progressives

The Case for Further Tax Cuts

Ranted By: Larry Walker, Jr.

Obama’s progressive form of economic change is destroying America. Not only does he threaten to hoard the keys, but to thrust the car over a cliff. Specifically, the effect of his policies on productivity, government subsidies, tax credits, class warfare, income taxes, and government spending is doing more harm to America than the Great Recession ever could.

Taking Away the Incentive

In the private sector, when you want to motivate a workforce you offer them things like more time off, bonuses, or stock ownership. In other words you offer them something in exchange for something. The Obama administration offers nothing for those who work hard. With Obama, if you work hard, you receive the reward of paying higher taxes, fees and fines to support those who don’t work as hard, or at all. If I told my employees that next year, the lowest paid would be getting a 50% decrease in pay, and the more highly paid would receive a 10% pay cut, would they work harder? No. In the real world they would quit immediately, hang around while looking for another job, or simply decrease their performance in line with the coming downgrade. Isn’t this what Obama is doing by proffering a tax hike for those who are working hard, paying their bills on time, and in essence supporting everyone else?

The Failure Subsidy

Now let’s take a person who has been unemployed for a year and is about to lose their home. They haven’t really looked for work because they’re on 99 weeks of unemployment, courtesy of Obama, and they expect the government to step in and make up the back payments on their home. Why should this person work when they can live off of less and still get by? Their plan is to start looking for work again when all the free government benefits run out. This person has in effect been given a government subsidy not to work, at the expense of those who are working. When my teenagers can go out and find jobs in this economy, I find it hard to believe that there are no jobs. One of them gets up at 5:00 AM and goes off to bake bread, while moochers stay home to collect free checks. Why do my kids work? Because their mother told them they must either work, or get out of the house. That’s the kind of incentive that will either make you or break you. Implying that we somehow need illegal immigrants to perform undesirable work, because Americans won’t is a sad, sad excuse.

Breaking the Free-Market

At a time when home prices had fallen between 30 to 50% in some Georgia communities, in stepped the federal government with an $8,000 refundable tax credit for first time homebuyers. Initially the credit was only $7,500 and had to be repaid over a 15 year period. People were already buying houses at the time, and were turning down the initial credit because it had to be repaid, so the government, in its wisdom, made it a giveaway. Did potential buyers really need an additional incentive beyond the existing 30-50% discount? What about the hardworking folks down the street who were left paying for their largest, and now most devalued, asset? Prices may have eventually recovered on their own had fewer houses been sold in the trough, but through government intervention, now all of our houses have been hopelessly devalued. Those who received the tax credit also received the bonus of equity in their homes, while those who hung on through tough times got screwed.

The Victims

The Obama administration talks a lot about the “haves” and “have-nots”. It seems there are a lot more have-nots today, than there were in January of 2009 (roughly 6.4 million more). Those who still have a job, a business, or some savings (things that they worked hard to achieve) are the new haves. The have-nots are those who are victims of an economy, hindered by the federal government. In many cases, the have-nots are the direct victims of the federal government. Instead of motivating people to get off of unemployment, welfare, subsidized housing and food stamps, the government is increasing these programs and fostering the entitlement mentality. What incentive is there for one of these, government-made, have-nots to ever claw their way out? If working means giving half of ones labor to the government, then why even try?

Legalized Robbery

I was looking over a client’s job situation recently. The conclusion was that if she accepts the proposed contract, she and her husband will be in a position where every additional dollar she earns, for the rest of the year, will be subject to 50% in federal, self-employment, and State taxes. Is it even worth the effort? If you were offered a contract that would pay you $68,000 in five months, but you had to pay $20,000 in travel expenses to earn it, and then another $24,000 in taxes, leaving you with just $24,000 would you do it? It might be better to just stick closer to home and find a W-2 job paying $30,000. Where is the incentive when the government stands to gain 50% of ones labor? Yet the Obama administration wants to raise taxes. Hell, taxes are already too high. We need additional tax cuts, not an increase. Top tax rates should be cut back down to 28% like they were under Reagan (and even that’s too high). No one in their right mind is going to put forth maximum effort for half. It’s just not going to happen. Many have-nots ponder this same dilemma everyday.

The Spending Bonanza

If the Bush tax cuts caused such huge deficits, then how did Obama’s July 2010 budget deficit end up exceeding Bush’s 2007 annual budget deficit, by $5.0 Billion?

Per the website, Liberty Works, “the one-month deficit for July was $165,043,000,000 or $5 Billion more than the “irresponsible Bush deficit” for the entire year of 2007.”

Graph via: http://blog.heritage.org/2010/02/05/past-deficits-vs-obamas-deficits-in-pictures/

Will the government ever be able to raise enough tax revenue to cover Obama’s massive spending gap? Let me answer that for you. No. Never in a 1,000 years. The only thing certain about our exploding national debt is that more revenue will eventually be required to cover it. The question is how to increase revenue without further damaging the economy.

