"Not One Single Dime"
Today Congress is debating whether the Bush Tax Cuts should expire or be renewed. The fact that this is being debated at all amazes me. The worst thing you can do during a recession is raise taxes. Everyone knows that; even the most uneducated among us.
The second worst thing you can do is try to spend your way out of a recession. But of course we know the Obama Administration has already attempted that. And, as expected, it has failed miserably regardless of what the President and Mr. Geithner are saying at every opportunity.
During the Presidential campaign in Dover, New Hampshire on September 12, 2008, then candidate Obama stated the following:
"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.... You will not see any of your taxes increase one single dime."
This sounds strikingly similar to George Bush’s claim in 1988: “Read my lips, no new taxes.” We all know he broke that promise. We all know he failed to get reelected. Hopefully, the same will happen here. When Obama allows the George W. Bush tax cuts to expire on December 31, 2010, it should be the final nail in the coffin for hope and change. All of us who are hoping for change may now actually get what we want.
It should also be noted for the record that President Obama has already broken this promise once before. The Health Care Reform Act contains a number of tax increases that originally were called penalties. After much chagrin, the Obama Administration finally had to admit these were taxes not penalties. Since that has been opined upon to death by commentators, I will not dwell on it here. Just suffice it to say he has already increased taxes on the lower and middle classes.
This article is primarily about the Bush tax cuts. And if they are allowed to expire, beginning in 2011, your taxes will increase by much more than one single dime as Obama stated. The raise will be much, much greater. Here's why:
Ryan Ellis wrote an article published July 1, 2010 on a website called Americans for Tax Reform. Mr. Ellis goes into some detail regarding what lays ahead if Obama and the Democrats get their way and allow the tax increase which, by the way, will be the largest tax increase in American history. Voters should arm themselves with this information now in order to make intelligent choices in the voting booth in November. By the way, it may not help regardless of who gets elected in November because a lame duck Democratic Congress with an angry Leftist President may be the most dangerous thing this country has ever seen. Beware mid-November through January!
Here are some facts on the tax increase scheduled for January 1, 2010:
• Personal income tax rates will rise...- The 10% bracket will rise to 15%- The 25% bracket will rise to 28%- The 28% bracket will rise to 31%- The 33% bracket will rise to 36%- The 35% bracket will rise to 39.6%
• The child tax credit will be cut in half from $1000 to $500 per child.
• The standard deduction will no longer be doubled for married couples relative to the single level thereby bringing back the so called marriage penalty.
• The dependent care and adoption credits will be cut.
• There will be a 55 percent top death tax rate on estates over $1 million. (If this is allowed to happen, then George Steinbrenner saved his heirs almost half a billion dollars by dying this year).
• The capital gains tax will rise from 15 percent to 20 percent.
• The marginal rate on dividends will rise from 15 percent to 39.6 percent
• Health savings (HSA) and flexible spending accounts (FSA) can no longer be used to purchase non-prescription, over-the-counter medicines.
• A $2,500 cap on flexible spending accounts FSAs will be added.
• Tax on non-medical early withdrawals from an HSA will double to 20 percent.
• Small businesses will no longer be able to expense up to $250,000 in capital purchases. Instead, the allowance will be reduced by 90% to only $25,000.
• Large business will have their expense deductions slashed by 50%.
• The “research and experimentation" tax credit will be eliminated,
• The deduction for tuition and fees will be eliminated.
• Teachers will no longer be able to deduct classroom expenses.
• The student loan interest deduction will be eliminated.
• Charitable contributions from IRAs will be eliminated. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.
To make matters worse, the Alternative Minimum Tax (AMT) will now be levied on at least 28 million families. That's a seven-fold increase from last year when it was levied on 4 million. This “AMT” disallows many deductions and exemptions such as state and local income, sales tax, property tax, accelerated depreciation, medical expenses and other tax preference items such as Intangible Drilling Costs. Instead, it sets a minimum tax rate of either 26% or 28%.
