Category Archive 'Tax Policy'
22 Nov 2011

57,000 Pages of Proof That the US Tax Code Needs Reform

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GE CEO Jeff Immelt

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.

22 Feb 2009

How to Reduce the Deficit

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First you throw away $787 billion dollars on democrat party special interests, then you raise taxes on “the rich,” i.e., you, me, and Joe the Plumber, and finally you cut the Defense Budget.

After all, in 2008, with two wars underway, we spent the staggering sum of $667 billion (base budget of $480 billion and $187 billion in supplemental spending) on national defense. Why, we wasted almost as much money last year on defending the country as Obama spent in his first month in office on “community development” (i.e., ACORN), the National Endowment for the Arts, more welfare, green boondoggles, and fattening the wallets of politically connected construction companies.

Washington Post:

President Obama is putting the finishing touches on an ambitious first budget that seeks to cut the federal deficit in half over the next four years, primarily by raising taxes on businesses and the wealthy and by slashing spending on the wars in Iraq and Afghanistan, administration officials said.

In addition to tackling a deficit swollen by the $787 billion stimulus package and other efforts to ease the nation’s economic crisis, the budget blueprint will press aggressively for progress on the domestic agenda Obama outlined during the presidential campaign. This would include key changes to environmental policies and a major expansion of health coverage that he hopes to enact later this year.

A summary of Obama’s budget request for the fiscal year that begins in October will be delivered to Congress on Thursday, with the complete, multi-hundred-page document to follow in April. But Obama plans to unveil his goals for scaling back record deficits and rebuilding the nation’s costly and inefficient health care system tomorrow, when he addresses lawmakers and budget experts at a White House summit on restoring “fiscal responsibility” to Washington. …

Even before Congress approved the stimulus package this month, congressional budget analysts forecast that this year’s deficit would approach $1.2 trillion — 8.3 percent of the overall economy, the highest since World War II. With the stimulus and other expenses, some analysts say, the annual gap between federal spending and income could reach $2 trillion when the fiscal year ends in September.

Obama proposes to dramatically reduce those numbers, said White House budget director Peter Orszag: “We will cut the deficit in half by the end of the president’s first term.” The plan would keep the deficit hovering near $1 trillion in 2010 and 2011, but shows it dropping to $533 billion by 2013, he said — still high but a more manageable 3 percent of the economy.

To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from “winding down the war” in Iraq, a senior administration official said. The budget assumes continued spending on “overseas military contingency operations” throughout Obama’s presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes “a fairly aggressive effort on tax enforcement” that would target corporate loopholes, the official said. And Obama’s budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-World War II high, to 22 percent.

02 Dec 2008

EPA Planning to Tax Livestock

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Beef and dairy cattle and hogs are part of the cycle of life. They breathe in oxygen and breathe out CO2, and their digestion of food produces methane as well. Living animals, at least domestic ones, from the perspective of environmentalists, thus constitute a major source of greenhouse gas air pollution, and consequently need to be taxed in order to discourage bovine respiration and porcine flatulence.

The EPA’s proposed addition of “greenhouse gases” under the Clean Air Act would amount to the imposition of major new taxes on domestic agriculture and on American consumers.

The American Farm Bureau offers some figures and notes that taxing US beef and pork production will only move that production outside US borders.

Most livestock and dairy farmers would not be able to pass along the costs incurred under this plan,” said Mark Maslyn, AFBF executive director of public policy. “Steep fees associated with this action would force many producers out of business. The net result would likely be higher consumer costs for milk, beef and pork,” said Maslyn, in comments submitted to EPA.

According to Agriculture Department figures, any farm or ranch with more than 25 dairy cows, 50 beef cattle or 200 hogs emits more than 100 tons of carbon equivalent per year, and thus would need to obtain a permit under the proposed rules. More than 90 percent of U.S. dairy, beef and pork production would be affected by the proposal, Maslyn noted.

