Archive for the 'Tax Policy' Category

The Solyndra Connection

Incompetence is one thing. Solyndra was criminal.

Ok, so Obama was his normal incompetent self when he lent $529 million in taxpayer funds to a struggling solar manufacturing plant which then went bankrupt. What’s the big deal? I mean besides the fact that he is asking for another $447 billion after admitting that with all the stimulus cash in the last bill he still failed to fix 152 structurally unsound bridges that Americans are driving on every day.

Except, wait, what’s this? The Obama administration specifically restructured the loan agreement so that if Solyndra went under and liquidated the investors would get their money back first. Read that again.

So unlike Chrysler, where the chicago boss stole the company from the bondholders and gave the liquidated funds to the unions, here Obama specifically determined that after giving $529 million in taxpayer funds to Solyndra, if Solyndra went under the owners of the company would get their money back before taxpayers got our money back. Congratulations, You have been officially robbed by the President.

So why would Obama do that? He didn’t care about the Chrysler bond holders who legally should have had first rights to those liquidated funds. What is so different about the Solyndra owners? Here is where this story goes from incompetent theft to 1st degree theft.

One of the two companies who is going to get paid back before taxpayers is Argonaut Ventures I, LLC, the investment firm for billionaire George Kaiser. Kaiser raised between $50,000 and $100,000 for Obama in 2008 and continues to raise significant campaign cash for him now.

Follow the money.

Barack Obama takes $529 million of our money and sinks it in a failing solar panel company. Obama changes the terms of the loan so that when the company goes under, whatever is left goes to the investors instead of back to the taxpayers. The investors donate a kickback of up to $100,000 to Obama’s campaign, that ends up being funded with our tax dollars.

Remember Tom DeLay? DeLay was accused of taking corporate donations of $190,000 to the national Republican party and finding ways of funneling them to the Texas state party, where corporate donations are illegal. DeLay’s sentence was three years in jail (currently being appealed). DeLay took donations willfully given to the GOP and redirected them to the state party. Obama took $529,000,000 of our tax dollars, laundered them through Solyndra, and now is receiving them back into his own campaign coffers through donations from George Kaiser. If DeLay got 3 years, how much time should Obama serve?

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Don’t Blink

This Saturday morning, July 23rd, the Senate was originally scheduled to vote on Cut, Cap and Balance, the Republican plan to cut $111 billion out of this year’s deficit, trim $4 trillion over ten years, and present a balanced budget amendment to the states.  Instead, Harry Reid moved the vote up to Friday morning, calling it a waste of time and the worst piece of legislation to ever come to the Senate floor.  It failed to pass on strict partisan lines.

Senator Schumer called the bill “Cut, Cap and Kill” because he insisted that the bill would kill Medicare.  Debbie Wasserman-Schultz declared in the House of Representatives that the bill would kill seniors and that it was the Paul Ryan plan on steroids.   The only problem is that in three different places Cut, Cap and Balance specifically exempted Medicare and Social Security from cuts and caps.  Had Republicans known, some of them might have been a little bit more up in arms about the bill.  It was actually a very good compromise.  It cut and cap wasteful spending on liberal social programs and government bureaucracy, not hot buttons like military, Social Security and Medicare.

Perhaps that is a more reasonable explanation of why Harry Reid went back on his promise to allow debate on Cut, Cap and Balance and instead moved the vote up.  Perhaps someone in the Senate actually read the bill and told Reid what was in it.  And then, as if scripted, suddenly news outlets started declaring a deal between Boehner and Obama that was so close Reid needed to get this bill off the floor and stop “wasting time” on it.  The only problem is there was no such deal.  Somebody was lying to provide the sense of urgency needed to cut off debate on Cut, Cap and Balance before it got out that Democrats were lying about it killing Medicare.

This has become the name of the game in budget talks.  Neither side is willing to give in because both sides know that 2012 elections hang in the balance.  The difference is that Republicans have actually gone so far as to write a good compromise bill.  Democrats can’t vote yes on it, not because it “kills Medicare” or kills seniors.  They can’t vote on it because passing Cut, Cap and Balance would destroy Democrat re-election hopes for 2012.  It would be a huge Republican victory because Republicans came up with it.

