TAXES

July 22, 2014

Starving the Beast

My article as originally published in American Thinker:

With the failure of Boehner’s “Plan B” it’s looking more and more like we’re going over this so-called “fiscal cliff,” although it’s nothing of the sort when compared to what lies ahead in our near future. Because we have a spending problem and not a revenue problem, worthless “solutions” that raise taxes without any real spending cuts will only send us over the looming debt cliff at a slightly different point in time, but over it none the less.

That said, now may be a good time to get your affairs in order?

It’s clear that the burden of higher taxes will ultimately fall upon all taxpayers as there simply aren’t enough “rich” to satisfy the enormous appetite of Obamanomics. Whatever the outcome of current negotiations, it may be time to try a variation of “starve the beast” as a way to force politicians to deal with this out-of-control government spending problem sooner rather than later.

There is a way to do this that would actually help individuals in the process and it could be done without an act of Congress. Critics may point out that this method won’t halt the growth of government as the “beast” will still find other ways to satisfy its appetite, but its level of consumption under President Obama is now so gargantuan that it will only lead to further deterioration of its health and an even earlier death if not altered soon.

To help “starve the beast,” perhaps more small business and middle class taxpayers should heed the advice of progressive judge Learned Hand:

Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.

The “rich” already understand this, which is why they move their money into tax shelters or take other tax-reducing measures, just as progressive CEO Eric Schmidt does by sheltering Googles and Googles of dollars in no-tax Bermuda. This is but one reason why higher taxes on the wealthy often result in less revenue to the Treasury. Much of Obama’s campaign was based upon the demonization of Mitt Romney for utilizing this very same strategy which just shows that one must be a liberal to be given a free pass for its usage. And trust me; wealthy liberals use it in order to retain every penny possible despite what they say publically.

But there are also tax-saving options available for small businesses and middle class workers which are often not utilized to their full potential. Opening an IRA retirement account, buying a health insurance policy and donating unused items to charity are just a few examples of ways to help “starve the beast” and offset some of the would-be gains to the Treasury when taxes go up (please retain the advice of a CPA though, as I am not one).

Many small businesses and middle class taxpayers currently miss out on these and other potential tax saving measures because, even though they would ultimately benefit financially from such options, extra money (which may or may not be available) needs to be spent up front to gain these deductions. But if much of this money is now going to be lost to the black hole of government anyway, why not arrange your affairs so as to make sure more of this money stays in your own coffers?

It’s time for all producers to take full advantage of every legal tax-saving measure possible in order to help “starve” this enormous beast. This would have the added societal benefits of individuals being better prepared for the real fiscal cliff as well as being less dependent upon government.

There is talk of politicians confiscating our retirement plans but fortunately — for now — the U.S. government is unable to move quite as quickly as the communist government of China is and “get it done,” as General Electric CEO and Obama Jobs Council Chairman Jeffrey Immelt seems to long for.


Reagan’s 25 Year Boom

 Reagan

Mark Levin read from these two excellent articles on his show yesterday.  History shows what really works.  Please take the time to read both:

When President Reagan entered office in 1981, he faced actually much worse economic problems than President Obama faced in 2009. Three worsening recessions starting in 1969 were about to culminate in the worst of all in 1981-1982, with unemployment soaring into double digits at a peak of 10.8%. At the same time America suffered roaring double-digit inflation, with the CPI registering at 11.3% in 1979 and 13.5% in 1980 (25% in two years).

And the result of Reagan’s policies:

These economic policies amounted to the most successful economic experiment in world history. The Reagan recovery started in official records in November 1982, and lasted 92 months without a recession until July 1990, when the tax increases of the 1990 budget deal killed it. This set a new record for the longest peacetime expansion ever, the previous high in peacetime being 58 months.

During this seven-year recovery, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third-largest in the world at the time, to the U.S. economy. In 1984 alone real economic growth boomed by 6.8%, the highest in 50 years. Nearly 20 million new jobs were created during the recovery, increasing U.S. civilian employment by almost 20%. Unemployment fell to 5.3% by 1989.

