Hell in a Handbasket: Life Under a Dem Congress

The bottom line is that stuff is cheaper and we're all wealthier when the Dems don't control Congress. Make of that what you will.

Tax Foundation Releases 2008 State-Local Tax Burden Study

Read the full report here. Punchline below:

Tax burdens are down from 2007 to 2008, mostly because income growth outpaced tax growth as the macroeconomy slowed. The largest drops were in Florida, Utah and the District of Columbia where the taxpayers' burden dropped by 0.5 percentage points between 2007 and 2008. Most state residents' tax burdens inched down a couple tenths of a percent, mirroring the national average which dipped from 9.9 percent to 9.7 percent.

IRET Releases Stimulus Tax Plan Analysis

Always good work by Steve Entin, a.k.a., "Mr. Expensing":

Some of the proposals would help people cope with the downturn, but most would not limit the downturn itself. Some would make the downturn worse. Some of the proposals make tax policy sense,and would be good permanent additions to the tax code. Most would not. Only one, a proposed cut in the corporate tax rate by Representative John Boehner (also in the original McCain package), would spur growth quickly. The proposals do not include other attractive and effective options for growth and damage control, such as extending 50% expensing and continuing the 15% caps on the tax rate on dividends and capital gains, or expanding saving incentives to help innocent savers recover from the crash in their financial assets.

Ear to the Ground - State News Roundup

MI Gov. Granholm and the Governors of DE, NY, KY, OH, and SD beg the Treasury to speed up $25 billion in loans to auto companies and give $10 billion in assistance to GM.

Oregon Tax Task Force looks at reforming or eliminating the corporate and personal income tax, but already has suggested replacements to ensure spending doesn't decrease.

Overspending in California is expected to reach $10 billion this year and $25 billion by next year, as Governor Schwarzenegger continues his call for a sales tax increase when the legislature returns next Tuesday.

Businesses in Texas fight to raise the small-business tax exemption, but legislators are quickly rejecting plans that shrink state coffers.

Happy Halloween: I Haven't Been This Scared in Years...

There comes a time when Halloween, which is right before the election every four years, that even grown-ups start to get scared.

Not from the potential of Roofie-filled candy cocktails being ingested, but the realization that the election day is only four days away.

Sadly, some voters might be a bit more scared this Halloween than in years past. Let's have a look why...

If you're following the Senate races, it might be a bit scary if you live in North Carolina, Oregon, Alaska or Georgia. Now, it's truly terrifying if you live in Minnesota!

As for the House races, that's scarier than a new Pauly Shore movie.

Of course all of the above assumes you are not a welfare dependent, manage the welfare dependency of others, are a union member or a union boss, a gun-hating atheist or Al Gore.

Because if you are, this Halloween may feel a bit more like Christmas come early.

All hope is not lost - click here, here and here for some easy to read one page hand-outs to slip in little Jimmy and Janies candy bags when then knock on your door.

We all know that good parents go through their kids candy bags like Keith Olberman dumpster diving outside the RNC. At least if you drop these handouts in the kids bags, the parents will be more successful that Olbermiester.

Happy Halloween!

Financial Frights for Halloween

This post originally appeared on FiscalAccountability.org

Halloween costumes often take inspiration from Hollywood and Washington. Forbes has print-ready masks available for you, and this year not only Washington is heavily represented here, but Wall Street, too.

If you don't have a costume for tonight yet, maybe you'll find inspiration here - what's going on with the bailout is certainly scary enough. Under Financial Frights, you will find chief bailouteurs Hank Paulson and Ben Bernanke, along with Wall Street figures Dick Fuld and Jimmy Cayne.

Clusterstock recommends strapping one mask to each side of your head and going as the "Four Faces of The Wallpocalypse."

McCain Trusted More on Taxes, Economy

According to Rasmussen:

After several weeks of John McCain’s campaign attacks on Barack Obama’s tax plan and idea of “spreading the wealth around”, the latest Rasmussen Reports national telephone survey finds voters trust McCain more than Obama on taxes, 47% to 45%.

Imagine If Small Businesses Banded Together...

H/T to Terry Neese, Tulsa Today

About 70 million people work for small businesses. These people make up one-third of the entire population of U.S. voters and can wield incredible influence in any election. Regardless of the polls, any candidate that can make his case in support of small business could walk away with the presidency on November 4, says Terry Neese, a distinguished fellow with the National Center for Policy Analysis.

Two-thirds of small business owners have been affected by the credit crunch, and 38 percent say economic policy will sway how they vote in November. They're carefully listening to what the candidates have to say about taxes, health insurance and other key issues. On taxes:

* John McCain emphasizes lowering corporate taxes, making permanent the Bush tax cuts, and lowering the capital gains tax.
* Barack Obama would raise capital gains and income taxes on individuals making over $250,000 a year, but would exempt small businesses from capital gains.

On health care:

* Sen. Obama would provide tax credits to employers paying insurance premiums, but allows individuals who can't afford insurance to buy into a government plan.
* Sen. McCain would establish refundable health care credits for individuals to purchase their own insurance, even across state lines.

Both candidates acknowledge the need for flexible workplaces so parents can balance family with work.

Small businesses create two-thirds of all new jobs, and contribute half of the Gross Domestic Product. And contrary to the reputation assigned them by the media, chambers of commerce are not creatures of big business; 96 percent of chamber members encompass businesses with fewer than 100 employees.

"Policy changes that help small businesses grow and prosper will help America grow," says Neese.

Myth vs. Fact: The Obama Infomercial

How Do You Give a Tax Cut to Non-Income Taxpayers?

Myth: “As president, here’s what I’ll do. Cut taxes for every working family making less than $200,000 a year. Give businesses a tax credit for every new employee that they hire right here in the US over the next two years, and eliminate tax breaks for companies that ship jobs overseas.”

Fact: According to IRS data, 33% of families don’t even have an income tax liability, so it’s impossible to cut their income taxes. Also, Obama’s summary conveniently leaves out the fact that he would bring the small business tax rate to over 50 percent and would hike the capital gains and dividends tax at a time of market turmoil. His plan is a massive tax hike.

Obama to U.S. Companies: Don’t Let the Door Hit You on the Way Out

Myth: (Ted Strickland speaking): “Think of this. Barack Obama is going to be a Democrat in the presidency who actually cuts taxes. But he’s gonna cut taxes for the people who really need a tax cut. He’s gonna cut taxes for the struggling families. And he’s gonna do that while holding accountable those companies that take advantage of tax breaks in order to send jobs offshore and to other countries.”

Fact: Obama will raise taxes by over $1 trillion by hiking the small business tax rates, the Social Security tax rate, and the nest egg tax rates on capital gains and dividends. Also, the reason companies move overseas is because our taxes are already too high. How does raising their taxes do anything but make this problem worse?

