Right now, if you are making $200,000, individually, or $250,000, married filing jointly, your effective income tax rate is 33%. If you make a million dollars, the effective rate is only 2 percentage points higher than that at 35%.
Under Obama's proposed rate changes, those in the $200,000 and $250,000 or more categories will be hit with a new rate of 36.9%; a 20% increase in taxes from 33% to 39.6%. If you're making a million dollars or higher, that increase to 36.9% is only a 13% increase in your taxes; up from 35% to 39.6%.
Even when Obama claims that millionaires should pay their fair share by paying more, he gets it wrong. That's because the millionaires still get better treatment than those below them under Obama's proposed tax rates. The percentage of increase is far less. All this is so much political theater and ideological B.S and not hardly some concept of fairness.
--- Federal Tax Tables: Moneychimp.com: http://www.moneychimp.com/features/tax_brackets.htm
Showing posts with label taxes on the rich. Show all posts
Showing posts with label taxes on the rich. Show all posts
Thursday, December 6, 2012
Thursday, November 8, 2012
Democrats Claim A Mandate To Raise Taxes On The Rich
Just two days, now, following the election, Obama and the Democrats have looked at the exit polling and have concluded that they have a mandate from the people to raise taxes on the rich. If that logic is true, then, they have also received a mandate to repeal or replace ObamaCare. That's because the same exit polling showed a majority of voters favoring a whole or partial repeal; 49% to 44%.
Personally, I wouldn't mind raising taxes on the rich if ObamaCare could be repealed.
--- Politico.com: Exit Polling On ObamaCare: http://www.politico.com/news/stories/1112/83427.html
--- Politico.com: President Obama sees voter mandate on taxes: http://www.politico.com/news/stories/1112/83502_Page2.html
Personally, I wouldn't mind raising taxes on the rich if ObamaCare could be repealed.
--- Politico.com: Exit Polling On ObamaCare: http://www.politico.com/news/stories/1112/83427.html
--- Politico.com: President Obama sees voter mandate on taxes: http://www.politico.com/news/stories/1112/83502_Page2.html
Monday, July 23, 2012
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.
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.
Monday, July 9, 2012
A Story of Higher Taxes & Tax Cuts and of Spending and Spending Cuts
When we look at the last 3 decades of economic activity, under five different presidents, we find an interesting story. A story of how higher taxes, tax cuts, increased spending, and spending cuts affected the economy; specifically, in terms of how the Gross Domestic Product (or, our total economic output) was impacted. And, the reason that I chose to look at the Gross Domestic Product (GDP) is because a healthy and growing GDP means less unemployment and higher federal tax revenues. Or, in other words: If our businesses are growing and their economic output is increasing, they will pay higher taxes and hire more employees; who, in turn, will also pay taxes. So, to tell that story, I've prepared this chart; making note of the President who was in office at the time and what tax changes and spending took place at the time:
Reagan/George H.W. Bush. When George H.W. Bush took over the presidency from Ronald Reagan in 1989, he inherited a roaring economy that was a pure product of Reaganomics. In 1988 and 1989, the economy grew at 7.69 and 7.48 percent; respectively. But, Bush also inherited deficits from Reagan. That's because Reagan used over-the-top military spending to break the back of the Soviet Union and stop the Cold War in its tracks. So, the task became to reduce the deficit. Working with the Democrats, Bush agreed to reduce spending and raise taxes to reduce the deficits; with the tax increases starting first. So, the famous "Read my lips. No new taxes" taxes when into effect. But, as we know, today, the Democrats snookered Bush and they never implemented a single, promised spending reduction to also help reduce the deficits. The result of those tax increases was simple: The growth in the economy slowed significantly; with GDP growth slowing to as low as 3.3% in 1991. Ultimately, Bill Clinton was able to use his famous "It's the economy, stupid" to defeat Bush.
Bill Clinton. Bill Clinton increased taxes in 1993. Primarily aimed at the rich, it raised the top income rate from 35% to 39%. It increased the corporate tax rate to 35%; and, removed the tax cap on Medicare taxes so that the rich paid more. Now, to this day, Democrats point to the fact that the economy got stronger after taxes were raised on the rich. And, if you look at 1994, the economy was actually stronger than it had been the year before; when taxes were lower. But, the real reason that the GDP jumped in 1994 wasn't taxes. It was the 1993 passage of the North America Free Trade Agreement (NAFTA). Because of that treaty, American manufacturers did a one-time ramp up in inventories (product) in anticipation of increased trade with Canada and Mexico. It's the same thing we see, every year, when manufacturers hike production to cover Christmas and holiday buying season. But, to get to the true answer on whether or not tax hikes on the rich helped the economy, you need only look to 1995 where growth was at only 4.65%.
