As Obama keeps pushing his (non) jobs bill that looks like another stimulus package, I’m tired of hearing that the bailouts worked. One of the amazing non-stories in the country is that when the bailouts occurred, what the government was doing was taking those companies and their employees who were totally solvant (ie Ford, Chrysler, etc) and rewarding their achievement by having their competitor bailed out (GM). If there has ever been unfair competition in this country, it was then. Those companies competed unsuccessfully, and then were given government money so they could produce again. This is pure hypocrisy — and practically discrimination — toward those successful companies.
Archives for September 2011
When the government gives out money, it is spending. Tax credits are government expenditures run through the tax system; your income collected is then given back to people on their taxes who meet a criteria. Simply having the IRS write the check (instead of a department such as Health and Human Services), allows the government to classify it a cut instead of spending. The “Making Work Pay Credit” cited in Kessler’s piece is a perfect example of what is not a tax cut – this is a government handout. Others include Cash for Clunkers , Energy Credits, and First Time Home Buyer Credits. Instead of doing the honorable thing and using the Treasury to send the money to each eligible taxpayer, the administration instead ran the disbursements through the IRS so they could claim a “tax cut”. This same type of deceit put Enron executives behind bars. Clearly there was nothing resembling a marginal rate tax cut that would be valuable to the economy .
A very good friend of mine, Wayne Crews, penned this great piece last night for Forbes after Obama’s speech. Crews is the VP of Policy for CEI. Below is his article in its entirety:
Hauling the United States Senate and a reluctant House together to listen to you on NFL kickoff night–when it’s not even State of the Union season besides–represents a magnificent triumph of community organizing. I listened in, but missed that bit about how jobs will actually be created, which had been the teaser.
There’s a famous observation that poverty doesn’t have causes; instead, poverty is the default state of mankind, while only wealth has causes.
My lesser noggin contends that the same can be said of joblessness and employment, respectively.
Hyper-creation of jobs is possible in the U.S., it’s there for the taking, as Alec Baldwin brilliantly put it in Glengarry Glen Ross in another somewhat twisted context. But it takes a leader willing to uproot the entrenched government that, by late 2011 A.D., has spent decades outlawing the “causes of employment” by means of a gargantuan Regulatory State that Obama barely acknowledged.
Obama’s “jobs” talk grudgingly nodded at some payroll tax relief (gee, thanks, after three years) and enthused about trade liberalization (great). But true colors burst forth in threats to require payment of ”fair share” aimed at the very producers presumably expected to create jobs in the first place.
The rest of the speech clung to otherwise discredited infrastructure bridge-and-school-building stimulus ideas (why don’t the involved states build it themselves, one might wonder) and admonitions to just shut up and spend and lend. He even mentioned spending on roofs. And invoked paying teachers as a federal matter.
Herein is our crisis. The very idea of of a presidential speech treating jobs as a public works phenomenon in any respect properly subject to federal delineation is something of an abomination in a free society. About the best to be said about the “American Jobs Act” grandiosely unveiled on September 8 is that, yes, there’ll always be an America, it’s just not going to be here, under these philosophies.
In this age of trillions, taxes and spending get all the press. That’s warranted, when government budgets double in the way that our GDP used to when job creation was legal.
But even today’s $3.5 trillion federal budget and $1.5 trillion deficit don’t capture government’s true size and scope anymore. A jobs agenda in 2011 would entail cutting taxes to Herman Cain’s “less than God needs” levels, but, even more urgently, an all out war on red tape that’s not even on Obama’s radar.
Obama is a brilliant man, in the know-it-all, Mensa-guy-working-at-Tower-
Anyway, today, the Code of Federal Regulations exceeds 157,000 pages. The number of rules in the pipeline in the Unified Agenda of Federal Regulationshas surged since Obama stepped in, from 3,983 in mid-2009 to 4,257 in the mid-2011 .
Of those in play this year, 219 rules are deemed “economically significant,” which means they cost $100 million or more.