“Rocket Fuel” for Small Businesses?

Myth: (Gov. Tim Kaine) “Barack has looked at the small business side of the American economy and says ‘look, that’s where most innovation and entrepreneurship is. Let’s give them the rocket fuel to really accelerate rather than giving tax cuts to the ExxonMobils or the big oil companies that need not one ounce of help from the government to be very successful.’”

Fact: Under Obama’s tax hike, the tax rate on two-thirds of small business income will exceed 50 percent for the first time since Jimmy Carter. If that’s rocket fuel, the U.S. economy won’t ever get off the launch pad. Also, raising taxes on energy companies won’t do anything except make energy more expensive for consumers.

Barack Obama, Spending Cutter?

Myth: “I’ve offered spending cuts above and beyond their cost”

Fact: We can’t say it any better than the AP: “Obama's assertion that "I've offered spending cuts above and beyond" the expense of his promises is accepted only by his partisans. His vow to save money by ‘eliminating programs that don't work’ masks his failure throughout the campaign to specify what those programs are—beyond the withdrawal of troops from Iraq.”

Small Businesses and Savers Should Be Worried About Obama

Myth: “So I’m not worried about CEO’s, I’m not worried about corporate lobbyists, I’m not worried about the drug companies or the oil companies or the insurance companies--they’ll be fine, they’re going to look out for themselves. I’m worried about the couple that’s trying to figure out how they’re going to retire. I’m worried about the family that’s trying to figure out how they can save for their child’s college education. I’m worried about the single mom that doesn’t have health insurance. I’m worried about the guy who has worked in a plant for 20 years and suddenly sees his job shipped overseas. That’s who I’m worried about. That’s who I’m going to be fighting for and thinking about every single day that I’m in the White House.”

Fact: If he’s worried about the couple about to retire, Obama should be asking himself why he wants to tank their 401(k) nest egg by raising capital gains and dividends taxes. If he’s worried about the parents saving for college or struggling to afford health insurance, he should ask himself if raising their small business employer’s tax rate to over 50 percent is a good idea. If he’s worried about the longtime employee’s job getting shipped overseas, he should ask if the fact that America has the second-highest corporate income tax rate in the world has anything to do with that.

Ear to the Ground - State News Roundup

South Carolina Gov. Mark Sanford tells Congress to oppose a second $150 billion stimulus package for states that would "further infect our economy with unnecessary government influence and unintended fiscal consequences." Sanford calls for flexibility in federal mandates "instead of a bag of money with strings attached." NJ Gov. Corzine and NY Gov. Paterson beg Congress for another federal handout.

Rhode Island Gov. Donald Carcieri aims to eliminate the state income tax, blaming bad tax policy for the state's fiscal and unemployment woes.

Minnesota budget director tells state agencies to cut 5% out of their budgets, a $1.8 billion reduction.

Michigan overspends millions on overtime pay alone in a failed prison system.

What Do You Favor? Another "Stimulus Package" or More Tax Cuts?

I think I'm with the nearly 60% of Americans that prefer tax cuts over more government spending. Is it any wonder that Congress' approval rating is at 11%? Here's a portion of the Rasmussen article on this poll:

Fifty-eight percent (58%) of U.S. voters say more tax cuts will better stimulate the economy than new government spending, even as Congress considers a second stimulus plan that could cost as much as $300 billion.

Only 32% think the government should pass another economic stimulus package, according to a new Rasmussen Reports national telephone survey. Forty-three percent (43%) disagree, and 24% are undecided.

Most Americans Agree with "Joe the Plumber" on Income Redistribution

By a staggering four-to-one margin, Gallup reports that Americans believe that growing the economy and creating jobs is more important than redistributing income:

When given a choice about how government should address the numerous economic difficulties facing today's consumer, Americans overwhelmingly -- by 84% to 13% -- prefer that the government focus on improving overall economic conditions and the jobs situation in the United States as opposed to taking steps to distribute wealth more evenly among Americans. …

Gallup Poll, 06-27-2008

This strong preference for broad-based economic growth and against Marxist income redistribution is present across the board:

• Adults: 84-13
• Republicans: 90-9
• Independents: 85-13
• Democrats: 77-19
• <$30,000 78-17
• $30,000-$75,000 83-16
• $75,000< 88-10

Top 1% of Income Earners Pay 40% of Income TaxesTop Half Pays 97% of Income Taxes

Thanks to the GOP staff of the Joint Economic Committee for this:

Who Pays What in Income Taxes?

Top 1%: 40%

Top 5%: 60%

Top 10%: 71%

Top 25%: 86%

Top 50%: 97%

Bottom 50%: 3%

Obama Can't Cut Income Taxes On the Middle Class

To your left is a chart showing the average tax rate paid by the middle 20 percent of households--the true middle class.

It shows that when President Bush entered office, they paid a small 5 percent of their income in federal income tax. Now it's down to 3 percent.

You can't cut these people's taxes. It's called "welfare checks."

Stock Market Does Better Under a GOP Congress

This post originally appeared on americanshareholders.org

No, really--it does. Just ask Richard Rahn:

Over the last quarter of a century when the Republicans controlled both houses of Congress, the stock market rose by an average of about 20 percent per year. When the Democrats controlled both houses of Congress, the stock market only rose at an average annual rate of 6.9 percent for the Dow Jones and a tepid 5.1 percent for the Standard and Poor 500. When one party controlled one house and the other party controlled the other house of Congress, the growth in the stock market was significantly less than when the Republicans controlled both houses (15.6 percent for the Dow Jones and 12.7 percent for the S&P, but significantly more than when the Democrats controlled both houses.

Interesting stuff. It's possible the best outcome is a GOP Congress and a Dem President, though we've only had six years of that combination.

Ear to the Ground - State News Roundup

Lawsuit challenging the funding of Maine's DirigoChoice health program comes as opposition to the Question 1 beverage tax ballot measure grows.

Governor Schwarzenegger calls legislators back to Sacramento on November 5 - one day after elections - to solve the state's $3 billion in overspending. GOP lawmakers continued to voice opposition to tax increases and sent the governor a letter Monday calling for tax cuts to grow the economy.

New York implements a hiring freeze to stem government spending...and then hires 31,684 new public employees.

Washington state employees sue the Public Employees Association for failing to tell them about required union dues or that they could vote on their union contract.

7-11 Polling Doesn't Bode Well for McCain

Most media outlets look to Zogby, Gallup, Real Clear Politics, and the like for the latest and most accurate polling data. A less conventional poll to watch is the one being conducted by the fine folks at 7-11. 7-11 customers can choose either the red McCain coffee cup or the blue Obama coffee cup to indicate their preferred candidate.

This picture is from a northern Virginia location and it shows McCain to be struggling to garner support in this swing state from the key demographic that is 7-11 coffee drinkers.

