Archive for the ‘Taxes’ Category

Have you recovered from your Tax Day hangover yet? It usually takes a few days before the headache of complying with 161 pages of IRS instructions goes away. Not to make it worse, but that’s triple the number of pages in 1985 and four times more than in 1975. That made it worse, didn’t it?

Despite all your hard work filing – Americans spend about 7.3 billion hours per year complying with all the IRS requirements – the United States still faces a budget deficit that is $1.3 trillion. President Obama and Democrats argue the answer to this is to raise taxes on the rich. Republicans disagree, but only about the raising the rate part.

That is what passes for a tax debate in Washington these days. Neither side wants to confront the reality that the only way to return a sense of sanity to the tax code is by scrapping the thing altogether. In it’s place? A tax code that is simple, low, fair, and honest. In other words, we need a flat tax that greatly eases the burden of compliance and stimulates the economy.

But how would that work?

Step 1: Scrap the code. Entirely. It’s not as impossible as it might sound. Even Obama’s own Bipartisan Deficit Commission, the so-called Simpson-Bowles Commission, called for tax reform that would lower rates and do away with many of the deductions and loopholes currently infecting the code. Not surprisingly, Obama ignored it.

Step 2: Establish a single, flat rate on personal and business income. Again, this isn’t as fantastic as it might sound. The key is in the process. You’ve probably heard that Warren Buffett pays a lower tax rate than his secretary. Let’s just assume this is true. Billionaires like Buffett, and even millionaires like Nancy Pelosi and Mitt Romney, can afford an army of tax lawyers to comb every word in the 3.6-million-word tax code looking for their deductions and loopholes. Can you afford such an army?

By eliminating every single deduction, credit, penalty, and loophole, we can erase the tax code’s inherent unfairness, which only benefits the Buffetts, Pelosis, and Romneys. Not only will this raise revenues, it will ensnare the tax cheats, expanding the nation’s taxable base. Next, you lower the rates considerably, doing away with brackets, until we have a single flat tax rate. In one popular flat tax proposal, a family of four would have the first $33,800 of its income tax free; any amount above this would be taxed at 17 percent – for everyone. No deductions, no loopholes.

Step 3: Do the same thing with corporate taxes. Right now, the U.S. has the highest corporate tax rate in the developed world. Even Obama has suggested it needs to go down. Like the individual flat tax, with the business flat tax income would be taxed once and only once. Businesses would calculate total revenue, subtract total expenses, and pay a flat tax on that amount.

Step 4: File your taxes on a postcard.

Step 5: Use all the time and money you’ve saved in the full pursuit of life, liberty and happiness.

That’s what a simple, low, fair, and honest tax code would look like. Many accuse the Tea Party of simply wanting lower taxes. We do, but lower rates are just part of fundamental tax reform. Many accuse the Tea Party of favoring the wealthy. These people have obviously never been to a Tea Party rally before. In fact, what the Tea Party wants is fairness – and not the faux class warfare “fairness” espoused by the Occupy Wall Street crowd.

Although the economic benefits of tax reform are important, the passion of grassroots activists is driven primarily by a set of simple values: Treat everyone the same as everyone else; don’t punish success; and simplicity equals transparency. Americans should know that there isn’t a better deal to be had if you can afford a lobbyist or a lawyer.

The reason Congress made 4,400 legislative changes to the tax code between 2000 and 2010 wasn’t to ensure that the U.S. Treasury was fat and full. It was because the tax code has become the plaything of Washington politicians, to be stuffed with as many little favors for select interests as possible.

It’s reforming that central unfairness that lies at the heart of the Tea Party Tax Code: Simple, low, fair, honest, and, most of all, flat.

Matt Kibbe @mkibbe is the president and CEO of FreedomWorks, co-author of “Give Us Liberty: a Tea Party Manifesto” and author of the upcoming book, “Hostile Takeover: Resisting Centralized Government’s Stranglehold on America.“

by Jim Demint

Recent news has provided Americans a steady stream of new reasons to support a full repeal of President Obama’s controversial health care takeover.

Just in the last few months, we’ve seen the administration impose an unprecedented mandate that all employers, even religious schools and hospitals, pay for employees’ abortion-inducing drugs, sterilization and contraception.

We have seen the Congressional Budget Office further expose the true costs of ObamaCare, raising estimates of spending on insurance subsidies by $51 billion, and admitting that millions more Americans will lose their employer coverage to get dumped into ObamaCare’s brave new insurance world.

And of course, last month we heard the administration’s lawyers hem and haw at oral arguments before the Supreme Court, further undermining ObamaCare’s already dubious constitutionality.