Permit fees vary from state to state but EPA sets a “presumptive minimum rate” for fees. For 2008-2009, the rate is $43.75 per ton of emitted greenhouse gases. According to Maslyn, the proposed fee would mean annual assessments of $175 for each dairy cow, $87.50 for each head of beef cattle and $20 for each hog.

In addition, Maslyn said the proposed rules would be ineffective because of the global nature of greenhouse gases. “Reduction of a ton of greenhouse gases anywhere will make a difference, but if a ton is removed in Iowa and replaced by a ton in China, then no net effect occurred,” he said. “A livestock tax and regulation of greenhouse gases under the Clean Air Act will impose restrictions and added costs on the U.S. economy without reducing greenhouse gases in the atmosphere.

02 Nov 2008

Defining The Rich Downwards

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Mark Steyn finds that democrats have been revising those figures of just who is “rich” and therefore eligible for Obama’s tax increases.

Just wait until after the inauguration.

The Obama middle-class limbo dance descends further. First, it was $250,000. Then $200,000. Just a couple of days ago, Joe Biden reduced it to $150,000. And now

    For the second time in a week, a prominent Democrat has downgraded Barack Obama’s definition of the middle class — leading Republicans to question whether he’ll stick to his promise not to raise taxes on anyone making under $250,000.

    The latest hiccup in the campaign message came Friday morning on KOA-AM, when New Mexico Gov. Bill Richardson pegged the middle class as those making $120,000 and under.

    “What Obama wants to do is he is basically looking at $120,000 and under among those that are in the middle class, and there is a tax cut for those,” Richardson said in the interview…

$120,000? I’m confident Senator Biden can cut that in half by Tuesday morning. Bottom line: If you make over 30 grand, you might want to restructure yourself as an offshore corporation in the Turks & Caicos.

18 Oct 2008

Big Government Destroyed Rome

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Eugéne Delacroix (1798-1863), (detail) Atilla suivi de ses hordes, foule aux pieds l’Italie et les arts (Attila followed by his Horde, Trampling under Foot Italy and the Arts), Bibliothèque, Palais Bourbon, Paris, 1843-47

Bruce Bartlett, at the Cato Journal, describes how the same policies pursued by today’s democrat party produced the downfall of Rome.

In the end, there was no money left to pay the army, build forts or ships, or protect the frontier. The barbarian invasions, which were the final blow to the Roman state in the fifth century, were simply the culmination of three centuries of deterioration in the fiscal capacity of the state to defend itself. Indeed, many Romans welcomed the barbarians as saviors from the onerous tax burden. [15]

Although the fall of Rome appears as a cataclysmic event in history, for the bulk of Roman citizens it had little impact on their way of life. As Henri Pirenne (1939: 33-62) has pointed out, once the invaders effectively had displaced the Roman government they settled into governing themselves. At this point, they no longer had any incentive to pillage, but rather sought to provide peace and stability in the areas they controlled. After all, the wealthier their subjects the greater their taxpaying capacity.

In conclusion, the fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class–and its taxpaying capacity–were exterminated. Although the final demise of the Roman Empire in the West (its Eastern half continued on as the Byzantine Empire) was an event of great historical importance, for most Romans it was a relief.

Read the whole thing.

17 Oct 2008

Biden: “No Joe the Plumbers in my Neighborhood”

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Biden: “I don’t have any Joe the Plumbers in my neighborhood that make $250,000 a year and are worried.”

1:12 video

Of course he doesn’t. How many plumbers (even those grossing $250K per annum) could possibly afford to live in Delaware’s Chateau Country like Joe Biden?

Delaware Online:

First elected to the Senate 36 years ago, (Biden) lives off Barley Mill Road in Greenville — northern Delaware’s priciest area — on a four-acre lakefront estate in a 7,000-square-foot custom home. Biden also owns a smaller carriage house on his property, where his widowed mother lives.

Local real estate agents said the Biden property is worth at least $2.5 million.

22 May 2008

RNC Attack on Obama

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“Not ready to be president.”

1:17 video

14 May 2008

What Else Can They Tax?

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How about the endowments of major universities? Massachusetts is thinking about doing just that.