The 7-11 coffee cup poll has predicted the winner of the last two presidential elections. Visit www.7election.com for the latest results in this not so scientific, but fun, poll.

Dolphins Owner to Sell Before Cap Gains Hike: "I'd Rather Give it to Charity than to Obama"

This post originally appeared on americanshareholders.org

The owner of the Miami Dolphins has said that he wants to sell his share of the team this year, before Obama's capital gains tax hikes go into effect:

"[Obama] wants to double the capital gains tax, or almost double it," Huizenga said. "I'd rather give it to charity than to him."

Incentives matter. Tax rates matter.

Spreading the Wealth Around: Patriotic or Un-American?

With just one week remaining until November 4, Americans are realizing that the tax-the-rich promises of the election season would reverberate throughout the economy. As the nation stands at a fork in the road - the path to freedom on the one hand and socialism on the other - another factor, all-but-forgotten, deserves consideration: is a tax-and-spend policy right and just?

Be forewarned, I do not impinge upon your credulity but present a bona fide historical account. For one brief moment in our nation's history the federal government not only paid off the entire national debt but ran a 50% budget surplus! In 1835, revenue flowed into the U.S. Treasury primarily through customs duties and western land sales, income flows difficult to regulate with any certainty. By 1836, public opinion pressured Congress to resolve the embarrassing scandal of taking more money than it needed. At first hindered by archaic Constitutional scruples regarding authorized spending, President Jackson and Congress devised a means to return the surplus to the states in block grants.

With the high tariff rates of the mid-1880s, gold once again rained down from the skies and the public cistern overflowed. To combat this grave political crisis, President Cleveland devoted his entire annual message of 1887 to tariff reform and the budget surplus, granting Congress no quarter for stealing hard-earned money from the American people. Faced again with the awkward surpluses of the Roaring Twenties, President Coolidge likewise rebuked Congress: "The collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny."

Coolidge uttered those words just eight short decades ago. Within living memory, political pressure forced presidents of the United States to decry the collection alone - not to mention the spending - of surplus revenue. Americans have long ridiculed excessive taxation as not only economically devastating but fundamentally unjust. Americans do not long tolerate injustice. Paying high taxes is not patriotic, it is un-American.

Ear to the Ground - State News Roundup

Measure Q in California seeks to add another 7 billion dollars in spending to a state currently plagued by overspending.

In a breach of ethics, "Georgians for Community Redevelopment" is using taxpayer dollars to fund a campaign for Amendment 4, which ironically would allow for further misuse of tax dollars.

A $23 million “Go Fish” project, designed to increase fishing tourism, gets approval amidst a budget meltdown in Georgia.

Massachusetts acknowledges that maybe now isn’t the time to enact programs guaranteeing free college education to the state populace.

In an effort to promote wasteful spending, New York state agencies continue to post job listings, some well over 100k, that not even democrat Governor Paterson wants to keep.

Obama's Tax Gap Is Over $250,000

If Barack Obama's tax hike had been in place since 2001, he would have paid over $250,000 more in income taxes than he actually did. This assumes that the 33% bracket stayed at 36%, and that the 35% bracket stayed at 39.6%. Here's the breakdown:

	Tax Gap
2001	$420
2002	$585
2003	$910
2004	$0
2005	$60,257
2006	$27,002
2007	$161,555
Total Tax Gap	$250,727

Maybe Obama needs to do his "patriotic duty" and pay up. Below is a check he might use to spread around his wealth:

Ear to the Ground - State News Roundup

Illinois citizens do not believe higher taxes are the solution to the budget shortfall.

Supporters of Question 1 in Massachusetts, a provision to repeal the income tax, are trying to overcome a disproportionate funding gap between themselves and their opponents.

Proposed changes to the prison system in Michigan could turn into tax relief for Michigan businesses.

South Carolina must finally make decisions on how to cut its bloated budget.

New Jersey may consider “real-time pricing”, raising rates during peak demand periods, to cut energy use.

Karl Rove: The Tax Argument Still Works

Preach on, Brother Rove:

Mr. McCain's economic argument is simple: Raising taxes on small businesses in the face of recession will deepen and prolong the downturn. Taxing Joe the Plumber and other entrepreneurs to pay for what the National Taxpayers Union says are Mr. Obama's $293 billion-a-year new spending plans is an expense the nation cannot afford. Mr. Obama's tax-and-spend prescription will cause the economic fever to spike, not recede...Wanting to raise taxes -- anyone's taxes -- in a slowdown is a warning sign of a misguided economic philosophy. Mr. Obama's proposal to redistribute wealth is a warning of indifference or hostility to enterprise.

Europe Needs a Tax Cut

Maybe the Europeans will get this right, even if we've screwed it up:

The best stimulus is a tax cut. In many European countries, payroll taxes or other government-mandated, nonwage labor costs place major burdens on wage earners and businesses alike, with the two sides often sharing the costs. Reducing these payroll taxes would augment the purchasing power of consumers, cut costs for businesses and provide an incentive to fire fewer workers now and hire more in the coming upswing.

North Dakota's Measure 2 Not Popular in the Ivory Tower

Well this should be a brow raiser for North Dakota taxpayers. Paul Nelson, the head of the North Dakota State University's communication department seems to be letting work go by the wayside these days in order to fight Measure 2. Measure 2, if approved, will slash the state income tax in half and reduce the corporate income tax rate, making ND more economically competitive and a more attractive place for employers to invest and create jobs. Below is the email that Professor Nelson sent around to his students this morning.


From: Paul Nelson
Date: Thu, Oct 23, 2008 at 9:08 AM
Subject: Vote No on Measures 1 & 2

Colleagues:



North Dakota State University will suffer immediate financial damage if measures 1 and 2 pass on the November ballot.

Many of our students are voting for the first time. Without demanding that they vote a certain way, you can use the attached information to show how the defeat of Measures 1 and 2 will affect their lives. We can hope that they vote self-interest.

If you want or need more information on the measures, Kelly has at her desk an explanation of the ballot measures.


Paul E. Nelson, Ph.D.

Professor & Head

Communication

NDSU Dept #2310

PO Box 6050 (Minard Hall 321G)

Fargo, ND 58108-6050

701-231-7705 (phone)

701-231-7784 (fax)

Paul.Nelson.1@ndsu.edu


Here are some more details on Professor Nelson -

Name: Paul Nelson

Title: Professor and Head of Communication Department at North Dakota State University

Interests: Long walks on the beach, French wine, using state resources and taxpayer dollars to lobby on ballot initiatives.

Texas Teachers Scamed by Union

Scamming Texas Teachers
by EmpowerTexans

Thanks to Choclatey Shatner for this tip from our friends at Texans for Fiscal Responsibility.