In 1997, Clinton bought into Newt Gingrich's "Contract with America" and signed into law the Balanced Budget Act. That law dramatically cut spending in many areas of the government. It created a budget surplus which many Democrats only attribute to Bill Clinton. More importantly, the economy grew at an average of over 6% during Clinton's last 4 years in office. At least until the dot com bubble burst in late 2000.
George W. Bush. In 2001, the economy took a one-two punch. First, the economy was already slowing when George W. Bush took office; with the slowdown due to the collapse of the dot com bubble the year before. Growth for the First Quarter of 2001 slipped to just 1.3%. So, in June of that year, Bush signed into law the first round of tax cuts to stimulate the economy; with most of the cuts phased in over a period of 9 years. Initially, it looked like the cuts were working, and, then, the knockout punch came with 9/11. The result was that growth slowed to just 1% in the 3rd Quarter. Some conservative economists think the impact of 9/11 would have been much harder had the cuts not been in place. That may be true because, despite the horrendous impact of 9/11, the economy did remain above water.
In 2003, it was obvious that the economy was not recovering fast enough. So, the second round of Bush tax cuts were put into effect. Actually, the 2nd Bush cuts were the same as the first; except that, instead of a 9-year phase in, the cuts were made immediate. As you can see from the chart, the economy started growing again until late 2006 when the Great Recession hit.
Barack Obama. As is well known and as we are reminded of with nearly every Presidential campaign speech, Barack Obama inherited the Great Recession which started in December of 2006 and that ended 5 months after Obama took office. Not knowing that the recession would actually end just 4 months later, Obama and the Democrats sign into law a $787 billion stimulus bill in February of 2009. Monies under that law were to be sent out to the states for shovel-ready projects that would help put people back to work. But, there was a snag and these so-called shovel-ready projects weren't so shovel ready. In fact, money for the first projects didn't go out the door until August; almost two month after the recession had ended. In fact, only about 26%, or so, of the stimulus was applied in 2009. Yet, from 2009 to 2010, the economy actually turned itself around. And, it did so despite the stimulus. If anything, the application of more stimulus in 2010 and 2011 only saw a slowing of the economy.
Summary. From the above we know that Reaganomics, with a combination of broad tax cuts and selective tax increases, produced the hottest economies in the last 3 decades. Tax increases had negative results under Bush Sr. and Clinton; even when the Clinton taxes were only aimed at the rich. Spending cuts by Clinton in 1997 made him a surplus spending hero. The "W" Bush tax cuts, too, netted positive results. And, Obama's massive spending has only produced a lackluster recovery.
Conclusion. It is spending cuts and tax cuts that have historically given our economy the biggest boost. The last thing we should do is allow Obama to have another stimulus in the form of a jobs plan and raise taxes on the rich. Both these actions have produced nothing but slow economies; and, if you researched it, you would also find higher unemployment. This is why, everyone in the country should push for the Simpson-Boles Deficit reduction plan or the tax and spending plan from Paul Ryan. Either would make this country better off than what Obama plans to do.
Reagan/George H.W. Bush. When George H.W. Bush took over the presidency from Ronald Reagan in 1989, he inherited a roaring economy that was a pure product of Reaganomics. In 1988 and 1989, the economy grew at 7.69 and 7.48 percent; respectively. But, Bush also inherited deficits from Reagan. That's because Reagan used over-the-top military spending to break the back of the Soviet Union and stop the Cold War in its tracks. So, the task became to reduce the deficit. Working with the Democrats, Bush agreed to reduce spending and raise taxes to reduce the deficits; with the tax increases starting first. So, the famous "Read my lips. No new taxes" taxes when into effect. But, as we know, today, the Democrats snookered Bush and they never implemented a single, promised spending reduction to also help reduce the deficits. The result of those tax increases was simple: The growth in the economy slowed significantly; with GDP growth slowing to as low as 3.3% in 1991. Ultimately, Bill Clinton was able to use his famous "It's the economy, stupid" to defeat Bush.