Rich countries can tolerate a ravenous, parasitic government class for a long, long time, in the same respect that a bigger dog can have more ticks. Unfortunately, with respect to today’s most energetic wealth- and job-creating sectors–energy, finance, health care, telecommunications, frontier technology–government regulation occupies the power-drunk, brake-happy driver’s ed instructor’s seat like never before.
The need to confront the crippling extent of regulation remains unappreciated by both parties. It requires, not a jobs plan, but liberalization so that all of us who are not politicians can create our own jobs plans.
Not that Obama could ever do it with regard to the signature health care and financial regulations on which he’s staked his legacy, Obama missed the chance to actually present a jobs agenda by:
· Aggressively opening up America to safe but aggressive natural resource access for “unprecedented” (his favorite word) drilling and mining.
· Stopping antitrust adventurism against America’s technology titans like Google and the intended AT&T and T-Mobile merger.
· Repudiatng “net neutrality” mandates as the anti-competitive, anti-infrastructure policy that they are.
· Inventorying all the legislation and regulations that impact a small business as it grows, and systematically rolling them back.
A jobs agenda further requires ensuring that future barriers to growth are removed. The president called for a “commonsense test” of no more regulation than health and safety legitimately require. OK then; so to do that, he could urge:
· A bi-partisan “regulatory reduction commission” to vote up or down immediately on a package of rules to eliminate.
· Congressional fast-track approval before major ($100 million-plus) regulations take effect. The REINS Act, or Regulations from the Executive In Need of Scrutiny Act, awaits the presidential nod.
· A freeze on new regulatory rulemaking.
· Adoption of proposals like Sen. Mark Warner’s (D-Va) “one-in, one-out” requirementl for any new regulation.
· Re-discovery of federalism by backing out of health and safety regulatory matters best left to states.
· Requiring the Office of Management and Budget to publish the numbers of major and minor rules produced by each agency, indicate where cost-benefit analysis was and was not done, and strengthen oversight.
· Regulatory flexibility and exemptions for small business.
· Declaring mere Federal Register publication of yet new mandates as insufficient notice to overburdened small business. Few have teams of lawyers and lobbyists in Washington capable of tracking it all.
· Boosting the scope of experimental programs like the Small Business Administration’s Regulatory Review and Reform program to allow affected businesspeople to systematically challenge burdensome rules.
· Lowering the threshold at which a point-of-order (a prodecural “hey wait a minute” in Congress) applies against new unfunded mandates
· Experimenting with a limited regulatory budgets.
· Establishing an annual presidential address on the state of over-regulation and its impact on productivity and GDP, and launching a congressional office of regulatory analysis (a “CBO” for regulations).
· Sunsetting regulations unless explicit reauthorization is made after five years.
· Implementing a congressional supermajority requirement for extraordinarily costly mandates
· Creation of a basic Regulatory Report Card to accompany the federal budget
If he actually wanted to, the President could comprehensively and systematically wall off further government interference with business job creation and the nascent enterprises that are America’s engines of job and wealth creation. The new “jobs” proposal instead presented a vision of spending, of greater compulsory government involvement in civil society and enterprise.
Government isn’t supposed to be making “jobs plans” (Obama’s phrase) for us. Until it stops, the real speech about jobs creation remains to be delivered.
To coincide with Obama’s
jobs re-election speech this evening, Americans for Tax Reform has done a nice job putting together a list of Obama’s tax hikes since he took office. ATR usually has a good amount of information regarding taxes on their site. I have reproduced the list in its entirety, because it is chock-full of good information.
Comprehensive List of Obama Tax Hikes
Since taking office, President Barack Obama has signed into law twenty-one new or higher taxes:
1. A 156 percent increase in the federal excise tax on tobacco: On February 4, 2009, just sixteen days into his Administration, Obama signed into law a 156 percent increase in the federal excise tax on tobacco, a hike of 61 cents per pack. The median income of smokers is just over $36,000 per year.