As if unions didn't have a bad enough reputation, Texas teachers unions are tricking the teachers into joining based on the false need for "liability insurance."

Click here to see your presidential candidates views on union issues.

Obama used taxpayer money to increase his wife’s salary?

According to the Examiner yesterday, after Barack Obama was elected to the Senate, Michelle Obama was promoted by University of Chicago Hospitals which netted her a 160% raise. They then received a “$1,000,000.00 federal earmark, requested by husband, after her promotion” (Examiner.com, Washington, D.C.,).

The man who is supposed to represent a new type of politics seems to have a record of old Chicago style politics. While he continues to claim he wants to reform the earmark system as much as John McCain, his record shows that when the public spotlight is not on him, Barack Obama is happy to fleece the taxpayer for his own personal benefit.

The full article can be found here: http://www.examiner.com/x-268-Right-Side-Politics-Examiner~y2008m10d22-Obamas-inexperience

FredPac Endorses Taxpayer Protection Pledge Signers

The following Taxpayer Protection Pledge Signers were endorsed by Fred Thompson's Pac yesterday. FredPac's mission is to help identify and support candidates on every level who support a platform of conservative, principles-based leadership and policies. Candidates who sign the Pledge promise their constituents and all Americans that they will oppose any and all efforts to increase the marginal income tax rates.

The following list shows those candidates:

US Senators

• Lamar Alexander
• Thad Cochran
• Norm Coleman
• Elizabeth Dole
• John Sununu
• Lindsay Graham
• John Cornyn
• Saxby Chambliss
  

US Representatives

• Steve King (IA-5)
• Thad McCotter (MI-11)
• Gresham Barrett (SC-3)
• Adam Putnam (FL-12)
• Chris Lee (NY-26)
• Jay Love (AL-2)
• Allen West (FL-22)
• David Schweikert (AZ-5)
• Tim Bee (AZ-8)
• Tom Rooney (FL-16)
• Pete Olson (TX-22)
• Chris Hackett (PA-10)
• Tom McClintock (CA-4)
• Don Manzullo (IL-16)
• Rick Goddard (GA-8)
• Jeff Miller (FL-1)

The Tax Tipping Point

What happens when 60% of voters don't pay taxes? They increase taxes on the other 40%. That's what's happening now in the Presidential election race. The chain of events is laid out pretty well today in the WSJ:

The sequence is always the same. High-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues. Fiscal and trade deficits soar. Public debt, excessive taxation and unemployment follow. The central bank tries to solve the problem by printing money. International competitiveness is lost and the currency depreciates. The system stagnates. And then a frightened electorate returns conservatives to power.

The Moral Case for Tax Havens

Ear to the Ground - State News Roundup

Gross amounts of wasteful spending occur in Missouri’s teacher retirement system.

In the midst of a severe budget crisis, New Jersey state employees continue to reap the benefits of their inflated salaries.

South Carolina legislators stood firm and passed a budget without increases in cigarette taxes or the repeal of property tax relief.

California’s legislature may face renewed attempts to pass tax hikes.

Lawmakers in Michigan have passed a “ridiculously punitive” 10% surcharge on items sold in prisons, which will cost both the prisoners and the state.

Obama Flip-Flops on World Series

Which team is it Senator Obama? The Tampa Bay Rays? or the Philadelphia Phillies?

I hope the Rays win personally. I'm a NY Mets fan!

H/T Rob Bluey

Quick Plug for Americans for Tax Reform

Americans for Tax Reform is working hard to reach people online. So I thought it would be a good idea to remind everyone about ATR's Facebook page and its Twitter account. Why not become a fan or follow us if you want to work with us?

Feel free to leave suggestions in the comment section about other ways ATR can reach out to people online.

Bernanke Endorses Higher Spending

See here. Because, you know, that always works so well:

While the Fed chief said any stimulus should be "well targeted," even a general endorsement amounts to a political green light. Mr. Bernanke certainly knows that Mr. Obama and Democrats on Capitol Hill are talking about some $300 billion in new "stimulus" spending, while President Bush and Republicans are resisting. And by saying any help should "limit longer-term effects" on the federal deficit, he had to know he was reinforcing Democratic opposition to permanent tax cuts.

WSJ: 85% of Small Businesses Pay Taxes on Their Owners' 1040s

Nice editorial chock-full of good data in the WSJ today. Here's a snippet:

• In 2001, Baucus wrote about cutting the top two income tax rates (the same ones Obama wants to hike back up): "entrepreneurs and small businesses -- owners of sole proprietorships, partnerships, S corporations, and farms -- will receive 80 percent of the tax relief associated with reducing the top income tax rates of 36 percent to 33 percent and 39.6 percent to 35 percent"
  
  
• From 2003 to 2007 with the lower tax rates in place, the U.S. economy added eight million jobs, or about 125,000 per month. The Small Business Administration says small business wrote the paychecks for up to 80% of new jobs in 2005
  
  
• According to a Gallup survey conducted for the National Federation of Independent Business last December and January, only 10% of all businesses that hire between one and nine employees would pay the Obama tax. But 19.5% of employers with 10 to 19 employees would be socked by the tax. And 50% of businesses with 20 to 249 workers would pay the tax. The Obama plan is an incentive to hire fewer workers.
  

Taiwan Cuts Death Tax From 50% to 10%

Hat tip on Taiwan's death tax cut to Dick Patten at the American Family Business Institute. Check out this pro-growth, supply-side policy rationale:

At 50% of all final estates, the government's previous tax policy was poor and resulted in many Taiwanese families sending their wealth offshore to wealth management service providers in Hong Kong and Singapore.

The policy also ensured that there was zero incentive for Taiwanese merchants with offshore businesses to repatriate their capital back to Taiwan. This created a long-term capital flight and caused the island's asset management industry to stagnate over the years.

Steven Billiet, CEO at ING Investment Funds in Taipei, says the total AUM could easily triple over the course of the next few years under the government's new tax rule. While it may not immediately induce Taiwanese individuals to repatriate overseas assets, it will at least lower the financial incentives for outward remittances that the Taiwanese systematically use to avoid tax.

Is Barney Frank's Solution to Everything Higher Taxes?

"Yes, I believe later on there should be tax increases. Speaking personally, I think there are a lot of very rich people out there whom we can tax at a point down the road and recover some of this money." (CNBC's "Closing Bell," 10/20/08)

Maryland 01: Frank Kratovil vs. Andy Harris

Yesterday, Club for Growth released another ad in Maryland's first congressional district against Democrat Frank Kratovil. While normally a solid Republican district, Frank Kratovil is virtually tied with Taxpayer Protection Pledge Signer Andy Harris. Kratovil claims to be a Blue Dog Democrat, but has yet to sign the Taxpayer Protection Pledge- a must for any true fiscal conservative.