Bill Clinton. Bill Clinton increased taxes in 1993. Primarily aimed at the rich, it raised the top income rate from 35% to 39%. It increased the corporate tax rate to 35%; and, removed the tax cap on Medicare taxes so that the rich paid more. Now, to this day, Democrats point to the fact that the economy got stronger after taxes were raised on the rich. And, if you look at 1994, the economy was actually stronger than it had been the year before; when taxes were lower. But, the real reason that the GDP jumped in 1994 wasn't taxes. It was the 1993 passage of the North America Free Trade Agreement (NAFTA). Because of that treaty, American manufacturers did a one-time ramp up in inventories (product) in anticipation of increased trade with Canada and Mexico. It's the same thing we see, every year, when manufacturers hike production to cover Christmas and holiday buying season. But, to get to the true answer on whether or not tax hikes on the rich helped the economy, you need only look to 1995 where growth was at only 4.65%.
In 1997, Clinton bought into Newt Gingrich's "Contract with America" and signed into law the Balanced Budget Act. That law dramatically cut spending in many areas of the government. It created a budget surplus which many Democrats only attribute to Bill Clinton. More importantly, the economy grew at an average of over 6% during Clinton's last 4 years in office. At least until the dot com bubble burst in late 2000.
George W. Bush. In 2001, the economy took a one-two punch. First, the economy was already slowing when George W. Bush took office; with the slowdown due to the collapse of the dot com bubble the year before. Growth for the First Quarter of 2001 slipped to just 1.3%. So, in June of that year, Bush signed into law the first round of tax cuts to stimulate the economy; with most of the cuts phased in over a period of 9 years. Initially, it looked like the cuts were working, and, then, the knockout punch came with 9/11. The result was that growth slowed to just 1% in the 3rd Quarter. Some conservative economists think the impact of 9/11 would have been much harder had the cuts not been in place. That may be true because, despite the horrendous impact of 9/11, the economy did remain above water.
In 2003, it was obvious that the economy was not recovering fast enough. So, the second round of Bush tax cuts were put into effect. Actually, the 2nd Bush cuts were the same as the first; except that, instead of a 9-year phase in, the cuts were made immediate. As you can see from the chart, the economy started growing again until late 2006 when the Great Recession hit.
Barack Obama. As is well known and as we are reminded of with nearly every Presidential campaign speech, Barack Obama inherited the Great Recession which started in December of 2006 and that ended 5 months after Obama took office. Not knowing that the recession would actually end just 4 months later, Obama and the Democrats sign into law a $787 billion stimulus bill in February of 2009. Monies under that law were to be sent out to the states for shovel-ready projects that would help put people back to work. But, there was a snag and these so-called shovel-ready projects weren't so shovel ready. In fact, money for the first projects didn't go out the door until August; almost two month after the recession had ended. In fact, only about 26%, or so, of the stimulus was applied in 2009. Yet, from 2009 to 2010, the economy actually turned itself around. And, it did so despite the stimulus. If anything, the application of more stimulus in 2010 and 2011 only saw a slowing of the economy.
Summary. From the above we know that Reaganomics, with a combination of broad tax cuts and selective tax increases, produced the hottest economies in the last 3 decades. Tax increases had negative results under Bush Sr. and Clinton; even when the Clinton taxes were only aimed at the rich. Spending cuts by Clinton in 1997 made him a surplus spending hero. The "W" Bush tax cuts, too, netted positive results. And, Obama's massive spending has only produced a lackluster recovery.
Conclusion. It is spending cuts and tax cuts that have historically given our economy the biggest boost. The last thing we should do is allow Obama to have another stimulus in the form of a jobs plan and raise taxes on the rich. Both these actions have produced nothing but slow economies; and, if you researched it, you would also find higher unemployment. This is why, everyone in the country should push for the Simpson-Boles Deficit reduction plan or the tax and spending plan from Paul Ryan. Either would make this country better off than what Obama plans to do.
Wednesday, January 25, 2012
Obama's Wish For A State Of Disunion Address
Once again, Obama launched another divisive, class warfare speech in what was supposed to be the annual State of the Union address. He talked about fairness being higher taxes on the wealthy. He talked about teamwork. Yet, is it fair and is it teamwork when almost half of all Americans pay no taxes? Is it fair that almost half of the country's high school students fail to graduate and, as a consequence, are unable to find good paying jobs. Are those people team players, Mr. Obama?
We want wealthy people in this country. We want them to use their wealth as capital to create jobs in America. We don't want to them to hand their wealth over to Washington, D.C. so that money can be squandered away in political cronyism like Solyndra.
