Obama supporters shocked, angry at new tax increase

You may have caught this on Drudge already, but Joseph Curl, writing in the Washington Times, has an interesting take on the recent tax increases being felt by Obama supporters.  Here are a few of the (kind of funny) quotes that he obtained: 

“I know to expect between $93 and $94 less in my paycheck on the 15th,” wrote the ironically named “RomneyLies.”

“My boyfriend has had a lot of expenses and is feeling squeezed right now, and having his paycheck shrink really didn’t help,” wrote “DemocratToTheEnd.”

“BlueIndyBlue” added: “Many of my friends didn’t realize it, either. Our payroll department didn’t do a good job of explaining the coming changes.”

“My paycheck just went down. So did my wife’s. This hurts us. But everybody says it’s a good thing, so I guess we just suck it up and get used to it. I call it a tax increase on the middle class. I wonder what they call it. Somebody on this thread called it a ‘premium.’ Nope. It’s a tax, and it just went up.”

“$86 a month is a lot. That would pay for … Groceries for a week, as someone said. More than what I pay for parking every month, after my employer’s contribution to that. A new computer after a year. A new quality pair of shoes … every month. Months of my copay for my hormones. A new thick coat (on sale or at discount place). It would pay for what I spend on my dogs every month … food, vitamins, treats.”

These reactions are in response to the social security payroll tax holiday that held the rate at 4.2% until the fiscal cliff deal mandated that it go back up to (normal) 6.2%.  These samples are anecdotal  to be sure.  The majority of citizens out there probably understand (at least they should once it is explained) that the social security tax holiday wasn’t permanent and would eventually need to snap back to the 6.2% it was before.

 

 

 

Rubio on Raising Taxes

Krauthammer explains taxes (quite well)

Bring Back the Ownership Society – SmartMoney.com

http://www.smartmoney.com/invest/strategies/bring-back-the-ownership-society-1323110888277/

Why taxes don’t work, and why higher tax rates won’t support the entitlement state

Breitbart.com, May 2012, American Enterprise Institute

Arthur Brooks describes why increasing taxes won’t help facilitate economic growth. The three main reasons, he argues, are (1) there’s no evidence such increases have helped other countries (or in the past), (2) tax hikes on small population segments don’t raise significant amounts of revenue, and (3) the targeted tax rate group happens to be small businesses. Obama likely knows this, so why the push? In a word: “fairness.”

As far back as the 2008 presidential primaries, Obama said he’d be willing to raise capital gains taxes — even if it lost revenue — in the interest of “fairness.” In his famous speech in Osawatomie, Kan., last year, employed the term “fair” or “fairness” some 14 times in his arguments to raise taxes. He has spent months demanding that “millionaires and billionaires … pay their fair share.” Meanwhile, just a few days ago on the Today show, billionaire investor Buffett — a major proponent of his namesake tax proposal –argued that tax hikes on the rich would “have a great effect in terms of the morale of the middle class.”

In other words, taxes are an issue of “fairness,” not economics, to these gentlemen. And they see raising taxes on the wealthy as a good in itself. President Obama’s use of the term denotes equalizing economic outcomes more than at present — that is the nature of defending redistributive taxation as fair, per se. But this is not in line with the way most Americans understand true fairness.

Michael Barone argues in his recent Washington Examiner column, that higher tax rates won’t support the entitlement state.  If the current programs limp along without reform, no amount of tax increases will fund them.  The primary reason for this is because people who make the most money (the famed “1%”) don’t actually make enough money.  

Over that period of nearly three-quarters of a century, federal receipts have never exceeded 20.9 percent of gross domestic product. That was the number for the war year 1944.

The highest number since was the 20.6 percent of GDP in 2000, the climax of the dotcom boom. In the Obama years, federal receipts have hovered at 15 percent of GDP.

That’s just because tax rates are too low, Obama backers reply. Just raise the rates on high earners and the problem will be solved.

Actually, high earners don’t make enough money to close the current budget deficit. You’d need to raise taxes on middle-income earners too.

But we have had higher income tax rates in most of the years since World War II. What history and Table B-79 show is that even much higher rates — like the 91 percent marginal rate on top earners imposed from the 1940s to the 1960s — have never produced federal receipts higher than 20 percent of GDP.

Why is that? As the late Jack Kemp liked to say, when you tax something, you get less of it. When the government took 91 percent of what the law defined as adjusted gross income over a certain amount, not many people had adjusted gross income over that amount.

Veronique de Rugy: Raising Taxes on Everyone

Raising Taxes on Everyone – By Veronique de Rugy – The Corner – National Review Online.