Background: Moderate Republican Wayne Gilchrist lost to State Senator Andy Harris earlier this year in a primary challenge.

Ear to the Ground - State News Roundup

If passed, the dozen ballot measures before California voters this fall could cost taxpayers nearly $80 billion over the next thirty years.

Louisiana Gov. Bobby Jindal vows not to raise taxes despite facing nearly $1 billion in overspending by next year.

New Jersey legislative budget office claims you can't cut spending to cover an overspending problem. Actually, you can always cut spending...especially if you don't have the money to begin with.

New York revises numbers: overspending predicted to be $12.5 billion over two years.

Election Deceptions

PC World suggests 12 dirty internet tricks that might prevent you or people you know from getting to the ballot box this November.

Don't Smoke! Oh wait, we want more money...

Earlier this spring, New Hampshire lawmakers passed a bill to increase the tax on cigarettes by 25 cents to $1.33 per pack. Their justification: higher taxes deter individuals from purchasing cigarettes. However, the legislation stipulated that the tax would not rise if the current tax could bring in over $50 million between July and September.

Wait...what? So, if you smoke less you are taxed more and if you smoke more you are taxed less? How does that align with the state's paternalistic attempt to use tax increases to curb smoking?

Well, it frankly doesn't. What it does show is how reliant tax and spend lawmakers are on revenue from targeted tax hikes masked in seemingly well-to-do justifications. Taxes on tobacco products only serve to depress economic activity in the state, while growing the size of government at the expense of consumers and taxpayers. Further, these taxes are often declining sources of revenue and rope taxpayers into future tax hikes once legislators become dependent on the diminishing, but already budgeted revenue.

The worst part: New Hampshire raked in roughly $48 million in cigarette taxes between July and September, just shy of the $50 million mark that would have stopped the tax hike. Thanks consumers, you brought in just enough revenue to keep bringing in more.

For more information, check out ATR's press release: Granite State Smokers Don't Puff Enough.

Ear to the Ground - State News Roundup

Vallejo, California illustrates exactly how much damage the unholy alliance of unions and government can cause.

Maryland is now rated the sixth worst business climate in the U.S. says the Tax Foundation.

ATR supports a YES vote on the Dirigo Tax Repeal, an abusive beverage tax in Maine that may meet its end in one of this year’s ballot initiatives.

New York may address its budget crisis with untimely and destructive tax hikes.

Measure 59 in Oregon will allow individual tax payers to deduct all their federal income taxes from their state tax returns and curb excessive government spending.

2008: The Worker Freedom Election

According to a Human Events article "Joe the Non-Union Worker", this election should be known as the "worker freedom election."

Alliance for Worker Freedom executive director Brian Johnson explains:

This 2008 election has been called several different things. Many Republicans and center-right activists are calling this the “401(k) election” due to the different tax and investment treatments the two candidates are proposing. Those on the left, who are tired of the Bush Administration, are referring to this as the “Take Back the Flag” election. While both are valid catch-phrases, neither captures the direct attacks on democracy that could occur as a result of an Obama administration. This is why the 2008 election should be referred to as the “Worker Freedom Election.”

The article continues talking about the vast amounts of money unions have spent supporting the left:

That hasn’t stopped unions from spending an exorbitant amount of money supporting their anti-worker causes. Since the 2000 election, unions have given close to $300 million to Democratic candidates across the country, according to the Center for Responsive Politics. Labor unions have already contributed a total of $52 million in the 2008 political cycle. Ninety-one percent of that went toward Democrats, with only 9 percent going toward Republican candidates. The largest 527 contribution in 2008 cycle was from one of the most ferocious unions and a staunch Obama supporter, the Service Employee International Union (SEIU), at $18 million. Just this year, the AFL-CIO and the “Change to Win” Federation (both Obama supporters) have promised to spend well over $300 million to ensure their agenda is part of the "change" America is being spoon-fed.

Joe the Plumber's Tax Hike, and Yours

Have a piece on this in townhall.com:

The point is that Joe the Plumber and others like him are the beating heart of the U.S. economy. If you tell these entrepreneurs that the government is going to take 50 percent of everything they make after a certain amount of income, they’re going to stop working. Joe the Plumber might not make as many house calls. He might not bother hiring that extra assistant plumber. Why should he? He can stay home, watch the Ohio State Buckeyes on TV, and not have to give half his enjoyment to anyone, least of all the government.

Ear to the Ground - State News Roundup

Kentucky circuit court sides with Gov. Steve Beshear to allow the state to censor the internet and control the domain names of 141 gaming web sites.

California borrows $5 billion in short term notes to cover $7 billion overspending problem. The move follows the passage of a $103 billion budget just one month ago.

Hawaii drops the nation's only state-run child health insurance program citing cost and a lack of registrants. Administrator of State Health Care Programs: Most registrants able to afford health insurance had simply dropped their plan to take advantage of the state's "free" coverage.

NJ Gov. Corzine proposes $150 million "stimulus package" as state already faces $400 million in overspending.

Update: As Head of Household, Joe STILL Faces a $4000 Obama Tax Hike

After yesterday, we learned that Joe the Plumber actually may file as head of household (we had him as married filing jointly).

Never let it be said we're not honest. I re-ran the numbers as head of household, which he presumably is since he's raising a son on his own. All other assumptions remain constant.

Here's our assumptions (thanks to the Tax Foundation for their feedback):

What will Joe the Plumber's tax hike be under an Obama Administration? Here's our crack at the answer.

First, some assumptions that apply to our analysis:

1. Joe has $280,000 in net profits from self-employment as a sole proprietor and no other income

2. Joe's filing status is "head of household" and he has one dependent

3. Joe's only adjustment to income is his deduction for one-half of the self employment tax

4. Joe's itemized deductions and personal exemptions are equal to 20% of his AGI

5. For illustrative purposes, we move the Obama tax hike date into 2008. This means that the self-employment tax has been raised from 2.9% to 15.3% on self-employment profits exceeding $250,000. We also assume that Joe's marginal tax rate has risen from 33% to 36%.

Obama has been very coy about what the self-employment tax would be for Joe, just that it would be less than 15.3%. Until he comes out with a more specific plan (not one he is simply "studying"), we're going with the worst case-scenario.

The revised numbers are the following:

Current Law: Joe faces an income tax of $53,742 and a self-employment tax of $20,768 for a total tax of $74,510.

Obama Tax Hike: Joe faces an income tax of $54,205 and a self-employment tax of $24,488 for a total tax of $78,693.

***So if he files as a single Dad, Joe's tax bill will rise by $4183***

Maybe not quite $10,000, but still pretty bad.

Joe the Plumber's New Tax Bill Is $10,000 Higher Under Obama

What will Joe the Plumber's tax hike be under an Obama Administration? Here's our crack at the answer.

