Posts Tagged ‘income taxes’

What Mitt Romney Said Last Night About Tax Cuts And The Deficit Was Absolutely Right. And What Obama Said Was Absolutely Wrong.

October 4, 2012

Mitt Romney repeatedly said last night that he would not allow tax cuts to add to the deficit.  He repeatedly said it because over and over again Obama blathered the liberal talking point that cutting taxes necessarily increased deficits.

Romney’s exact words: “I want to underline that — no tax cut that adds to the deficit.”

Meanwhile, Obama has promised to cut the deficit in half during his first four years – but instead gave America the highest deficits in the history of the entire human race.

I’ve written about this before.  Let’s replay what has happened every single time we’ve ever cut the income tax rate.

The fact of the matter is that we can go back to Calvin Coolidge who said very nearly THE EXACT SAME THING to his treasury secretary: he too would not allow any tax cuts that added to the debt.  Andrew Mellon – quite possibly the most brilliant economic mind of his day – did a great deal of research and determined what he believed was the best tax rate.  And the Coolidge administration DID cut income taxes and MASSIVELY increased revenues.  Coolidge and Mellon cut the income tax rate 67.12 percent (from 73 to 24 percent); and revenues not only did not go down, but they went UP by at least 42.86 percent (from $700 billion to over $1 billion).

That’s something called a documented fact.  But that wasn’t all that happened: another incredible thing was that the taxes and percentage of taxes paid actually went UP for the rich.  Because as they were allowed to keep more of the profits that they earned by investing in successful business, they significantly increased their investments and therefore paid more in taxes than they otherwise would have had they continued sheltering their money to protect themselves from the higher tax rates.  Liberals ignore reality, but it is simply true.  It is a fact.  It happened.

Then FDR came along and raised the tax rates again and the opposite happened: we collected less and less revenue while the burden of taxation fell increasingly on the poor and middle class again.  Which is exactly what Obama wants to do.

People don’t realize that John F. Kennedy, one of the greatest Democrat presidents, was a TAX CUTTER who believed the conservative economic philosophy that cutting tax rates would in fact increase tax revenues.  He too cut taxes, and he too increased tax revenues.

So we get to Ronald Reagan, who famously cut taxes.  And again, we find that Reagan cut that godawful liberal tax rate during an incredibly godawful liberal-caused economic recession, and he increased tax revenue by 20.71 percent (with revenues increasing from $956 billion to $1.154 trillion).  And again, the taxes were paid primarily by the rich:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So we get to George Bush and the Bush tax cuts that liberals and in particular Obama have just demonized up one side and demagogued down the other.  And I can simply quote the New York Times AT the time:

Sharp Rise in Tax Revenue to Pare U.S. Deficit By EDMUND L. ANDREWS Published: July 13, 2005

WASHINGTON, July 12 – For the first time since President Bush took office, an unexpected leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion.

A Jump in Corporate Payments On Wednesday, White House officials plan to announce that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February.

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.

The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be “significantly less than $350 billion, perhaps below $325 billion.”

The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well
.

And of course the New York Times, as reliable liberals, use the adjective whenever something good happens under conservative policies and whenever something bad happens under liberal policies: “unexpected.”   But it WASN’T “unexpected.”  It was EXACTLY what Republicans had said would happen and in fact it was exactly what HAD IN FACT HAPPENED every single time we’ve EVER cut income tax rates.

The truth is that conservative tax policy has a perfect track record: every single time it has ever been tried, we have INCREASED tax revenues while not only exploding economic activity and creating more jobs, but encouraging the wealthy to pay more in taxes as well.  And liberals simply dishonestly refuse to acknowledge documented history.

Meanwhile, liberals also have a perfect record … of FAILUREThey keep raising taxes and keep not understanding why they don’t get the revenues they predicted.

The following is a section from my article, “Tax Cuts INCREASE Revenues; They Have ALWAYS Increased Revenues“, where I document every single thing I said above:

The Falsehood That Tax Cuts Increase The Deficit

Now let’s take a look at the utterly fallacious view that tax cuts in general create higher deficits.

Let’s take a trip back in time, starting with the 1920s.  From Burton Folsom’s book, New Deal or Raw Deal?:

In 1921, President Harding asked the sixty-five-year-old [Andrew] Mellon to be secretary of the treasury; the national debt [resulting from WWI] had surpassed $20 billion and unemployment had reached 11.7 percent, one of the highest rates in U.S. history.  Harding invited Mellon to tinker with tax rates to encourage investment without incurring more debt. Mellon studied the problem carefully; his solution was what is today called “supply side economics,” the idea of cutting taxes to stimulate investment.  High income tax rates, Mellon argued, “inevitably put pressure upon the taxpayer to withdraw this capital from productive business and invest it in tax-exempt securities. . . . The result is that the sources of taxation are drying up, wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people” (page 128).

Mellon wrote, “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower taxes.”  And he compared the government setting tax rates on incomes to a businessman setting prices on products: “If a price is fixed too high, sales drop off and with them profits.”

And what happened?

“As secretary of the treasury, Mellon promoted, and Harding and Coolidge backed, a plan that eventually cut taxes on large incomes from 73 to 24 percent and on smaller incomes from 4 to 1/2 of 1 percent.  These tax cuts helped produce an outpouring of economic development – from air conditioning to refrigerators to zippers, Scotch tape to radios and talking movies.  Investors took more risks when they were allowed to keep more of their gains.  President Coolidge, during his six years in office, averaged only 3.3 percent unemployment and 1 percent inflation – the lowest misery index of any president in the twentieth century.

