Obama wants a Millionaire Tax to Pay for his Political Stimulus Bill and Shrink his Deficit

Posted by PITHOCRATES - September 17th, 2011

Going Green is Just Another Excuse to Raise Taxes, Grow Government and Transfer more Wealth from the Private to the Public Sector

Big government has big ideas.  And big taxes to pay for them (see Crippling energy bills are YOUR fault, says Huhne as he claims families could treat themselves to a mini-break if they shopped around by Glen Owen and Jonathan Petre posted 9/17/2011 on the Daily Mail).

Utility price rises have pushed the average household energy bill to almost £1,300 a year, partly driven – as critics pointed out yesterday – by ‘green’ taxes imposed by Mr Huhne’s [Energy Secretary] department.

The stealth levies, introduced to fund Britain’s investment in wind and solar power, are costing families an average of £200 a year…

This represents an increase of between 15 and 20 per cent on the average domestic power bill. The money is being used to help fund the building of 10,000 wind turbines and the proposed installation of £7 billion worth of smart meters in homes.

To make your tomorrow better we will make your today worse.  You’re welcome.

Green energy may be good for the planet.  To combat ‘global warming’.  But it’s not good for your wallet.  Or purse.  And the kicker is this.  What kind of science is global warming based on?  Fraudulent science.  And if this doesn’t tell you why governments are pushing for green energy nothing will.

It’s about the money.  It always is.  And always was.  It’s another excuse to raise taxes.  To grow government.  And transfer more wealth from the private to the public sector.  So politicians can play god.  Which is something narcissists are wont to do.

Higher Tax Rates Discourage Growth, Deter Investment, Kill Jobs and Prolong Recessions

That was in the UK.  Over in the USA their government is going green, too.  Because there’s big money in going green.  They recently invested a half billion dollars in Solyndra.  President Obama visited the plant.  Vice President Joe Biden made a video clip praising those 1,000 new jobs.  That were permanent jobs.  And they were.  Right up to that mass layoff.  As the company went belly up this month.

But it was good while it lasted.  Throwing around such massive amounts of money.  Having the power to pick winners and losers.  It really strokes a narcissist’s ego.  Even if their winners turn out to be losers.  I mean, it’s not like they have to repay that half billion dollars.  They’ll just turn to the taxpayers for more taxes.  And blame the rich for not paying their fair share (see Obama Tax Plan Would Ask More of Millionaires by Jackie Calmes posted 9/17/2011 on The New York Times).

President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials…

Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.

We should note, though, that it’s not the size of the rate that matters.  But the pile of money that it taxes.  Someone earning $60,000 a year with a top marginal tax rate of 25% may pay a puny $11,000 in taxes.  But someone with a 15% tax rate on an investment return of $40 million will pay an obscene $6 million in taxes.

Now, in case you’re not good with math.  Or you are a liberal Democrat.  Let me help.  $6 million is more than $11 thousand.  A lot more.  About 54,000% more.  The rich person may pay a lower tax rate.  But he or she pays more tax dollars.  Way more.

The rich pay more.  The less-rich pay less.  The rich pay for benefits.  The less-rich consume benefits.  We take money from the rich.  And give to the less-rich.  Sounds like redistribution of wealth, doesn’t it?  So you can see this is less about paying your fair share of taxes then it is about redistributing wealth.  To garner more votes come election time.

The Obama proposal has little chance of becoming law unless Republican lawmakers bend. But by focusing on the wealthiest Americans, the president is sharpening the contrast between Republicans and Democrats with a theme he can carry into his bid for re-election in 2012…

Mr. Obama’s proposed Buffett Rule puts a new spin on that pitch, as he tries to put Republicans in Congress and in the presidential race on the defensive for their rigid stand against higher taxes.

Using class warfare for the 2012 election.  Why?  Because he sure can’t run on his record.  For his record sucks.  His economic policies have been a disaster.  And are on track to put us back into recession.

So he will employ this ploy.  To make the Republicans look like heartless bastards.  Protecting their rich patrons.  While the rest of the nation suffers the ravishes of the Obama recession.  A recession Obama blames, of course, on George W. Bush.  That rich Texan oilman.  Despite that Recovery Summer in 2010.  When he, Barack Obama, ended the Bush recession.

Mr. Obama has been citing Mr. Buffett as he promotes his $447 billion job-creation plan. He proposes to offset the cost of that plan and reduce future budget deficits through higher taxes on the wealthy and on corporations after 2013, when the economy will presumably be healthier.

Ah, yes, his political stimulus bill.  That thing he calls the American Jobs Act.  Which no Congress person has yet to introduce into the House of Representatives.  Including no Democrat.  Which is telling.  Next year is an election year.  And the way this bill reeks of politics they want nothing to do with it.

Rich people invest their wealth.  They may buy corporate bonds.  Which will allow a business to grow.  Create jobs.  And you know nothing helps that process more than higher taxes.  You know, if you’re living in insanity land.