There is so much more so read the rest at Forbes:     

Setting the record straight on the Clinton tax increases and the Bush tax cuts:

Despite evidence to the contrary, President Obama and his supporters insist that a tax increase will not impede economic recovery. They claim that the Clinton tax hikes spurred the boom of the 1990s and that the subsequent Bush tax cuts hurt the economy. Members of Congress must reject this faulty notion—and reject the President’s call for burdening Americans with higher taxes and an even slower economy. 

Read the rest at Heritage 

Back to our Homepage

 


It’s Business that Pays it Forward Not Government

My article as originally published in American Thinker: 

Obama makes it sound as if starting and running a successful business is as easy as ordering fast food from the local government office. “I’ll take a double cheeseburger with extra bacon, an XXL order of fries, two (to stay legal in NYC) 16oz sodas and throw in an Apple on the side — that’s right, the multi-billion dollar corporation — not the fruit.” Those who have actually created a business know better.

It’s true that everyone receives some help and guidance along the path of life but Obama is trying to put the government cart before the private-sector horse in this case. Without private-sector business activity, the government would have zero money to spend on roads, bridges, teachers or anything else for that matter. The money must first be extracted from businesses and the people who work hard and receive their paychecks from those businesses (at least before the Feds started printing money). It’s like a capitalist version of the feel-good movie Pay it Forward if you will. A good deed multiplies exponentially over time. It’s a delicate process and unfortunately Obama’s big government policies are currently stifling business creation and expansion.

 Sure business start-ups today are benefitting from some government services that were paid for by others. But funding for those services can ultimately be traced back to past business start-ups that became successful and created a “branching tree” of tax revenue (and technology) for the government to utilize.

In reality, the ultimate act of Pay it Forward for Americans started when our Founding Fathers risked life, limb and fortune to give us our Constitution. This is the same document that Obama has been ignoring as of late. It’s a document that was created for the sole purpose of limiting what people like Obama would be able to do to “the people” while temporarily in power.

Ironically Barack Obama and Elizabeth Warren have had plenty of “help” over the years as well. Warren played American Indian long enough to move up the ranks at Harvard. And Obama has had the help of teleprompters, domestic terrorists , a communist mentor and 100% support of the mainstream media to name just a few. But what have they and their far-left views created for the benefit of society?

Voters need to perform a good deed and Pay it Forward for the next generation by electing Mitt Romney this November.

Thomas Sowell Talks Taxes

Two must-read articles by Thomas Sowell:

The Invincible Lie

Part 1:

Anyone who wants to study the tricks of propaganda rhetoric has a rich source of examples in the statements of President Barack Obama. On Monday, July 9th, for example, he said that Republicans “believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans, that that will somehow unleash jobs and economic growth.”

Let us begin with the word “spend.” Is the government “spending” money on people whenever it does not tax them as much as it can? Such convoluted reasoning would never pass muster if the mainstream media were not so determined to see no evil, hear no evil and speak no evil when it comes to Barack Obama.

Read the rest at The American Spectator

Part 2:

Nothing produces more of a sense of the futility of facts than seeing someone in the mass media repeating some notion that has been refuted innumerable times over the years.

On July 9th, on CNN’s program “The Situation Room” with Wolf Blitzer, commentator Gloria Borger discussed President Obama’s plan to continue the temporary extension of the tax rates established under the Bush administration — except for the top brackets, where Obama wanted the tax rates raised.

Ms. Borger said, “if you’re going to lower the tax rates, where are you going to get the money from?”

Read the rest at The American Spectator       

Back to our Homepage


Why High Tax Rates are Harmful

So what is the true cost of tax “fairness.”

Raising tax rates on upper-income earners is an appealing idea to many people. The President certainly hopes that it is. The most common argument against the idea is that it would diminish the incentive for business owners to invest, hire, and grow their businesses. Although that is all too true, it’s only one kind of damage done by high marginal tax rates. Even if we were not in a recession, more tax progressivity would still be a bad idea.

It’s well known that taxes reduce economic effort. If you want less of something, tax it. That, by itself, reduces wealth creation and economic growth. Less well recognized, however, is that high tax rates misdirect and misallocate economic activity.

Read the rest at The American Spectator    

Back to our Homepage


The Obamacare Tax Fix

My article as originally published in American Thinker:   

Of course President Obama lied when he said that the individual mandate contained within the ACA was “not a tax.” But it was the only way he could force this medicine through Congress and down the throats of “the people,” so the end justified the means in this case. And thanks to Roberts, it appears the unpopularity of raising taxes can be avoided in future cases as well.