Furthermore, Mellon was also vindicated in his astonishing predictions that cutting taxes across the board would generate more revenue.  In the early 1920s, when the highest tax rate was 73 percent, the total income tax revenue to the U.S. government was a little over $700 million.  In 1928 and 1929, when the top tax rate was slashed to 25 and 24 percent, the total revenue topped the $1 billion mark.  Also remarkable, as Table 3 indicates, is that the burden of paying these taxes fell increasingly upon the wealthy” (page 129-130).

Now, that is incredible upon its face, but it becomes even more incredible when contrasted with FDR’s antibusiness and confiscatory tax policies, which both dramatically shrunk in terms of actual income tax revenues (from $1.096 billion in 1929 to $527 million in 1935), and dramatically shifted the tax burden to the backs of the poor by imposing huge new excise taxes (from $540 million in 1929 to $1.364 billion in 1935).  See Table 1 on page 125 of New Deal or Raw Deal for that information.

FDR both collected far less taxes from the rich, while imposing a far more onerous tax burden upon the poor.

It is simply a matter of empirical fact that tax cuts create increased revenue, and that those [Democrats] who have refused to pay attention to that fact have ended up reducing government revenues even as they increased the burdens on the poorest whom they falsely claim to help.

Let’s move on to John F. Kennedy, one of the most popular Democrat presidents ever.  Few realize that he was also a supply-side tax cutter.

Kennedy said:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

– John F. Kennedy, Nov. 20, 1962, president’s news conference


“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964

“In today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.”

– John F. Kennedy, Jan. 24, 1963, message to Congress on tax reduction and reform, House Doc. 43, 88th Congress, 1st Session.


“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

– John F. Kennedy, Sept. 18, 1963, radio and television address to the nation on tax-reduction bill

Which is to say that modern Democrats are essentially calling one of their greatest presidents a liar when they demonize tax cuts as a means of increasing government revenues.

So let’s move on to Ronald Reagan.  Reagan had two major tax cutting policies implemented: the Economic Recovery Tax Act (ERTA) of 1981, which was retroactive to 1981, and the Tax Reform Act of 1986.

Did Reagan’s tax cuts decrease federal revenues?  Hardly:

We find that 8 of the following 10 years there was a surplus of revenue from 1980, prior to the Reagan tax cuts.  And, following the Tax Reform Act of 1986, there was a MASSIVE INCREASE of revenue.

So Reagan’s tax cuts increased revenue.  But who paid the increased tax revenue?  The poor?  Opponents of the Reagan tax cuts argued that his policy was a giveaway to the rich (ever heard that one before?) because their tax payments would fall.  But that was exactly wrong.  In reality:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So Ronald Reagan a) collected more total revenue, b) collected more revenue from the rich, while c) reducing revenue collected by the bottom half of taxpayers, and d) generated an economic powerhouse that lasted – with only minor hiccups – for nearly three decades.  Pretty good achievement considering that his predecessor was forced to describe his own economy as a “malaise,” suffering due to a “crisis of confidence.” Pretty good considering that President Jimmy Carter responded to a reporter’s question as to what he would do about the problem of inflation by answering, “It would be misleading for me to tell any of you that there is a solution to it.”

Reagan whipped inflation.  Just as he whipped that malaise and that crisis of confidence.

This might explain why a Gallup poll showed that Ronald Reagan is regarded as our greatest president, while fellow tax-cutting great John F. Kennedy is tied for second with Abraham Lincoln.  Because, in proving Democrat policies are completely wrongheaded, he helped people.  Including poorer people who benefited from the strong economy he built with his tax policies.

Let’s move on to George Bush and the infamous (to Democrats) Bush tax cuts.  And let me quote none other than the New York Times:

Sharp Rise in Tax Revenue to Pare U.S. Deficit By EDMUND L. ANDREWS Published: July 13, 2005

WASHINGTON, July 12 – For the first time since President Bush took office, an unexpected leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion.

A Jump in Corporate Payments On Wednesday, White House officials plan to announce that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February.

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.

The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be “significantly less than $350 billion, perhaps below $325 billion.” The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well.

[Update, September 20: The above NY Times link was scrubbed; the same article, edited differently, appears here.]

Note the newspaper’s use of liberals favorite adjective: “unexpected.” They never expect Republican and conservative polices to work, but they always do if they’re given the chance.  They never expect Democrat and liberal policies to fail, but they always seem to fail every single time they’re tried.

For the record, President George Bush’s 2003 tax cuts:

raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.

These increases in tax revenue have substantially reduced the federal budget deficits. In 2004 the deficit was $413 billion, or 3.5% of gross domestic product. It narrowed to $318 billion in 2005, $248 billion in 2006 and $163 billion in 2007. That last figure is just 1.2% of GDP, which is half of the average of the past 50 years.

Lower tax rates have be so successful in spurring growth that the percentage of federal income taxes paid by the very wealthy has increased. According to the Treasury Department, the top 1% of income tax filers paid just 19% of income taxes in 1980 (when the top tax rate was 70%), and 36% in 2003, the year the Bush tax cuts took effect (when the top rate became 35%). The top 5% of income taxpayers went from 37% of taxes paid to 56%, and the top 10% from 49% to 68% of taxes paid. And the amount of taxes paid by those earning more than $1 million a year rose to $236 billion in 2005 from $132 billion in 2003, a 78% increase.

Budget deficits are not merely a matter of tax policy; it is a matter of tax policy AND spending policy.  Imagine you have a minimum wage job, but live within your means.  Then you get a job that pays a million dollars a year.  And you go a little nuts, buy a mansion, a yacht, a fancy car, and other assorted big ticket items such that you go into debt.  Are you really so asinine as to argue that you made more money when you earned minimum wage?  But that’s literally the Democrats’ argument when they criticize Reagan (who defeated the Soviet Union and won the Cold War in the aftermath of a recession he inherited from President Carter) and George Bush (who won the Iraq War after suffering the greatest attack on US soil in the midst of a recession he inherited from President Clinton).