Higher tax rates don’t make economies healthier.  They make them sicker.  They discourage growth.  They deter investment.  They kill jobs.  And prolong recessions.  The economy will not be healthier in 2013.  Not with higher tax rates on the very people that can make it healthier.

Even Mr. Buffett probably paid a higher effective rate than he claimed, Mr. Mankiw [an economics professor at Harvard] added, because much of his income came from corporate income that had been taxed before it was paid out to individuals.

That’s right.  The money Mr. Buffet earns on his investment?  Uncle Sam already taxed it.  At the corporate income tax rate.  His tax is the second tax paid on those earnings.  Which begs the question how much is enough?  How much of our money is enough for the government?  And the answer is no matter what we pay it will never be enough.

The Danger of Raising Taxes on the Rich is that it doesn’t Address the Problem of Excessive Spending

We pay enough in taxes.  In fact, we pay too much.  The government is just spending too much.

The problem is baseline budgeting.  And tax and spend liberalism.  Not only are they spending a lot today but they will be spending even more tomorrow.  More programs.  More benefits.  Guaranteed.  At least they’re guaranteed as long as we continue to use baseline budgeting.  Where this year’s budget is last year’s budget plus more.  Automatically.

And this is the danger of raising taxes on the rich.  It doesn’t address the problem.  This excessive spending.  In fact it facilitates it.  Like an addiction.  Which means they will make this argument forever.  As they have forever.  The problem is this.  There will never be enough taxes.  Not to sustain continuous increases in spending.  Which we will always have.  As long as we continue to use baseline budgeting.  And continue to elect liberal Democrats.

If the current system favors the rich then here’s a novel idea.  Tax the less-rich at the rich tax rates.  Then everyone pays their ‘fair’ share.  But what about government you may ask.  How will they get by on less?  Well, that’s easy.  They can ask any one of us.  Because we’ve been doing it for years.

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Obama Delivers his $447 Billion Political Stimulus Plan to Congress

Posted by PITHOCRATES - September 12th, 2011

Had the $800 Billion Stimulus worked we wouldn’t need the $447 Billion Stimulus

We have a plan. Rather, Congress does. President Obama delivered it today. And he reiterated that they must pass it now. That there was no time for political games. Like he was doing. Saying basically that if the Republicans don’t pass it they don’t want to help the economy. And, by extension, they hate the American people. For only those who hate the American people could deny them jobs (see Obama urges no “political games” on jobs plan by Laura MacInnis and Matt Spetalnick posted 9/12/2011 on Reuters).

President Barack Obama called on Republicans not to play “political games” with his jobs plan as he pressed for swift passage of a $447 billion package he hopes will revive the U.S. economy and boost his re-election prospects…

He took aim at Republicans who have resisted many of his economic initiatives in the past.

“We can’t afford these same political games, not now,” Obama said.

Economic initiatives in the past? Like that $800 billion stimulus? You know, if that had worked we would not need another stimulus. But we apparently need another stimulus. So the previous stimulus must have failed. And, if so, why would this stimulus be any different?

It would appear that the only one playing a game now is the president.

Stimulus Sleight of Hand: Taking from the Private Sector to Stimulate the Private Sector

So let’s take a look at what the president calls stimulus. First of all, where is that $447 billion going to come from (see Obama proposes tax hikes on wealthy to pay for $447B jobs bill by Sam Youngman posted 9/12/2011 on The Hill)?

The White House said Monday that President Obama wants to pay for his $447 billion jobs bill by raising taxes on the wealthy and business.

Oh. He’s going to pay for his jobs bill by raising taxes on the job creators. I mean, let’s face it, poor people don’t create jobs. Rich people do. And businesses. And why aren’t they creating them now? They have no idea what cost this administration is going to levy on them next. Like a tax hike to pay for another stimulus bill.

The stimulus will be temporary. But you can bet those tax hikes won’t be. They’ll be permanent. And a disincentive for rich people and business owners alike to risk their money to create jobs.

The administration would tax the income investment fund managers make, known as “carried interest,” as regular income instead of as capital gains, which has a low 15 percent tax rate. This is another long-standing administration goal that has been resisted by Wall Street as well as some Democrats.

The administration estimates the capital gains change would provide $18 billion in revenue.

In other words, he wants to chase what investment capital we have out of the country.

A lot of people lose money in the stock market. Because it’s risky. It’s like gambling. Where there is no such thing as a sure thing. So those who take big risks often lose big. Even Donald Trump has filed for bankruptcy protection a couple of times. That’s why when they do win they need to win big. To cover all of those times they don’t win. But when you raise the tax rate on those winnings from 15% to 33% (the current top marginal income tax rate), it’s going to make investors think twice. That’s an increase of 120%. They may not just whistle a happy tune and pay it. You see, the funny thing about capital, it’s mobile. You can move it. And park it.

European investors are parking their money in U.S. banks at a negative interest rate while they wait out the European sovereign debt crisis. American investors can just as easily move their money out of the country. And wait for a more favorable investment climate before returning. Which won’t create jobs. Or provide tax revenue.

