Following is an excerpt from a Wall Street Journal editorial. Full article linked below. I think a lot of the confusion could be cleared up if we went to a flat tax on everyone.
"The Buffett rule is rooted in the fairy tale that taxes on the wealthy are lower than on the middle class. In fact, the Congressional Budget Office notes that the effective income tax rate of the richest 1% is about 29.5% when including all federal taxes such as the distribution of corporate taxes, or about twice the 15.1% paid by middle-class families. (See "How Much the Rich Pay," January 23, 2012.)"
WSJ Editors: The Buffett Ruse
January 29, 2012
January 26, 2012
Romney's Goof
Mitt Romney missed a "teachable moment" when he released his tax returns the other day.
Predictably, critics on the left, and amazingly some on the right, like Gingrich, pounced on Romney's returns as proof that the wealthy don't pay their fair share. Or, as Gingrich put, being paid for "no work". As you all know, this is because Romney's income derives from capital gains on investments, which are taxed at 15%. And as we have heard before, how does it make sense that Warren Buffet pays a lower tax rate than his secretary? Egad! The unfairness of it all!
But a couple of points are worth noting. First, that income from capital gains has already been taxed at the corporate level. And as we all know, U.S. corporate tax rates are either the highest or second highest among developed countries in the world (depending on whether Japan has finally lowered their corporate tax rate, which I don't know). So, by the time Romney realizes a capital gain, the effective tax rate on that money can be as high as 45%.
Second, there is a reason that capital gains are taxed at lower rates. The economy benefits by having capital flowing, as opposed to being locked up. If we raised the cap gains rate to, say, 35% (the upper earned income rate), investors will be less likely to sell assets that trigger the tax. We have seen this scenario play out over and over again. When cap gain tax rates are low, people are more likely to sell assets and pay the tax. This not only keeps capital flowing through the economy, it increases revenue to the government. And as someone once said, you can't have capitalism without capital.
Why Romney didn't explain all of this is a mystery to me. My guess is that he's so paranoid about the class warfare strategy of the Democrats that he's like a deer in the headlights.
Predictably, critics on the left, and amazingly some on the right, like Gingrich, pounced on Romney's returns as proof that the wealthy don't pay their fair share. Or, as Gingrich put, being paid for "no work". As you all know, this is because Romney's income derives from capital gains on investments, which are taxed at 15%. And as we have heard before, how does it make sense that Warren Buffet pays a lower tax rate than his secretary? Egad! The unfairness of it all!
But a couple of points are worth noting. First, that income from capital gains has already been taxed at the corporate level. And as we all know, U.S. corporate tax rates are either the highest or second highest among developed countries in the world (depending on whether Japan has finally lowered their corporate tax rate, which I don't know). So, by the time Romney realizes a capital gain, the effective tax rate on that money can be as high as 45%.
Second, there is a reason that capital gains are taxed at lower rates. The economy benefits by having capital flowing, as opposed to being locked up. If we raised the cap gains rate to, say, 35% (the upper earned income rate), investors will be less likely to sell assets that trigger the tax. We have seen this scenario play out over and over again. When cap gain tax rates are low, people are more likely to sell assets and pay the tax. This not only keeps capital flowing through the economy, it increases revenue to the government. And as someone once said, you can't have capitalism without capital.
Why Romney didn't explain all of this is a mystery to me. My guess is that he's so paranoid about the class warfare strategy of the Democrats that he's like a deer in the headlights.
January 23, 2012
Is There a Limit on Federal Power?
Below is an excerpt from an article by George Will on the upcoming Supreme Court case on Obamacare...
"If there is no outer limit on Congress’s power to regulate behavior in the name of regulating interstate commerce, then the Framers’ design of a limited federal government is nullified. And if there is no outer limit on the capacity of this government to coerce the states, then federalism, which is integral to the Framers’ design, becomes evanescent."
Full article linked below. It's worth a read. As Will notes, it could be the most important USSC case since 1954.
George Will: A Supreme Obamacare Test
"If there is no outer limit on Congress’s power to regulate behavior in the name of regulating interstate commerce, then the Framers’ design of a limited federal government is nullified. And if there is no outer limit on the capacity of this government to coerce the states, then federalism, which is integral to the Framers’ design, becomes evanescent."
Full article linked below. It's worth a read. As Will notes, it could be the most important USSC case since 1954.
