Posts Tagged 'taxes'

Back to Our Roots

Shock: Mitt Romney is quickly falling out of favor with the GOP.

Ok, I’m not really shocked.  In fact while I thought Romney was going to win, it wasn’t what I was predicting when he won the nomination.  In fact, I wrote back in March on Whitehouse12.com that when it came down to it, the election would not be about the economy.  Turns out, I was right.

With a mixture of QE Infinity, a suspect September jobs report, and unemployment applications surprisingly falling (because California failed to report their numbers on time), the argument on the economy became relatively dampened just in time for the election.  Toss in pure media malpractice in their coverage on Benghazi and Sandy, where there was simply the latest in a string of incompetencies by this administration, and come election day Romney’s success as a businessman did not put him over the edge in voters minds.

What did put Obama over the edge was perception.  Obama was the candidate with your lady parts on his mind, and not in a dirty way.  He was the one who didn’t put women in binders, whatever that means.  But he was the one who is making it so that our nation stops killing sick people.  He is the one who cares so much about the poor and middle class, despite taxing them through Obamacare.  And of course, his strategy of divide and conquer worked.  Obama is the President of blacks, Hispanics, women, students, the poor, the middle class, Hollywood, and so on.  Romney’s one failed attempt at divide and conquer was announcing that he was not the guy for the 47%.  Somehow that was less successful than Obama’s strategy.

The Republican establishment has 2012 all figured out.  If only we offered our version of the Dream Act, rewarding young illegal immigrants for good behavior.  If only we were less rigid about what we believed and sounded more like Democrats.  The fact is, we did ok with moderates.  Moderates don’t win elections.  The only reason we keep having it drilled into our heads that they do is because pandering to moderates is a great way to lose conservative votes.

Now, Republicans have an opportunity to communicate with the country.  The Fiscal Cliff should teach the country a few very important lessons.  All the tax hikes in the world won’t solve our deficit problem.  Tax hikes on the rich will hurt the economy, but they won’t cover even one major pork bill.  The problem is spending.  We are spending ourselves broke and not even taxes on the rich can close the gap.

But instead, the lesson coming out of the fiscal cliff is that we all need to do our fair share.  Those of us who make more should pay far more.  Forget deficits and budgets and all that wonky stuff.  If you are rich, you didn’t build that.  It’s time for you to suffer like we are all suffering so that we can all share in this wonderful suffering that is America.  Somehow this is the message that is resonating, and it is probably because we have no Newt Gingrich in Congress to stand up and call the whole concept ridiculous.

Conservatism is not about shared suffering.  It is about freedom and opportunity.  It is about striving for so much freedom and opportunity that poverty becomes a choice.  It is about a people who tell the government what it can and can’t do, not the other way around.  It’s about personal responsibility and the ability to choose whether or not to buy your neighbor the things he or she needs and wants.

Conservatism is about fair, simple taxes.  It is about states rights.  It is about limited foreign engagement only when our national security is at risk.  It is about the right to drink beer and shoot off fireworks in your back yard.  It is about the right to teach your kids the Bible or worship however you want.  It is about the right to live, pursue happiness, own property, earn your way through school and get a job you love.  The outcomes are not guaranteed, but the right to pursue the outcomes are.

This is a message that would resonate.  Freedom gets people to the polls.  The problem is that too many moderate Republicans are so worried about governing that they forget their primary responsibility: to uphold the constitutional protections against their attempts to govern.  We are a nation of individuals governed by states and united under one constitution.  A party that runs on a conservative constitutionalist platform will win.

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.

Why PBS Should Be Defunded

Three words: Stevie Ray Vaughn.

Please keep reading, do not get me wrong.  I absolutely love Stevie Ray Vaughn.  I have several CDs with nearly every song he performed, video of him playing live, and I think by far he is my favorite guitarist ever.  And once a month, PBS plays Stevie Ray Vaughn videos.  Why do they play Stevie Ray Vaughn videos instead of their usual programming of 1950s variety show reruns, heavily left leaning political commentary, the newest garage band, or opera?  Because it’s time for the monthly pledge drive.

