Obama Officials: New Taxes May Be Needed

You have to wonder what the professors at Harvard, Yale and other high end colleges and universities are teaching about economics. Everytime we turn around we hear about how the Dems want to raise taxes on "the rich." Do they believe that the top income earners in the nation have a money tree that they can harvest at anytime. Do they believe that they can continually add more and more tax burdens without their being any detrimental effect on the economy at all?

Apparently, Harvard and Yale graduates believe just that. Those of us who went to more mainstream schools like the University of Maryland know better. We know that the more money the government confiscates from the private sector, the harder it is for jobs to be created and sustained. We know that there isn't a limitless supply of money and we understand that eventually, tax burdens will become so heavy that taxpayers will look for ways of minimizing the effect or simply move their means of income to a new location (e.g. off-shore).

The Dems are still trying to further wreck our economy by taxing away the means for employers to hire new employees. From Fox News:

President Obama may have to raise taxes to pay for public health care and the growing deficit, an eventuality that administration officials touched lightly on Sunday as they promoted an economy emerging from recession. With an expected deficit next year of $1.8 trillion, and spending still being planned for a $1 trillion, 10-year health care reform, officials say something will have to be done to prevent further erosion of the economy. "We will not get this economy back on track, recovery will be not strong and sustained, unless we ... can convince the American people that we're going to have the will to bring these deficits down once recovery is firmly established," Treasury Secretary Tim Geithner said on ABC's "This Week." Asked point blank whether it was right to suggest it is a matter of when, not if, taxes will be raised, Geithner responded, "It is absolutely right."

What Obama and Geithner seem to be completely unable to understand is that continually piling on more taxes for those who earn over $500,000/year will soon mean that they will get less take-home pay than people earning less than $500,000/year. Thus, who would ever want to earn that much money if it means less take-home pay? Those people will simply find a way to bring their income down below that $500,000/year level. That means less tax revenue which in turn means that the government will have to begin taxing lower income people in order to make up the difference.

The health care reform bill which is supposed to be saving us money is getting more and more expensive.

Which makes this little tidbit very interesting:

National Economic Council President Larry Summers said on CBS' "Face the Nation" that jobs are a lagging indicator and once output increases, job growth will start to pick up. "I think we have a ways to go. I want to emphasize the basic realities. Unemployment is still very high in this country," Summers said. He added that it's not a good idea to rule out future taxes. "There is a lot that can happen over time. ... But what the president has been completely clear on is that he is not going to pursue any of his priorities -- not health care, not energy, nothing -- in ways that are primarily burdening middle-class families. That is something that is not going to happen," Summers said.

Except that is is going to happen, one way or the other. Either a direct tax increase on middle-class incomes, or indirect taxes on companies and corporations who will simply pass the tax along to the middle-class in the form of higher retail prices.

But what are the Harvard and Yale graduates in the government proposing? More taxes and more spending:

While economists agree spending is required in a recession, [Rep. Mike] Pence said that money would be better spent by the American people, not the federal government. "Borrowing a trillion dollars from future generations of Americans and spreading it around the economy is going to have some catalytic effect in the economy in the short term, but again, it's no substitute for fiscal discipline in Washington, D.C.," he said. 'This piecemeal approach -- government handouts through a government bureaucracy -- is no substitute for broad-based tax relief and fiscal discipline in Washington, D.C."

I find it amusing how the Dems are constantly saying that Republicans haven't had an original idea since Ronald Reagan. Given their idea of tax and spend, tax and spend, and then raise taxes again to make up for the overspending, the Dems have not had an original idea since Franklin Delano Roosevelt.

You can access the complete article on-line here:

Obama Officials Don't Dismiss Possibility Of New Taxes
Fox News
August 3, 2009

Missouri House Approves State Fair Tax Constitutional Amendment

I've been a proponent of the FairTax for a few years now. My faith in the FairTax has never waivered nor will it anytime soon. Although many on the left (and a few on the right) have worked to discredit the idea of the FairTax over the past few years, the movement is gaining momentum.

The lastest victory come from Missouri where the House of Representatives voted to approve of a state Constitutional Amendment that would give Missouri a state-level FairTax.