George Will: A Supreme Obamacare Test
January 21, 2012
Wesley Mouch Lives
This kind of stuff is straight out of Atlas Shrugged. If someone asked these Democrats whether a company or an individual will continue to produce once the marginal tax rate reaches 100%, how would they answer?
Democratic Party Economics: The "Reasonable Profits Board"
Democratic Party Economics: The "Reasonable Profits Board"
January 15, 2012
More Solyndras
In light of the fact that Mitt Romney is getting heat from both Republicans and Democrats for his time at Bain Capital, heat which is either steeped in ignorance or political gamesmanship or both, it is remarkable that the venture capitalism undertaken by the Obama administration, with taxpayer dollars, is not garnering much attention.
It is comforting to find out that CBS has at least one journalist who takes her job seriously.
Unreal: CBS News Identifies Eleven "New Solyndras"
It is comforting to find out that CBS has at least one journalist who takes her job seriously.
Unreal: CBS News Identifies Eleven "New Solyndras"
January 7, 2012
Emperor Obama
I am somewhat aghast at the latest example of Obama's imperiousness.
His "recess" appointment of Richard Cordray to head the Consumer Financial Protection Bureau not only ignores the Constitution but Dodd-Frank as well, which created the CFPB. The Senate is not in recess. Granted, Republicans are gaveling the Senate into session every three days for the express purpose of preventing Obama from making these recess appointments, but this is a strategy that Democrats have employed in the past as well. It may be unseemly, but that's the way they do things in the dysfunctional world of Washington. The fact is that the Senate is not in recess, ergo, Obama cannot make a recess appointment. But he doesn't care. He will just do as he pleases, Constitution be damned.
Even if one were to forgive him this transgression, there is the problem of the language in Dodd-Frank. It specifically states that the director of the CFPB shall not assume authority until confirmed by the Senate. Perhaps it was an oversight by the staffers who wrote the bill, but the end result is that language forbids the use of a recess appointment, which by defintion is not confirmed by the Senate.
Obama is defending his action by proclaiming that he won't let Congress stand in the way of doing what he believes is right for American consumers. He neglected to mention that he won't let the Constitution, or the Act itself, stand in the way of what he wants. His ends apparently justify any means.
For anyone who may believe that George Bush conducted an imperious presidency, I have a question: Is it abhorrent when Bush does it but acceptable when Obama does it?
His "recess" appointment of Richard Cordray to head the Consumer Financial Protection Bureau not only ignores the Constitution but Dodd-Frank as well, which created the CFPB. The Senate is not in recess. Granted, Republicans are gaveling the Senate into session every three days for the express purpose of preventing Obama from making these recess appointments, but this is a strategy that Democrats have employed in the past as well. It may be unseemly, but that's the way they do things in the dysfunctional world of Washington. The fact is that the Senate is not in recess, ergo, Obama cannot make a recess appointment. But he doesn't care. He will just do as he pleases, Constitution be damned.
Even if one were to forgive him this transgression, there is the problem of the language in Dodd-Frank. It specifically states that the director of the CFPB shall not assume authority until confirmed by the Senate. Perhaps it was an oversight by the staffers who wrote the bill, but the end result is that language forbids the use of a recess appointment, which by defintion is not confirmed by the Senate.
Obama is defending his action by proclaiming that he won't let Congress stand in the way of doing what he believes is right for American consumers. He neglected to mention that he won't let the Constitution, or the Act itself, stand in the way of what he wants. His ends apparently justify any means.
For anyone who may believe that George Bush conducted an imperious presidency, I have a question: Is it abhorrent when Bush does it but acceptable when Obama does it?
January 6, 2012
My Other Car is an Escalade
More good news for the Chevy Volt...
An interesting tidbit from this item is that the average income of Volt buyers is $170,000. In other words, we have wealthy folks being subsidized by taxpayers to buy these little firetraps, all so they can assuage their green consciences.
I just love it when government thinks it possesses greater wisdom than free markets.
Great news: GM to "call back" 8,000 Chevy Volts for "structural modifications" related to battery fires
An interesting tidbit from this item is that the average income of Volt buyers is $170,000. In other words, we have wealthy folks being subsidized by taxpayers to buy these little firetraps, all so they can assuage their green consciences.
I just love it when government thinks it possesses greater wisdom than free markets.
Great news: GM to "call back" 8,000 Chevy Volts for "structural modifications" related to battery fires
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