But if those weren’t reason enough to support the full repeal of ObamaCare by Congress and a new president, Happy Tax Day! I’ve got four trillion more of them for you.

You probably already know that ObamaCare is full of what Democrats these days call “revenue enhancements” — job-killing tax increases on everything they can think of to pay for their health care takeover.

What you might not know is that the largest tax increases in the ObamaCare legislation are not indexed for inflation.

For example, the “high-earners” surtax hits individuals who make more than $200,000, and couples who earn more than $250,000. People making that much will comprise about 3% of the country in 2013.

But as time goes by, and inflation drives up income, today’s “high-earner” threshold will “medium” earners and, eventually, “almost everyone” earners.

According to the nonpartisan Medicare actuary, by 2080, ObamaCare’s tax on high earners will hit 79% of American taxpayers.

Meanwhile, the 40% tax on high cost health plans, the so-called “Cadillac health plans,” was linked to general inflation, instead of the much higher inflation rate in the health care sector.

So it won’t be long before the president’s “Cadillac” tax starts hitting Americans with “Honda” insurance. (A cynic might even wonder if this is why the tax won’t kick in until 2018, long after the end of Obama’s presumed second term.)

According to the CBO, all of the ObamaCare tax hikes will raise taxes by about 0.7% of gross domestic product by 2021. As more and more Americans sneak into the president’s definition of “high earner,” by 2035, it will be 1.2% of GDP, and rise from there.

Between now and 2035, that comes out to more than $4 trillion — that’s what happens when taxes, aimed at the rich, inevitably hit the middle class.

The pain from ObamaCare taxes is already being felt.

Medical device manufacturers, whose products ObamaCare slaps with a special tax, are already laying off workers. Even businesses in industries unconnected to the health care sector are holding back.

As an analyst at UBS put it, ObamaCare’s burdens are already “arguably the biggest impediment to hiring, particularly hiring of less skilled workers.”

Consider that $4 trillion in new taxes between now and 2035 comes out to $169 billion taken out of the private economy every year.

Since it costs businesses about $63,000 to create one middle class job, ObamaCare is already going to cost Americans 2.7 million lost jobs per year.

The total comes out to $3,300 in higher taxes for the average family, on top of the $2,400 increase in health insurance premiums (which the president promised would actually drop by $2,500).

How do you solve a problem like ObamaCare? Simple: you don’t. Its out-of-control costs will either destroy our health care system, or bankrupt our country — and, eventually, both.

This is a big part of why the public opposed ObamaCare in 2010, why they want the Supreme Court to overturn in and why they want Congress to repeal it.

For all the hidden taxes, for all the exploding spending projections, for all the untold dollars and freedoms that will be lost under government-run health care, for all the unknown unknowns, the American people actually seem to know exactly what ObamaCare will always cost them: more.

• DeMint, U.S. senator from South Carolina, sits on Congress’ Joint Economic Committee.

Sen. Brown: Bill targets tax scofflaws in Congress

BOSTON (AP) – U.S. Sen. Scott Brown is pushing a new bill that he said would make it easier to collect back taxes from federal workers and members of Congress.

The Massachusetts Republican said that a recent report by the Internal Revenue Service showed that in 2010, 98,000 federal employees owed a combined $1 billion in back taxes.

Brown said members and employees of the U.S. Senate alone owed over $2 million.

The bill would require members and employees of Congress and federal employees who file financial disclosures forms to report any delinquent tax liability to the appropriate ethics office and come up with a plan to pay off the taxes.

Those who fail to arrange a payment plan with the IRS within a year could have those back taxes taken directly out of their wages.

‘THE BEGINNING OF SERFDOM’: BECK EXPOSES THE SURPRISING HOLE IN THE BUFFETT RULE
by Tiffany Gabbay
According to The Blaze’s Madeleine Morgenstern, the proposed plan would require those earning more than $1 million annually pay at least 30% in income taxes. It is scheduled for a Senate vote on April 16.
Regardless of his claim that the Buffett Rule does not engage in class warfare, Obama’s words might ring otherwise. During his weekly radio and Internet address, Obama asked, “when it comes to paying down the deficit and investing in our future, should we ask middle class Americans to pay even more at a time when their budgets are already stretched to the breaking point?”
“Or should we ask some of the wealthiest Americans to pay their fair share?”
 The only problem?
Warren Buffett will likely not be paying his “fair share” anyway. At least not in income tax.
Such a statement might seem unbelievable, but on his Wednesday radio broadcast, Glenn Beck and his co-hosts, Pat Gray and Stu Burguiere, explained why some of the country’s wealthiest are actually not paying any income tax at all — and the reason just might surprise you.
While progressives would quickly suggest the reason is because “the wealthy are benefiting from an unfair tax system that rewards only the top ‘1%’” — in actuality, Buffett, along with George Soros and likely even Bill Gates, are not actually earning income. Thus, there is nothing to pay income tax on. Rather, long-time entrepreneurs like Buffett and Soros are likely living off their investments. This is different than So, while Buffett and Soros both clamor for higher income tax for the wealthy, it is all an empty display as they would not be effected by an income tax increase on the top income-earners anyway. Both rainmen maintain that an income tax increase will neither effect them nor bother them at all. This, Beck said, is the ironic “truth.” income — such as a salary — and is not subject to income tax.