WSJ:

Massachusetts legislators, demonstrating a growing resentment against the wealth of elite universities in tight economic times, are studying a plan to levy a 2.5% annual tax on the portion of college endowments that exceed $1 billion.

After all, as Jim Manzi notes:

Viewed purely in terms of economics, Harvard is really a $40 billion tax-free hedge fund with a very large marketing and PR arm called Harvard University that has the job of raising the investment capital and protecting the fund’s preferential tax treatment.

Hat tip to David Nix.

14 Dec 2007

Surprise, Surprise! UN Conference Urges Global Emissions Tax

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Marc Morano reports on Senator James Inhofe’s blog from the UN conference in Bali.

How do you save the Earth from catastrophic climate change? Create a new International tax to be used to redistribute monies from countries like to US to the Third World.

A global tax on carbon dioxide emissions was urged to help save the Earth from catastrophic man-made global warming at the United Nations climate conference. A panel of UN participants on Thursday urged the adoption of a tax that would represent “a global burden sharing system, fair, with solidarity, and legally binding to all nations.”

“Finally someone will pay for these [climate related] costs,” Othmar Schwank, a global tax advocate, told Inhofe EPW Press Blog…

Schwank said at least “$10-$40 billion dollars per year” could be generated by the tax, and wealthy nations like the U.S. would bear the biggest burden based on the “polluters pay principle.”

The U.S. and other wealthy nations need to “contribute significantly more to this global fund,” Schwank explained. He also added, “It is very essential to tax coal.”

The UN was presented with a new report from the Swiss Federal Office for the Environment titled “Global Solidarity in Financing Adaptation.” The report stated there was an “urgent need” for a global tax in order for “damages [from climate change] to be kept from growing to truly catastrophic levels, especially in vulnerable countries of the developing world.”

The tens of billions of dollars per year generated by a global tax would “flow into a global Multilateral Adaptation Fund” to help nations cope with global warming, according to the report.

Schwank said a global carbon dioxide tax is an idea long overdue that is urgently needed to establish “a funding scheme which generates the resources required to address the dimension of challenge with regard to climate change costs.” …

The environmental group Friends of the Earth, in attendance in Bali, also advocated the transfer of money from rich to poor nations on Wednesday.

“A climate change response must have at its heart a redistribution of wealth and resources,” said Emma Brindal, a climate justice campaigner coordinator for Friends of the Earth. …

MIT climate scientist Dr. Richard Lindzen warned about these types of carbon regulations earlier this year. “Controlling carbon is a bureaucrat’s dream. If you control carbon, you control life,” Lindzen said in March 2007.

06 Nov 2007

Peggy Noonan on Hillary

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Peggy Noonan rightly identifies the skepticism of ordinary Americans as a key obstacle to Hillary’s 2008 ambitions.

For a few years now I’ve thought the problem for the Democrats in general but for Mrs. Clinton in particular is not that America is against tax increases. They’ve seen eight years of big spending, of wars, of spiraling entitlements. They’ve driven by the mansions of the megarich and have no sympathy for hedge fund/movie producer/cosmetics empire heirs. They sense the system is rigged toward the heavily protected. They sense this because they’re not stupid.

The problem for Mrs. Clinton is not that people sense she will raise taxes. It’s that they don’t think she’ll raise them on the real and truly rich. The rich are her friends. They contribute to her, dine with her, have access to her. They have an army of accountants. They’re protected even from her.

But she can stick it to others, and in the way of modern liberalism for roughly half a century now, one suspects she’ll define affluence down. That she would hike taxes on people who make $150,000 a year.

But those “rich” — people who make $200,000 and have two kids and a mortgage and pay local and state taxes in, say, New Jersey — they don’t see themselves as rich. Because they’re not. They’re already carrying too much of the freight.

Followup: The Financial Times observes the even the democrats have begun to recognize the truth. Though democrats love class warfare, they’re really shooting at themselves.

A legislative proposal that was once on the fast track is suddenly dead. The Senate will not consider a plan to extract billions in extra taxes from megamillionaire hedge fund managers.