As the truth about this enormous tax increase begins to settle in, many in the middle-class (think independents) will start to make some noise about the fact that their taxes will go up despite Obama’s promise that those who earn less than $250K a year wouldn’t see a penny of tax increase under Obama’s watch.

So would it really surprise anyone if Obama now tried to become a middle-class hero and campaigned on “fixing” Obamacare — if reelected — by shifting the “unfair” burden of this tax (while pointing out who brought the issue before the Supreme Court and caused it to become a tax) away from the middle-class and poor and onto the backs of the “rich” who can better tolerate the burden and should be paying their “fair share” anyway.

Obama has already shown that he is willing to say or do anything regardless of truth or Constitutionality so why not?


Marco Rubio on NPR

Marco Rubio does a good job conveying the conservative message to an NPR audience.

From The American Spectator:

As millions of NPR listeners made their way home in Thursday afternoon’s oppressive heat, their windows rolled up and AC on (incidentally allowing them to hear the radio more clearly), Florida Sen. Marco Rubio managed to achieve three important goals: 1. Sound simultaneously intelligent, principled, and likeable; 2. Make a principled case against raising taxes; 3. Make an equally principled case for compromising with the opposition to fix the nation’s federal budget mess before it becomes an irreversible disaster.

Read the rest at The American Spectator     

Back to our Homepage


Nanny Bloomberg Stumbles onto Something

My article as originally published in American Thinker:  Bloomberg can try to sugarcoat this all he wants but NYC’s proposed ban on the sale of large soda drinks over 16 oz, which is supposed to save people from their own destructive impulses, is yet another example of the ever growing nanny-state. Obviously confused as to which country he lives in, Mayor Bloomberg says: “We’re not taking away anybody’s right to do things, we’re simply forcing you to understand that you have to make the conscious decision to go from one cup to another cup.” Aside from the lost freedoms involved, this should make the trash collectors union happy.

While Bloomberg and the government have absolutely no business “forcing” people to do such things, the Mayor actually inadvertently makes the case for why we need “forced” limited government.

When questioned about his nanny-state intrusion Bloomberg stated:

“The idea here is, you tend to eat all the food in the container in front of you,” Bloomberg said on MSNBC Thursday afternoon. “If it’s a bigger container, you eat more. If somebody put it in a smaller glass or plate or bowl in front of you, you would eat less.”

The amount of food or beverage that people pay for and then consume using their own money is nobody’s business but their own. What is everybody’s business though, is the ever expanding colossal girth of the Federal Government due to its voracious appetite for taxpayers’ money. Isn’t it about time that the government is placed on a “forced” diet for the health of the entire nation?

Bloomberg’s logic equally applies to government spending as well. You see, the government tends to “eat” all of the tax dollars that are placed in front of it. If it’s a bigger “container” of taxes, it “eats” more. If a smaller “container” of taxes were placed in front of the government, it would be forced to “eat” less. But without some sort of “forced” restraint, the government has the ability to just borrow or print more dollars for its consumption.

The only way to “force” this tax diet would be with a Constitutional Amendment to cap spending as a percent of GDP such as what Milton Friedman had proposed in Free to Choose or like the Spending Limitation Amendment (SLA) as proposed in 2010 by Reps. Mike Pence, Jeb Hensarling, and John Campbell.

If we’re truly interested in a healthy nation, instead of the government limiting consumers choices (read freedoms) to things like a maximum 16oz soda, why don’t we instead limit the Federal Government’s choice to a maximum of 16% of the GDP? Otherwise, the way things are going, this behemoth is going to explode. Try as it may the media can only sugarcoat these economic numbers for so long.

President Obama did inherit an already obese Federal Government, but despite the claims by some that he placed it on a healthy diet, the truth of the matter is that Obama actually super-sized virtually everything.


Hoarding Tax Dollars

My article as originally published in American Thinker:   California is headed for the fiscal cliff even sooner than was expected, as the budget deficit has suddenly grown from a projected $9.2 billion to $16 billion. Governor Brown, who helped put California on its current unsustainable path during a prior term as governor, wants to raise taxes even higher, which will further cripple the economy of this already over-taxed state.