First, some assumptions that apply to our analysis:

1. Joe has $280,000 in net profits from self-employment as a sole proprietor and no other income

2. Joe's filing status is "married filing jointly" and he has no dependents

3. Joe's only adjustment to income is his deduction for one-half of the self employment tax

4. Joe's itemized deductions and personal exemptions are equal to 20% of his AGI

5. For illustrative purposes, we move the Obama tax hike date into 2008. This means that the self-employment tax has been raised from 2.9% to 15.3% on self-employment profits exceeding $250,000. We also assume that Joe has to have the pre-Bush tax cut tax brackets from dollar one of taxable income.

Obama has been very coy about what the self-employment tax would be for Joe, just that it would be less than 15.3%. Until he comes out with a more specific plan (not one he is simply "studying"), we're going with the worst case-scenario.

Similarly, we're assuming Obama would raise Joe's income taxes from dollar one, not simply from dollar $250,001. After all, someone has to pay for that overhead projector in Chicago--might as well be Joe.

The Results

Current Law Under current law, Joe faces a self-employment tax of $20,768 and an income tax of $49,908 for a total tax liability of $70,676

Obama Tax Hike Joe's self-employment tax his risen to $24,488 since he's paying the full rate after $250,000 of SE tax. His income tax liability has risen to $56,090. This gives him a total tax liability of $80,578

So, Joe can expect to pay almost $10,000 more under the Obama tax hike under a worst case scenario. I guess that's ok, though--that's money Obama can use to "spread the wealth," right?

Ear to the Ground - State News Roundup

$100 million tax hike measure on Missouri casinos heads to court for removal from the ballot.

Michigan lawmakers get 43% poor approval rating stemming from last year's $1.4 billion tax hike.

MA Gov. Deval Patrick announces $1 billion in cuts to cover $1.4 billion in overspending this year.

WI Gov. Doyle predicts the state overspent by $3 billion.

Maryland officials trim $297 million from the budget.

If Dems Win It All, Big Labor Could Turn Back the Clock

Card check may be only the beginning, according to Brian Johnson of the Alliance for Worker Freedom:

If Barack Obama takes over the White House and the left continues to control the House and the Senate – labor unions live. The so-called Employee Free Choice Act, (better known as Card Check), will be passed into law. Card Check disenfranchises millions of workers by stripping their right to private ballot voting when deciding on union membership. This legislation will open the flood-gates for mass-unionization, threats, violence, intimidation and coercion that will rival 1950s gangster movies. Forced mandatory bargaining will be thrust upon each state, despite their previous sovereign laws in the form of the misnamed Public Safety Employee-Employer Cooperation Act. Right-to-work laws will be repealed, leading to forced unionization and compulsory dues paying as a condition of employment. Automatic paycheck deductions will be used to virtually “steal” union members “dues” to be used for political activity and other actions that they may not support. Independent contractor “reform” will render entrepreneurs obsolete as they are forced to choose one company to work for. Competitive sourcing and privatization of government activities will cease to exist as government unions mandate all services be performed “in house.” This will result in an increase in the size and scope of the federal government, thus leading to higher taxes.

Spread the Wealth: Obama, or Huey Long?

Obama:

Huey Long:

"I had come to the United States Senate," he later explained, "with only one project in mind-- that . . I might do something to spread the wealth of the land among all of the people."

Hey, they're both corrupt politicians from party machines that like to steal money and give it to their friends, right?

ATR Fact Checks Debate #3

Obama claims that the 95% of taxpayers making less than $200,000 will get a tax cut under his plan. This is wrong:

• According to Tax Foundation, 33% of households don’t have an income tax liability
• Obama “tax cuts” are mostly welfare spending
  

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There are 28 million small business owners in the U.S. Of these, about 3 million make $200,000 per year or more. Two-thirds of small business profits are earned by these business owners. Small businesses pay their business taxes on their personal returns, so increasing tax rates on these 3 million business owners increases taxes on two-thirds of small business profits:

Small businesses (companies with <100>) employ 42 million Americans. If you increase taxes on most small business profits, many will be laid off

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Obama actually did vote twice for budget resolutions that call for increasing the tax on capital gains, dividends, small businesses, workers, families, and even death. In fact, look it up right here and here.

• Increases top rate from 35% to 39.6%
• Increases lowest rate from 10% to 15%
• Brings back the marriage penalty
• Brings back a 55% death tax
• Increases the capital gains tax from 15% to 20%
• Increases the dividends tax from 15% to 39.6%
• Cuts the child tax credit in half from $1000 to $500
  

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Obama didn’t vote on the Peru FTA. He could tell both sides he was with them:

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The federal employee health benefit plan’s most popular plan costs $13,422 in 2009 (Blue Cross Blue Shield Standard family)

For any families making less than $250,000 per year or so, the McCain health credit will be a net tax cut assuming average health premium costs. For lower income people, it will be a sizeable tax cut

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How much will the Obama tax hike shrink your 401(k)?

McCain vs Obama: Who Supports Worker Freedom?

Yesterday, the Alliance for Worker Freedom released a 15-variable matrix comparing Sen. McCain and Sen. Obama on issues concerning labor, worker freedom and trade.

Visit http://www.workerfreedom.org/ for the full version with complete citations and to also download the handy one-page version for meetings, a preview of which is below.

Click here for the full complete version with citations.

Click here for the one-page handout version.

Obama and the Plumber

Barack Obama was confronted over the weekend by a tough question and he answered it honestly. When asked by a plumber in Ohio, “Your new tax plan is going to tax me more, isn’t it?”

Barack said, “It’s not that I want to punish your success. I just want to make sure that everybody who is behind you, that they’ve got a chance for success too…..My attitude is that if the economy’s good for folks from the bottom up, it’s gonna be good for everybody…I think when you spread the wealth around, it’s good for everybody.”

Obama does understand redistribution of wealth/Socialism/spreading the wealth, whatever we want to call it. That’s his plan and that is what he wants for Americans. What he will find out is that if this plan is known and spoken honestly to Americans, they will reject it. Americans want to be left alone to create jobs, raise their families, and worship the way they please. Americans do not want to be punished for success. Whether Obama wants to punish some for success or not, that is what he is trying to do and that is what Americans do not want.

Wealth
by luvnews

Obama Campaign Releases Fraudulent Tax Calculator

You might have seen that the Obama campaign released a "tax cut calculator" today. Let's just say there are a few bugs in it (and I'm not even mentioning the obvious problem that Obama is for a massive tax hike):

· The forgotten tax hike. By its own admission, the tax calculator ignores the unprecedented imposition of Social Security payroll taxes on small business profits exceeding $250,000 (where two-thirds of small business profits exist). This is despite the fact that Obama told Charlie Gibson on October 8th that he wants to keep the Social Security tax rate “the same” for these small business owners. This would result in a top small business tax rate of 54.9 percent—the highest level since the Carter Administration.