The decision by Senate majority leader Harry Reid, the Nevada Democrat, surprised many Washington insiders, who saw the plan as appealing to the spirit of class warfare that infuses the Democratic party. Liberal disappointment in Mr Reid was palpable at media outlets such as USA Today, where an editorial chastised: “The Democrats, who control Congress and claim to represent the middle and lower classes, ought to be embarrassed.”

Far from embarrassing, this episode may reflect a dawning Democratic awareness of whom they really represent. For the demographic reality is that, in America, the Democratic party is the new “party of the rich”. More and more Democrats represent areas with a high concentration of wealthy households. Using Internal Revenue Service data, the Heritage Foundation identified two categories of taxpayers – single filers with incomes of more than $100,000 and married filers with incomes of more than $200,000 – and combined them to discern where the wealthiest Americans live and who represents them.

Democrats now control the majority of the nation’s wealthiest congressional jurisdictions. More than half of the wealthiest households are concentrated in the 18 states where Democrats control both Senate seats.

26 Aug 2007

We Already Paid For It

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The Sunday Times reports:

Pennsylvania officials plan to build up to 10 toll areas along the 311-mile stretch of Interstate 80 in the next three years to help pay for road, bridge and mass transit projects and subsidies. …

Pennsylvania’s plan is to generate about $950 million a year through the sale of bonds backed by tollway revenue and other state sources over the first 10 years, with about $500 million going to road and bridge projects throughout the state, and the remaining $450 million going to subsidize mass transit in Philadelphia, Pittsburgh and other cities.

State officials say that about 70 percent of the 21 million vehicles that travel I-80 annually are from out of state, and 40 percent are commercial trucks.

This is completely outrageous.

The owners of the cars and trucks driving on Pennsylvania’s portion of Route 80 already paid for its construction with their federal income taxes. And they continue to support its upkeep by paying federal fuel taxes.

There is no justification whatsoever for the greedy, grasping pols who infest Harrisburg to reach out for additional revenues for highway maintenance. Funds are already amply provided for just that purpose through both state and federal systems of taxation.

And the proposed transfer of wealth from far-from-affluent rural Pennsylvania to the Commonwealth’s two largest cities is absolutely unconscionable.

Making I-80 a toll road also violates the principle that at least one major route ought to be free of tolls, providing travellers some choice about paying toll charges. The only East-West alternative route across Pennsylvania, Route 76, is already a toll road.

When you read the Times article, too, you’ll find that Arlen Spector has declined to oppose this loathsome scheme. Whenever I read about the political genius of Karl Rove, I remember the craven refusal of George W. Bush and the National Party to support the conservative Pat Toomey against Spector in the 2004 Republican Primary. Spector defeated Toomey, even with George W. Bush’s support, only by 51-49 per cent. There might be a real Republican senator from Pennsylvania if Karl Rove was really so smart.

24 Aug 2007

Proven: Tax Cuts Increase Federal Revenue, Reduce Deficit

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Wars are costly, and the US has conventionally spent more than its actual revenues in time of war. Say what you will about George W. Bush’s management of the War in Iraq. His domestic tax policies (i.e. tax cuts) combined with the Rumsfeldian parsimony in troop deployments have successfully kept the US economy healthy and avoided customary war-time inflation.

As the New York Sun notes, the deficit is shrinking faster than those glaciers the moonbats are so concerned about.

2004: $413 billion
2005: $318 billion
2006: $248 billion
2007: $158 billion

Close readers of this column may recall the top three numbers in the list above from our editorial of July 12, “Incredible Shrinking Deficit.” It commented on the mid-session review released by President Bush’s Office of Management and Budget, which projected the fourth number, the 2007 federal budget deficit, at $205 billion. Yesterday, the Congressional Budget Office released its own updated estimate for 2007, $158 billion, a deficit even smaller than the White House’s July figure. The CBO yesterday also released its latest estimate of the 2007 deficit as a percentage of the Gross Domestic Product, allowing us to update another list of deficit numbers:

2004: 3.6%
2005: 2.6%
2006: 1.9%
2007: 1.2%

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