Taxing The Rich Won't Result In Obama's Estimated Revenues

According to Barack Obama, eliminating the Bush tax cuts for the rich will produce $850 billion in increased revenues over 10 years.   But, I'm betting that won't even come close to happening.

First of all, the rejiggering of the top two tax brackets will actually result in expanding the middle 28% tax bracket; lowering the rates of many who are currently paying a 33% tax rate.  In the case of those filing as singles, the upper limit of the 28% tax bracket will have to be adjusted from the current $178,650 ceiling to a new ceiling of $199,999.  As a result, all those currently making between $178,651 and $199,999 will see their taxes lowered.  Those married and filing jointly will see the 28% tax ceiling raised from $217,750 to $249,999.  And, marrieds filing separately will see the 28% tax bracket expanded from a current ceiling of $108,725 to $124,999.  So, in a way, there could be a lot of upper middle class taxpayers who will actually see their tax rates lowered.

Then, too, the married but filing separately option will probably become more attractive for many.  Take for example, a family where one income earner is making $120,000 and the other $130,000.  Under the Obama tax scenario, filing jointly would result in a tax bill of 36% or approximately $90,000.   If they filed separately, their total combined tax would be only $70,000; for a savings of $20,000.  Of course, tax advice is essential since some tax deductions are lost when filing separately.  But, if you don't have those deductions, its all gravy.

Lastly, don't expect the rich to just lay down and accept the new Obama tax.  Simply increasing charitable contributions will save many who are close to paying Obama's higher tax.  Businesses may accelerate certain purchases to increase the deductions and keep them in a lower bracket. Investments in tax free bonds will become more popular.  Even buying a Chevy Volt could keep some from paying the higher tax.  Setting up trusts can save thousands in income taxes.  And, I am quite sure the "brains" of those tax consultants are working overtime to find as many ways as possible to save their clients money.  For sure, their business will pickup because the higher amount of taxes being paid will warrant paying their fees.  Also, being forced to buy health insurance for their employees or pay a penalty may actually keep some businesses from having to pay the new, higher Obama tax on the rich.  Ain't that a kick in the Prez's pants!

The False Argument That Clinton Raised Taxes On The Rich And The Economy Boomed

With Obama running around calling for increased taxes on those making $200,000 individually, and on families making more than $250,000, there are those, including the President, who are mis-characterizing what actually happened to the economy in the nineteen nineties when Bill Clinton was in office.

It is true that when Clinton took office in 1993, he and the Democrats in Congress raised the top marginal tax rate of the highest income earners from 31% to 39.6%.  And, it is also true that the economy did well despite the higher taxes on the rich.  What people are ignoring are two critical economic events in the 90's that helped offset the deleterious effects of that tax increase: (1) the implementation of the North American Free Trade Agreement (NAFTA) on January 1 of 1994 and (2) the Dot-Com boom; starting in 1995.

NAFTA alone has seen our inter-North American trade triple since 1994.  The Dot-Com boom created more millionaires and businesses than any other time in our nation's history.  So, to paraphrase Mr. Obama on Clinton's success:  "He didn't do that, someone else made it happen!"

One last point.  The so-called budget surpluses that Bill Clinton created came about because of Newt Gingrich's Contract With America; announced during the 1994 election process.  Once the Republicans took over Congress, they worked with Clinton on the passage and implementation of several bills in 1995-1996 that were designed to reduce federal spending.  As a result, the country went into budget surpluses; starting in 1998.  Any Democrats claiming that Bill Clinton's taxes on the rich created a better economy and reduced deficits is just an attempt to re-write history. It should also be pointed out the the economy did better under the Clinton deficit reduction years than any of the Clinton years prior to that.

Obama's "Return To Tax Rates Under Bill Clinton" Lie

In almost every speech the President makes regarding the killing of the Bush tax cuts for the rich, he claims that all he is trying to do is change their tax rates to what they were under Clinton.  But, this a lie.

Under ObamaCare, there are 18  new taxes and tax increases that are, in a large part, aimed at those making $200,000 individually or at families making more than $250,000.  That same group that Barack Obama would target by killing the Bush tax cuts for the rich.

First, there is a nine-tenths of a percent increase in the Medicare taxes that are already being paid for by that $200k+ income group.  But, this is not a traditional income tax; which is imposed after deductions.  This tax is applied to unadjusted gross wages.   Iit is the equivalent of raising the income tax on the rich by 2% or more.

Then, too, there's the 3.8% investment tax that no other group will see.  Under the current laws, any person who sells a home at a profit won't have to pay a capital gains tax on those profits as long as they buy another home at an equal or higher value.   But, under ObamaCare, any profits made from home selling for high income earners will be hit with a surtax of 3.8%.  And, this 3.8% tax will also be added to all existing rates for any investment profits; including dividends and interest earned.