A Conservative [R]esurgence

What’s the solution? We need a conservative resurgence in America. Give us the incentive to produce, take away the subsidy for failure, stop tampering with the free market, and free us that we may lift the have-nots. Reduce income tax rates, and stop spending more than we have. Our present course is destined for failure.

The bottom line: Drastically cut the size of government, and don’t just freeze tax rates, cut them. You can’t just cut taxes without a corresponding reduction in spending. It doesn’t work like that. Yet, until taxes are cut, the government will be trapped in providing greater failure subsidies (bailouts), and further destructive interference with the free market. That’s how it works.

If you’re not part of the solution, you’re part of the problem.

Tax Relief for the Middle Class (whatever middle class means)

by: Larry Walker, Jr.

With the imminent expiration of the Bush tax cuts, Mr. Obama and his progressive minions fathom that its termination doesn’t really constitute a tax increase. It’s not a tax hike in their minds, it’s just the conclusion of another failed Bush policy which helped contribute to the ‘great recession’. So in 2011, when your taxes climb, and they will advance across the board (as shown here), you shouldn’t blame Obama. Paying a little bit more shouldn’t be a problem now, because we are far better off today under Obama’s economic stimulus, than we were in all of 2001 through 2008. Right?

Leave it to Barack H. Obama, II to have an answer for every problem facing Americans today.

You got problems? Obama’s got solutions.

Problem: You are upside down on your mortgage and can’t see the light of day.

Solution: That’s not my fault, it’s Bush’s fault. You’re still getting a tax hike.

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Problem: You are still trying to work out a loan modification to try to save your home.

Solution: Hopefully that will work out, but right now I need to raise your taxes.

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Problem: You recently lost your home and are struggling to make ends meet.

Solution: So sorry, but I gotta raise your taxes too.

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Problem: You’re on 99 weeks of extended unemployment benefits due to a rotten economy and the failed stimulus program.

Solution: Be sure to have taxes taken out of it, because you’re getting a tax hike too.

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Problem: You haven’t saved enough for retirement and you are trying to find a way to save more.

Solution: Well, if you have money to save, then you can pay more taxes. You’re definitely getting a tax hike.

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Problem: Your business suffered massive losses over the last two years and you’re still paying off loans and credit lines, and trying to dig your way out of a hole.

Solution: We all have to do our fair share. A tax hike for you.

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Problem: The Gulf of Mexico oil spill completely destroyed your livelihood and you don’t know what you’re going to do.

Solution: That’s BP’s fault, not mine. Set some of that BP money aside, because you’re getting a tax hike too.

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Problem: You’re already working two jobs and still living paycheck to paycheck.

Solution: Try to cut back on expenses, or get a third job, because you’re getting a tax hike too.

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Problem: You’re one of the 1.4 million who filed for bankruptcy last year.

Solution: Now that all of your debts are out of the way, paying more taxes should not be a problem. Tax hike!

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Problem: You’re one of the 40 million Americans currently on food stamps.

Solution: Since there will be 3 million more on food stamps next year, we have to raise taxes on everyone else to help out folks like you. And if you earn enough income to be taxed in the near future, don’t you worry, you’re getting a tax hike too.

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Problem: You’ve paid taxes your whole life, and you’re worried that the reinstatement of the 55% estate tax in 2011 will force the sale of your family business.

Solution: If you leave an estate worth over $1 million, your estate will be forking over the 55%. But, since you’ll be dead by that time you shouldn’t worry about it so much. When we spread the wealth around it’s good for everybody.

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Problem: You’re worried about how the known (and hidden) taxes in Obamacare, the Stimulus Act and other stealth legislation will affect you on top of the 2011 tax increase.

Solution: Don’t worry about it. You’ll find out when we do. Once we finally finish reading and interpreting all of this mess, … I mean reform, we’ll let you know.

Here’s what our current tax rate schedule looks like as compared to what the 2011 rates may look like (assuming no adjustment for inflation):

Obama and the progressives want to somehow let the Bush tax cuts expire for anyone making over $200,000 per year, but it’s not clear whether or not tax rates for those below that amount will revert to pre-2001 levels. Since there is no cut-off at $200,000 per year under our current tax rate schedule, Obama will need to invent a new tax rate schedule. Here’s what an Obama tax rate schedule might look like:

Under current tax law, those making over $373,650 a year are considered wealthy, but from now on, if you make over $200,000 a year (formerly $250,000) you’re rich, because Obama says so.

Unusual uncertainty remains unusually uncertain.

It will be interesting to see how Congress resolves this. If Congress fails to take action, taxes will rise across the board, by default. Waiting until after the November elections is not an option.

Black and Center

The new paradigm

[D]issing America: The Looming [R]esurgence

2011 Tax Hike: Progressive Style