So, while Buffett and Soros both clamor for higher income tax for the wealthy, it is all an empty display as they would not be effected by an income tax increase on the top income-earners anyway. Both rainmen maintain that an income tax increase will neither effect them nor bother them at all. This, Beck said, is the ironic “truth.”

Beck explained that entrepreneurs who are still building businesses, growing their investments, paying employees’ salaries and collecting a salary of their own, however, still “need their income” in order to operate and would soar to new heights if their businesses were afforded a tax break. “I would hire more people…and make new investments,” Beck said of such a scenario.
“Ten years ago, I was broke.”
“We worked together… as a team to build something amazing.” He explained that while some outlets will report what they claim are his yearly earning, those outlets are in fact reporting what Beck’s entire company earns gross. After paying salaries (including his own), insurance coverage for the business and its employees and covering various operating expenses, Beck still pays income tax on what remains.
He warned that the federal government is “closing the door” on the “dreamers” and “builders” of the world.
“They are closing the door on you,” he said pointedly. “It is the beginning of serfdom.”
Another point of contention discussed during the program was the alleged salary and income tax rate of Warren Buffett’s secretary — the lone woman being used by President Obama to model his entire tax policy after. Yes. One person.
Buffett claims his secretary earns $60,000 per year and pays a 30% income tax rate. While the salary is more than most secretaries earn, the figure, given her longtime tenure with one of the wealthiest men in the world, seems conspicuously on the low-side. Nonetheless, if we were to conduct our analysis based on a $60,000 salary, then Buffett’s secretary would not be paying 30%, but rather 14%. Going one step further, Stu pointed out that the average secretary earns $33,000 a year and thus pays 10% in income tax.
These figures reveal that a lie is being told somewhere. Either Buffett’s secretary is not paying 30% income tax and is rather paying roughly half that number, or, Buffett’s secretary is paying 30% and thus is earning over $250,000 — the proper income bracket to allow for a 30% income tax rate.

By Henry J. Reske
Buried within President Barack Obama’s 2013 budget is a proposal to triple the tax rate on corporate dividends which now stands at 15 percent, a move that would have a severe effect on retirees, The Wall Street Journal notes in an editorial.

Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6 percent, according to the Journal. The rate jumps to 41 percent with the planned phase-out of deductions and exemptions and then hits 44.8 percent with the 3.8 percent investment tax surcharge in Obamacare.

“Of course, the White House wants everyone to know that this new rate would apply only to those filthy rich individuals who make $200,000 a year, or $250,000 if you’re a greedy couple. We’re all supposed to believe that no one would be hurt other than rich folks who can afford it,” the Journal wrote.

“The truth is that the plan gives new meaning to the term collateral damage, because shareholders of all incomes will share the pain. Here’s why. Historical experience indicates that corporate dividend payouts are highly sensitive to the dividend tax. Dividends fell out of favor in the 1990s when the dividend tax rate was roughly twice the rate of capital gains.”

When the rate fell to 15 percent in 2003, dividends reported on tax returns nearly doubled to $196 billion from $103 billion the year before the tax cut, and by 2006, dividend income had grown to nearly $337 billion, The Journal wrote. Economists who examined dividend payouts came to the conclusion that the tax cut played a significant role in the increase in dividend payouts.

“If you reverse the policy, you reverse the incentives,” the Journal wrote. “The tripling of the dividend tax will have a dampening effect on these payments.

“Who would get hurt? IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.”

The Journal concluded that “all American shareholders would lose” as the taxes would make stocks less valuable and prices would fall, causing a sell-off and noting that 51 percent of adults hold shares of stock today either directly or through mutual funds.

“Tens of millions more own stocks through pension funds. Why would the White House endorse a policy that will make these households poorer? Seldom has there been a clearer example of a policy that is supposed to soak the rich but will drench almost all American families.”

© Newsmax. All rights reserved.