In addition, many extremely high income earners are self-insured when it comes to paying for their health care.  For that reason, it is highly likely that they will be hit with the Individual Mandate Tax of $900 a year.  Then, too, many wealthy have Cadillac insurance plans.  These plans give them goodies like private rooms when they are hospitalized and access to the best physicians and specialists.  The ObamaCare tax on those plans is a 40% excise tax.

On top of all the aforementioned taxes, the rich will also have the pleasure of experiencing all the other tax and related cost increases that the rest of us will experience.

Obama Proves, Once Again, That He Doesn't Understand Business

In announcing his plan to let the Bush tax cuts for the rich expire at the end of the year, the President mentioned that he will keep in place those tax cuts that will benefit 97% of all small businesses.  But what he didn't mention is that the remaining 3% that will lose the Bush tax cuts, amounts to about 1.2 million small businesses.  Also, that 3% generates 91% of all small business income. Obama acts as if of these businesses won't  miss that money or be adversely affected by the tax increase. This is total ignorance of how small businesses operate and use those profits.


Small business owners just don't  take their profits and  head off to the nearest casino to have some fun.  Most plow their after-tax profits back into the operation or they put it away for that inevitable rainy day.  When they do hire an employee, they use those profits to not only pay that employee's salary but, also, to outfit or equip each new worker.   The best example of how Obama's plan would severely hurt a small business is that of the family farm. Farming is boom and bust activity.  One year, they may make more than $200,000. But, the following year, they may lose the entire crop to floods or drought.  So, farmers always pack away as much money as they can to cover those unproductive years.  Furthermore, farmers don't see profits until the crop is actually brought in.  Until that time, they have to live off multiple years of profits in savings accounts. And, the expenses are high.  In a study done by the University of Iowa, the average farmer had both fixed and operational costs in excess of $438,000 in 2008.  So, obviously, a farmer has to have a minimum $438,000 in the bank; just to cover the potential of losing the following year's crop.  And, that doesn't include the salary they need to live on. But, Obama's plan would take a minimum of $6,000 a year away from that farmer for every year he makes more than $200,000.  So, when you're talking about an annual operational cost of $438,000 dollars, you might be talking about the difference between a farmer staying in business or going into bankruptcy.

Only a fool would think that raising taxes has no consequences.  Generally speaking, raising taxes has one of two results: (1) higher prices for the things that we all buy or, (2) businesses going belly up because they can not longer compete. And, the latter always ends in higher unemployment.

References:

Small Business Statistics: http://dailycaller.com/2012/07/10/obama-tax-hike-would-affect-1-2-million-small-businesses/

University Of Iowa Farm Study:  https://www.extension.iastate.edu/agdm/wholefarm/pdf/c1-10.pdf

Obama's Straw Man Argument For Not Extending Tax Cuts For The Rich

Barack Obama knows that increasing any taxes, even for the rich, will further damage this weak economy.  That's why, in 2010, when the economy was stronger than it is today, and, when he had complete control of  Congress, he chose to extend "all" the Bush tax cuts for two more years.   He could have easily done what he is now suggesting; which is to extend them for everyone "except" those making more than $200,000, individually, and any families making more than $250,000.  But, this is an election year; and, Obama is trying to set up a straw man argument in order to bait the Republicans into defending an extension of the Bush tax cuts for the rich.

Politically, I'm sure that he thinks he can achieve an electoral advantage by aligning the Republicans with the one percent who are rich and by having himself emerge as the protectorate of the 99% who are not. Simply, it's a continuation of his class warfare politics.  It also takes the focus off his miserable stewardship of the economy and our high unemployment.  Also, think about this.  Would raising taxes on the rich grow the economy or reduce unemployment?  Of course not.  In fact, it would do the opposite. That's why Obama's whole argument is more about him getting reelected and not about helping this country.

Mr. President, It's Tax Increases. Not, Tax Cuts For The Rich

Whenever Obama talks about taxes on the rich, he always talks in terms of "tax cuts for the rich."  That's intentional because using the words "tax cuts" makes it seem as if the rich are getting away with something.  But, in reality, Obama wants to raise taxes on the rich by extending the Bush tax cuts for everyone but the rich.   And, as far as the rich getting away with something, the top forty percent of all wage earners -- the people that Obama wants to target with his tax increase -- already pay 84.3% of all the taxes.  Then, too, Obama says these people aren't paying their fair share.   But, what is a "fair share"?  "Fair share" is a relative term.  What might seem fair to one person, could also seem highly unfair to another.   I could say that the 52% of this country who are not paying any taxes aren't paying their fair share.  In fact, I could easily say that they aren't paying any share.

Obama's targeting of the rich is an old socialist theme.  It also shows that Obama has a deep-seated envy and hatred of the rich.   Yet, without the "rich," those 52%, who don't pay taxes, wouldn't be able to enjoy their free ride.