[To read that article in its entirety, click here].

When Romney said that the small businesses that create jobs was going to be hurt by Obama’s taxes, he was RIGHT.  In a different article available here, I document the facts from official sources and then say:

Out of 27,281,452 total firms, 21,351,320 are listed as “nonemployer firms.”  Which means that 78.23 percent of all small businesses hire ZERO employees.   So when Obama says that 97% of small businesses won’t be affected by his tax hike, please understand that the whopping majority of those businesses that won’t be affected aren’t hiring anybody.  Another 3,617,764 small businesses have no more than four employees.  Those small businesses that hire zero workers plus those small businesses that hire no more than four workers constitute 91.5% of ALL small businesses.

Here’s a more relevant way to look at it.  When you consider the businesses that employ more than four people, you are looking at businesses that hire 94.97 percent of ALL the workers who work for small businesses.  And while not all of the small businesses that hire between 5-9 employees are going to be paying higher taxes as a result of Obama’s class warfare on small businesses, most of them do.  And virtually none of the businesses that hire more than ten employees are going to earn less than $250,000 a year.

Romney pointed out in the debate that half of all jobs created by small business and a quarter of ALL THE JOBS CREATED IN AMERICA would have their income taxes skyrocket under Barack Obama.

When Romney said that Obama’s taxation was going to destroy 700,000 small business jobs, he was RIGHT.

Which is why 85% of small businesses agree with Romney and disagree with Obama that Obama’s policies have led America down the wrong track.

Which is why 64% of small businesses are saying they plan to simply wait Obama out rather than create jobs while he’s trying to ruin them.

Obama deceitfully talks about giving tax cuts to small businesses when in fact he is actually massively taxing them.

Obama IS helping small businesses … into BANKRUPTCY.  And Obama says the recession is behind us while small businesses are going belly up in droves.

Romney absolutely crushed Obama in the debate last night.  Nobody had EVER won a debate by the margin that Romney won by in the history of CNN.  If you have any decency and care about people who need a job and love this country at all, please cast your vote for Mitt Romney.

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Note To The Party That Is Pathologically Incapable Of Comprehending Simple Reality: High Tax Rates ‘Failing To Boost Revenues’

February 24, 2012

Somewhere in heaven, Warren Harding and Andrew Mellon are laughing themselves into tears over how pathologically stupid liberals are. 

Keep in mind, for most of our nation’s history we didn’t even HAVE federal income taxes.  Harding and Mellon were the first pair to try lowering tax rates in the belief that rewarding success and investment would stimulate more success and investment – as opposed to the liberal thinking that if you just keep punishing the producers, they will surely produce more.  The bottom line is that Tax Cuts INCREASE Revenues; They Have ALWAYS Increased Revenues every single time we have ever done it.  And the bottom line is that every single time we have allowed liberals to try their Marxist class warfare punish the success of the rich meme, it has backfired.

The federalist papers called the states the laboratories for democracy; the idea was that the states under a relatively weak federal government could try different things; and to the degree those attempts worked or failed, people could vote with their feet.

The only thing that keeps democracy from working, in the federalist sense, is a federal government that usurps power.  Which is of course what we’ve got such that failing states get propped up while successful ones get undermined.

Still, look at what has happened in states like Maryland or New York or California and realize that high-tax liberalism has failed over and over again.  But Democrats are determined to remain stupid.

The quintessential example of this determination to remain pathologically stupid and to ignore reality whenever it gets in the way of liberalism is the infamous yacht tax that taxed the purchase of luxury items.  A central tenet of economic liberalism is that rich people are incapable of changing their behavior, such that Democrats can raise their taxes by a given percentage and thus obtain that same given percentage in higher revenue.  So they imposed a tax on luxury items such as yachts that only rich people tend to buy, figuring that they would thereby increase revenues and punish the rich at the same time.  But guess what happened?  Rich people quit buying those yachts; Democrats gutted entire industries.  And the only people were hurt were the small businesses that built and maintained yachts and other luxury items and the employees who worked in those industries who lost their jobs.

Democrats keep making the exact same mistake over and over and over again.

Democrats cannot learn; to put it in theological terms, they despise the truth and want to believe lies.  They are immune to reality.

And the states with the highest tax rates invariably also have the highest debts.  And high tax Europe – the model Obama is pursuing – is going down the drain.  Which add to further proofs that the economic policies of liberalism are the economic equivalent of a circular firing squad.

And liberals are pathologically stupid wherever you go:

50p tax rate ‘failing to boost revenues’
The amount of income tax paid fell sharply last month in the first formal indication that the new 50p higher rate is not raising the expected amount of revenue.
By Robert Winnett, and James Kirkup
10:58PM GMT 21 Feb 2012

The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.

Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.

The self-assessment returns from January, when most income tax is paid by the better-off, have been eagerly awaited by the Treasury and government ministers as they provide the first evidence of the success, or failure, of the 50p rate. It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1 billion.

Although the official statistics do not disclose how much money was paid at the 50p rate of tax, the figures indicate that it is falling short of the money the levy was expected to raise.

A Treasury source said the relatively poor revenues from self-assessment returns was partly down to highly-paid individuals arranging their affairs to avoid paying the 50p rate.

“It’s true that SA revenues are a bit disappointing — it’s still early, but it looks like there’s been quite a lot of forestalling and other manoeuvring to avoid the top rate,” said the source.
 
However, another Treasury source added that the tax deadline had been extended by two days because of industrial action at HM Revenue and Customs. Therefore, it was too early to begin assessing the revenues raised from the 50p rate of tax because about 20 per cent of self-assessment tax is paid in the hours before the deadline.
 