But, this President only wants to berate the wealthy and cripple them through higher and higher taxes. What happens when those wealthy just give up and leave America? Who, then, pays for all our debt? Let's not forget that, in just 3 years, Obama is responsible for 1/3 for all the debt that this nation has accumulated in its 235 year history. Now, he thinks the wealthy -- those making more than $250,000 -- should fix the massive debt problem that he and the Democrats have created. Where's the team play when he and the Democrats put their radical priorities ahead of the health of this country. Once again, Obama's community organizing principals of disunion were quite apparent in last night's speech.
We want wealthy people in this country. We want them to use their wealth as capital to create jobs in America. We don't want to them to hand their wealth over to Washington, D.C. so that money can be squandered away in political cronyism like Solyndra.
But, this President only wants to berate the wealthy and cripple them through higher and higher taxes. What happens when those wealthy just give up and leave America? Who, then, pays for all our debt? Let's not forget that, in just 3 years, Obama is responsible for 1/3 for all the debt that this nation has accumulated in its 235 year history. Now, he thinks the wealthy -- those making more than $250,000 -- should fix the massive debt problem that he and the Democrats have created. Where's the team play when he and the Democrats put their radical priorities ahead of the health of this country. Once again, Obama's community organizing principals of disunion were quite apparent in last night's speech.
Monday, September 26, 2011
Simple, Legal Ways The Rich (or Anyone Else) Pay Lower Taxes
Amid all the current "tax the rich" debates, most Americans don't seem to understand how the rich are able to pay lower tax rates. They are able to do so because our tax laws are written to "encourage" them to do so. Here's some of the simple ways they lower their tax burden and how many middle class Americans can save money on their own tax bills:
1. Tax Free Municipal Bonds and Bond Funds. When a community or state wants to build new roads, schools, or perform other expensive building activities, it often spreads the cost of those projects over a period of 30 years by selling debt instruments known as Municipal bonds (aka: Muni's). In order to encourage investors to buy these bonds and, at the same time, keep the payable interest rates low for the states and communities issuing them, the Federal tax laws allow interest income from these bonds to be free of any Federal taxation. Depending on a person's tax status and level of risk aversion, this can be a very effective means to avoid Federal taxes.
2. Charitable Contributions. Generally, speaking, a person can deduct charitable contributions to up to 50% of their adjusted gross income as long as other 20% and 30% deduction rules are adhered to. In other words, if properly done, charitable contributions can lower someone's tax rate by as much as 50%. Actually, more if the the charitable contribution pushes someone into a lower tax bracket. Again, these allowable deductions are intentional to spur charitable giving to help fellow citizens who are less fortunate.
3. Capital Gains and Losses. For the purpose of tax laws, certain buy/sell activities are defined as capital gains or capital losses. Typically, we know these activities to be the buying and selling of stocks and bonds; but other buy/sell activities are also defined as "capital" transactions. In any event, if a capital trading activity results in a net gain; the IRS will tax the entire gain at the current capital gains tax rate which is substantially lower than the normal high-income tax rates. On the other hand, if there is a loss, the taxpayer can only claim $3,000 of that loss in the current tax year and the balance must be carried forward to be applied in the next and, sometimes, succeeding tax years. Therefore, if a taxpayer has a loss or a carried over loss, his/her marginal tax rate will be lowered. The bottom line is that we have advantageous tax laws associated with capital buy/sell activities because we want Americans to invest in America's corporations.
4. Tax Deferred Income. Under the current tax laws, certain types of income are shielded from taxation. For most of us, this is contributions and income generated by Individual Retirement Accounts and other qualified tax deferred retirement accounts such as 401k's. Rich or poor, the maximum contribution that can be made to a traditional IRA is $5,000. However, coupled with some or all of the above tax saving activities, retirement funding and other tax deferred activities can help lower the overall tax rate; especially for the rich.
None of these tax saving techniques are loopholes. They were all intentionally made part of our tax laws to help America grow; build new roads and schools; aid our neediest citizens; and help most of us save for our retirement. While it is true that the rich greatly benefit from these tax deductions, it is also true that these deductions strongly help our country as a whole. Yet, our President continues to demonize the rich for having taken advantage of the very tax breaks that Congress, in the past, has always found to benefit society.
Please Note: No one should get involved with any of the above tax lowering methods without advice from a tax or investment consultant.