From Fair Tax Nation:

In a development of potential national significance, the Missouri House of Representatives, on April 16, 2009, sent a proposed amendment to the Missouri Constitution, HJR36, to the state Senate that, if enacted, would bring a state-level Fair Tax to Missouri. The sponsor of the bill, Edgar G. Emery (R-Missouri District 126, Lamar), advised me yesterday he thinks the bill has a reasonable chance of passage in the state Senate. There is no definite time table yet there - the resolution has had its first reading. However the passage of the proposal in the state House has enhanced the profile of the bill in the state Senate. If the state Senate approves, the measure will be submitted to the voters of the State in November 2010 without need for consideration by the Governor. If approved by the voters, the measure would take effect on January 1, 2012, and Missouri would become the first laboratory in the United States - and perhaps the world - to test the macro-economic benefits of the Fair Tax. New Jersey FairTax State Co-Director, engineer and business owner, Norm Simms, has stated frequently that his decisions on where to site production are sensitive to tax climate. If the state FairTax passes, businesses would be expected to seriously consider locating - or relocating - to Missouri. Credit for the success of this bill goes to the Missouri FairTax volunteeers.

You can access Missouri HJR36 on-line here:

Missouri HJR36

There have been many efforts at tax reform over the past twenty years, but all of them failed to produce the desired results. Here are three end-goals that any tax reform plan must have in order to be viable:

1) The plan must remove from the IRS any power to intrude on the private lives of American citizens.
2) The plan must remove from the K Street lobbyists any power to influence Congressional votes.
3) The plan must not allow hidden taxes to be passed along to the consumer at any time.

There is only one tax reform plan that addresses all three of these end-goals:

THE FAIR TAX


Americans For Fair Taxation

Nothing Is Certain But Death And The FairTax by Dr. Mike Adams

The movement is growing! Despite what naysayers and negativists are parroting in their misguided criticisms about the FairTax, this is becoming a bigger and bigger issue and soon, Congress and the American people are going to have to seriously study and consider it.

Read what Dr. Mike Adams has to say in his latest column from TownHall.com:

The idea comes to me from a former student who was waiting on me the other night at the bar of a seafood restaurant in Wilmington. I had a beer in one hand and my copy of FairTax: The Truth in the other when an Obama supporter asked the following: “Why do you support the FairTax? We just need to change the tax code to punish corporations that are sending our jobs over to China.” Armed with FairTax: The Truth, I responded with the following: “I’m from Texas as is Representative Bill Archer. He testified in front of Congress about the results of an interesting study of 500 companies in Japan. When asked what they would do if the U.S. abolished its present tax system and went with a consumption tax, 80% said they would build their next plant in America. The remaining 20% said they would relocate to America altogether. Now that’s change you can believe in!”

Yes, it is. But I still find it amazing that there are educated people out there who still believe that a more punishing tax code will bring jobs back to the U.S. You might as well believe that more anti-semitic laws would have brought more Jews back to Nazi Germeny.

And how does it compare to the proposed Flat Tax? Dr. Adams looked at that too in another conversation:

Supporter of the Flat Tax of Yesterday (SOFTY): Sorry, I support the flat tax. Adams: How often do you change your underwear? SOFTY: What? Adams: I assume you change your underwear every day? SOFTY: Yes, what the hell does that have to do with it? Adams: That means you’ve changed underwear 8036 times in the last 22 years. SOFTY: And? Adams: And the I.R.S. has changed the tax code 16,000 times in the last 22 years. They change the tax code twice as often as you change underwear. How long do you think a flat tax would remain flat? SOFTY: (Silence) Adams: Would you like to borrow my book?

While the Flat Tax is far superior to what we have now, I don't believe it goes far enough in addressing the issues that our income tax system has produced.

What does the FairTax do? It replaces the entire Federal Tax Code with one simple, easy to understand and completely visible national sales tax on new goods and services. No more income tax, no more hidden taxes, no more death tax, no more any tax on personal wealth or income.

The FairTax:

• Enables workers to keep their entire paycheck
  
• Enables retirees to keep their entire pension
  
• Refunds in advance the tax on purchases of basic necessities
  
• Allows American products to compete fairly
  
• Brings transparency and accountability to tax policy
  
• Ensures Social Security and Medicare funding
  
• Closes all loopholes and brings fairness to taxation
  
• Abolishes the IRS
  

Additionally, the FairTax is the only Tax Reform plan that addresses the three following end-goals:

1) The plan must remove from the IRS any power to intrude on the private lives of American citizens.
2) The plan must remove from the K Street lobbyists any power to influence Congressional votes.
3) The plan must not allow hidden taxes to be passed along to the consumer at any time.



You can access Dr. Adams' complete column online here:

Nothing Is Certain But Death And The FairTax
Dr. Mike Adams
TownHall.com
May 12, 2008

Election Watch: Hey Big Spender! Media Fail To Report Cost Of Campaign Promises

This article by Nathan Burchfiel of the Business & Media Institute is from January 30 of this year but it is still relevent in terms of comparing the candidates for President. It is also important to note that these comparisons have gone largely unreported by Old Media.

