesn’t seem to matter. 

Secondly, he wants to raise taxes to lower the consumption of gas.  The idea being, the more you tax something, the less of it you get.  This runs contrary to the current dem push to raise taxes to fix the economy.  If taxing gas leads to less gas consumption doesn’t taxing corporations and investors lead to less growth and less investment? 

Just remember this November when you go to the polls, you can vote for the party that wants to take more and more of your money away or the party that believes taking less from you leads to a better America.

Question: How much money is ‘too much’?

(Nov 17, 2007) – Like I was sayin’… you can shave my head, but it won’t cure your baldness.

 I haven’t seen it in a while, but every now and then, one of the Dem candidates talks about those “greedy CEOs” who make so much more money than YOU do.

I brought the topic up the other day at lunch and was shocked at the number of people felt that “some” people make too much money and something needs to be done about it.

In America, do we want or need our government to decide how much is too much?  When I hear that some CEOs earn 400 times the average worker, I ask myself “how do I become a CEO?” and not”what can be done to put a stop that?”.  A couple of people at lunch indicated that people shouldn’t be “allowed” to make that much as it isn’t fair.

 Granted, some CEOs do a terrible job, but is it up to the federal government to step in and ensure the bad CEOs make less?  I am not talking about the corrupt CEOs at Eron, Tyco, and other places, but rather leaders at companies that either lead well or don’t.

And why is this only aimed at CEOs?  Why not actors or sports starts?  Mel Gibson made at least 100 million on “The Passion”, but the guy that brings him his coffee or one of the stunt men probably didn’t make anything like that.  How many millions does Tom Cruise make to act in a move while the person that picks out his clothes for the film makes tens or hundreds of times less?  What about the guy that hands Lebron James a Gatorade?  Shouldn’t he share in the millions?

I believe that we should be able to make what somebody is willing to pay us, regardless of how much more we make than somebody else.  In America for now, you can earn as much as you can without the government stepping in when you make “too much”.  Why would we want to change that?

Incidentally, if you would like to pay me 100 times what I am making now, I can arrange my schedule for interviews….