From Heritage Foundation.
Hurstbourne Tarrant (or Uphusband),
Monday, 7th November 1825.
We came through a village called Woodcote, and another called Binley. I never saw any inhabited places more recluse than these. Yet into these the all-searching eye of the taxing Thing reaches. Its Exciseman can tell it what is doing even in the little odd corner of Binley; for even there I saw, over the door of a place, not half so good as the place in which my fowls roost, “Licensed to deal in tea and tobacco.” Poor, half-starved wretches of Binley! The hand of taxation, the collection for the sinecures and pensions, must fix its nails even in them, who really appeared too miserable to be called by the name of people. Yet there was one whom the taxing Thing had licensed (good God! licensed!) to serve out cat-lap to these wretched creatures!
—William Cobbett, Rural Rides (1830).
The Weekly Standard reports that American athletes winning medals at the London Olympics will owe the US Government money.
Americans who win bronze will pay a $2 tax on the medal itself. But the bronze comes with a modest prize—$10,000 as an honorarium for devoting your entire life to being the third best athlete on the planet in your chosen discipline. And the IRS will take $3,500 of that, thank you very much.
There are also prizes that accompany each medal: $25,000 for gold, $15,000 for silver, and $10,000 for bronze.
Silver medalists will owe $5,385. You win a gold? Timothy Geithner will be standing there with his hand out for $8,986. ...
[M]ost other Olympians won’t pay any taxes on their medals because America is one of only a handful of countries which taxes “worldwide” prize income earned overseas.
The Politico reports that at least on Republican wants to give American athletes a break.
[Senator Marco] Rubio (R-Fla.) introduced [on Wednesday] The Olympic Tax Elimination Act, which would exempt U.S. Olympic medal winners from paying taxes on their medals. Olympians receive honorariums in the form of cash payments of $25,000 for gold, $15,000 for silver and $10,000 for bronze, which the IRS currently taxes.
“Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness,” Rubio said in a statement. “Athletes representing our nation overseas in the Olympics shouldn’t have to worry about an extra tax bill waiting for them back home.”
The current U.S. economic recovery is arguably the worst in modern American history. Incomes are flat, housing is moribund, and the past three years have seen the longest stretch of high unemployment in this country since the Great Depression. Yet President Barack Obama—with the backing of Treasury Secretary Timothy Geithner—has the temerity to propose a corporate tax reform plan that would actually raise the tax burden on American business (and de facto on workers, too) without lowering rates to an internationally competitive level. This is a terrible, terrible plan:
..The Obama-Geithner plan would lower the statutory corporate tax rate to 28 percent from 35 percent, currently the second-highest among advanced economies. But that would still leave the combined U.S. corporate tax rate—state and federal—at 32.2 percent, far above the OECD combined average of 25 percent. The U.S. combined rate would be a bit below slow-growing Japan and France but above the U.K. and Germany. That’s not nearly good enough. Canada just lowered its corporate tax rate, for instance, to 15 percent. So instead of having the second highest corporate tax rate in the world, the United States would probably be fourth behind Japan, France, and Belgium.
From Dan Mitchell.
From Alex Tabarrok:
The NYTimes reported earlier this year that through an extraordinary use of tax breaks and clever accounting:
[General Electric] reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
The Times highlighted the skill of GE’s dream team:
G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.
More recently from The Weekly Standard we find what kind of effort it takes to pay no taxes on $14 billion in profits:
General Electric, one of the largest corporations in America, filed a whopping 57,000-page federal tax return earlier this year but didn’t pay taxes on $14 billion in profits. The return, which was filed electronically, would have been 19 feet high if printed out and stacked.
(FYI, the length of GE’s tax return has doubled since 2006 when it (first?) filed electronically at an equivalent of 24,000 pages.)
GE’s tax bill illustrates both why our corporate tax rate is too high and too low. The nominal rate is too high which encourages a real rate which is too low.
Hat tip to Walter Olson.