Here is a very relevent comparison:

Obama’s reference to “finite resources” seems ironic, considering he leads all presidential contenders in proposed new spending with a whopping $287 billion, according to a new report from the National Taxpayers’ Union Foundation. Fellow Democrat Sen. Hillary Clinton (N.Y.) trails him with $218 billion in proposed new spending. Republican candidates come in much further behind. Former Arkansas Gov. Mike Huckabee has proposed new funding totaling $54 billion. Former Massachusetts Gov. Mitt Romney proposed $19.5 billion and Sen. John McCain (Ariz.) has proposed nearly $7 billion.

The report from the National Taxpayer's Union can be accessed on-line here:

2008 Presidential Candidate Spending Analyses
National Taxpayer's Union
Copyright 2008

Just the difference between Sen. McCain and either Gov. Romney or Gov. Huckabee is significant but the differences between Sen. McCain and the two Dem candidates is staggering.

Further, the two most liberal candiates haven't been coy about how they intend to pay for their socialist programs such as universal health care:

It would also cost taxpayers $110 billion every year. Clinton made it clear she would help finance her health care plan by “rolling back” the Bush tax cuts, amounting to a massive tax increase. But she had to admit that wouldn’t cover it all. Some journalists took note. ... “Mr. Obama this week said getting rid of Mr. Bush’s tax cuts would fund his proposed $85 billion in tax cuts for the middle class. But his $50 billion health care plan is also funded by the Bush tax cuts and cost-savings measures,” Bellantoni wrote. Anne Kornblut of The Washington Post mentioned Obama’s apparent double-talk in a Sept. 19, 2007, brief, noting his promised tax cuts though “he earlier said he would use those funds for his health-care program.”

For those of you keeping score, in terms of taxes, we have the two Dems promising to raise taxes (exorbitantly it would seem), and the presumptive GOP candidate pledging to make the 2001 tax cuts permanent.

You can access the complete article on-line here:

Election Watch: Hey Big Spender! Media Fail To Report Cost Of Campaign Promises
Nathan Burchfiel
BusinessAndMedia.org
January 30, 2008

Another Response To John Bowyer's Misinformed Criticism Of The FairTax

Looks like lots of people read John Bowyer's January 9, 2008 column where he sarcastically questions the FairTax. Over at TownHall, William Phelps has a response to Bowyer's questions. Here are some of the more pertinent ones:

Q: Are sales taxes, where they area currently in operation, simple and free from special interest lobbying? Since there are no exemptions and no tax shelters under the fair tax, there would be no work for the tax lobbyists in Washington who currently manipulate the income tax for the special interests. Because the fair tax includes the prebate reimbursing on the necessities of life, there is no need for exemptions. Fair tax is not based on any existing system, but was developed based on original research by leading institutions and economists on the charge to develop of the best tax system for the federal government.

Since the tax applies uniformly to all new goods and services a tax lobbyist would have to get Congress to consent to changing the tax on one single commodity, say lumber. However, in order to make up the shortfall, Congress would have to raise the tax on a comparable commodity, say plumbing supplies. Such a manipulation of the tax code could not be hidden and would immediately be seen by consumers (as the FairTax applies at the retail level where consumers pay the bill) and Congress would face major negative publicity as a result, not just from constituents, but from business leaders of other industries. That would be incredibly bad for re-election prospects.

Q: Isn't it that the rate is not really 23% but 30% at least, because it's tax inclusive? Bowyer doesn't understand that inclusive and exclusive ways of computing rates don't change the dollar amount of the tax. Either way the tax is the same $23 per $100. Computed the same inclusive way as the income tax, the fair tax is $100 -$23 = $77. Computed the exclusive way it is $23 divided by $77. =30%. If you computed the income tax on the exclusive basis, the 25% bracket would be the 33% bracket, or $25 divided by $75 =33%. Either way it is the same $25 tax per $100.

This just shows how desperate opponents of the FairTax are to find a flaw in the system. They parse words and play with numbers to make people think the FairTax is more than it really is. But as Phelps notes, it does not matter what rate you believe in, in real numbers, the tax on a $100 purchase will always be $23.

Q. How do we determine interest rate portion of the mortgage? Just as now, the market rate is the interest rate, but market interest rates will fall to the level of tax free bonds today which will make it easier for home buyers who will be paying the purchase price in pretax dollars, rather than after tax dollars under the income tax. The borrower and lender will continue to state the interest rates in the debt instruments, but this is irrelevant to how the home would be taxed. The fair tax applies to the purchase price of the home, if it is new.