On the other hand, Democrats can’t write a plan of their own.  They haven’t submitted a budget in over 800 days, and they can’t submit one now or that will also destroy their chances of getting re-elected in 2012.  Democrats can’t write a bill that says “We want to raise taxes so that we don’t have to cut spending as much” and still win in 2012 because the vast majority of the country doesn’t want Democrats to raise taxes so that they can spend more.  They are spending enough already, and we are taxed enough already.  On the other hand, Democrats can’t write a plan saying “Ok, no higher taxes, just cuts” or they will lose their class warfare base.  The liberal base of the Democrat party does not want a bill that doesn’t raise taxes on the “rich”.  It’s not about raising revenue, it’s about punishing upper classes more.

Republicans submitted a plan and it was a good plan.  Obama has signaled that he is willing to let the country default on its debt rather than compromise with Republicans.  Democrats have proven that they are the party of no on a budget deal.  If Republicans end up caving in order to save our credit rating, I hope Americans get the right message.  It doesn’t mean Republicans are wimps and we need to get rid of them.  It means they can only do so much with just a majority in the House.  We need to give them the Senate and the Presidency in 2012 if we expect anything to get accomplished.

The Abortion Deduction

In four hours the government shuts down.  Republicans refused to fund abortion both directly in DC and indirectly at Planned Parenthoods across the country.  The result is that after failing to pass a budget in 2010 when Democrats controlled both houses and the Presidency, after failing to even consider HR 1, and after refusing the latest stop gap, Democrats are going to let the government shut down.  Apparently abortion funding is something Democrats won’t compromise on.

But that actually isn’t what this blog is about.  It is about a different abortion bill.  While Obamacare canceled the ability to use HSAs and Flex plans to buy over the counter drugs, and raises the AGI floor for medical deductions from 7.5% to 10%, abortions are still considered medical expenses.

In fact, cosmetic procedures, health club dues, quit smoking programs, non-prescription drugs, weight loss programs, vitamins, acne treatments, and even specially designed cars for the handicapped are non-deductible medical expenses.  But abortion is deductible for taxes.

Republicans are currently working on passing a bill that will add abortion to other non-deductible medical expenses except in the case of rape, incest, or danger to the mother’s life, but Democrats are expected to kill the bill.

That is the country we live in.  You can kill an unborn baby on demand, and then deduct the cost from your taxes.

Back to being just President

It’s amazing to me that after shrugging of Republican fears of anti-constitutional judicial activism, now Democrats are crying judicial activism after the voiding of Obamacare by a Pensacola judge.  Judge Roger Vinson agreed with 26 states that the Federal government does not have the right to force citizens to buy certain products from private corporations.

He is right.  Where in the constitution does it even suggest that the government can force people to buy things?  And this is for a very good reason.  After all, if the government could mandate that you buy certain products from private industries, then those in power could maintain their power by picking winners and losers through legislation.

For a good example, you don’t need to look any further than the Obama administration’s handling of the bailouts.  They violated the constitution when they took Chrysler and GM from the bond and stock holders and handed them over to the unions.  Imagine what they could do if the judiciary upheld a law stating that they could order citizens to purchase goods from private companies.

What would happen is that we would all eventually be fit into the government mold of a model citizen.  If the government could tell you what foods you could eat, or what car you could drive, don’t you think they would?

Actually, they already do through our tax system.  You get tax breaks if you buy a home, go to school, buy energy efficient improvements or cars, give to charity, or do so many other government approved activities.

For once, a judge is saying no and is upholding the constitution.  President Obama must be mystified that a court would actually act as a check and balance against his power.  For years the judiciary was the vehicle of social changes that the legislature could not pass if they hoped to be re-elected.  Whether it was deciding that women have the constitutional right to privacy when depriving their unborn of the constitutional right to life or almost any decision by the 9th circuit, the courts have not been the last line of defense for constitutionalism that they were designed to be.  This time, the system worked.

Fresh into Obama’s presidency, he chose to stop enforcing federal drug laws in medical marijuana states.  He so poorly enforced immigration laws that states resorted to writing their own immigration laws, which he then sued them for.  Obama chose to drop the voter intimidation case against the black panthers even after the justice department had won the case.  He violated the constitution with a moratorium on oil drilling in the gulf.  When a judge struck it down, he turned around and issued a new moratorium.

With everything going on in Egypt, if anyone should be respecting the will of the people and our democratic rule of law, it should be President Obama.  Our constitutional system of freedom, elections, and a government of checks and balances is what prevents Presidents from becoming tyrants, and citizens from becoming revolutionaries on days other than the first Tuesday in November.