Charles Krauthammer explains the president’s recent tax proposal. This is politics, but it’s not only politics, this is the real Barack Obama.
A most revealing window into our president’s political core: To impose a tax that actually impoverishes our communal bank account (the U.S. Treasury) is ridiculous. It is nothing but punitive. It benefits no one — not the rich, not the poor, not the government. For Obama, however, it brings fairness, which is priceless. ...
Obama has actually gone and done it. He’s just proposed a $1.5 trillion tsunami of tax hikes featuring a “Buffett rule” that, although as yet deliberately still fuzzy, clearly includes raising capital gains taxes.
He also insists again upon raising marginal rates on “millionaire” couples making $250,000 or more. But roughly half the income of small businesses (i.e., those filing individual returns) would be hit by this tax increase. Therefore, if we are to believe Obama’s own logic that his proposed business tax credits would increase hiring, then surely this tax hike will reduce small-business hiring.
But what are jobs when fairness is at stake? Fairness trumps growth. Fairness trumps revenue. Fairness trumps economic logic.
Obama himself has said that “you don’t raise taxes in a recession.” Why then would he risk economic damage when facing reelection? Because these proposals have no chance of being enacted, many of them having been rejected by the Democratic-controlled Congress of Obama’s first two years in office.
Moreover, this is not an economic, or jobs, or debt-reduction plan in the first place. This is a campaign manifesto. This is anti-millionaire populism as premise for his reelection. And as such, it is already working.
Obama’s Democratic base is electrified. On the left, the new message is playing to rave reviews. It has rekindled the enthusiasm of his core constituency — the MoveOn, Hollywood liberal, Upper West Side precincts best described years ago by John Updike: “Like most of the neighborhood, she was a fighting liberal, fighting to have her money taken from her.”
Added Updike: “For all her exertions, it never was.” But now with Obama — it will be! Turns out, Obama really was the one they had been waiting for.
That is: the new Obama, today’s soak-the-rich, veto-threatening, self-proclaimed class warrior. Except that the new Obama is really the old Obama — the one who, upon entering office in the middle of a deep economic crisis, and determined not to allow “a serious crisis to go to waste” (to quote his then-chief of staff), exploited the (presumed) malleability of a demoralized and therefore passive citizenry to enact the largest Keynesian stimulus in recorded history, followed by the quasi-nationalization of one-sixth of the economy that is health care.
Considering the political cost — a massive electoral rebuke by an infuriated 2010 electorate — these are the works of a conviction politician, one deeply committed to his own social-democratic vision.
That politician now returns. Obama’s new populism surely is a calculation that his halfhearted feints to the center after the midterm “shellacking” were not only unconvincing but would do him no good anyway with a stagnant economy, 9 percent unemployment and a staggering $4 trillion of new debt.
But this is more than a political calculation. It is more than just a pander to his base. It is a pander to himself: Obama is a member of his base. He believes this stuff. It is an easy and comfortable political shift for him, because it’s a shift from a phony centrism back to his social-democratic core, from positioning to authenticity.
The authentic Obama is a leveler, a committed social democrat, a staunch believer in the redistributionist state, a tribune, above all, of “fairness” — understood as government-imposed and government-enforced equality.
That’s why “soak the rich” is not just a campaign slogan to rally the base. It’s a mission, a vocation. It’s why, for all its gratuitous cynicism and demagoguery, Obama’s populist Rose Garden lecture on Monday was delivered with such obvious — and unusual — conviction.
He’s returned to the authenticity of his radical April 2009 “New Foundation” address (at Georgetown University) that openly proclaimed his intent to fundamentally transform America.
In a 2001 NPR, State Senator Barack Obama complains of constitutional constraints on redistributive change.
Liberals are burbling in delight over Massachusetts Senate candidate Elizabeth Warren’s full-throated expression of the left’s soak-the-rich version of the social contract.
I hear all this, you know, ‘Well, this is class warfare, this is whatever. No. There is nobody in this country who got rich on his own — nobody.”
“You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.
“Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.”