Source of statistics: http://constitutionalconservative.wordpress.com/myth-the-rich-dont-pay-their-fair-share/

Does Obama Even Remember 9/11?

In speech after speech, Barack Obama keeps blaming George Bush for his own economic and deficit woes.  The way he tells it, Bush took a Clinton surplus and turned it into a deficit by his spending on two wars, and because the Bush tax cuts (for the rich) made it so.

What is really infuriating about Obama's claim (along with many Democrats) is that it completely ignores why there was one of those wars and an increase in deficit spending, and why the tax cuts were even passed into law.  By blaming Bush for these problems, Obama is completely ignoring the impact of 9/11.

Besides the fact that 9/11 forced us to go to war in Afghanistan, that attack on the twin towers sent this country into a tailspin.  People stopped flying; especially to travel locations.  They were scared. Unemployment zoomed in travel destinations such as Las Vegas, Orlando, and Hawaii.  The economy suffered and tax revenues fell; resulting in budget deficits.

On top of that, Federal spending skyrocketed; further causing budget deficits to increase.  President Obama conveniently forgets that the Department of Homeland Security and the hiring of thousands of Transportation Security Administration (TSA) airport screeners arose from the ashes of 9/11.  Billions more were spent on screening devices and baggage scanning systems.  Aircraft cockpit doors were made entry proof.  Billions were spent in beefing up federal buildings in the U.S. and around the world to protect them from either drive up or drive into car bombings and/or walk-in terrorist bombers.   And, billions more were spent on container x-ray devices at every U.S. seaport of entry.

Lastly, the Bush Tax Cuts were passed into law in 2003 because 9/11 had literally slowed the economy to a snail's pace.  In fact, from 2001 to 2003, the economy only grew by an anemic 7.7%; when, in fact, a growth of 18% or more would have have normally been expected.  After the tax cuts became law, the economy recovered; increasing by 26% from 2004 until the the recession hit in 2007.

Obama's claims are truly being taken out of context.  And, don't expect the mainstream media to set the record straight!

Bill Clinton: Obama's Antagonist From Within

Obama and the Democrats must be wildly shaking their heads lately, over remarks made by Bill Clinton.  It just seems like Clinton is on a one-man quest to undermine every campaign strategy that Obama has conjured up.

For days, the Obama campaign had tried to make Romney look like a job killer for his leadership of Bain Capital.  And, as part of that leadership, team Obama was trying to convince the voters that Romney was not qualified to be president.  Well, in one fell swoop, Clinton shot those arguments down with the following two comments: "I don't think that we ought to get into the position where we say this [Bain Capital] is bad work. This is good work...[and]...The man [Romney] who has been governor and had a sterling business career crosses the qualification threshold [for president]."

Then, just a couple of days ago, Clinton said that we should extend all the Bush Tax Cuts.  This after Obama has spent months trying to convince Americans that the Bush tax cuts for the rich should be left to expire.

These aren't just forgetful lapses by Clinton.  After all, Clinton is one of the most political savvy people in America today.  I think, in an odd way, Clinton is actually trying to push Obama into campaigning in a different direction.  I think he's trying to tell him to drop the Bain Capital and "unqualified" arguments that Romney can't be president.  At the same time, I think he feels that the attacks on the rich are not strategically wise.

Or, I could be dead wrong and Clinton is actually trying to shoot down Obama's reelection chance in retaliation for his treatment of Hillary in the lead-up to the 2008 primaries.

If Romney Wins, Will Democrats Try To Sink His Presidency With Tax Hikes

I don't know if you know it or not but, January 1, 2013 is being not-so-lovingly referred to as "Taxageddon".  That's because, on that date, Americans will be hit with the largest total tax increase in the history of the union.

Right up front, the Bush tax cuts are set to expire; meaning that people in the lowest tax brackets -- the people who benefited most from the Bush tax cuts -- could see their tax rate rise by 50%.  Most all other Americans will see tax increases of around 12%.  Additionally, taxes will go up for any income from interest and dividends, and for capital gains.  The child tax credit will fall back to $500 from the current $1000 per child level. The marriage penalty will be back.  At the same time, the $5 million estate/inheritance tax exemption will slide back to a million dollars; meaning that, once again, many small business will either change hands or go belly up in order to pay Uncle Sam.

The tax fury doesn't just stop there.  A number of tax increases that are associated with ObamaCare are to take effect on that very same "Taxageddon" date.   Individuals making $200,000 and marrieds making $250,000 will be hit with a 0.9% tax increase to fund the new health care law.  At the same time, if those $200,000/$250,000 tax bracketers should sell property and make a profit, they will be hit with a federal 3.8% surcharge on those profits; whereas today, they would pay no tax at all.   Also as of January 1, medical devices will be hit with a 2.3% excise tax for any device selling for more than $100. Even Granny's wheelchair won't escape this tax.