Francesca Lagerberg, head of tax at Grant Thornton, an accountancy firm, said: “My guess is that because the 50 per cent rate was flagged up in advance many taxpayers, particularly those with their own businesses, decided to extract dividends ahead of the change. It highlights the fact that high tax rates don’t always deliver high tax revenues.”
 
George Osborne, the Chancellor, is expected to receive a definitive analysis from the revenue on the 50p rate before next month’s Budget. The Liberal Democrats have insisted that it must stay because it is important to demonstrate that the rich are paying their fair share.
 
David Laws, a Lib Dem MP, has also suggested reducing tax relief on pensions for top earners.
 
The prospect of higher taxation on pensions comes as savers complain that low interest rates and quantitative easing have pushed down returns on savings and pensions.
 
Charlie Bean, the deputy governor of the Bank of England, last night insisted that those people should accept the pain as the price of restoring the wider economy to health.
 
The Confederation of British Industry, in its Budget submission today, urges ministers not introduce new levies on the rich, warning that the UK “will become a less attractive location for entrepreneurs and key employees”.

Wealthy people, confronted by excessively high tax rates, have several options: they can move, they can move their money somewhere else, they can hide or shelter their money.  In our system, they can also take advantage of so many loopholes that the IRS ends up playing a losing game of Whackamole.

Meanwhile, the very premise of liberals is also deeply flawed: even assuming that high taxes would raise more in revenue – which it factually does NOT do – you still have the dilemma that taking more money out of the private economy and putting more money into the pockets of government is counterproductive and frankly immoral.

Conservative principles lack in demagogic power.  They rule in actually WORKING.  As one example of that success, Texas created 38% of ALL the jobs created in America in 2010.

Hey Democrats, Why Is It That States With The Highest Tax Rates Have The Highest Debt???

December 21, 2011

I wrote an article entitled, “Tax Cuts Increase Revenues; They Have ALWAYS Increased Revenues” that documents the fact that, on every single occasion in which it has ever been tried, cutting income tax rates has increased federal tax revenues and resulted in a healthier economy.

Democrats stupidly won’t believe that.  Mostly because they are stupid people who are committed to stupid and depraved world views (such as Marxism).

A Newsmax article documents that what is true of the federal government and tax cutting also happens to be true of the states and tax cutting:

Abolish State Income Taxes
Tuesday, 20 Jul 2010 11:15 AM
By Richard Rahn

Did you know there are nine states that have no state income tax?

The non-income-tax states (see accompanying chart) are geographically and economically diverse, ranging from the state of Washington in the Pacific Northwest, to Texas and Florida in the South, and up to New Hampshire in the Northeast.

Why is it that some of the states with the biggest fiscal problems have the highest individual state income tax rates, such as New York and California, while some of the states with the least fiscal problems have no state income tax at all?

High-tax advocates will argue that the high-tax states provide much more and better state services, but the empirical evidence does not support the assertion.

On average, schools, health and safety, roads, etc. are no better in states with income taxes than those without income taxes. More importantly, the evidence is very strong that people are moving from high-tax states to lower-tax-rate states — the migration from California to Texas and from New York to Florida being prime examples. (Next year, the combined federal, state, and local income tax rate for a citizen of New York City will be well over 50 percent, as contrasted with approximately 38 percent for citizens of Texas and Florida.)

If the citizens of California and New York really thought they were getting their money’s worth for all of the extra state taxation, they would not be moving to low-tax states.

The obvious question then is, Where is all the extra money from these state income taxes going?

It is going primarily to service debt, and to pay for inflated salaries and employee benefits. It is interesting that the high-tax-rate states also, on average, have much higher per capita debt levels than states without income taxes. (Alaska is an outlier because it has its oil reserve to borrow against and actually gives its citizens a “dividend” each year.)

The biggest additional burden the high-tax states have is unionized government worker contracts. My Cato colleague Chris Edwards notes: “Half of all state and local spending — $1.1 trillion out of $2.2 trillion in 2008 — goes toward employee wages and benefits.”

His study showed that, on average, total hourly compensation for state and local government workers was 45 percent higher than for equivalent private-sector workers.

In addition, the government workers are rarely fired even those with poor job performance. Importantly, the differential was much greater in states where more than half of the state employees were unionized, and these were all in states with state income taxes, with the exception of Washington.

High rates of unionization of public employees and high rates of debt go hand in hand. Those states whose government workers are less than 40 percent unionized have median per capita state debt of $2,238, while those states where unionization rates are over 60 percent have a median per capita state debt of $6,380.

High rates of unionization tend to lead to excess staffing, unaffordable benefits, and pensions.

There have been a number of both empirical and theoretical studies showing the negative impacts of state income taxes and particularly those with high marginal rates on economic growth within the state.

A recent study published in the Cato Journal by professors Barry W. Poulson and Jules Gordon Kaplan, which was carefully controlled for the effects of regressivity, convergence, and regional influences in isolating the effect of taxes on economic growth in the states concluded: “Jurisdictions that imposed an income tax to generate a given level of revenue experienced lower rates of economic growth relative to jurisdictions that relied on alternative taxes to generate the same revenue.”

State Income Tax Rates and Debt (All Figures Percent)
States Income Tax State Debt as % of Income
Without Individual Income Tax
Tennessee 0 2.02
Texas 0 2.70
Nevada 0 4.07
Wyoming 0 4.90
Florida 0 5.20
Washington 0 7.93
South Dakota 0 10.95
New Hampshire 0 14.10
Alaska 0 24.01
Highest Individual Income Tax rates
Iowa 9.28 6.47
Maryland 9.23 7.26
California 10.55 7.55
Oregon 11.36 8.61
Hawaii 11.00 11.89
New Jersey 9.06 12.01
New York 10.67 12.22
Vermont 8.95 13.12
Rhode Island 9.9 20.04

The state of New York is a poster child for what not to do. At one time, it was the richest and most populous state. But at least going back to the Harriman and Rockefeller administrations decades ago, it decided it could tax and spend its way to prosperity. (Note: New York City residents face a maximum combined state and city income tax of over 12 percent, while those in many New York counties pay a little less than 9 percent, giving the state an average maximum tax rate of almost 11 percent.)