Another $3 billion would come from changing the way corporate jets depreciate. With a few other revenue raises, Lew indicated the total measures proposed by the administration would bring in $467 billion, $20 billion more than the cost of Obama’s jobs bill.

What is it with him and corporate jets? He sure hates those corporate jets.

So he will pull a half trillion dollars out of the private sector. So he can inject it back into the private sector. Less a small handling fee. And the usual gifts to his political cronies. Resulting in more debt. And very little stimulus. If any.

This is less stimulus. And more political sleight of hand. Taking from the private sector to stimulate the private sector.

The White House dug in on its refusal to say how many jobs the package would create, pointing instead to an estimate from Moody’s that said the bill would create about 1.9 million jobs.

Lew noted that he was not a part of Obama’s economic team when NEC director Christina Roemer and Vice President Biden’s former chief economist Jared Bernstein said that the original stimulus package would reduce unemployment to below 8 percent.

After months of being reminded by Republicans that the recovery act did not cut unemployment, which is now at about 9 percent, Lew said he thinks it is “dangerous to ever predict unemployment rates.”

If Moody’s prediction is accurate, that’s $ 235,263.16 per job. It would be cheaper just to give $30,000 to 1.9 million people. That would only cost $57 billion. And it would probably stimulate more. Of course, they won’t do that. Because that wouldn’t reward any political cronies.

And there’s a good reason why they’re not making any predictions. Because they know this stuff doesn’t work. They only made the unemployment rate prediction because they thought the economy would have fixed itself in short time. It usually does. That’s why they were in such a rush to pass it. They had to pass it before the economy recovered. They had no idea how bad things were. Or how their policies would make things worse. Because they have no idea of how the economy works.

And isn’t the refusal to make unemployment predictions an admission that they have no faith in what they’re doing? Vis-à-vis the economy, that is. For they have full faith and confidence in the political effects. They can predict the campaign donations this will generate. And the likely votes. But they won’t make these predictions public. For it will be admitting the truth of this political stimulus.

Stimulus that Works: Cutting Costs for Business

But someone knows how to create jobs. Not by putting more money into workers’ pockets. But buy cutting a business’ costs (see Detroit Sets Its Future on a Foundation of Two-Tier Wages by Bill Vlasic posted 9/12/2011 on The New York Times).

The newest Chrysler workers earn about $14 an hour, compared with double that amount for longtime employees on the same shift. With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries…

What was once seen as a desperate move to prop up the struggling auto industry is now considered an integral part of its future. The demand for $14-an-hour manufacturing jobs is providing Detroit’s Big Three automakers with a ready pool of eager new employees. Last year, Chrysler was flooded with inquiries about the jobs here, and it froze the list after receiving 10,000 applications.

So someone understands. American cars weren’t selling because they couldn’t compete in the market place. They couldn’t sell the cars they had. And they certainly weren’t going to expand production. But cut labor costs and look what happens. They can compete in the market place again. And create jobs.

So far, about 12 percent of Chrysler’s 23,000 union workers earn the lower wage, and over all, 4,000 or so of the 112,000 U.A.W. members are second-tier hires. Those numbers are expected to grow — and in fact can increase significantly even under the current contract. The jobs are central to the contract talks now because they are viewed as a critical element of the industry’s continued recovery.

The benefits for the lower-tier workers are scaled back as well. They get a maximum of four weeks paid time off a year, versus five for the longtime workers. And instead of the guaranteed $3,100-a-month pension a full-paid worker receives after age 60, the new hires have to build their own “personal retirement plan” based on contributions from the company of less than $2,000 a year.

This is stimulus that works. Cut costs for business. And business creates jobs. Which is the goal of stimulus.

Raising taxes on business won’t cut costs for business. So it won’t stimulate. Raising taxes on business to pay for a stimulus bill will tap the brakes on the very economy they’re trying to stimulate. And what is government spending that doesn’t stimulate? Pork. Earmarks. Rewarding political cronies.

Keynesian Stimulus Spending stimulates Politics, not Economic Activity

Let the political games begin. And the lying. The latest stimulus is no different from the first stimulus. It will fail. Only it will be less of a failure. The only good thing we can say about it.

Detroit has shown the way. If you want to create jobs. If you want to stimulate the local economy. You cut costs. You don’t raise them. And you do it in a way where there is little uncertainty. The two-tier wage system is here to stay. The automotive companies can plan on this cost certainty.

You know another name for this? Supply-side economics. That’s right. They fixed the car companies on the supply side. Not the demand side. That’s why they won’t take this model and apply it to the rest of the economy. That would go against every Keynesian fiber in their body. But they did in Detroit. Because they had to save the UAW. And things were so bad in the U.S. automotive industry that they had to drop politics this one time. But they will be damned if they’ll concede defeat and stop their Keynesian ways everywhere else. I mean, if they did, how, pray tell, would they reward their political cronies?

Keynesian stimulus spending stimulates politics. Not economic activity. Whereas supply-side economics stimulates economic activity. Not politics. So you can see why those in government are Keynesians. Because spending our money before we can is more important than our economic wellbeing.

 

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