And that, my friends is capitalism.  I love the PBS pledge drive shows.  They did a Pink Floyd concert, Queen, and some more cultural stuff like Victor Borga and some classical master pieces.  But seriously, PBS pledge drives are the best time to watch PBS because they bring out the shows you would actually be willing to pay for.  And then they break in for 15 minutes to tell you that for a pledge of $125 you can get your very own Stevie Ray Vaughn CD as a thank you gift.  But they also lie to you and tell you that they need the funds so that they can show great programming like this all the time.

It’s not true.  What they mean to say is pledge money so that they know what to play for their next pledge drive.

I watch PBS a lot.  I love britcoms.  My wife loves the new Dr. Who.  She also loves costume dramas.  My son loves Elmo and nature shows.  If it wasn’t for the leftist political commentary, the fact that my tax dollars are already funding it, and the fact that pledging money gets you more of the Antique Roadshow, cooking shows, This Old House and opera, not more Stevie Ray Vaughn and Are You Being Served, I might actually give to PBS.  I mean, where else can you see Mr. Bean and Hugh Laurie in a comedy about the trenches of World War I.

I would not stop watching PBS if they showed commercials.  After all, in between shows we already have spots for the latest Masterpiece Theatre preview, the corporate sponsors of PBS, the uber-wealthy families and foundations who give PBS  grants, and of course a quick mention of “taxpayers…er, I mean viewers like you”.

If they replaced 15 minute pledge breaks with commercials and showed stuff people wanted to see, just like every other TV station, they would come out ahead.  I believe that’s true even if they showed a symphony performance or a nature show.  Surely no one can make the argument that Elmo would struggle for viewership.

At least that would be true for my household.  Of course, NOVA might have some difficulties with the majority of our country believing in God and on the fence about Global Warming, and Frontline might have to cast conservatives in a positive light at least once a year.  Oh yeah, and NPR would have to work on just how much they sound like a mouthpiece for the DNC.  After all, Air America showed that liberal talk radio struggles in the free market.

Ron Schiller may be an anti-Semitic, hateful leftist who thinks all Tea Partiers are racists and all mainstream media groups are Zionists, but he is not the reason PBS should be defunded.  PBS should be defunded so that they can compete in the free market and have to show good programming, like Stevie Ray Vaughn and ‘Allo, Allo!’, all the time.

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.

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.

The Triple Dip, When and Why

We are slowly slipping into the double dip in this Government perpetuated recession.  In 2008 and 2009 we had some choices to make to end this recession.  The choice was, are we going to give Americans capital, opportunity, stability, and a framework from which to rebuild the economy, or are we going to reinflate the bubbles, slowly bleed out anyone who has capital, throw money at pet projects and bribes, consolidate political power, and provide trillions in dollars of unfunded social programs that encourage economic depression.  We chose the later option.

The result, as predicted, is that now that the government has run out of bubble inflation capital and we have destroyed hopes for future stability and growth with crushing and ineffective debt, we are entering the double dip.  But there is still hope.  With a solid pro private growth energy policy, extension of current tax rates, repeal of the socialism, subsidies and taxes of the Healthcare plan, end to welfare unemployment benefits, and sale of government interests in any private company, we can make this double dip short, bitter, and done.  Instead, we will continue to head directly into a triple dip.

Why a triple dip?  Things are going to get better in the fall.  They will get better for a couple of reasons:

1. Democrats need to win in December.  The portion of our recession that is dependent solely on moods and perceived economic conditions will be affected by massive propaganda from the left, media optimism, and all sorts of economists coming out declaring victory over the bear.  This movement will be short-lived because with 10% unemployment you can only maintain your credibility so long.