The results have been the opposite of what was promised.

New York’s relative population, economic growth, and per capita income have all declined, particularly in relation to those states without a state income tax.

In the past year, per-person taxes have increased by $419 in New York, far higher than any other state. (Note: They went up only $1 in Texas. Is New York or Texas now better off?)

Income taxes, as contrasted with consumption (i.e., sales) taxes and modest property tax rates, are far more costly to administer and do far more economic damage (by discouraging work, saving and investment) and are far more intrusive on individual liberty.

The states without state income taxes overall have had far better economic performance for most of the past several decades than have the income tax states — particularly those with high marginal taxes.

The Tea Party movement indicates that it might be the right time politically for politicians in the income tax states to call for those taxes to be phased out.

Good economics might actually be good politics this year.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

That table alone is worth a million bucks.  Notice how it documents the fact that liberal/Democrat economic policy is about as abject a failure as you can get.

What is also interesting is that the United States did not have a permanent federal income tax until 1913.  That, coincidentally, was the same year that Democrats also gave us the Federal Reserve with the promise that they would now be able to fix everything.  Like all of their promises, it was a giant lie.

Many founding fathers warned against a federal reserve system that Woodrow Wilson ultimately rammed down our national throats.  Here are the words of Thomas Jefferson in particular:

“If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” -Thomas Jefferson, The Debate Over The Recharter Of The Bank Bill, (1809).

For the factual record, the Federal Reserve, perversely named as it is, is in fact the very kind of “private bank” that Jefferson warned us about.  It’s fascism, but Democrats love fascism.  Fannie Mae and Freddie Mac are examples of other “government sponsored enterprises” devised by Democrats that give us the very, very worst of both government and private enterprise.

And this article directly relates that tax and the out of control Federal Reserve system with our present out of control debt.

Democrats have led the way in screwing up America for the last hundred years.  They were screwing it up in 1913 under Woodrow Wilson.  They were screwing it up again in the 1930s under FDR.  And now we are royally screwing it up under Obama.

And now we have no chance of lasting another hundred years because Democrats have loaded us up with debt that we can never hope to ever repay even as our debt continues to spiral even more out of control.

Proof That Republican Economic Policies Work Just FINE: Conservative-Friendly Texas Created 38% Of ALL U.S. Jobs In 2010

June 10, 2011

How’s THIS for a record to run for president on?

CNBC EXCERPTS: RICHARD FISHER, FEDERAL RESERVE BANK OF DALLAS PRESIDENT AND CEO ON CNBC’S “SQUAWK BOX” TODAY
Published: Tuesday, 7 Jun 2011 | 10:51 AM ET Text Size By: Jennifer Dauble

[….]

FISHER ON CREATING RULES:

“WE’VE GOT TO CREATE RULES AND REGULATIONS HERE THAT ATTRACT CAPITAL AS WELL AS DEAL WITH OUR UNFUNDED LIABILITIES OUR DEFICIT PROBLEMS AND SO ON, JUST AS TEXAS HAS MANAGED TO DO SO RELATIVE TO OTHER STATES IN THE UNITED STATES.”

[…]

FISHER ON TEXAS JOBS:

“SINCE THE RECOVERY BEGAN, 38 PERCENT OF ALL JOBS CREATED IN AMERICA HAVE BEEN CREATED IN TEXAS, AND TEXAS IS BACK UP, IN FACT MY 11TH FEDERAL RESERVE DISTRICT OF TEXAS, PARTS OF LOUISIANA, PARTS OF NEW MEXICO; OBVIOUSLY 96 PERCENT OF THAT PRODUCTION AND THE NUMBER OF PEOPLE ARE IN TEXAS OF MY DISTRICT- HAS MORE EMPLOYMENT NOW THAN IT HAD WHEN THE CRISIS BEGAN.”

Obama and the Democrats have relied on a demagogic narrative that Republican policies failed and Democrats offer “hopey changey” for the last three years of what is now an increasingly obviously failed presidency.  The fact that it couldn’t be more false doesn’t stop them from telling and retelling the liberal fairy tale over and over and over again to a wide-eyed mainstream media and anyone else fool enough to believe them.

The difference between California (liberal Democrat) and Texas (conservative Republican) are the difference between long dark hopeless night and bright sunny optimistic morning.  Take for example restaurant chain Carl’s Junior:

Carl’s Jr. chief downplays Texas talk
Written by Henry Dubroff
Wednesday, 02 February 2011

CKE Restaurants CEO Andy Puzder sees advantages in moving the company’s headquarters from Carpinteria to Texas, but a move is not imminent, he told The Business Times.

In a Feb. 2 telephone interview from Houston, where he is looking at the  company’s fast-growing Carl’s Jr. operation, Puzder said he paid a  visit to Texas Gov. Rick Perry earlier in the week and discussed the  company’s growth in the Lone Star State.

But he said that CKE, the parent company of Carl’s Jr. and Hardees,  won’t break its lease in Carpinteria or abandon the headquarters in the  near term. “We love California and we’d love to stay,” said Puzder. “Our  heart and soul is in California.”

But Puzder said that long delays in opening stores, California’s  byzantine rules on overtime pay and high personal income taxes could  make a move inevitable. “We feel more like we’re being pushed out,” he  said, adding that “economics may compel us to do so.”