2. Obamacare Individual Mandate Excise Tax (takes effect in Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following
|1 Adult||2 Adults||3+ Adults|
|2014||1% AGI/$95||1% AGI/$190||1% AGI/$285|
|2015||2% AGI/$325||2% AGI/$650||2% AGI/$975|
|2016 +||2.5% AGI/$695||2.5% AGI/$1390||2.5% AGI/$2085|
Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337
3. Obamacare Employer Mandate Tax (takes effect Jan. 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346
Combined score of individual and employer mandate tax penalty: $65 billion/10 years
4. Obamacare Surtax on Investment Income (Tax hike of $123 billion/takes effect Jan. 2013): Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income: Bill: Reconciliation Act; Page: 87-93
|2013+ (current law)||23.8%||43.4%||43.4%|
|2013+ (Obama budget)||23.8%||23.8%||43.4%|
*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8% surtax does not apply to non-resident aliens.
5. Obamacare Excise Tax on Comprehensive Health Insurance Plans (Tax hike of $32 bil/takes effect Jan. 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956
6. Obamacare Hike in Medicare Payroll Tax (Tax hike of $86.8 bil/takes effect Jan. 2013): Current law and changes:
|All Remaining Wages
|Obamacare Tax Hike||1.45%/1.45%
Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93
7. Obamacare Medicine Cabinet Tax (Tax hike of $5 bil/took effect Jan. 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959
8. Obamacare HSA Withdrawal Tax Hike (Tax hike of $1.4 bil/took effect Jan. 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959
9. Obamacare Flexible Spending Account Cap – aka “Special Needs Kids Tax” (Tax hike of $13 bil/takes effect Jan. 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389
10. Obamacare Tax on Medical Device Manufacturers (Tax hike of $20 bil/takes effect Jan. 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986
11. Obamacare “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI (Tax hike of $15.2 bil/takes effect Jan. 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995
12. Obamacare Tax on Indoor Tanning Services (Tax hike of $2.7 billion/took effect July 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399
13. Obamacare elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Tax hike of $4.5 bil/takes effect Jan. 2013) Bill: PPACA; Page: 1,994
14. Obamacare Blue Cross/Blue Shield Tax Hike (Tax hike of $0.4 bil/took effect Jan. 1 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004
15. Obamacare Excise Tax on Charitable Hospitals (Min$/took effect immediately): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS. Bill: PPACA; Page: 1,961-1,971
16. Obamacare Tax on Innovator Drug Companies (Tax hike of $22.2 bil/took effect Jan. 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980
17. Obamacare Tax on Health Insurers (Tax hike of $60.1 bil/takes effect Jan. 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993
18. Obamacare $500,000 Annual Executive Compensation Limit for Health Insurance Executives (Tax hike of $0.6 bil/takes effect Jan 2013). Bill: PPACA; Page: 1,995-2,000
19. Obamacare Employer Reporting of Insurance on W-2 ($min/takes effect Jan. 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957
20. Obamacare “Black liquor” tax hike (Tax hike of $23.6 billion/took effect immediately). This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105
21. Obamacare Codification of the “economic substance doctrine” (Tax hike of $4.5 billion/took effect immediately). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113
In an Op-Ed to the Washington Times last week (Stop Exporting American Jobs 8/23/11) Rep. Duncan Hunter assiduously notes that very little is being said about jobs moving overseas but he fails to point out the obvious reason why: our government policies are the driving force behind the mass exodus of businesses abroad. A staggering increase in regulations coupled with the the highest corporate tax rate among industrial nations form the foundation of a very anti-business climate in our current administration.
Hunter goes on to suggest that companies are being offered incentives to move overseas, but the reality is that as the government continues to meddle in business affairs, it creates more disincentives to stay here. High taxes, legislation such as Dodd-Frank, and entities such as the EPA, SEC and the NLRB contribute to the rising cost of doing business here. For many companies, moving abroad is a matter of corporate survival.
Mr. Hunter calls for putting American workers first instead of sending them away. For those legislators who insist that government is the solution – instead of recognizing that it is the problem – maybe it is time to send them away. If Congress, of which Hunter is an elected member, did its job putting American workers first by sticking to the Constitution and staying out of the free-market, perhaps our businesses would once again have the liberty to grow and thrive in our great nation.