2. Taxes are going to jump significantly for successful businesses, and for most small businesses regardless of whether they are successful.  The result is that companies will move money around and play the shell game to report as much income as possible now instead of later.  Profits and GDP will spike in November and December as companies switch from cash to accrual, defer depreciation, push capital towards debt repayment and distributions, hold off on purchases and bill payments, and leave the mailbox full of bills so that they don’t have to report them until January.

3. Stocks are in correction mode right now, but when they slip into full on bear mode, many of them will become undervalued this Summer.  Oil is trading at $75 during a Summer where millions of barrels have been lost in the gulf.  Citigroup remains cheaper than a Happy Meal.  Good dividend paying stocks have become so cheap that their dividends alone provide a better return than most bank CDs.  People will get back into the market in the Fall.  We may even see the Dow flirt with 11,000 by December.

4. The Christmas retail season will be better than last year and the year before.  It doesn’t take much.  Expect more Democrat stimulus programs to help drive this.  States as well will run sales tax holidays and many stores have slashed prices to accommodate the 10% unemployed.  With the other good news, consumer sentiment will skyrocket, even if their actual purchases don’t.

Then comes January and the triple dip.  Here is why:

1. Government economists, media outlets, and the administration will no longer have credibility.  Just as with the double dip, we will have heard “unexpectedly”, “below estimates”, and “surprisingly” so many times that nothing will surprise us anymore.  The same thing is happening with this double dip, where Obama touts 431,000 new jobs but then we find the truth.  400,000 are churned census temp jobs and the private sector is losing jobs.

2. The shell game will be over.  Companies will record and pay their bills.  They will write off bad receivables.  They will recontribute money into their company and use it solely for write-offs.  They will lay off employees whose insurance they can no longer afford.  Their income statements will become dismal and it will create a downward spiral.  They will sell underperforming stocks, properties, and other investments at discounts up to 45% in order to offset capital gains rates of about 45%.

3. Just as the bear market produces underpriced stocks, a bull market does the opposite.  The optimism of the election season Fall will produce stocks of banks teetering on the edge that are worth twice what they were in the Summer.  Oil will be at $78-80 going into a Winter season where it typically hovers between $65-70.  Medical industries will be finally reporting net profits after the higher embedded taxes.  Stocks will crumble back into the low 10,000s, perhaps even below 9,000.

4. With the power they have left, Democrats will pass tax policy that brings back higher tax brackets, higher capital gains rates on upper incomers, higher embedded taxes on energy, and probably a VAT tax on all Americans.  On the other hand, there will be no room for error left with the debt.  Even still, the jump in tax revenues from the Fall will inspire the Left to spend stimulus dollars near the election.  But the drop off of payroll taxes in January and embedded taxes will sink the budget.  The withdrawal of stimulus and crushing taxes will leave the government out of solutions and a spiraling upward debt that they already have no control over.

Recession recovery is not difficult.  Eventually, people with no employment and no money will either start drinking and begging, or they will start a business, invent something, or work for someone who did.  People who once made 60k as a computer programmer will make 25k flipping burgers for a while.  Or they will become millionaires by inventing a device that picks up popcorn without getting your fingers greasy or pierces ears rather painlessly.

What prevents them is outside influence.  If you have the option between making 25k flipping burgers or 30k taking extended unemployment benefits from the government, any fool or wise-man is going to take the 30k.  If you can’t get a job because your employer has to pay 7% of every dollar he pays you to the government and buy your health insurance and pay you a minimum of $7.65 an hour to mop the floor, then recovery will be difficult for you.  If you can’t start your own business because you have to pay start up fees to your state, and then over half your income in taxes to the state, local and federal government, then you won’t.  And you won’t hire anyone either.

If you specialize in oil drilling, but think the government might shut you down, you won’t invest in the process.  If you are a doctor, but can’t afford to pay the majority of your income in taxes and still pay off your student loans, you will be out of luck.  If you have a small business and want to invest in your business, but can’t because you have to pay 50% of every dollar that goes back into the business in taxes, you will not experience growth.

So far, this administration has done the opposite of everything they could to produce growth.  Unless the pattern changes, the third recession could be worse than the first.


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