Sofar, the administration is appealing and ignoring the ruling.  But if Vinson’s ruling stands, Obama will need to make a decision.  Will he respect our constitution and the rule of law and start over on healthcare?

Obama has delivered change.  We now have an executive branch that can own private businesses, force consumers to buy, pick and choose what laws to enforce, reward supporters and punish detractors.  Obama has greatly extended the power of his office.

The message from Judge Vinson’s ruling is clear.  We have a democratic government designed with checks and balances and based on the constitution.  It’s time for Obama to go back to being just President.

Imagine No Deductions

3.8 Million.  That is the number of words in our current tax code, according to Taxpayer Advocate chief Nina Olson.  Americans spend 6.1 billion hours every year preparing their tax returns.  Tax preparation requires 3 million full time professional tax preparers and 89% of Americans either use a professional or spend an average of $50 on tax software.

Do you prepare your own return?  Should you be able to prepare your own return?  I think we can all agree tax preparation is way too complicated.  Some have proposed a Fairtax, which would be like a national sales tax.  There are other proposals to fix and shrink our tax code.  Olson proposes something much more similar to what I have advocated for a few years now.

The Taxpayer Advocate Service points out that many Americans have an effective tax rate far below their actual marginal rate.  For example, an American in the 25% tax bracket may only pay an effective rate of 9% because he has more than $15,000 in income excluded through various deductions and credits.  Olson argues that we could reduce tax rates significantly by consolidating the tax code and getting rid of all those various credits and deductions.  So who is standing in the way?  She says you are.

She’s right.  Obama’s debt panel came to the same conclusion, but could not get enough votes to send their proposal to Congress.  Let’s test this theory.  What would you say if your congressman got up at a townhall meeting and told you he was going to vote to get rid of the mortgage interest deduction?  What about the child tax credit?  How about credits and deductions for education?  What about charitable giving deductions?  Chances are, the crowd would turn into an angry mob before he could even mention lower marginal tax rates.

So far that has been the case.  Americans on both sides of the aisle are unwilling to sacrifice their credits and deductions for a simpler, revenue neutral solution.  But it’s not just Americans who want to hang on to behavior based tax reduction.

Lobbyists, and by extension the government, would hate to lose the ability to increase or reduce your taxes based on your behavior.  Right now the government can reward you for going to college, buying a house, being a teacher or performing artist, saving for retirement, having kids, working and getting childcare for those kids, working even if you can’t make a lot of money, making energy efficient improvements to your home, buying health insurance, buying energy efficient vehicles, giving to charity, paying union dues, adopting kids, hiring people who can’t get jobs ever since they raised the minimum wage, and so much more.  They can penalize you for taking early retirement distributions, not buying insurance, and of course, making too much money.  The government has more control over your personal life on your annual tax return than through any other venue.

Olson proposes a zero-based budget where we start with nothing and add back only the credits and deductions that Congress considers absolutely necessary.  Then consolidate the tax rates into two brackets.  Here’s the problem, if Congress didn’t think those credits and deductions were necessary, they wouldn’t have enacted them in the first place.  No Congressman is going to proudly announce that he voted against a tax deduction for teachers who pay for supplies out of pocket, or a credit for a student who goes to college.

The constitutional solution is a tax that is fair and equal for each individual.  It is a tax that does not reward or punish individual behavior.  It is a tax that does not take into account relations, status, and is flat based on income.  If you want a simple tax system with a return that you can file yourself with a pencil and a calculator, you will have to kiss your credits and deductions goodbye.

Obama’s big win of 2010:extending Bush’s biggest win of 2001

Victory, Immortal Fame!  So cries the last warrior standing, ironically right before he himself dies, after defeating his surrounding army.  The warriors of the mythical army, raised from serpent’s teeth planted in the ground, are tricked by Jason into battling each other.  So ends this humorous battle in Argonautica.

Not so different was the media coverage of the passing of the Bush tax cut extension.  After Obama defeated his fellow Democrats in passing this extension, the media hailed it as a much needed victory for the White House.

Wait.  What?

If you read Obama’s Tax Cuts of 2010, you shouldn’t be too  surprised.  In fact, the only thing that should surprise you is exactly how much of the Republican agenda Obama acquiesced to in this tax rate extension.  I predicted back in October, 2009 that Obama would extend the Bush tax cuts for at least the middle class, and that he would herald them as tax cuts instead of merely extensions of the Bush tax rates.  But at the time I figured it would come at the cost of no estate tax fix, higher rates for upper income earners, and other built in tax hikes.  Instead, this “White House victory” looks more like something from the last 8 years that supposedly “got us into this mess in the first place”.

