Posts Tagged 'tax'

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?


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.

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.

Trickle up has not worked

Considering the last time trickle down was tried was 2003 and it resulted in a record number of quarters of economic growth, job growth, increased tax revenues, and low unemployment, I really don’t see how people can argue that trickle down doesn’t work.

On the other hand, we have been trying trickle up since 2007.  We raised the minimum wage, we reduced requirements for poor people to get loans, we handed out stimulus checks with AGI limits, we poured a trillion dollars into shovel ready jobs for middle class and union workers (that Obama lied about, and has since admitted that those jobs never existed in the first place), we passed healthcare legislation that taxes the healthcare industry and insurance companies and gives breaks to tiny companies who can’t afford to pay their employees a living wage, and we had the government buy and steal ownership in failed companies.  No aspect of trickle up has worked.

We have a record number of Americans on food stamps.  We extended unemployment benefits until it became a type of unregulated welfare.  We had cash for clunkers.  We had the making work pay tax credit.  We made credit for poor people and failing businesses even easier to come by.  We gave tax credits for hiring unemployed people and all the people the minimum wage squeezed out of the market.  But poor people with subsidized incomes don’t hire people.  Employers and companies do.  And not just failing companies with subsidized loose credit; companies that are successful and are growing hire people.

What have we gotten from trickle up?  When Pelosi gave her inaugural speech as Speaker of the House, she promised no new deficit spending.  Since then US debt has increased by $5 trillion dollars.  The entire 8 years of George W. Bush’s Presidency saw our debt increase by less than that, even with 9/11, the tech bubble, two wars, and two years of Pelosi/Reid. Companies are getting ready to drop insurance coverage as rates continue to spiral out of control and Obama’s penalty taxes become far cheaper than Obama’s healthcare taxes. Official unemployment (those still looking) is steady at 9.5% while real unemployment is around 17%.  Tax revenues have fallen, wages have fallen, and the only economic recovery we have in the stock market is 2/3rds Fed injections as the government has continued to buy bad debt-backed securities.

The scariest thing about the left today is that they think the Obama/Pelosi/Reid economic plan of trickle up worked.

This, Mr. President, is why we have laws…

President Obama has a now established pattern of choosing which laws he will and will not enforce.  We saw it first when he decided to stop enforcing federal drug laws in states that allow medical marijuana.  Next, his attorney general decided to not only stop enforcing US immigration laws, but to sue any state that did.  It will be an interesting development if the Supreme Court sides with Obama against Arizona immigration laws since they mirror Federal law.  Imagine waking up one morning and discovering that our immigration laws are unconstitutional.

Next Obama’s attorney general decided that bribery charges against the administration, brought by fellow Democrats, were not worth investigating.  And most recently, when House Minority leader John Boehner wrote to the President inquiring on the status of implementing the President’s executive order banning taxpayer funded abortion, a bargaining chip used to turn pro-lifer Bart Stupak and his followers, Boehner received no response.  Come on now, Mr. President, you even wrote that one all by yourself!

We are now beginning to learn the consequences of Obama’s attitude towards the rule of law.  Only a week ago, amid discouraging polls and perceptions that Obama wasn’t actually doing anything in the gulf, Obama called BP into his office for a closed door meeting.  When they emerged, BP was oh so sad and remorseful and vowed to set up a $20 billion trust fund to pay any and all damages.  Obama has been touting his success ever since.  Good, right?

The problem is that if Obama actually did anything, then he is guilty of extortion.  Constitutionally, the President of the United States cannot walk into a closed door meeting with a public corporation and demand that they hand over cash.  When Joe Barton infamously apologized to BP for the shakedown, he should have instead asked Tony Hayward the following:

“Mr. Hayward, please be very careful in how you answer these questions: Did President Obama offer you or BP anything explicitly or implicitly in order to set up the $20 billion dollar fund? Did President Obama threaten you or BP explicitly or implicitly with anything if you did not set up the fund? Did President Obama mention or imply anything about the status of your current or future drilling operations, availability of leases, or duration of the moratorium on drilling in relation to your setting up of this $20 billion fund?”

Of course, as Senator Kyl has learned, conversations in these closed door meetings don’t matter unless you are wearing a wire.

But now we are learning the folly of Obama’s shakedown and why exactly we have a legal system aside from Obama’s badge and six-shooter.  When someone is taken to court and ordered to make reparations in civil and criminal issues the money is non-deductible to the offending party and non-taxable to the receiving party.  Not so with this trust fund.

By avoiding the courts, BP now gets a nice $20 billion write-off on their taxes, while the victims have to pick it up.  Obama’s shakedown will shift $7 billion in taxes from BP to the victims of the oil spill.  But it gets better.

If the monies are recorded as income subject to self-employment tax, you can tack on an additional 15.3% to the victims’ tax bill that BP wouldn’t have had to pay.  That’s another $3,060,000,000.  Of the $20 billion trust fund that BP has promised to the oil spill victims, half will go to Obama’s government in taxes.  All because Obama decided once again that he is too good for our constitution and rule of law.

Of course, I’m sure Treasury Secretary Tim Geithner would make an exception for them.

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