· Small business tax hike. It tells those earning $250,000 or more that, “You will probably not get a tax cut” under an Obama Administration. Considering the Obama tax hike will result in a marginal tax rate approaching 50 percent on two-thirds of small business profits (which resides in these households), one might call this a bit of an understatement.

· Spending, not tax cuts. Most of the “tax cuts” Obama claims credit for is in fact spending. “Refundable tax credits” means that if you zero out your income tax liability, the government gives you a welfare check. This isn’t an income tax cut—it’s spending. According to the Tax Foundation, one-third of households don’t have an income tax liability. It’s impossible to cut their income taxes, despite what this “calculator” says.

· Bait and switch. Everyone is told that they may be eligible for refundable credits including a college credit, a retirement savings credit, etc. However, these credits phase out on quite modest levels of income, thus deceiving voters.

McCain Tax Cuts 2.0

This week, the McCain-Palin campaign has released a second wave of tax cut proposals. The new elements include a 50% cut in the capital gains and dividends tax rates, as well as an increase in allowable net capital losses from $3000 to $15,000 per year.

When combined with the existing tax plan--keeping the small business rate at 35%, cutting the corporate income tax to 25%, cutting the death tax rate to 15%, and full expensing of capital equipment--you have (by far) the most pro-growth tax cut plan since Reagan.

Ear to the Ground - State News Roundup

Iowa Governor Chet Culver calls on the President and Congress to financially assist states that are strapped for cash. Twenty-nine states have overspent their revenue this year.

New Jersey Republicans call for a fourth-quarter sales tax holiday. The proposal would reduce the sales tax to 3.5% between Thanksgiving and January 4.

Gov. Jim Gibbons looks at future budget cuts after ordering state agencies to lower their budgets by 14% for the next two years.

Minnesota's sales tax hike ballot measure looks unlikely to pass.

Colorado Amendment 49 - Why it's Important

Jon Caldara, president of the Independence Institute, provides explanation of Amendment 49 that even 1st graders can understand:

Ear to the Ground - State News Roundup

States That Can't Pay for Themselves: from CA to NY, a cheat sheet on some of the states that overspend your tax dollars.

South Dakota ballot measure 10 will make state government contracts transparent and ban taxpayer dollars from being used for government funded lobbying.

Pork and pet project grants in Georgia come under fire as state agencies are asked to cut spending by 10%.

Louisiana lawmakers weigh property tax relief for post-hurricane reconstruction.

We Won’t Use It, and Neither Can You: The Modern Approach to Federal “Land Management”

Behold, the Shangri-La of land management: the “wilderness.” Back in the heyday of the Great Society, the Wilderness Act of 1964 buckled a chastity belt securely around federal lands, “…where the earth and its community of life are untrammeled by man, where man himself is a visitor who does not remain.” Radical environmentalists promptly swallowed the key. At the present, the Wilderness Act forbids human contamination of roughly 5% of the entire country, except for limited hiking. Not even the bicycle, the sacred cow of “green” transit, may tread upon wilderness land. And Gaia said, “Dismount from they cycle and put off thy cannabis moccasins from thy feet, for the place whereon thou standest is holy ground.”

Though now delayed by the bailouts, the Senate plans to expand the bloated federal wilderness domain by almost one million additional acres of American land under the Omnibus Public Land Management Act of 2008. I propose a test: rather than add more “wilderness,” sell all of the existing wilderness land in the state of Oregon to the highest bidders. Much of the barren wasteland no one will wish to buy, indicating that precious few people would visit the land even if the Wilderness Act were to be repealed. Prime timber and mineral lands, however, would fetch a handsome price, thus allowing the federal government to shrink the deficit. Rural counties also face severe budget cuts – even bankruptcy – without federal compensation for the greedy hoarding of these tax-free lands. Privatizing that land would dramatically expand the tax base of many struggling backcountry counties. Trust Americans with America, and privatize “wilderness” lands.

It's Just Too Easley to Burn Money in The Old North State

Profligate
Definition:
1 : completely given up to dissipation and licentiousness 2 : wildly extravagant : prodigal
(Ex: Gov. Easley has presided over one of the most profligate administrations in North Carolina history.)


Well Governor Easley (NC-D) is at it again. Under pressure from Republicans and the media, the order for a $9,000,000 private jet that he instructed the state Department of Commerce to buy has been cancelled.

Unfortunately for North Carolina taxpayers, it looks like the state may not be able to recoup the $250,000 down payment. Ouch

Once thing is certain, Tax Hike Mike loves spending other people’s money. Details of Easley’s $170,000 taxpayer-funded luxury vacation were reported on this blog back in July.

Given the way Easley and Lt. Governor Perdue have managed the state’s finances, it’s no wonder it took North Carolinians 191 days this year to pay for the cost of their government.

ATR Launches New "2008 Election 401(k) Calculator"

Today ASA and ATR, in partnership with Rutledge Capital, is launching a new "2008 Election 401(k) Calculator." It will be prominently featured on the ASA website through the election, and will go live on the ATR website at 1PM EST.

The calculator asks you to input the value of your 401(k). Then, it recalculates what your 401(k) will be worth under four different tax scenarios:

• The Obama plan to raise the cap gains and dividends rate to 20%
• The McCain plan to cut the corporate income tax rate from 35% to 25% and expense equipment
• The Hill Democrat/Obama-in-the-Primaries plan to raise the capital gains tax to 28% and the dividends tax to 39.6%, and
• The ATR plan to cut the capital gains a dividends rate to 0%, cut the corporate rate to 25%, and expense equipment
  

Since it's a widget, the code is available by clicking "get this widget." It can be loaded up on any blog or website.

Put in the value of your 401(k) and see what happens.

It's All About the Benjamin's Baby...

Ever wonder how all these "left-wing, eco-environmental, let's close the borders and build a wall and while we're at remove about 100,000 people from North American because we're too populated" groups get their funding?

Well, never fear. Thanks to ActivistCash.com you can now follow the money to your favorite tree-hugging socialist group and find out which organizations Pamela Anderson supports (because you just know she makes good decisions).

Who would have thought Alec Baldwin would be the spokesman for the Physicians Committee for Responsible Medicine. I wonder what form of currency they pay him in (yeah...you get it)

Ear to the Ground - State News Roundup

Michigan AG Mike Cox pushes for greater spending transparency in government. For more information, check out the Center for Fiscal Accountability.

After pressure from outside groups, tax-and-spend Allegheny County executive Dan Onorato proposes reducing the newly installed tax on alcohol beverages from 10% to 7%, but leaves in place the rental car tax. Together, the taxes have collected $11 million above budget projections, but Onorato says the extra revenue shouldn't be returned to taxpayers.