CKE has been growing rapidly in Texas, where it now has 40 restaurants  and expects to have 300 by the end of the decade; in comparison, it has  700 stores in California. “The growth of this company is in Texas, and  the real big question for this company is, where are your restaurants  and where is the growth?” Puzder said.

Puzder also said that Californians leaving the state for jobs and  entrepreneurial opportunities in Texas are part of the reason for its  fast growth in that state. Carl’s Jr.’s brand familiarity is so high in  Texas that the two most recent store openings in the state, including a  unit in Houston, set records for revenue. “Jobs and consumers are in  Texas,” Puzder said. “Our customers beat us here.”

And, yes, CKE moved its operations to Texas.

And yes, a LOT of Californians have beaten them to the Lone Star State.  I showed previously the difference in cost between renting a truck to move from California to Texas versus moving from Texas to California.  At that time, it cost $900 to move from Texas to California, versus $3,000 to go the other way, because all the moving trucks were already in Texas.  That’s a 233 percent difference.

Which matches a national trend, as people are forced to move out of failed blue states to successful red states.

Thanks to the failure of liberalism.

Here’s some of the specific reasons why liberalism fails at job creation from another article:

Carl’s Jr. chewed up by California, Moving Corp HQ to Texas

[…]

Indeed, CKE Restaurants, parent of Carl’s Jr., is likely to move its headquarters from Carpinteria, near Ventura, to Texas and is undergoing a rapid expansion of restaurants in the Lone Star State. Right before the budget circus got going Wednesday, CKE CEO Andrew Puzder spoke at the California Chamber of Commerce, blocks from the Capitol dome. Like most of us, Puzder loves California and has no interest in leaving it, but he told harrowing tales about doing business in a state that has gone from an entrepreneurial heaven to a bureaucratic nightmare.

“It costs us $250,000 more to build one California restaurant than in Texas,” he said. “And once it is opened, we’re not allowed to run it.” This explains why Carl’s is opening 300 restaurants in Texas and only maintaining its presence in California. Texas has lower taxes than California, but the reason for the shift has more to do with regulation and with the attitude of the respective governments.

Puzder complained about the permitting process here, where it takes eight months to two years to open a new restaurant compared to an average of 1 1/2 months in Texas. In California, restaurants have to provide new curb cuts, new traffic lights, you name it. The company must endure so many requirements and must submit to so many inspections that it becomes excessively costly – and the bureaucrats are in charge of the project.

Once the restaurant is open, Puzder said, the store’s general managers are not allowed to run the business as if they own it. That’s the key to the company’s customer service approach – allowing general managers to do whatever it takes to make customers happy. But California’s inflexible, union-designed work rules, for instance, classify general managers as regular employees. They must be paid overtime for any work beyond an eight-hour day. They must take mandated breaks at specified times.

If a busload of customers comes to a store, these general managers must sit back and do nothing if they are on a break period. Most states have 40-hour workweek rules, meaning employees are paid overtime after exceeding 40 hours of work in a single week. In California it is based on the day, which limits the ability of managers to work, say, six hours one day and 10 hours the next day. Puzder complains about these industrial-era requirements that impede flexibility and harm customer service.

And California law encourages “private attorney general” lawsuits against private businesses over overtime and other regulatory rules, which has created a huge financial incentive for attorneys to file questionable legal actions against restaurants.

“It’s not like we have kids working in coal mines or women working in sweatshops,” Puzder said. It’s not as if his workers in other states, where these regulatory rules don’t exist, are oppressed, he added. “How does this help us instill entrepreneurial values?” He wonders how all these nonsensical rules teach people about being independent from the government rather than dependent on it.

I’d argue that the rules are designed specifically to impede private enterprise and to hobble entrepreneurship. After all, the unions, trial attorneys and liberal legislators writing these rules believe that government is the answer to most problems and that private industry is a cancer.

“People are just dying to get out there and make money,” Puzder said. “But California is setting a bar here. You can’t work smarter, harder, longer or better.” His company has had to fire hardworking store managers who insist on working longer hours than the state allows. He wants to tell these people, “Come to Texas, and we will hire you.”

The big debate at the Capitol has been whether to pass a budget with tax extensions. Gov. Jerry Brown and Democratic legislators believe the only thing wrong with California is that people here don’t give the state enough of their paychecks. They believe this state has too-few government workers and too little oversight of business.

Democrats offer us a government of the Weiners, by the Weiners and for the Weiners.  They want the Anthony Weiners of the world to have control over your health care, over your pension, over your life.  They want government’s finger in every pie.  They want more taxes, taking a bigger and bigger share of earnings, savings and profits.  They want more regulations.  They want to be able to say who receives and who pays, who wins and who loses, even who lives and who dies.

The Democrat Party and Barack Obama are failing America – to the extent they even want “America” at all.

When you think Democrat policies versus Republican policies, don’t consider Obama’s way overused and frankly demagogic “Republicans drove us into a ditch” analogy; just consider Republican states like Texas and Democrat states like California.  The conclusion couldn’t be more clear.

If Rich People Are Evil Like Obama Says, You’d Better Pray They Don’t Get Their Taxes Raised

April 26, 2011

Obama routinely demonizes rich.  He tells us they’re not good people, that they don’t care, that they don’t pay their fair share even though they pay MORE than their fair share when you consider the fact that nearly half of Americans pay no federal income tax at all.

There’s just one problem with Obama’s demagoguery.

If you think the rich are evil and greedy, then why do you not think that if they get their taxes raised, they won’t just pass those taxes onto you in the form of higher prices?

Here’s the thing about taxes on the rich: all the rich would have to pay them, and all the rich would have their taxes increased by the same percentage, and they would all have their taxes increased at the same time.