Of course, Brown and the Democrat-controlled legislature can’t find any legitimate areas where spending could be cut and instead threaten to slash spending for schools and public safety. This is akin to an alcoholic who, when confronted with a lower income, claims he can no longer feed his children while pushing a shopping cart full of booze toward the cash register.

I’m an electrical contractor in California, and if the level of construction activity is indicative of the health of an economy, this state is on its deathbed. I recently gained not only a tiny glimpse of the true state of the economy, but also another example of why California and the federal government are always broke, no matter how much additional money is confiscated in the form of taxes.

I was recently invited to a job walk for a very small residential remodel in a small Northern California city by one of the general contractors I frequently work with. It was for a federally funded city program that provides zero-interest, zero-payment 30-year “loans” for low-income households.

Given the size of this project (no more than $60K), what I first found striking was that there were eight general contractors present to compete for this small amount of work. This was the kind of project where if the economy were even remotely healthy, the owners would be forced to offer cash incentives just to get people to show up to offer a proposal. Not exactly a ringing endorsement for current economic conditions.

Once I set foot in the residence, I quickly forgot about the hordes of competitors surrounding me and was instead focused on conditions that made me think I was suddenly stuck within an episode of Hoarders. These were some of the worst living conditions I had ever personally witnessed. There were piles of junk everywhere, and the filth was unimaginable. One of the city inspectors even commented on how the owners had done a good job of cleaning things up so far and that we “should have seen it before,” but that some dumpsters would be brought out so the clean-up could be continued. I was totally shocked.

The existing bathroom, which was going to be remodeled, unfortunately had carpet on the floor. I say unfortunately because the stench of urine was almost unbearable as I surveyed the necessary electrical requirements. This is a house that should have had the doormat placed on the inside so that people could wipe their feet before returning to the outdoors.

The money for this program comes from HOME (Home Investment Partnerships Program) and is given to the cities by the State and to the State through HUD. A “low-income” family of four that lives in San Francisco County can earn up to $88,800 per year and still qualify for this program. The loans are secured by the property and are supposed to be repaid after 30 years of zero interest and zero payments.

While I question the validity of this program’s existence in the first place, why is taxpayer money being used to “improve” a property when it’s clear that the “investment” will be totally trashed once complete? Just because someone is poor doesn’t mean he doesn’t have the ability to take care of what he does own. And how many truly poor people own their own homes — in California?

As bad as the above scenario may sound, the situation gets even worse from a taxpayer’s perspective. City and county building departments have been hit hard by the housing bust, which means the associated government employees have much less work to do these days. A small “free-market” project like the one described would require the pulling of the appropriate permits, and after that, several inspections by building officials would take place once various milestones had been met. Even with residential projects much larger than this one, there is really no reason for a building official to come out for a job-site pre-bid meeting such as this.

This felt more like a job-walk for a large public works project, as there were no fewer than three building officials present at the meeting for this one tiny project. There may have been a fourth, but I’m not 100% positive. Believe me: there is no reason why one person couldn’t have handled this job-walk. There is no way permit fees alone could cover this level of involvement on the part of city employees.

So according to Governor Brown and the Democrat-controlled legislature, there is no room for austerity, yet we have federal money being given to the states to be handed out in the form of loans for “low-income” housing rehabilitations that are supposed to eventually be repaid (unless the “investment” is turned into a worthless pile of trash) and then recycled for the same purpose. But in addition to the initial cost to U.S. taxpayers, there are also the hidden costs that the state and local governments (which are already broke) are incurring as a result of this program. So what are the true costs to California? How many other examples of fraud, waste, and abuse are out there?

Federal, state, and local governments have been hoarding more and more of the taxpayers’ money, yet you won’t find a giant pile of this money stashed somewhere. The only thing that is truly piling up is an enormous mountain of debt.

Just a little something to think about the next time a politician tells you’re not paying your “fair share.”


Sweden as an Economic Role Model?

I’m not sure about that but this piece from Dan Mitchell at Townhall is an interesting read:

Sweden has a very large and expensive welfare state, but it’s actually becoming a bit of a role model for economic reform.

[Snip]

Notwithstanding the many admirable features of Sweden, I never thought they would be moving in the right direction on fiscal policy while the United States was heading in the opposite direction.

Read the whole thing at Townhall.com  

Back to our Homepage