Monday, October 3, 2011
READ MY LIPS - NO NEW TAXES!
So here, as outlined by Kay Bell in “Obama Tax Bill – Winners, Losers” at BANKRATE.COM, are BO’s individual tax proposals -
· Allow the Bush-era tax rate cuts for higher-income earners to expire, making the top individual income tax rate 36.9 percent.
· Institute the "Buffett Rule" to add a new tax rate for households making more than $1 million a year.
· Reduce the value of itemized deductions to 28 percent for high-income taxpayers.
· Expand the current 2 percentage point employee payroll tax cut to a 3.1 percent rate -- half of the usual 6.2 percent rate -- for 2012.
· Return the estate tax limits to 2009 tax year levels: a $3.5 million exclusion and a 45 percent rate on estates worth more than that.
Basically his answer is to raise taxes on the rich because they can afford it. The typical Democratic answer for everything.
I support BO’s call for support of WPA-like public works projects, included in his Jobs Package. And I like that he has also proposed eliminating oil and gas tax preferences and preferences for the coal industry, and taxing carried (profits) interests as ordinary income. It is a good start at ridding the Tax Code of special interest loopholes – but much more needs to be done.
And I somewhat support his tax credits for hiring the chronic unemployed and returning vets (also in his Jobs Package). But I do not think that such credits will actually create new jobs. As an employer I will not create a new job just because of a tax credit – but I would, when faced with multiple equally-qualified applicants for an existing position, choose to hire the person that would generate a tax credit.
As for the payroll tax holiday (the final evolution of the disastrous Bush tax rebate checks) – as I have said before, as an employer and an employee (I pay myself a salary) I personally welcome it from a strictly selfish point of view, but I doubt very much that they are effective. It is certainly not going to make me run out and hire a new employee.
But I say a very strong “nay” to raising taxes on the “wealthy”. We should not punish success, entrepreneurship, and just plain hard work – we should celebrate and encourage it!
It is argued that the rich should pay more because they ultimately get more benefit from the programs and protections of the government (although those who pay absolutely no income tax seem to me to be getting much more benefit from government). With a relatively flat tax system the rich would still pay more than the not so rich – 25% of $1 Million is a lot more than 25% of $50,000.
We shouldn’t raise taxes, we should cut spending. And we don’t have to cut genuinely beneficial programs or compromise our security.
I have said it before and I will say it again – every budget of every department of every governmental entity - federal, state, and local - can be cut without sacrificing needed programs because every budget of every department of every governmental entity contains substantial waste and pork.
Let us look as a simple local example (from person knowledge) -
John Q Taxpayer is employed full-time as a civilian employee of the Police Department of the City of Metropolis. His mother is also an employee of the City of Metropolis. The City provides its employees with family health insurance coverage. John Q, because of his age, is covered by the insurance provided to his mother. So he does not require his own individual insurance coverage, and is not separately covered under the City’s plan.
Because the City does not pay for separate insurance for John Q as an employee he receives additional cash in his pay in lieu of insurance coverage.
In this situation John Q does not pay for his own outside health insurance coverage and has opted out of City coverage. The City of Metropolis is already paying for John Q’s health insurance coverage by paying for the family coverage of his mother, which includes John Q.
There is no logical reason why the City should pay John Q additional money, above and beyond his normal pay. This is waste.
On the federal level, didn’t we just recently hear that “the Pentagon spent more than $720 million since 2001 on fees for shipping containers it failed to return on time”? This is just one of many, many examples of waste.
The appropriate solution for balancing the budget is a combination of doing away with business and individual special interest loopholes and “tax expenditures” and cutting waste and pork.