This last question (as well as the question about used goods being taxed) is why I firmly believe that Bowyer never even read the FairTax Plan. Had he done so, these questions would have seemed stupid to him.

You can access the complete column on-line here:

A Fair Defense For The Fair Tax
William Phelps
TownHall.com
January 28, 2008

Herman Cain Supports The FairTax

Despite naysyers like Bruce Bartlett and Jerry Bowyer and others who throw uninformed criticism at the FairTax, the FairTax movement is growing. One day, the FairTax will be a reality and the United States will undergo a major economic boom as a result, regardless of how loudly people like Barlett and Bowyers yell or how many times they stamp their feet in protest.

The FairTax, unlike any other proposed tax reform plan, would address three end-goals:

1) The plan must remove from the IRS any power to intrude on the private lives of American citizens.
2) The plan must remove from the K Street lobbyists any power to influence Congressional votes.
3) The plan must not allow hidden taxes to be passed along to the consumer at any time.

Curiously, whenever anyone criticizes the FairTax and then is asked how these three end-goals are to be achieved through any other tax reform plan, they quickly become quiet, almost as if they are embarrassed for not having an answer.

In his January 17, 2008 column, Herman Cain looks at the FairTax movement with regards to the 2008 Presidential Primary:

Immediately after the Iowa Straw Poll last August, the noted and respected journalist George Will referred to the FairTax believers who supported Mike Huckabee as “those FairTax people.” He made it sound as if the people who helped Huckabee finish an unexpected second place among Republican presidential contenders were politically challenged, unfit to associate with the political elites. Jay Bookman, a columnist with the Atlanta Journal-Constitution, referred to the FairTax believers in his editorial on Dec. 23, 2007, as a “cult.” He called it “Huckabee’s Fantasy FairTax” as Huckabee was surging in the unreliable presidential polls leading up to the Iowa caucuses held on January 3.

And yet, neither Will nor Bookman has come up with an alternative proposal that addresses the three end-goals stated above.

Cain continues:

Because of George Will’s history of writing thoughtful and credible opinion articles, I am willing to give him the benefit of the doubt that his comment was just a slip of the tongue. This may have been motivated by his acquired skepticism of any dramatic changes being possible in the halls of Congress. Personally, I hope this was indeed the case, because I would miss George’s political insight if he were forced to take a Don Imus-like sabbatical. On the other hand, Bookman clearly displayed his ability for misinformation and factual inaccuracies, too many to spend valuable time and space refuting. Anyone familiar with the facts of the FairTax can peruse his attempted assassination of the FairTax for himself. One would also note that pure media bias could hardly be an excuse. If Huckabee’s success continues, the greater the attempts will be to derail him by the liberal opposition, the Republican establishment and, naturally, his Republican presidential rivals. The FairTax is the biggest cure for our tax code insanity on the political table. Mike Huckabee’s courageous embrace of the idea has heightened interest in it by many, and attracted contempt against it by many more. Since death to the FairTax has not been achieved swiftly by skepticism, denial or distortion, then we can expect repeated attempts to kill the FairTax by a thousand cuts. Fortunately, there are millions of believers in the FairTax, and they have been around much longer than the current presidential race. It is a legitimate movement in this country that is based on solid economics and analysis. The real cult consists of people who are skeptical of dramatic changes, and those who are content with allowing this country to drift into economic mediocrity.

No matter what you think about Mike Huckabee or his personal choices in life, he has brought the FairTax to national prominence. It may not be such a big player in this election, but in 2012, after millions more people have had the chance to read the real FairTax Plan rather than someone's misinformed criticism, the FairTax will loom large in the campaign.

You can access the complete column on-line here:

The Attempted Assassination Of The FairTax
Herman Cain
NorthStar Writers' Group via FairTax.org
January 17, 2008

Also, Professor Laurence J. Kotlikoff, Professor of Economics at Boston University, has this rebuttal to Bruce Bartlett's criticism of the FairTax:

Why the Fair Tax Will Work
Laurence J. Kotlikoff
FairTax.org
January 15, 2008

And here is a rebuttal to Jerry Bowyer's column criticizing the FairTax. It should be noted that had Mr. Bowyer actually read the FairTax Plan before commenting on it, he would have found the answers to the very questions he posed with such sarcasm.

The FairTax Crowd Answers Jerry Bowyer
Louis R. Woodhill
FairTax.org
January 14, 2008


Americans For Fair Taxation