One of Glen Reynolds’ readers, who signs himself Fog City sent along his own rejoinder to Warren, originally posted in a discussion of her remarks in the Current Events section of a Stanford Football Fan forum:
“You built a factory out there? Good for you,” “Built a factory” is a summary for a lot of work. Put up equity, designed a business, took risk to buy land, get permits, pay property taxes and use taxes and permit fees. Then, bought a bunch of equipment and had it installed …and paid sales taxes. Hired some employees and paid them a bunch of money and paid payroll taxes on top of that. Bought a bunch of raw materials from companies that paid a bunch of salaries and a bunch of taxes. Building a factory is a huge private investment that pays the public a lot of taxes for the right to be built.
“But I want to be clear: you moved your goods to market on the roads the rest of us paid for.” Between fuel taxes, license fees, tolls and various taxes on transportation related activities, the roads budget is smaller than the total tax take.
you hired workers the rest of us paid to educate; No, you did not educate them. You babysat them for 12 years. Then I hired them, taught them how to be responsible and show up for work, taught them how to communicate in clear sentences, taught them that there are rights and wrongs and (unlike with your schools) wrongs have consequences in the workplace. Then paid for extended education for my employees so they could continue to improve themselves and better add value to what we do around here.
“You were safe in your factory because of police forces and fire forces that the rest of us paid for.” Funny, my factory has 24/7 security guards because the last time it was broken into, the police did not even bother to take a report, they just said “call your insurance company”. As for fire? The closest fire department is 10 miles away. My insurance company requires that I have a full wet sprinkler system to qualify for insurance because there is no local fire protection.
“You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.” Well, that is not exactly true. When the AFL-CIO tried to unionize my workforce, they staged three days of noisy protests outside my factory. The police forces just stood around and watched as the protesters intimidated my workers, vandalized their cars and destroyed my property.
You say “we” like the government and society are the same. They aren’t. My company and my community and you politicians are not “we”.
Another Stanford fan signing himself neodymian60 remarked in disgust:
I’ll weigh in because she could be my next Senator and the Democrats here are scrambling to unseat Scott Brown. Somehow she seems like the perfect insufferable replacement for the insufferable Ted Kennedy.
She has the big 3. Harvard. Lawyer. Academic. Check.
She is shrill, contentious, and condescending as only the elite can be.
While any idiot knows that there can be no market without roads and consumers, she insults everyone’s intelligence by having to explain that to them. And then insults the successful by making it seem as if they have betrayed everyone with their talents. ...
I just got a call from the Brown campaign and gave them $110.
You built a factory out there? Good for you,” she says. “But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.”
Um – the thing is – those who built the factory and employed the workers generated the revenue that allowed the ctizens to pay for the roads, police etc. It sure as hell wasn’t built by the poor.
She continues: “Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
Um – again. THEY HAVE ALREADY BEEN DOING THAT. Hey if she questions that – just go to a town that revolved around a factory that went out of business and see how that town is faring. The factory – as it employs the citizens and pays its taxes etc (not to mention all its fees etc under the various regulations/licensing requirements) IS TAKING A HUNK OF THAT AND PAY IT FORWARD FOR THE NEXT KED WHO COMES ALONG.” Course if the factory shuts down – then that kid loses that opportunity and the town loses a whole lot of revenue.
Rocky 17 vented:
Elizabeth the Harvard and Rutgers Prof, Head of TARP, lawyer, marxist, head of consumer affairs, candidate for US senate in Mass. friend of Obama, friend of Harry Reid…
If anyone on this board doubts that she is for the social contract that successful people need share their success with those who aren`t successful and have no cause for personal celebration or reward, that she intends that wealth redistribution is necessary and good, that she is not a marxist, you must be Palcal. There is no successful individual except those who have earned it on the backs of others and therefore owe the masses. There are no successful countries except those that earned it on the backs of other countries and therefore owe those countries.