MA ballot measure to abolish the state income tax continues to gain ground.

Idaho Governor Otter proposes a mileage tax on drivers.

Ear to the Ground - State News Roundup

ATR weighs in on Kentucky Gov. Beshear's effort to regulate the internet and violate constitutional due process rights by banning online gaming.

Contract with Iowa: House GOP outlines 2009 agenda, including business tax cuts, a property tax freeze, and an end to pork-barrel spending.

After passing a budget only weeks ago, Gov. Schwarzenegger and California legislators may return to the drawing board for further cuts and budget tweaks.

Facing an estimated $3 billion in overspending by next summer, Pennsylvania lawmakers are already considering tax increases.

This Is What You Get When You Call Tax Cuts "Spending"

Open Blog to the Tax Foundation Re: "Tax Earmarks"

Yesterday, the Tax Foundation contributed to the healthy debate the movement has been having about taxes and spending.

There are several items that Gerald Prante mentioned that I wanted to respond to. As such, readers should probably have read his post before reading mine below:

1. I fully acknowledge that some tax cuts are 100% revenue losers (child tax credit, three-legged spayed dogs credit, etc.). Some tax cuts have revenue feedback effects that make their cost something less than the static score (e.g., a cut in the top ordinary personal rate). Very few tax cuts probably pay for themselves (a cut in the top corporate rate comes to mind)
   
   
2. I fully acknowledge that the tax code can cause economic distortions. One of the reasons housing prices are high is no doubt due to the mortgage interest deduction, for example. No argument there
   
   
3. If, though, I were to put in place Prante's three-legged spayed dogs credit, how does that "cost the taxpayers money?" It costs the Treasury some tax revenue, but it doesn't have to come at the expense of any other taxpayer. It's only if you assume that the government has the right to a certain percent of GDP in taxes that it becomes a zero-sum game
   
   
4. Alternatively, suppose I was to create a three-legged spayed dogs earmark subsidy. In order to finance this, I would first have to steal the money from an actual taxpayer (as opposed to the Treasury). Then, I would have to filter the subsidy through the federal bureaucracy. Finally, I'd create a welfare recipient who expects his check. While the economic distortion would be similar, the way it's done is far more innocuous when it's a tax break as opposed to a spending program
   
   
5. I would hope that would all agree that the three legged spayed dog tax credit is, in fact, a tax cut. A tax cut is anything which causes taxpayers to pay less in taxes. If my tax bill before the credit is $10,000, and it's $9,000 afterwards, I just got a tax cut. If my tax bill is $10,000 and I get a $900 check from the government (don't forget to pay the unions their $100 vig), my taxes didn't go down at all
   
   
6. As conservatives, we can distinguish between good tax policy and bad tax policy. I would much prefer cutting the capital gains rate to doubling the child tax credit. However, I would not oppose doubling the child tax credit merely because I can't cut the capital gains tax rate instead. As conservatives, we're for lower taxes
   
   
7. Turning to the bailout plan itself (ATR is very much against a bailout, incidentally), there was a revenue title added onto the final version. This revenue title didn't "create new earmarks" since earmarks are spending. In fact, it didn't create all that many new tax cuts. All it mostly did was to prevent current tax relief from expiring--in other words, it prevented tax increases. The biggest chunks here were the extension of the research and development tax credit and the inflation adjustment to the AMT patch.
   
   Even if we can't agree that the vitriol for earmarks and pork should be reserved for the true enemy--spending--can't we at least agree that preventing a tax hike is certainly not a bad thing?
   

Ear to the Ground - State News Roundup

Michigan Senate votes to eliminate the 22% business surcharge tax, despite opposition from Governor Granholm and the Democrat-controlled House of Representatives.

An overspending problem in its last throws: After a sales tax increase fails, California Gov. Schwarzenegger is seeking Treasury Department assistance for a $7 billion loan to cover a 42% increase in state spending over the past 5 years.

Also in CA, Propositions 7 and 10 that call for government enforced quotas of "renewable energy" and rebates for vehicles deemed environmentally acceptable are drawing severe criticism from both taxpayer advocates and leading environmental groups. Click here for all ballot initiatives and referendum currently being tracked by ATR.

Spenders Remorse: New Jersey tax and spend lawmakers feeling the election year heat as revelations of past abuses of a $128 million property tax slush fund emerge.

Ear to the Ground - State News Roundup

Michigan House of Representatives considers property tax relief as the state Senate revs the up campaign against the Michigan Business Tax.

New Hampshire delays 25 cent cigarette tax hike until October 15.

Georgia overspending could top $2 billion.

Arizona Gov. Napolitano plans to meet with lawmakers two days after the November election to solve $800 million spending problem.

Iowa weighs tax credits to help businesses with flood recovery.

Tax Cuts ARE NOT Earmarks

Rich Lowry and others are calling tax cuts in the Senate bailout package "earmarks" today.

Calling tax cuts "earmarks" is very unhelpful and completely wrong from a fiscal conservative perspective. There is no such thing as a “tax earmark.” Earmarks are spending. There are appropriations earmarks. There are authorization earmarks. There are no “tax earmarks.” To claim that there are puts tax deductions and credits (which is what we’re talking about here) on the same par as bridges to nowhere. Was the creation of HSAs a “tax earmark?” How about the home mortgage interest deduction? One might call for lowering the rates and broadening the base, but we should not fall into the trap of equating tax cuts and spending increases. That’s how some Senate Republicans got in such massive trouble over health care last year and energy this year vis-à-vis taxes.

This is precisely the same logic that Treasury’s Stanley S. Surrey used in the 1960s to create the “tax expenditure” concept. This faulty doctrine treats tax exclusions, adjustments, deductions, and credits as if they were the same as a federal appropriation. They are not. They might not be ideal tax policy, but they are federal revenue reductions—not budget increases.

I would exempt from my statement the outlay effects of refundable tax credits. Those are, indeed, spending and could rightly be sullied with the term “earmark.”

It’s this confusion between tax cuts and spending increases that I’ve found is the number one cause of well-meaning offices slipping into Taxpayer Protection Pledge violations. When I see things communicated that would contribute to this confusion, I try to jump all over it.

Ear to the Ground - State News Roundup

NY Governor Paterson establishes a new commission to explore public-private partnerships, including privatizing transportation projects and the state lottery. The announcement comes as Chicago seals a deal to privatize Midway airport.

Gov. Schwarzenegger vetoes a bill to impose a tax on cargo entering major California ports. The ports handle over 40% of the nation's imports.

Campaign heats up against the severance tax hike in Colorado.

Final phase-in of Minnesota gas tax hike takes effect, bringing the tax to 25.5 cents per gallon.