Filed under: Capitalism, Economy, Europe, Humor, Taxes | Tags: Tax the Rich, The Rich Have Choices, The Rich Move Elsewhere
This year France elected a new socialist president, Francois Hollande, who immediately announced his intention to undo whatever Sarkozy and Merkel dreamed up. He also announced an intention to raise taxes on millionaires, as he seeks to cut France’s public deficit to 3 percent of gross domestic product next year from a projected 4.5 percent deficit this year. Mon Dieu! But this sounds somehow somewhat familiar.
Ooops! President Francois Hollande’s 75% tax rate on the rich, France’s top court just ruled is unconstitutional. The tax was a focal point of discontent among entrepreneurs and wealth creators, many of whom have moved to Britain or other more friendly climes. Noted French actor Gerard Depardieu moved across the border to Belgium.
Politically, this has an impact because it was a symbol for French public opinion, and was considered abroad as the emblem of French tax excess, of “French tax hell,” said Dominique Barbet, senior economist at BNP Paribas SA in Paris. “In deficit terms, it’s truly negligible.
The decision could be positive for France’s bond market because it show there is a limit to the government’s ability to raise taxes on the wealthy and may decrease the flight risk of more rich French citizens.
Hollande’s 2013 budget relies on 20 billion euros in additional taxes: 10 billion euros from companies and 10 billion euros from individuals. There were also new taxes on capital gains, an increased tax on wealth, higher inheritance taxes and an exit tax for entrepreneurs who sell their companies. There is also a new 45% tax bracket for incomes exceeding 150,000 euros per year.
The Laffer Curve applies in France as well as here. The taxes would not bring in the amount expected. But the whole thing does sound familiar.
Filed under: Capitalism, Democrat Corruption, Domestic Policy, Economy, Statism, Taxes | Tags: Biggest Government Spender, More Stimulus, Tax the Rich
President Obama on Wednesday announced that any budget deal must include $1.6 trillion from higher taxes. “When it comes to the top 2%, what I’m not going to do is extend further a tax cut for folks who don’t need it.” He argued that we are never going to get anywhere near balancing the budget without more revenue from people earning above $250,000 a year.
Economist Stephen Moore points out that “the country needs an economy that will create more of the ‘millionaires and billionaires’ that Mr. Obama loves to excoriate, not more taxes from those who already exist.”
Mr. Obama also said Wednesday that “The math tends not to work.” Closing tax loopholes wouldn’t provide enough revenue for a budget deal. Thus, tax rates must go up immediately for those making more than $250,00 a year, even if this means sending the economy over the January 2013 tax cliff. He’s betting that the Republicans will blink.
Obama’s latest line that any budget deal must raise taxes by $1.6 trillion, which is $800 trillion more than he had agreed to with Speaker Boehner last year. Stocks promptly took another dive on the President’s remarks. The Dow fell 185 points, and is now down 5% since Mr. Obama’s re-election. The President is playing political chicken.
Democrats in the Senate have announced that there will be no deal without another stimulus. Previous attempts to “stimulate” the economy have worked so well that one cannot imagine what they’re thinking, but it must be something along the lines of “this time it will be different.”
The President is skilled at campaigning, if you favor Chicago-style campaigning. And is the Biggest Government Spender in world history. Obama’s first major legislative initiative was the so-called stimulus, which increased future federal spending by nearly a trillion dollars, the most expensive legislation in history up till that point. “You don’t promote economic recovery, growth and prosperity by borrowing a trillion dollars out of the economy in order to spend a trillion dollars back into it,” explains Peter Ferrara.
After only his first year, Obama’s spending binge had climbed to 25.2% of GDP — the highest in history except for World War II. The average during President Clinton’s two terms was 19.7, during Bush’s two terms it was 19.6%, and during the 60+ years from World War II until 2008 — 19.7%. Obama’s 2013 budget shows federal spending increasing from $2.938 trillion in 2008 to an all time record $3.796 trillion, an increase of 27.3%.
President Obama is a Big Government Spender. His ideas are concerned with what government should do which revolve around ever more government control of the entire economy. More spending, more regulation, more control. He has told us innumerable times that “government service” is the important job in the economy. He does not like business, has no respect for business, and disapproves of profit.
The President wants higher taxes and higher federal spending to “spread the wealth around.” He believes that would make the economy grow faster as the middle class and the poor spend the money “the rich” were wasting in savings and investment.