Thus the apology tour at the initial stages of the Obama administration, the rage at successful people, the class warfare rhetoric. She and Obama are two peas in a pod, share the same values and cannot be called anything but Marxist redistributionists. To me, this is the antithetical behavior and value of what made the US exceptional and why the country is headed into the deep morass with policies that slowly and quickly drain the wealth of America over the world.
Gosh, it looks like some Stanford grads must have gone into business and become conservative.
Tyler Durden responds to President Obama’s “Millionaire Tax” proposal.
In his increasingly desperate attempts to pander to a population that has by now entirely given up on the hope, and barely has any change left, Obama is going for broke (or technically the reverse) by setting the class warfare bar just that little bit higher. This time around, his targets are millionaires, who according to the NYT are about to see their taxes soar. Or not: nobody really knows if the proposed “Buffett Rule”, affectionately known for crony communist #1, will impact just millionaires income tax, which incidentally is the same as what everyone else is paying, or, far more importantly, their Investment Income, which is where the bulk of America’s wealthy income comes from. Which incidentally makes all the sense in the world: two and a half years after Bernanke has been desperately doing everything in his power to raise the “wealth effect” if only for the richest 1% of the US population, it is, from the government’s perspective, time for the taxman to come knocking and demand his share of the capital gains. Yet what is lost in this ridiculous proposal are the unintended consequences…
Read the whole thing.
There isn’t any hope that Obama can get these kinds of proposals through Congress. What this is all about is testifying aloud in public to his fidelity to the leftist redistributionist faith and energizing his base of parasites and looters.
A small businessman tells the DC political class where to get off.
From Bird Dog.
James C. Capretta, at National Review, has a sense of déjà vu all over again, as democrats artfully attempt to induce Congressional Republicans to blink, or to at least win the PR battle, in the confrontation over raising the federal debt ceiling. Republicans caved before, he points out, resulting in the election of William Jefferson Clinton to the presidency.
As the debt-ceiling showdown heads into its final stages, the political maneuvering has intensified, with both sides seeking to gain the upper hand in the public-relations war. Leaders from both parties know the stakes in this fight are very, very high; confrontations of this sort tend to become defining moments in political life, for good or ill. At this stage, anything could still happen, with many scenarios still in play. But for Republicans, there are reasons to worry that this showdown could be headed toward a political and fiscal debacle if they are not very careful.
It wouldn’t be the first time Democrats got the better of Republicans in a budget fight. In 1990, Richard Darman, who was director of the Office of Management and Budget, wanted to strike a budget deal to bring projected budget deficits down by $500 billion over five years. As a precondition for entering the talks, however, Democratic Senate majority leader George Mitchell demanded that Pres. George H. W. Bush renege, in writing, on his “no new taxes” pledge. The president did so at Darman’s urging, and from that moment on, the president’s standing and leverage plummeted. At crucial moments in the ensuing process, the tax increases kept getting larger and more onerous, and the spending cuts and entitlement reforms kept getting more ephemeral. In the end, it was just a question of how bad the political fallout would be for the president, which of course turned out to be very bad indeed.
In the current fight, it’s quite clear what President Obama and his allies are trying to accomplish. First, they want a package upon which the president can campaign in 2012. Something on the order of a “$3 trillion deficit-cutting program” (no matter how phony) — or even $2 trillion — would help the president downplay the big-spending, liberal image that most independent voters now have of him.
Second, the president wants to raise taxes without getting blamed for it. Hence the disingenuous cat-and-mouse games aimed at luring Republicans into accepting tax hikes behind closed doors so that the president never actually has to take ownership of them before they become law. Quite a trick if he can get away with it.
Third, and most important, Democrats want a deal that doesn’t give an inch on what really matters to their voting base — which is the entitlement status quo. The Democratic party has come to define itself as the party of entitlements. The New Deal. The Great Society. Obamacare. Nothing gets the Democratic heart beating quite like ensnaring the entire American middle class in entitlement dependence. For Democrats, victory means forcing Republicans to accept a budget framework that leaves today’s entitlement superstructure — and most especially centralized government management of American health care — exactly as it is today. ....