If you raise the taxes of the rich (who own and run all the businesses), you wouldn’t get everyone raising their prices right away, nor would they all raise their prices by the same amount.  But every single owner and chief executive is going to face the same increase of cost in doing business.  And over time – if there is anything in the universe called “equilibrium” – they will raise their prices for their products to compensate for that higher cost of doing business.

And given that the 2nd law of thermodynamics – which is ALL ABOUT a system’s tendency to reach equilibrium – is one of the best attested principles of science, I would argue that voting to raise taxes on the people who run the businesses is pretty much a 100% guarantee that you will be raising taxes on yourself via higher prices.

The only businesses that will suffer, and the only “rich people” who will lose their “riches,” will be the smaller small businesses who don’t have the resources to last through the transition period which will ultimately end with the customers paying the higher prices and thus the higher taxes.  Businesses will pass their higher taxes onto the consumers who buy their products.

Think of automotive tires.  Let’s say you increase the taxes of every single tire producer and dealer by 10%.  Do you seriously not think that, over time, you won’t end up paying the lion’s share of that 10% increase in higher prices for tires?  And it frankly doesn’t matter what product or service we’re talking about.  If you want the lowest prices, keep taxes down and the government off the backs of the producers, distributors and sellers, and allow them to have a fair fight with each other to compete for your business.

Think I’m wrong?  Keep reading.

There’s this other little fact that the leftist demagogues never bother to pay attention to: lower tax rates on the rich actually invariably result in the rich paying a higher percentage of all taxes paid:

In 1980, the top 1 percent of earners paid 19 percent of income taxes, and the bottom half of earners paid 7.1 percent. A decade later, with a lower maximum rate, the top 1 percent paid 25 percent of taxes, while the bottom earners paid just 5.8 percent. By 2008, top earners paid 38 percent of taxes, the bottom half 2.7 percent.

Put another way, when you examine the Treasury Department data in lieu of the Bush tax cuts:

The rich are now paying more than they would have paid, not less, after the Bush investment tax cuts. For example, the Treasury’s estimate was that the top 1 percent of earners would pay 31 percent of taxes if the Bush cuts did not go into effect; with the cuts, they actually paid 37 per­cent. Similarly, the share of the top 10 percent of earners was estimated at 63 percent without the cuts; they actually paid 68 percent.

Which is to say that if I really hated people who weren’t rich, I would show my hate by raising the tax rates of the rich.

It’s a Charlie Brown thing.  As long as that bald fool keeps thinking he’s going to kick the football with Lucy holding it, he’s going to keep ending up flat on his back in pain.

In a war, in a game of strategy, or in many sports, the very best and most ruthless way to win is to make your opponent think that if he does X he will gain an advantage.  But the moment he does X, you seize the advantage and destroy him.  And as long as the poorer classes keep falling for this Marxist demagogic class warfare trick, they’re going to keep screwing themselves.

There are a number of reasons for why keeping low tax rates for the rich results in their paying a higher percentage of taxes paid.  Most basically, if you allow the rich to keep more of their profits, they will invest more and take more risks.  And the result is more opportunity and more jobs for all.  If you demagogue the rich and try to seize more of their profits, they will shelter their money and act in ways that hurt the overall economy and most definitely hurt the poor.

That is the short of a much longer article I wrote entitled, “Tax Cuts Increase Revenues; They Have ALWAYS Increased Revenues.”  And there’s only about a hundred years worth of data (which you will see in the article) that proves the basic statement of that article is true.

So, if you allow Barack Obama to be your Lucy and trick you into trying to kick the rich, all you’re going to end up doing is hurting yourself and hurting the economy.  You’re going to end up flat on your back just like Charlie Brown, and Obama as Lucy will keep playing the same trick on you over and over again.

Rush Limbaugh Predicted LeBron James Would Sign With Miami Because He’s Not An Idiot Liberal

July 9, 2010

Here’s Rush Limbaugh on July 1 predicting LeBron James would sign with Miami and explaining why he would do so:

RUSH: If things are on schedule, representatives of the New York Knicks are meeting with LeBron James who today becomes a free agent in the National Basketball Association.  Now, many of you are saying, “Oh, come on, Rush, stick to the issues.  Football’s bad enough, golf’s even worse, now, we gotta talk NBA?”  No, we’re not talking NBA.  The New York Knicks and the New Jersey Nets both want LeBron James.  The Cleveland Cavaliers want him to stay in Cleveland, of course.  Here’s the decision LeBron James has to make, and let’s just use his current contract.  His contract just expired, was five years, $96 million.  If LeBron James had earned that money in New York he would have had to pay an additional $12.34 million in state and city income taxes than, say, if he played in Miami or for the Dallas Mavericks or wherever there is no state income tax.  So here you have these poor schlubs that run Madison Square Garden that own the Knicks and they’re going to try to persuade LeBron James to move to New York to play for the Knicks and they gotta tell him, “By the way, you’re going to pay about 12 to 15, maybe $20 million more in taxes in New York than you would if you –” they won’t tell him but his agent will.

Now, I have a question for all of you do-gooders out there, what should LeBron James do?  Should LeBron James decide to play for the Knicks and pay the additional taxes to show his compassion and to show he’s willing to give something back, which is what we demand of our athletes, or should he not sign with the New York Knicks or the Nets, sign with the Miami Heat and pocket and use the additional money for his own economic stimulus? What would you do if you were LeBron James and somebody was going to offer you in excess — remember, his old deal is $96 million over five years.  Let’s just make it up.  Let’s say somebody’s going to pay him $140 million over five years.  I don’t know what it’s going to be, but let’s say that new number is gonna — and, you know, taxes are going up next year, federal taxes going up, New York taxes are going up, if he goes to play for the Lakers, it’s the same kind of situation. I don’t think the Lakers are in the running, but regardless, what would you do?