In a market economy, if consumer demand is insufficient to clear the market, the price of the good or service will fall until demand equals supply. President Obama’s concept of raiding the savings and investment of “the rich” to spread the wealth around and thus increase spending and consumption is exactly backwards. If those who make the sacrifice to save and to take the risk of investing find that the government is going to seize their savings and investment when they are successful reduce their savings and investment and take their money elsewhere where it will not be confiscated.
Many economists are predicting a new recession, double digit unemployment, collapsing real wages and incomes and new poverty records due to Obama’s policy intransigence. Increases in the top tax rates of nearly every major federal tax are already enacted and will go into effect on January 1. That will be on top of the highest corporate tax rate in the world, the end of the temporary payroll tax cut, and the end of the Bush tax cuts. It’s not going to be pretty.
Barack Obama doesn’t understand economics, and he refuses to listen to those who do.
Filed under: Capitalism, Domestic Policy, Economy, Freedom, Politics, Taxes | Tags: Redistribution of Income, Tax the Rich, The Laffer Curve
There’s a lot about economics that is counterintuitive, and for the most part, liberals just don’t understand that. More than that, they deliberately reject the idea when it is explained. Perhaps it’s just not in their DNA.
For example: the minimum wage, which is meant to be the bottom limit for beginning workers, and is meant to protect innocents from exploitation. For liberals, it’s not enough pay for a poor person and his family. But the minimum wage is not directed to a worker and his family. By the time someone has a family to support, they can be assumed to have worked.
True beginners aren’t worth very much. They don’t know how to sweep the floor, how to answer the telephone, how to speak to customers, and how to follow the rules of the business. The manager is going to have to teach them all these things before they can be turned loose to do them properly on their own. All workers are a cost to business, but at a certain level of productivity, their work pays for their cost and makes money for the employer. Most minimum wage employees get a raise within the first six months. When they become useful, their reward grows. When government raises the minimum wage, it increasingly eliminates job openings for beginners, depending on how high the minimum wage becomes. There is a reason why there are ATM machines, and more and more stores have self-checkout machines.
If you raise taxes, you get more revenue, right? Liberals hate the Laffer Curve because it directly attacks a cherished belief. Raising taxes has always been their solution to their constant need for more revenue to support Big Government. If they were to give up on the idea that they cannot constantly raise taxes, they would have to give up on the idea that they can constantly increase the size of government. They would become Republicans.
From June 2009 to September 2012, America gained some 2.59 million jobs. That weak recovery was what Obama bragged about. But nearly all of the job creation occurred in right-to work states, states in which no industry can force a worker to join a union in order to work. There are 22 right-to-work states, and those states were responsible for 72% of all net household job growth. But don’t unions get better pay for their workers? Many workers don’t believe that it matters.
Peter Ferrara wrote in Forbes on Friday that:
If those who make the sacrifice to save and take the risk of investing find that the government is only going to seize their savings and investment when they are successful, they will soon sharply reduce their savings and investment, at least here in America. That will only hurt the middle class and the poor the most, as they lose the jobs and rising wages and incomes essential to their own personal prosperity.
But that is all only going to get much worse in Obama’s second term, as his policies produce renewed recession, double digit unemployment, collapsing real wages and incomes, and new poverty records.
In a market economy, consumer demand can never be inadequate for the economy to grow and prosper. If demand is not sufficient to clear the market for any good or service, the price of the good or service will fall until demand equals supply.
Filed under: Capitalism, Economy, Freedom, Taxes | Tags: No Balanced Budget, No Cuts in Spending, Tax the Rich
President Obama is opposed to a balanced budget. He is against the Cut, Cap, and Balance Act , and he is against the Balanced Budget Amendment to the Constitution. He said it’s not needed for Congress and the President to balance the budget. He made that clear in his press conference today.
It is interesting that the President has finally become interested in the budget and the debt-ceiling. His $3.7 trillion budget for FY 2012 was dead on arrival in Congress. The Senate (Democrat controlled) voted 97-0 to reject the President’s budget. It contained 43 tax hikes. The President will probably continue to call a press conference after every meeting with Republicans so that he can emphasize the need to raise taxes, particularly on “the rich” and corporations.
Let’s just say that the President is in full-time attack mode, and he is a fierce competitor. I suspect that he equates leadership and governing with spending on his favored proposals. He is trying to blame Congress for any excess spending, and surely Nancy Pelosi and her backroom tactics have a lot to answer for — including the second Bush term.
But it was the President’s stimulus, the President’s ObamaCare, the President’s takeover of the auto industry and the President’s attempt to shut down the fossil fuel industry. President Barack Obama was responsible for more spending than any other president in history, and in fact, responsible for more spending than all the presidents put together.