The reality of the above taxes is simple: If all of the above go into effect as scheduled, it would send our economy into a tailspin -- basically, into another recession.  Surely, the Democrats wouldn't want that to happen if Obama is elected.  So, my guess is that they will gladly join the Republicans to extend the Bush tax cuts for another year or two.

But, what if Romney beats Obama? What, then?  Would the Democrats go so far as to allow the Bush tax cuts to expire?  Would they actually do that to sink the economy and a Romney presidency with it?  Of course, if the Bush tax cuts did expire, the Democrats would make it seem like it was the Republicans who made it happen.  My guess is that the Democrats would fight to keep the cuts for the middle and lower classes; forcing the Republicans to squabble over tax cuts for the rich.  In the process of being at odds with each other, common ground won't be found and the Bush cuts will expire. In typical fashion, the Democrats will blame the Republicans because the Republicans, as usual, were only for tax cuts for the rich.  We'll just have to wait an see.

Democrats For The Bush Tax Cuts?

If you read the New York Times or the Washington Post or watch NBC, ABC, CBS, CNN, or MSNBC, the chances are pretty good that you wouldn't know that there is a growing chorus of Democrats who want to extend the Bush Tax cuts; especially those for the wealthy (Click here to See Story: Divisions among Dems over tax cuts for affluent).

Senate Democrats like Evan Bayh, Kent Conrad and Ben Nelson are the real leaders on this. Actually, you have most of the fiscally conservative "Blue Dog" Democrats in the House and Senate who believe that the tax cuts should be extended.

The thing is, that all these Democrats understand that lower taxes help drive the economy. This is something that Nancy Pelosi, Harry Reid, and Barack Obama aren't willing to admit to their political base of fiscally and financially challenged voters who only see the rich as fat cats and ignore the thousands of small business owners who employ almost 70% of the workers in America, and who are taxed at the highest rates. Like it or not, the Bush Tax Cuts helped the economy after the massive plunge following 9/11. Much of the "deficit" that the left constantly complains about wasn't due to the tax cuts. It was due to all that was done after 9/11 to create new government agencies such as the TSA, and to completely rework our national security operations and harden government sites in the U.S. and around the world. And, despite the massive costs of two wars, the Bush deficits had been dwindled down to just about $185 billion in 2007; a year before the current recession hit.

The fact is that federal tax revenues grew by 37%, or from 1.7 trillion to $2.4 trillion from 2003 to 2006 (Click here to See Congressional Budget Office Report: Growth in Federal Tax Revenues From 2003 to 2006). This helped offset much of the spending that took place during this time. The Iraq and Afghanistan Wars had cost almost a trillion dollars through 2007. Yet, the total combined deficits by the Bush Administration from 2003 through 2007 was about $1.4 trillion; meaning that, if you exclude the cost of those two wars, the 5-year adjusted deficit spending was really only about $50 billion a year. Compare that to the current-year Obama budget deficit of $1.47 trillion.

Last week, Ben Bernanke argued before Congress that the Bush Tax Cuts should be left in place and not allowed to expire in January (Click here to See Story: Bernanke Says Extending Bush's Tax Cuts Would Maintain Economic Stimulus). I really think Pelosi, Reid, and Obama would be smart to heed that advice. In fact, I think this economy would be in worse shape today without them. Extending them will give businesses the reassurance that they can operate effectively without another government burden (ie. ObamaCare, Financial Regulation, Cap and Trade, Card Check, etc.) being hoisted upon them. Maybe then, corporate America will start spending the near 1-1/2 trillion dollars that is estimated to be held in reserves for fear of further government regulation and taxes.

A Word About Taxes

Before the word tax became associated with government economics, it was a word that had the following synonyms:

charge, cumber, drain, encumber, enervate, exhaust, lade, load, make demands on, oppress, overburden, overtax, overuse, overwork, press hard on, pressure, prey on, push, put pressure on, saddle, sap, strain, stress, stretch, task, tire, try, weaken, wear out, weary, weigh, weigh down, weigh heavily on, weight

When I hear politicians say that taxes won't cripple business, I can only think that they don't understand the origins of that word. Taxes are what the word implies. They are a burden and they do cripple the economy.

In the upcoming year, the Bush tax cuts are due to expire. With the current stimulus plan working so poorly, an immediate extension of those tax cuts by this Congress would go a long way in sending a signal to business that they can expand and hire people without worrying about the added burden of increased taxes for next year.

At the same time, while Congress is toying with the possibility of a second stimulus, this economy could get a big kick start if they would consider tax cuts for the average citizen; rather than another boondoggle expense package that solely gives union workers some extra part time work in filling pot holes and building running tracks.