Read more on Newsmax.com: Obama Dividend Tax Would Devastate Retirees
Important: Do You Support Pres. Obama’s Re-Election? Vote Here Now!

Colleen Owens
In January and February of this year, the Internal Revenue Service began sending out letters to various local Tea Parties across the country. Mailed from the same Cincinnati, Ohio IRS office, these letters have reached Tea Parties in Virginia, Hawaii, Ohio, and Texas (we are hearing of more daily). There are several common threads to these letters: all are requesting more information from these independent Tea Parties in regard to their nonprofit 501(c)(4) applications (for this type of nonprofit, donations are not deductible). While some of the requests are reasonable, much of them are strikingly onerous and, dare I say, Orwellian in nature.

What are local Tea Partiers to think with requests like “Please identify your volunteers” or “are there board members or officers who have run or will run for office (including relatives)”? What possible reason would the IRS have for Tea Parties to “name your donors” when said donations are non-deductible? These are just a few of the questions asked by the IRS in these letters, and one cannot help but suspect an intrinsic threat encompassing all these demands.
The other question is the timing of these IRS letters requesting reams of copies and hundreds of hours of work and potentially thousands of dollars in accounting/legal fees (all due in two weeks). Some of these Tea Party groups have not received anything concerning their nonprofit status since 2010 prior to these letters.
These documents are further undermined by a letter sent to the IRS Commissioner Shulman. Signed by six Senators, it requests that the commissioner investigate 501(c)(4) groups to determine whether they are engaging in substantial campaign activity, including opposition to any candidate. Who signed this letter? Senators Schumer, Franken, Udall, Shaheen, Whitehouse, Merkley and Bennet — all Democrats.
Could it be that these Senators want the IRS to investigate the nonprofit status of Media Matters and its coordinated political activity with the White House? Or perhaps they are concerned with nonprofit ACORN groups’ record of voter fraud, and other previous campaign abuses including alleged close ties with President Obama’s Project Vote? No, when these Senators sent this letter to the IRS commissioner, the message would be very clear. The 501(c)(4) groups they want investigated are not those with Democratic liberal ties.
But why would a department like the IRS cave to Democrat demands? Could it be because this Democratic administration proposed a budget earlier this month that would result in “$1.1 billion in new funds for the Internal Revenue Service… that would translate to 5,112 new hires, or a 5 percent expansion of enforcement operations”? Colleen Kelley, president of the National Treasury Employees Union, couldn’t contain her glee at the prospect of over 5,000 new union hires, exclaiming in response to the announcement that “the administration’s 2012 funding level for the IRS would permit the agency to improve services through increasing response rates to inquiries, deploying enforcement resources to what the White House called high-return integrity activities and by modernizing information technology systems.”
The IRS is already focusing on “deploying enforcement resources,” as Kelley put it, toward targeting small, local Tea Parties; we’re sorry to report that these “high-return integrity activities” are generating a higher fear factor, not necessarily higher returns.
In the near future, the Affordable Healthcare Act mandate and all things related to healthcare are to be policed and enforced by the IRS. This means thousands more IRS agents will be added, but the actual number is yet unknown. Considering that healthcare accounts for 1/6th of the U.S. economy, it will probably be a significant number of additional agents. According to the tax administration inspector general, Russell George, “The new Affordable Care Act provisions represents the largest set of tax law changes in 20 years.” That’s an overwhelming thought considering there are over 70,000 pages of federal tax code.
The Tea Party movement is well known for wanting to shrink the size of government and decrease government spending because of the ballooning deficit. This means that unionized government employees that may be out of a job if the Tea Party is successful also have the power to choose whether or not Tea Party groups get nonprofit status. And those same employees are also requesting names and information of board members, volunteers, donors, invited speakers(and party affiliation) and just about anyone that has had any association with the Tea Party.
It is apparent that there is a potential conflict of interest and it could be used to stifle the right to free speech of the Tea Party members, or any other citizen willing to question the system and powers that be.
Many Tea Party boards are afraid to speak out publicly about these intrusive requests because of fear of being personally targeted and singled out by the IRS. This is especially scary to citizens of modest incomes that don’t have the financial means to hire accountants or tax attorneys. And that is probably the point. Cower and fade away, or face possible persecution at the hands of government bureaucrats.
Some people may read this article about this possibly-coordinated effort against Tea Parties and be glad. But, the tables can easily be turned if and when another party takes control. The potential of using the IRS as a weapon against those that disagree with the people in power is exactly why the Tea Party fears the growth of government.
If your Tea Party has received similar letters, please let me know (Colleen Owens, citizenczar@gmail.com) and I will put you in contact with other Tea Parties that have also received them. I will not publish your Tea Party or names publicly.
Remember the words of Ben Franklin, “We must all hang together, or assuredly we shall all hang separately.”