It would be far better to find a way to cut whatever spending can be cut sensibly with some Democratic support, raise the debt limit modestly, and leave the big questions on entitlement reforms and taxes to the collective judgment of the voting public in 2012.
Glenn Reynolds adds:
So driving home from the gym just now, I heard Rush Limbaugh saying that if the GOP caves on the debt-ceiling fight we’ll see a Tea Party-backed third-party candidate for President, and the RNC will “implode” for lack of contributions. I think that’s right, but I don’t think that will happen. ...
[T]he Democrats aren’t holding very many cards, and there’s no reason for the GOP to fold under the threat. Which isn’t to say that they won’t fold anyway, of course. As Teddy Roosevelt once said about Oliver Wendell Holmes, Jr., I could carve a better backbone out of a banana. . . .
Federal Budget, Federal Deficit, Federal Spending, Pat Buchanan, Republicans, Taxes, The Mainstream Media
Pat Buchanan left mainstream Conservatism for the Paleocon fever swamps some years ago, and has rarely ever made much sense since, but today the old Pat Buchanan is back and in fine form. In fact, Buchanan identifies precisely the tactics of bluffing and intimidation that the mouthpieces of the establishment are using to try to frighten the Republican leadership (which holds all the cards) into surrendering on tax increases to the impotent, discredited-by-reality, and sinking-daily-in-the-polls democrats. Pat Buchanan is right: the level of shrillness of the MSM commentariat is directly proportionate to their desperation. They know they’re losing.
By refusing to accept tax increases in a deal to raise the debt ceiling, Republicans are behaving like “fanatics,” writes David Brooks of The New York Times.
Anti-tax Republicans “have no sense of moral decency,” he adds.
They are “willing to stain their nation’s honor” to “worship their idol.” If this “deal of the century” goes down, as he calls the Barack Obama offer, “Republican fanaticism” will be the cause.
“The GOP has become a cult” that has replaced reason with “feverish” and “cockamamie beliefs,” writes Richard Cohen of The Washington Post. The Republican “presidential field (is) a virtual political Jonestown,” the Guyana site where more than 900 followers of the Peoples Temple drank the Kool-Aid that Rev. Jim Jones mixed for them.
Does anyone think this an appropriate description of such mild-mannered men as Mitt Romney, Tim Pawlenty and Jon Huntsman?
“The GOP’s Hezbollah Wing Is Now Fully in Control,” screams The New Republic over a recent lead editorial.
Other columnists charge the GOP with holding America “hostage” by refusing to accept tax hikes to avert a default on the debt.
What to make of this hysteria?
The Establishment is in a panic. It has been jolted awake to the realization that the GOP House, if it can summon the courage to use it, is holding a weapon that could enable it to bridle forever the federal monster that consumes 25 percent of gross domestic product.
To bully and blackmail the GOP into surrendering the weapon and betraying its principles and signing on to new taxes, that establishment has unleashed rhetoric more befitting a war on terror than a political dispute.
For how, exactly, are Republicans threatening the republic?
The House has not said it will not raise the debt ceiling. It must and will. It has not said it will not accept budget cuts. It has indicated a willingness to accept the budget cuts agreed to in the Biden negotiations.
Where the GOP has stood its ground is on tax increases. ...
The Republican Party has not said it will refuse to raise the debt ceiling. It has an obligation to do so, and will.
The House has simply said it will not accept new taxes on a nation whose fiscal crisis comes from overspending.
If the GOP keeps its word, raises the debt ceiling and accepts budget cuts agreed to in the Biden negotiations, the only people who can prevent the debt ceiling’s being raised are Senate Democrats or Obama, in which case, they, not the GOP, will have thrown the nation into default.
It is the establishment that is resorting to extortion, saying, in effect, to the House GOP: Give us the new taxes we demand, or Obama will veto the debt ceiling and we will all blame you for the default.
The GOP should stand its ground—and fix bayonets.