Now, I’m going to make a prediction. (interruption) What, Snerdley, what, what?  Yeah, okay.  Snerdley says you are making my prediction come true even before I make it.  Snerdley said, “Well, there’s more to New York than just the taxes. New York versus Miami?  Come on.  Yeah, I’ve made that call, and where am I?”  In fact, for a guy like LeBron Miami is more — I mean you got South Beach down there, you got Dwyane Wade down there playing for the Heat.  Here’s my point.  A lot of you are probably saying, “I would go to the team that I really wanted to play for regardless the extra taxes because even at $140 million, even if I have to pay an additional 15 or $20 million, look at what I will have left over.”  I know a lot of people will say that.  Until you earn it, and then you will totally change your mind about it.  But my question to you is, is LeBron James, if he chooses to play for the Miami Heat or the Mavericks, I don’t know if they’re in the running — let’s say if he chooses a team with no state income tax, and saves 12 to $20 million dollars a year in taxes, is he being smart, is he being selfish, is he not being a good citizen?  What is he?

You want to keep LeBron James or, say, that company that hires lots of workers, or those rich people whose property taxes benefit the community?  LOWER TAXES.

Smart people avoid high taxes.  They leave those for STUPID people to pay.

That’s something Democrats will just never get.  They foolishly keep thinking that raising taxes won’t change people’s behavior.  And they keep thinking wrong.

If you want less of something, tax it.

Unfortunately, the state of Ohio decided it wanted less LeBron James.

By the same measure, Democrats want fewer businesses, fewer jobs, less economic growth, and less productivity.  It’s as simple as that.

There’s another entirely unrelated political nexus here, with LeBron James and Barack Obama sharing a common arrogance that sounds good but means nothing.

First, LeBron, whose rather recent remark (during the NBA playoffs) sounds pretty pathetic in light of last night’s news that he’s abandoning Cleveland:

BOSTON — LeBron James is bowed and bruised but not beaten. Asked why the Cavaliers fans should still believe, King James said yesterday after practice, “Because they got me.”

If I were a Cavalier fan I’d be pissed at “King” James.  Arrogantly talk crap.  Then lose.  Then walk away.

Now Barack:

Rep. Marion Berry, D-Ark., fears that these midterm elections are going to go the way of the 1994 midterms, when Democrats lost control of the House after a failed health care reform effort.

But, Berry told the Arkansas Democrat Gazette, the White House does not share his concerns.

“They just don’t seem to give it any credibility at all,” Berry said. “They just kept telling us how good it was going to be. The president himself, when that was brought up in one group, said, ‘Well, the big difference here and in ’94 was you’ve got me.’ We’re going to see how much difference that makes now.”

Ah, yes, another bogus promise for idiot liberals to believe.

I don’t see things going any better for Democrats with their arrogant “messiah” than they just went for the Cleveland Cavaliers with their arrogant “king.”

Rather Than Border Security, Obama Administration Demands Fair Wages For Illegal Immigrants, And Ergo Still More Illegal Immigrants

June 21, 2010

We can put two data points together to arrive at a rather obvious conclusion:

Data point 1: Obama is holding border security hostage to his obtaining his socialist-open-borders-amnesty-for-illegals-perennial-Democrat-voting-base agenda.

Data point 2: the Obama administration demands “fair wages” for undocumented illegal immigrants. As for data point 2, here’s the latest word from Team Obama:

Sec. of Labor, Hilda Solis: “Every worker in America has the right to be paid fairly, whether documented or not.”

Can’t believe that such naked “workers of the world, unite!” Marxism would come out of the mouth of an Obama cabinet member???

Here’s the video.

It shouldn’t be that surprising that she would advocate Marxist “solutions,” considering her long history connecting her to both socialism and communism (and see also here).

Mind you, that policy flies in the face of what Obama’s embrace of illegal immigration is having on the US economy and the burden on American (by which I mean actual, documented American) taxpayers:

“Costs on average for every illegal alien headed household about $19,600 more if they consume the city services than they pay in taxes, so the rest of the taxpayers have to part costs. Schools become overcrowded, English as second language programs push out other programs.”

It doesn’t matter that these “undocumented” immigrants are a burden to their own damn countries.  And therefore obviously a burden to ours.  After all, we liberals don’t give a damn about our country, because “we’re citizens of the world,” so why should we care if they’re a burden to America or not???

Should the United States government be working to protect our borders from what can only be described as an invasion even in literal, military terms, or should it be working toward guaranteeing high wages for illegal immigrants – which can only have the impact of attracting more illegal immigrants?  If you’re a Marxist like Hilda Solis and like Barry Hussein, it’s not even close.

Oh, well.  God damn America, anyway.  Certainly, God damn the American taxpayers.  And God damn America’s borders and America’s security, while we’re at it.

Now, as to data points 1 and 2, and the rather obvious conclusion, Obama says Jon Kyle is a liar for reporting what the Liar-in-Chief said to him.  But then you run into data point 2.  And you see how they line up so cozily together.  And you know who’s lying and who’s telling the truth.

Not only does the Obama administration have no intention whatsoever to do anything about border security or reducing the number of illegal immigrants, but he wants to impose more policies to INCREASE the number of illegal immigrants.  The more the merrier.  At least until the Merry-go-round collapses.

How about this instead: “Every illegal immigrant in America has the right to a good hard boot in the butt out of our country, whether amoral liberals want to demagogue them as a racist partisan issue or not.”  Do you notice how much better that one sounds?

Notice I’m laying aside the naked chutzpah of a woman who doesn’t bother to pay her damn taxes giving me a lecture about paying anything.  Oops.  I let that cat out of the bag, didn’t I???