BUDGET WATCH: $45 Billion Tax Increase On American Energy Production Will Hit Families, Small Businesses and Rural Communities Hardest

WASHINGTON, D.C., February 13, 2012 – Since his State of the Union Address, President Obama has repeatedly talked about expanding “all-of-the-above” energy production. However, a closer look at his Fiscal Year 2013 budget proposal reveals more of the same job-destroying tax increases on American energy that will stifle production and cost jobs. The President simply doesn’t understand that raising taxes on energy production will ultimately end up costing American families and small businesses thousands of dollars at a time when they can least afford cost of living increases.
For example, every penny the price of gasoline increases, it costs consumers an accumulated $4 million per day. As gasoline prices continue to rise, the last thing consumers need is more expensive energy due to President Obama’s billions of dollars in tax increases.

Specific energy tax and fee proposals in the President’s budget:

Tax on production of hardrock minerals ($1.8 billion)
Non-producing lease fee ($738 million)
Offshore inspection fees ($30 million)
Onshore inspection fees ($480 million)
Repeal Domestic Manufacturing Tax Deduction for oil and natural gas ($11.6 billion)
Repeal expensing for intangible drilling costs ($13.9 billion)
Repeal percentage depletion for oil and natural gas wells ($11.4 billion)
Increase geological and geophysical amortization period for independent producers to seven years ($1.4 billion)
Repeal percentage depletion for hard mineral fossil fuels ($1.7 billion)
Tax increase for Oil Spill Liability Trust Fund ($717 million)
Repeal expensing of exploration and development costs ($440 million)
Repeal domestic manufacturing deduction for hard mineral fossil fuels ($271 million)
Tax increase on capital gains coal royalties ($422 million)
Repeal exemption to passive loss limitation for working interests in oil and natural gas properties ($82 million)
Repeal deduction for tertiary injectants ($100 million)

Here are a few lines from the President’s State of the Union Address:
“Let’s never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts,” he said. “An America built to last insists on responsibility from everybody.”
Remember these words as you read this article.
You and I sweat each year about this time trying to figure out the tax code and ways to keep as much money as we can. Then we have to listen to President Obama telling us that we are not paying our “fair share.”
Now we learn why the President wants more tax dollars from us. His own aides owed the IRS close to one million dollars in back taxes at the end of 2009. Remember Timothy Geithner? He is the current United States Secretary of the Treasury. He was previously the president of the Federal Reserve Bank of New York. He didn’t pay Social Security and Medicare taxes for several years while he worked for the International Monetary Fund. He didn’t have to. He’s special. He knows what’s best for us, but he doesn’t have to abide by the same rules.
To show you how stupid Republicans are, here’s what Orrin Hatch said when he learned about the back taxes issue. “I still support him. He’s a very competent guy.” Next time you’re up for an IRS audit, give Orrin a call and ask him if he’ll support you.
To my surprise, the Los Angeles Times, and Washington Post reported on government tax delinquents that did not get much attention.
Here’s what a Los Angeles Times article had to say on the subject:
We now know that federal employees across the nation owe fully $1 billion in back taxes to the Internal Revenue Service.
As in, 1,000 times one million dollars. All this political jabber about giving middle-class Americans a tax cut. Thousands of feds have been giving themselves one all along — unofficially. And these tax scofflaws include more than three dozen folks who work for the president with that newly decorated Oval Office.
A Washington Post article gives some detail to the story that will make you spitting nails. “The average unpaid tax bill is $12,787 among the Senate’s delinquent taxpayers and $15,498 among those working in the House.”
These are same people who want to raise taxes and spend more money – your money and my money. They increase the IRS’s budget to go after delinquent tax payers while they do nothing about their own taxes.
Rep. Jason Chaffetz (R-Utah) introduced legislation to fire federal workers who owe back taxes unless they agreed to a payment plan. Eight Republicans co-sponsored the bill. No Democrats signed it, and some have said firings would reduce the government’s prospects of being paid.
Someone needs to find out if these guys paid up, and another study needs to be done to find out who didn’t pay in 2010.

Read more: 41 Obama White House Aides Owed $831,000 in Back Taxes http://godfatherpolitics.com/3341/41-obama-white-house-aides-owed-831000-in-back-taxes/#ixzz1kV3ZOB00

Neil Cavuto showed us this disturbing video of an Occupy Wall Street protester vowing to burn New York City to the ground on November 17 and implying that violence is right around the corner.

