by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, POTUS, TAXES, TRUMP
House Republicans have put forth a bill that would make some of the tax cuts and changes permanent instead of expiring after a few years. This includes:
- The reduction in the individual tax rates
- The increased new standard deduction, which went to $12000/individual and $24000 married couples
- Special deduction for pass-through business owners
It’s worth noting that the corporate tax reduction was already permanent with last year’s law. Other additional financial parts of this new legislation include:
- Allowing employers to join together to offer 401Ks in order to lower costs
- Allow 401K users who have an annuity to transfer it tax-free to an IRA
- Remove the age ceiling (70½) requiring distributions from IRAs and 401Ks, and continue to contribute up to $6,500/year in an IRA
- Create a new universal savings account with a maximum of $2,500/year
after tax funds that can used for non-retirement purposes
- Allow parents to remove up to $7,500 from a retirement plan without penalty under certain child-related conditions.
- Allow 529 college savings accounts to fund various other educational expenses, including apprenticeship programs, home schooling, or child student loan payments.
As if on cue, Democrats rebuke the legislation as being overly beneficial to the wealthy — as if the economic upswing which has helped everyone across-the-board, has not happened. They also chide the bill for adding to the federal deficit, even though Democrats were virtually silent when Obama had very sizeable deficits throughout most his administration. However, putting forth the legislation at this time indicates that Republicans are interested in talking about the strong economy ahead of the midterms elections — which is the smartest thing they can do right now. The GOP missed the chance to make the Bush Tax cuts permanent. They would do well not to make the same mistake twice.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMACARE, POLITICS, TAXES, TRUMP
I’m sick and tired of reading over and over again in places both liberal and conservative that Trump’s (as well as the Republican’s) proposed tax reforms are going to give the lion’s share of the cuts to the top 1%. The entire concept is totally distorted.
In fact, nobody has been talking about the series of tax changes that occurred when Obama and his Democrat cronies passed the Obamacare increases. These raised the Bush tax rates on only the wealthiest from 36% – 39.6 % and then again raised the tax rates on the wealthiest by adding a net investment income tax (NIIT), otherwise known as the “Obamacare tax,” which covered all investment income. The increase also raised capital gains on the wealthiest ones from 15% – 20%. When the 3.8% tax would get tacked on, capital gains rates effectively went from 15%- 23.8% — an increase of about 55%. That’s ridiculous!
Those ludicrous tax increases were principally responsible — along with the hemorrhage of regulations coming out of the Obama administration — for the horrific economic performance since Obama took office. The first step of any meaningful tax reform should be to reverse those Obamacare tax increases, which went 100% to the higher income individuals, and 0% to the middle class and lower income. The reversal of those insane tax increases should in no way be considered a tax cut. It is just restoring what was in fact an egregious toxin on our entire economy.
by | BLOG, FREEDOM, GOVERNMENT, TAXES
Let’s put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
>-The first four men (the poorest) would pay nothing
>-The fifth would pay $1
>-The sixth would pay $3
>-The seventh $7
>-The eighth $12
>-The ninth $18
>-The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But, what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?” The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being “paid” to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:
>-The fifth man, like the first four, now paid nothing (100% savings)
>-The sixth now paid $2 instead of $3 (33% savings)
>-The seventh now paid $5 instead of $7 (28% savings)
>-The eighth now paid $9 instead of $12 (25% savings)
>-The ninth now paid $14 instead of $18 (22% savings)
>-The tenth now paid $49 instead $59 (16% savings)
Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth. “But he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”
“That’s true!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes also get the most “benefit” from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
Author Unknown
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMA, POLITICS, TAXES, TRUMP
Nick Timiraos’ recent article in the Wall Street Journal ( Donald Trump’s Spending Push Rankles Fiscal Conservatives, 11/28/16) , is rather disingenuous with his so-called analysis of Trump’s fiscal roadmap. He clearly aims to torpedo Trump’s plan to cut taxes by tying the discussion to deficits — though correlation, of course, does not necessarily mean causation. Timiraos’ analysis is full of half-truths, but it is not entirely certain if that is willfully written or just plain economic ignorance.