1. Tax Free Municipal Bonds and Bond Funds. When a community or state wants to build new roads, schools, or perform other expensive building activities, it often spreads the cost of those projects over a period of 30 years by selling debt instruments known as Municipal bonds (aka: Muni's). In order to encourage investors to buy these bonds and, at the same time, keep the payable interest rates low for the states and communities issuing them, the Federal tax laws allow interest income from these bonds to be free of any Federal taxation. Depending on a person's tax status and level of risk aversion, this can be a very effective means to avoid Federal taxes.
2. Charitable Contributions. Generally, speaking, a person can deduct charitable contributions to up to 50% of their adjusted gross income as long as other 20% and 30% deduction rules are adhered to. In other words, if properly done, charitable contributions can lower someone's tax rate by as much as 50%. Actually, more if the the charitable contribution pushes someone into a lower tax bracket. Again, these allowable deductions are intentional to spur charitable giving to help fellow citizens who are less fortunate.
3. Capital Gains and Losses. For the purpose of tax laws, certain buy/sell activities are defined as capital gains or capital losses. Typically, we know these activities to be the buying and selling of stocks and bonds; but other buy/sell activities are also defined as "capital" transactions. In any event, if a capital trading activity results in a net gain; the IRS will tax the entire gain at the current capital gains tax rate which is substantially lower than the normal high-income tax rates. On the other hand, if there is a loss, the taxpayer can only claim $3,000 of that loss in the current tax year and the balance must be carried forward to be applied in the next and, sometimes, succeeding tax years. Therefore, if a taxpayer has a loss or a carried over loss, his/her marginal tax rate will be lowered. The bottom line is that we have advantageous tax laws associated with capital buy/sell activities because we want Americans to invest in America's corporations.
4. Tax Deferred Income. Under the current tax laws, certain types of income are shielded from taxation. For most of us, this is contributions and income generated by Individual Retirement Accounts and other qualified tax deferred retirement accounts such as 401k's. Rich or poor, the maximum contribution that can be made to a traditional IRA is $5,000. However, coupled with some or all of the above tax saving activities, retirement funding and other tax deferred activities can help lower the overall tax rate; especially for the rich.
None of these tax saving techniques are loopholes. They were all intentionally made part of our tax laws to help America grow; build new roads and schools; aid our neediest citizens; and help most of us save for our retirement. While it is true that the rich greatly benefit from these tax deductions, it is also true that these deductions strongly help our country as a whole. Yet, our President continues to demonize the rich for having taken advantage of the very tax breaks that Congress, in the past, has always found to benefit society.
Please Note: No one should get involved with any of the above tax lowering methods without advice from a tax or investment consultant.
Friday, July 15, 2011
80% of American's Favor Increasing Taxes?
This morning, Obama pulled another amazing number out of the air to try and push support for his tax hikes on the "rich"; you know, those single tax payers making more than $200,000 a year and those marrieds making in excess of $250,000. He said there's no debate because 80% of Americans support raising taxes. Well, not so fast Mr. President! In a Wall Street Journal/NBC poll that was taken earlier this year, it is true that 81% of the respondents said they agree with tax hikes for the rich. But, the rich, in that poll, were those who make over $1 million a year; not the $200,000/$250,000 that Obama keeps yapping about. Once, again, this President is seriously misrepresenting the facts in order to support his position.
While that poll showed strong support for taxes on the ultra-rich, others aren't as definitive. The difference seems to be in how the question is asked.
A recent McClatchy poll indicated that 67% wanted taxes on the rich "if" it meant that cuts in medicare and medicaid could be avoided. Not, hardly the "strong" 80% number that Obama is quoting. And, just this morning, Rasmussen released polling data that showed only 34% want tax hikes; and 55% opposed any.
Obviously in the area of tax hikes, you can "cherry pick" any polling data you can find to support your position. Unfortunately, our president sought fit to find the biggest, outlying cherry he could find. I just love this guy's concept of "transparency" in governing.
While that poll showed strong support for taxes on the ultra-rich, others aren't as definitive. The difference seems to be in how the question is asked.
A recent McClatchy poll indicated that 67% wanted taxes on the rich "if" it meant that cuts in medicare and medicaid could be avoided. Not, hardly the "strong" 80% number that Obama is quoting. And, just this morning, Rasmussen released polling data that showed only 34% want tax hikes; and 55% opposed any.
Obviously in the area of tax hikes, you can "cherry pick" any polling data you can find to support your position. Unfortunately, our president sought fit to find the biggest, outlying cherry he could find. I just love this guy's concept of "transparency" in governing.
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