When speaking amongst a crowd in Manhattan, he said, “Ain’t no more talking… They got guns, we got bodies. They got bricks, we got rocks. Let’s see what they got.”

The protester continued his rant, saying, “In a few days, you’re going to see what a Molotov cocktail can do to Macy’s.”

The protesters plan to try to shut down Wall Street on Thursday.

By David S. Addington, Heritage Foundation November 8, 2011 at 6:15 pm

President Obama’s Agriculture Department today announced that it will impose a new 15-cent charge on all fresh Christmas trees—the Christmas Tree Tax—to support a new Federal program to improve the image and marketing of Christmas trees.

In the Federal Register of November 8, 2011, Acting Administrator of Agricultural Marketing David R. Shipman announced that the Secretary of Agriculture will appoint a Christmas Tree Promotion Board. The purpose of the Board is to run a “program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace; maintain and expend existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry” (7 CFR 1214.46(n)). And the program of “information” is to include efforts to “enhance the image of Christmas trees and the Christmas tree industry in the United States” (7 CFR 1214.10).

To pay for the new Federal Christmas tree image improvement and marketing program, the Department of Agriculture imposed a 15-cent fee on all sales of fresh Christmas trees by sellers of more than 500 trees per year (7 CFR 1214.52). And, of course, the Christmas tree sellers are free to pass along the 15-cent Federal fee to consumers who buy their Christmas trees.

Posted on November 5, 2011 at 5:48pm by Mike Opelka
Ken Langone is not known for sitting on his opinions. Last summer, the co-founder of Home Depot made headlines with his stinging criticisms of President Obama.

During a Friday appearance on CNBC’s “Squawk Box,” the outspoken Ken Langone told interviewer Andrew Ross Sorkin exactly how he feels about the protesters in Zuccotti Park.

Mr. Langone closed this segment by taking Sorking to school on what he (Langone) believes to be the main problem with the growing American dependence on welfare.

See The Full Interview

While understandable, given a rational aversion to a new sales tax, your suggestion that it is better to reform our current income tax behemoth than to consider Herman Gain’s 9-9-9 tax plan reflects a timidity that is far too limiting. Getting the marginal income tax rate down to 9% and eliminating taxes on dividends and capital gains would be a quantum economic game-changer.
Our current income tax dis¬courages both work and thrift and, as such, is morally defi¬cient. In practical terms, it is a heavy obstacle to capital formation, solid long-term eco¬nomic growth and rising stan¬dards of living. It must be jettisoned in its entirety. Mr. Cain’s alternative is ingen¬iously simple and effective. Revenue neutral initially, it would greatly expand incen¬tives to work and save, pro¬moting sustainable economic growth and wealth creation.
PAUL MATTEN New York
I’ve just retired, having en¬dured high income tax rates and payroll taxes all my life. Now, living off my life savings which have already been taxed, I am faced with a new consumption tax that will again tax my earnings. Her¬man Cain’s 9%, plus 8.5% Washington state sales tax, takes a 17% bite out of our nest egg and makes our golden years look that much less golden. And we thought the dividend tax was double taxation.
JOHN FLARRY Ferndale, Wash.
You fail to point out one of the bigger upsides to a national sales tax: Everyone pays it. Because our current tax code has been manipulated for every reason, be it good, bad or indifferent, approximately half of the wage earners in America pay no federal in¬come tax. If historical trends continue, with current admin¬istration’s help no less, the na¬tion will continue to see a smaller percentage of wage earners paying income tax.
I’m not advocating Mr. Cain’s plan as I do believe the pitfalls you point out are a likely outcome, but I would think your editorial board would see the fairness in a na¬tional sales tax as something positive because it would bet¬ter spread the burden of fund¬ing the federal government on the backs of all Americans. Maybe then lower-wage earn¬ers will think twice next time the politicians call for raising tax rates, since they would feel the pain as the, rest of us do.
STEVE SANDMAN Lake Forest, III.
You mention that all legiti¬mate business expenses would be deductible except wages. I’ve been a tax practitioner for more than 35 years and when I read wages won’t be deduct¬ible, I knew my job would be secure and the IRS would need much more funding. My busi¬ness would move from compli¬ance to planning and handling audits. Why? If I can deduct all expenses but wages, I’m going to spend a whole lot of time figuring out how to turn wages into some other ex¬pense, and you can be sure we’ll figure out ways to turn ordinary income into capital gains and dividends since they would both be tax exempt.
Since states and cities will not be changing their income tax rates, nonfederal tax rates could effectively be outra¬geously high. Imagine two Ohio companies, one a manu¬facturer with a lot of materials costs, and one a service busi¬ness where the overwhelming cost is wages. The first will have a huge advantage as it can deduct most of its costs, but the second can’t deduct its main expense under the Cain plan and must pay the 9% not on its profits, but on profits plus wages. The effect of this will be magnified by state taxes.
BILL TAYLOR West Lafayette, Ind.
Herman Cain at least has proposed something which the voter’s .can get their mental hands on and feel and touch, kick the tires and slam the doors. Very much akin to Paul Ryan’s proposals on health care, it is concrete. Every other Republican candidate comes up with smoke and mir¬rors, battles over vaccines and “cloud” type proclamations that mean zero. The Journal’s protestations that future legis¬lators will continue to raise the rate of the national sales tax reflect a paranoid fear that Americans can’t restrain themselves. The tea party says we can.
GARY ROTOLO Evergreen, Colo.
Your editorial does not mention one significant bene¬fit of Mr. Cain’s tax proposal: the diminishment of the power of the federal govern¬ment to reward the few to the detriment of the many through the corrupt manipula¬tion of the tax code.
MATT FINN Woodbury, Minn.