First, Timiraos suggests that budget deficits “fell from 2010” but “are on track to climb in the next decade,” yet doesn’t even give any hard data to back that up — because their really isn’t any. A deficit is still a deficit. Going from a $1.4 trillion budget deficit, as Obama had in 2009, down to a $600 billion deficit in 2016, is still a massive deficit. And of course, Timiraos also doesn’t even mention that the “the total national debt nearly doubled to $19.3 trillion from $10.6 trillion when Obama took office.” Those two data points indicate an enormous spending problem on the part of Obama, something Timiraos totally ignores.
Timiraos then has the audacity to try to link rising deficits to tax cuts by Republicans. Timiraos writes, “the last two times Republicans reclaimed the White House from Democrats—in 1981 and 2001—they also successfully pushed for large tax cuts. Deficits nonetheless rose during their administrations.” Again, another instance of Timiraos telling only part of the story. Both tax cuts resulted in huge revenue increases, but it was even greater spending that created larger deficits. The tax cuts were not the problem; the deficits were not caused by a lack of revenue. Even Republicans can overspend.
Once more, near the end of the article, Timiraos tries again to make Obama’s economics to be the pinnacle of fiscal responsibility, when he writes, “Concerns about deficits over the past few years have faded because economic growth remains disappointing and because Washington took several steps to cut spending and increase taxes after deficits jumped in 2009. Deficits have also fallen below projections in recent years due to a surprising decline in the growth rate of health care spending and because interest rates have been lower than projected.” Only the Democrats are unconcerned about deficits — because their deficit spending is so astronomical, it’s better not to talk about it at all! Suggesting that Obama “cut spending and increased taxes” and that “Deficits have also fallen below projections in recent years” again ignores Obama still spent $600 billion – $1.4 trillion more than his revenue receipts were. When deficits are projected to be $1 trillion, and the actual deficit comes in a bit lower than that (but still in the hundreds of billions), you still have a deficit problem! Timiraos also ignores the fact that Obama regularly had record tax receipts each month (noted on this blog numerous times), and yet Obama still could not control his overspending.
To ignore this economic reality of the past eight years, and the simultaneously try to suggest that a tax plan with tax cuts will alarmingly increase the deficit is reckless. Timiraos ought to be ashamed at such blatant hypocrisy.
by | ECONOMY, FREEDOM
President Obama, please stop lying. There are no “tax cuts for the wealthy” on the table. The Bush tax rates are what the taxpayers pay and have been paying for 10 years. Keeping the rates the same does not equate to a tax cut. And changing the rates to the Clinton-era rates is, in fact, a tax increase.
These current tax margins have been built into the economic market for a decade. Our economy – for better or for worse – has operated on that particular set of data. Increasing of the rates would have the effect on the marketplace and in the business world of immediately reducing the value (by reducing the after-tax cash flow) of all existing investments, and, by reducing the expected return of prospective investments, will eliminate many of them (and the jobs that would have gone with them).
To talk about “restoring the old Clinton-era rates” is ludicrous for several reasons: 1) the Clinton-era economy was stronger than our current one; 2) the Clinton rates did not have the burdens of taxation introduced by legislation since then; 3) state and local tax rates are significantly higher (and states have much higher debt levels which portend even greater increases); 4) the enormously increased burden of Obama (and some Bush) era regulations exists, which have the same effect of still further tax increases, and 5) we now have to contend with Obamacare and all the staggering taxes associated with it.
Additionally, spending during the Clinton-era was much lower than now. Currently, Obama is spending 24% of the GDP, compared to 18% with Clinton. It was Clinton who specifically declared “the era of big government is over”; he aimed to reduce the spending in order to substantially reduce the size of government. Not so with Obama. Really, how in the world does Obama have the chutzpah to compare himself to Clinton when talking taxes?
Referring to a continuation of the same law is not a “tax cut”. Just because the liberals have not accepted it doesn’t mean it’s not the law. Increasing tax rates on any segment of taxpayers, especially the segment responsible for nearly all job creation, is irresponsible.