The question then, if this is truly a White House victory, is if Obama has become a born again Capitalist.  The tax extension doesn’t just extend Bush tax rates for two years, it also gives a generous estate tax system that increases the exemption from $1 million to $5 million and lowers rates to 35%.  It also gives businesses of any size 100% bonus depreciation on new asset purchases in a tax gift to huge corporations.  And lastly, it replaces the Making Work Pay Credit with a 2% across the board cut in Social Security taxes.

The 2% Social Security cut was Obama’s answer to the expiring Making Work Pay Credit and is perhaps the greatest evidence of either a change of heart on Obama’s part, or a total victory on the Republican’s part.  In 2010, the Making Work Pay Credit will give families making less than $40,000 a credit of $800, while denying families making more than $175,000 any credit.  It was a perfect Liberal tax cut.  It was even poorly administrated.

On the other hand, the 2% Social Security cut is an across the board flat cut that is easy to administer and has no AGI cap.  So in 2011 a family that makes less than $40,000 will actually be paying more taxes, while a family with  a working husband and wife who make $200,000 combined will get a tax cut of $4,000.  This year they would have no tax break.  This non-progressive change is a White House victory?

The 2010 tax rate extension was an acknowledgment by the left that the policies of the last 8 years did not get us into this mess.  The Bush tax cuts got us out of the last mess and just might work this time too.  How they can claim that this Republican victory was anything else is beyond me.

The only thing the Democrats got out of this deal was not having to pay for the next unemployment benefits extension.  But in the end, Obama found it easier to defeat his own majority party than to take out the minority Republicans.  The result?  Your taxes aren’t going up next year no matter who you are.  And just as expected, Obama is saying it is because of him.

Why the “rich” want to pay more taxes

Why are Bill Gates and Warren Buffet saying they should pay higher taxes? It seems like a rational enough question.  After all, why should we be cramming a tax break down their throats?  If they want the tax cuts to go away, shouldn’t we honor their request?  After all, they are freakin’ rich.  When I say freakin’ rich, I mean that they could pay your income for the rest of your life with the cash they keep in their wallet for emergencies.

Meanwhile, you and I are breaking our backs and paying our taxes and…oh, calling for an extension of the Bush tax cuts?  If Buffet (who is apparently the smartest investor who ever lived) and Gates think they should be paying taxes at a higher rate, why don’t we just let them?

It’s a troubling question, until you think about it.  Obama and the Democrats aren’t looking to raise taxes on everyone who makes more than $250 million a year.  They are looking to raise taxes on everyone who makes more than $250,000 a year ($200,000 if you are single).    I think we are asking the wrong question.

Bill Gates and Warren Buffet can pay higher taxes whenever they want.  All they have to do is sell some of their tax free municipal bonds (the city didn’t need those funds anyway) or lay off some workers and use the money to write a check to the government.  There is no limit to the extra taxes they can pay.  They don’t need Obama to tell them to pay more.  The question should be this: Why do billionaire businessmen, whose companies have grown so large that most competition can’t keep up with them, want people who make $250,000 a year to pay higher taxes?  For that matter, why do they want their fellow billionaires, and competitors, to pay higher taxes?

Small businesses create something invaluable to our country.  They are managed by people with incomes of $250,000 or more on paper and nothing to show for it except sweat, tears, and hope.    Hope that the equipment they just invested in, giving them a fraction of a deduction over the next 5 years, and the building they bought to house their business, with a deduction spread out over 39 years on land that is never expensed, will provide future profits in tangible cash that they can actually take home and reward their families with.  Those families, by the way, are the ones who see Mommy or Daddy go to the office for 80 hours a week creating goods and services and providing jobs.

On the other hand, small businesses provide fresh ideas.  Small businesses are where adopted college drop outs can help invent personal computers that turn into a franchise of computers, phones, personal devices and operating systems that provide stiff competition to Microsoft and IBM.  Steve Jobs wasn’t born a billionaire either.

Our heart strings will be tugged at as the Democrats call our attention to the starving Americans who can’t find a job, and then insist that we raise taxes on small business employers because Warren Buffet thinks rich people should get a tax hike.  But before you accept their premise, ask yourself why Warren Buffet wants that small business owner making $250,000 a year to pay higher taxes.


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