 Illinois Loses Most Jobs in the Nation

In a trend that continues to worsen, more Illinoisans found themselves unemployed in the month of July.

Illinois lost more jobs during the month of July than any other state in the nation, according to the most recent Bureau of Labor Statistics report. After losing 7,200 jobs in June, Illinois lost an additional 24,900 non-farm payroll jobs in July. The report also said Illinois’s unemployment rate climbed to 9.5 percent. This marks the third consecutive month of increases in the unemployment rate.

Illinois started to create jobs as the national economy began to recover. But just when Illinois’s economy seemed to be turning around, lawmakers passed record tax increases in January of this year. Since then, Illinois’s employment numbers have done nothing but decline.

Data released today by the bureau confirms this downward trajectory. When it comes to putting people back to work, Illinois is going backwards. Since January, Illinois has dropped 89,000 people from its employment rolls.

It’s too early to know conclusively the full impact of the tax hikes on the Illinois economy. Nevertheless, Illinois’s employment numbers serve as a good reminder that public policies have dramatic consequences for the daily lives of Illinoisans. A combination of high taxes, overspending and red tape do nothing but chase away job creators and leave too many citizens without jobs. Springfield needs to act now and reverse course.

There is more to know than you see on your check stub, more than you see on your tax return, more than you see on your quarterly estimated taxes, more than you see at the gas pump. The following numbers from usrevenue.com bring some clarity to taxes in the US.

Federal Budgeted Revenue 2011 (Federal Government Income)

Income Taxes: 1.154 Trillion
SS/Med/Ins .806 Trillion
Ad-Valorem .133 Trillion
Business/Other .079 Trillion
Fees/Charges .001 Trillion
Total: 2.173 Trillion

53% is from personal income taxes paid by citizens
37% is from personal & employer SS, Medicare, or Gov. Ins. paid by citizens & employers
6% is from ad valorem: Fuel, Inheritance, Tariff, Leases, and other value-based taxes
3.6% is from corporate/business taxes
0.04% is from use fees or charges

53 % of all federal revenue is paid up front by us
16 % is deducted from our pay for social insurance
21 % is paid on our behalf by or employer, but ultimately it is passed back in the cost of products
6 % is paid by companies and passed on to us in the cost of products
4 % is paid by companies and passed on to us in the cost of products
Use fees or charges are paid by citizens directly to federal agencies, for the privilege of using (our) public land.

The fact is that we as citizens and consumers pay either directly or through hidden taxes the full $2 trillion in annual federal revenue. Business pays nothing, because they have to cover the cost of taxes in the price they charge for the products or services, which we pay. In addition they must bear the administrative costs for reporting and paying the taxes, again a cost coming to us in the price of the product or service.

There are a total of 311 million citizens, so the average citizen is paying $6987.00 this year in federal taxes. For a family of four the average is $27948.00. Averages however can be deceptive, for taxes are not paid evenly, in fact over 40% of all federal taxes are paid by just 1% of taxpayers, those in the highest income bracket, and a full 97% of taxes are paid by 50% of taxpayers, those of average income and above. Only 3% of taxes are paid by those in bottom 50% of the income scale.

It is just plain ignorance that people believe the rich should pay more taxes; each of us who make less than $410,000.00 are already being heavily subsidized by those who earn more than that.

Those that would increase corporate taxes to “redistribute the wealth” obviously don’t understand that a business tax is just a hidden tax on the consumer, and an overhead cost that takes investment and growth money out of businesses.