Here’s an interesting quote from the article:

The U.S. generally has lower taxes than European countries but our overall federal tax system is unusually progressive. By contrast to the U.S. federal government, like it or not, European governments are raising lots of revenue from low-income people to pay for the services provided to them, as this article in The Economistclearly explains. The result is more revenue but also more government (and still some deficits). Americans like to think they are very different from Europeans. They claim to prefer smaller government and lower taxes. But what they’ve got instead is lots of spending that most taxpayers would rather not pay for.

This, by the way, is why I thought the Bush years were so toxic. Cutting taxes while increasing spending dramatically — Bush increased real spending by 60 percent, as opposed to Clinton’s increase of 12.5 percent — is a recipe for large deficits leading more taxes later or certainly intense pressure to raise taxes. My colleagues Matt Mitchell and Andrea Castillo have a new paper on this issue that I highly recommend for those considering the current debate. This mentality persists today: We are faced with large deficits but many lawmakers still aren’t serious about restraining spending, choosing instead to retreat behind a debate over the tax treatment of high-income earners.

The Obama years could mean a “lost decade” for the United States

E. Thomas McClanahan writes in the Kansas City Star how the Obama years may be looked at as America’s “lost decade” years from now:

After five years of lousy economic performance, you would think people would be sick of it by now. Guess not. How else to explain why we’re having a big fight over inequality instead of arguing over how to jump-start growth?

There’s no denying inequality has increased. Median wages haven’t kept up while families in the upper tax brackets have prospered. But even so, getting the economy back on its typical growth path of 3.4 percent a year should be the overriding imperative.

That would do wonders for the immediate problem of too few jobs and too many jobless — not to mention the problem of lagging incomes and insufficient federal revenue.

 

Balance the budget without raising taxes IS possible

The Washington Times describes how to close the deficit without raising taxes. Obviously, there are two competing thoughts on the subject: the Center for American Progress (left leaning think tank) proposes perpetually higher taxes and an actual increase in overall spending. On the other aide, the Heritage Foundation describes a way that balance can be archived without taking more funds out of the private economy.

Obama’s favorite think tank, the Center for American Progress, submitted a plan that calls for the federal government to eat up more than 20 percent of the American economy through taxation every year, in perpetuity. Being the liberals that they are, CAP calls for even higher levels of spending — above 22 percent of GDP by 2022 alone.

Contrast CAP’s plan with that of the Heritage Foundation. It returns taxation to just above the historical U.S. average at 18.5 percent of GDP. By cutting spending to pre-Great Society levels, the Heritage plan not only balances the budget but actually begins to lower our cumulative national debt.

Heritage achieves these savings by repealing Obamacare; making the wealthy pay more for their Medicare benefits and shifting the program to a premium-support model; capping Medicaid spending and turning the program over to the states; and transforming Social Security back into an anti-poverty program as originally promoted by President Franklin Roosevelt.

Piers Morgan makes Stephanie Cutter squirm (she even seems to turn red towards the end)

Is it just me, or does everyone else watch Stephanie Cutter and get the sense that she’s always running at about 8500 RPMs?  Try not to wince when you watch her try and defend her claim that Gov. Romney’s tax plan actually adds 5 trillion dollars to the national debt:

By the way, what’s always lost on liberals when it comes to fiscal policy, is the nature of a free market. Free markets expand when the right economic conditions are present. When markets expand, jobs are created. When jobs are created, more tax payers are created. It’s counter intuitive, but it’s true: when you lower tax rates and encourage business expansion, you expand the pool of tax payers and thus, increase revenues.

Ms. Cutter outlines and either/or argument where you either raise revenue by increasing the tax burden OR you cut spending. What she (and many on the left) don’t understand is that when you unleash the free market, you raise revenue far more efficiently than merely raising taxes.

For a lesson on why this is the case, check out this video from Prager University:

Economist rejects Obama’s characterizations of Romney’s tax plan

Princeton Economist: Obama Campaign Is Misrepresenting My Study on Romney’s Tax Plan | The Weekly Standard.

I can’t tell exactly how the Obama campaign reached that characterization of my work.  It might be that they assume that Governor Romney wants to keep the taxes from the Affordable Care Act in place, despite the fact that the Governor has called for its complete repeal.  The main conclusion of my study is that  under plausible assumptions, a proposal along the lines suggested by Governor Romney can both be revenue neutral and keep the net tax burden on taxpayers with incomes above $200,000 about the same.  That is, an increase in the tax burden on lower and middle income individuals is not required in order to make the overall plan revenue neutral.

Romney provides details on his tax plan on his website.

John McCormack explains how the math works at the Weekly Standard.