Eighty percent of the American people, he says, want their taxes raised. He phrased it a little differently, but that’s what he meant. They want him to have more revenue. And as far as spending cuts are concerned, health care is off the table, and regulation is off the table, and his policies are off the table, but he’d be willing to slash defense some more.
The Left abuses the language so much that people often do not understand the real facts. They said Bush’s “tax-cuts for the rich” so often that many believe that most of the Bush tax cuts went to the very rich. Not true. 77 percent of the tax cuts went to the middle class, and the bottom 50 percent were relieved of the necessity of paying any income tax at all.
The OECD (the Organization for Economic Co-Operation and Development) points out that the United States has the most progressive tax system in the world. Of the richest 10% in every industrialized country in the world, the US has the highest percentage tax rate on personal income and payroll taxes. And the U.S. corporate tax rate is the second highest in the industrialized world. Obama claims that we have the lowest rate of taxes since the 1920s. I suppose he’s trying to suggest that it was too low taxes that brought on the Great Depression to which he always wants to compare the Obama Recession. He’s more than a little weak on history.
When the President talked about raising taxes as part of “shared sacrifice” he said:
And I do not want, and I will not accept, a deal in which I am asked to do nothing, in fact, I’m able to keep hundreds of thousands of dollars in additional income that I don’t need, while a parent out there who is struggling to figure out how to send their kid to college suddenly finds that they’ve got a couple thousand dollars less in grants or student loans.
In other words, the money that you don’t “need” belongs to the government. What does he think that the rich do with the income they don’t “need?” They invest it. That’s where “capital” comes from. He’s willing to pay a little more in taxes so that seniors still have Medicare and kids still have Head Start.
Nobody is proposing to deprive any seniors of Medicare — except the President. Even the plans for reforming Medicare are careful to protect the benefits of current Medicare recipients, and all over 55 years of age. This is why the President has remained uninterested in budget talks until just the last couple of weeks. He appointed a budget commission, and refused to consider their careful study. He did not submit a balanced budget to Congress. It is becoming apparent that he must be forced to balance the budget and cap spending.
He’d rather demagogue.
Filed under: Capitalism, Democrat Corruption, Economy, Politics, Taxes | Tags: Ignore Human Nature, Tax the Rich, The Progressive People's Budget
The Progressive People’s Budget from the Progressive Caucus in Congress—76 of the most partisan Democrats in the House, responds directly to Paul Ryan’s “Path to Prosperity”, in just the way you would expect. They want to increase taxes.
First they want to raise the Social Security tax to cover nearly all of a taxpayer’s income. At present the tax is imposed on the first $106,000 of earnings. The caucus would tax a full 90% of income, no matter how high it goes. They would raise the Social Security Tax that employers pay as well. Then they would create three new individual brackets for the highest incomes with the top at 47%. They would raise the capital gains tax, the estate tax, and the corporate tax. And of course, repeal all the Bush tax cuts.
Spending savings would come in the form of cuts for national defense. They would end “overseas contingency operations” — Afghanistan and Iraq— beginning in 2013. Then they would “reduce strategic capabilities, conventional forces, procurement, and research & development programs.” In other words in an increasingly dangerous world they would gut America’s ability to defend itself not only today, but far into the future.
The “People’s Budget” amounts to — a new stimulus plan. I told you. If it didn’t work, it’s only because they didn’t invest enough money. Progressives priorities never change. $1.4 trillion for job creation, early childhood K-12 and special education, quality child care, energy and broadband infrastructure, housing, and research and development with some roads and trains thrown in. That will fix everything, won’t it?
We are $14,500,000,000,000 in debt.
This year’s deficit is $1,700,000,000,000.
Obama has already spent $1,000,000,000,000
to stimulate the economy.
We don’t have a revenue problem,
we have a spending problem.
We have tried high tax rates before. It seems as if when you raise taxes, it should bring in lots more revenue. It seems as if it would do no harm to the economy. It assumes that interest rates would stay the same. From 1951 to 1963, the lowest tax rate was 20% to 22% and the highest ranged from 91%-92%. The top capital gains tax rate was 39.6%. Individual income taxes have been a constant percentage of GDP regardless of how high rates on salaries are.
When the tax on capital gains is high, it brings in less revenue. When the tax is low, it brings in more. When the tax is high, people hold on to their gains. When the tax is low, they are more willing to realize their gains. There are always consequences. When you raise taxes on corporations, many pack up and move overseas. The only reliable way, according to economist Alan Reynolds, to raise real federal revenues over time is to raise real GDP.