To foster a robust economy there should be no taxation of business. People should not have to send their social services money to the government; it should go into their personal accounts. There should be no hidden taxes; citizens should know exactly what they pay in taxes. Business would boom, prices would decrease, consumer power would increase, and personal wealth would increase.

“It’s time to level the playing field.”  “The rich need to pay their fair share.”  “We have to end tax breaks for millionaires and billionaires.”  These are some of the stock phrases used by President Obama and his administration to fire up their troops to picket private homes, gin up mobs to protest success and to channel America towards the future they envision.  Like a one trick pony or an extremely inept coach the Progressives’ playbook has only one option.  It’s a Hail Mary pass they run over and over: class warfare.  From Marx to Chavez the collectivists have always played the same card from each according to the ability to each according to their need. 

Over a century of propaganda and indoctrination has conditioned most Americans to accept one of the most insidious aspects of class warfare as a natural and respectable feature of our government: progressive taxation.   At its core progressive taxation is the quintessential action of the Trojan horse the Progressives have constructed to transform America from a representative republic with a capitalist economy into a centrally planned socialist democratic republic.

The shock troops for this movement which has captured the leadership of both major parties is made up of the Corporations Once Known as the Mainstream Media, unions, crony capitalists, and a conglomeration of front groups and organizations, many of which receive vast amounts of government money.  These interest groups constantly agitate for Progressive policies and carry the water for Progressive politicians.  They also contribute time, money and resources for the election campaigns of the very Progressive politicians who vote to give them government grants in a circular money laundering scheme which if not illegal is certainly immoral.

Who are these Progressives in America today?  They’re the most vocal proponents of the manmade global warming hoax.  They serve as willing acolytes for their Nobel Prize winning high priest.  After failing to pass their much desired cap-n-trade they are regulating it into existence through the Environmental Protection Agency.

They are also the same ones who after leading the charge against integration, standing in the school house door and attacking peaceful demonstrators with everything from fire hoses to clubs they support every media starved Civil Rights professional who will rant and rave on cue to keep America’s deepest wound festering. 

They use Political Correctness to monitor and manage the discussion.  Political Correctness is the Progressives’ version of New Speak and the coin of their realm.  Many of these verbal add-ons are merely variations and expressions on the over-riding theme of take from the evil rich to help the deserving poor, with a good dose of “We’ve got to do it for the children” thrown in for good measure.  Political Correctness is strangling free speech and pushing many into a cone of silence wherein they no longer have the liberty to express their opinions without retaliation on the job or in school.

People who wish to take from the rich and give to the poor never create wealth themselves.  They always want to take from one and give to another so they can drain off a living in between exulting in the power to decide who deserves the blessings of their charity.  And they always seem to get more than anyone else.

The massive frauds and waste of the Federal government shows where this is headed.  As they swallow more of the economy their ineptitude seems to grow in direct proportion to the size of the swag.  Take for instance the stimulus slush-fund of 2009.  Billed as a way to create jobs this bill spent $278,000 for every job created.  In terms of the national debt President Obama is spreading the wealth around at an astounding rate of 3.94 billion dollars per day in deficit spending alone.  He has gone beyond taxing the rich and is now taxing the unborn.

Looking back at the battle cry of “Tax the rich” which symbolizes the inequity which is the Progressive tax system some often confuse this with the story of Robin Hood.  They say he stole from the rich to give to the poor.  They point to Robin and say that is all they want to do, take some of the excess wealth held by the rich and distribute it to the unfortunate. 

Unfortunately for them such a translation of the Robin Hood myth turns the story on its head.  After returning from a war of choice initiated by an absentee king in the Middle East Robin learned his estate had been taxed away.  Finding this level of abuse intolerable he became an outlaw stealing the ill-gotten loot government agents were extorting from the people in the form of taxes and then returned the money to those who had actually earned it.

Wait a minute maybe we do need Robin Hood today!

Dr. Owens teaches History, Political Science, and Religion for Southside Virginia Community College.  He is the author of the History of the Future @ http://drrobertowens.com View the trailer for Dr. Owens’ latest book @ http://www.youtube.com/watch?v=_ypkoS0gGn8 © 2011 Robert R. Owens drrobertowens@hotmail.com  Follow Dr. Robert Owens on Facebook or Twitter @ Drrobertowens.

‘He becomes visibly agitated. . . . He does not like to be challenged on policy grounds,’ says the House majority leader of the president.

The Wall Street Journal August 6, 2011

What we’ve got here is far worse than a failure to communicate.