And because the AMT is not indexed to inflation, the number of households affected by this tax will dramatically increase over time. This was predicted by the Congressional Budget Office way back on April 15th, 2004, when it issued this statement:
"Over the coming decade, a growing number of taxpayers will become liable for the AMT. In 2010, if nothing is changed, one in five taxpayers will have AMT liability and nearly every married taxpayer with income between $100,000 and $500,000 will owe the alternative tax."
In short, the AMT disallows deductions otherwise available under standard IRS rules, and is based upon a very complex set of criterions.
If these changes are allowed to happen, it will be disastrous for the economy. Small business will be stymied. Spending by private business will be substantially lowered or cease completely. What does that mean? Unemployment will go up. We will not only have a double dip recession, we will probably have an economy worse than that of the Great Depression.
Right now, every economic indicator shows that the economy is barely holding onto the ledge. Anything that would cause investors and/or private sector business owners to stop spending may be the straw that breaks the camel’s back. These tax increases contain a number of such straws.
For example, if you raise the Capital Gains and Dividend Tax Rate, you will be directly hitting investment. Investment is what drives the economy. For every dollar an investor pays in taxes, it is one potential dollar that will not be used to finance another company or to increase capital expenditures in an existing company. It also makes less dollars available to hire another few employees should the need arise. It also takes the incentive away to make more money. Remember the Lauffer Curve whether you agree with it or not.
The same is true if you increase the write-off period on big ticket items. If a company is permitted to expense $250,000 in capital expenditures each year, it may be more inclined to make purchases of big-ticket items than if it can only expense $25,000 per year. Anything over $25,000 would now have to be capitalized and charged off over a number of years. Private sector business will no longer make those purchases or they will decrease dramatically. Look at what happened after the Homebuyer Credit and Cash for Clunkers ended. It would be the same thing. Jobs will be lost and/or not created.
Middle Class homes will not make additional purchases as well. If you cause an average family to pay an additional 5% in taxes, that is 5% less discretionary income to keep the economy moving. Plus, if people lose faith in the economy, more money goes into savings which is also dangerous because money saved is not money spent. Personal savings rates are already up so this is already happening.
In addition, we are on the verge of a deflationary spiral which is considered a disaster to an economy in the sense the people do not tend to spend money when they think prices are going down because they are waiting for price decreases. Manufactures, then lower prices to stimulate purchases. This does not work because every price decrease is met with more expectations on the buyers for more price decreases. The last time this happened in the United States was in the 1930’s. We have now had three straight months of decreases in the Consumer Price Index. At what point are we officially in such a spiral?
When you couple the tax increases set for January, 2010 with the possibility of deflation, we are on the precipice of a disaster the likes of which this country has never seen. Also, by the way, does the printing of fiat money in the manner that the government has in the past 18 months scare anyone? Shouldn’t we be in the midst of the greatest inflation this country has ever seen? This is a doomsday scenario waiting to happen.
In closing, it is my opinion that this tax increase cannot be permitted. It is not the way to close the budget gap. Congress must find other ways to do so. They cannot rely on more taxes. They must limit the size of government by necessity even if that is not what they want. Governor Schwarzenegger has had to do it in California and it has made him extremely unpopular. Sometimes the tough decisions are the necessary ones.
Congress must reign in spending. Keep the tax cuts in place for another 4-5 years or make them permanent. Give the economy a chance to cycle its way out of this depression. Do not make it any worse.
Maybe we can start by eliminating some government programs. Maybe the Department of Energy which has proved useless should cease to exist? Maybe the Health Care bill should be left unfunded? There are many other ways to curb the spending even to the extent of privatizing the Post Office.
A tax increase to allow uncontrolled spending to continue is not the answer, especially in light of the fact that President Obama will be breaking one his most solemn campaign promises. Of course with him that does not seem to be an issue. He is breaking promises ever day he is in office. Maybe that is why his approval rating currently stands at about forty-three percent.
© 2010 by Craig Covello and Frank DeMartini. Used with permission. All rights reserved.
Labels: Barack Obama, Craig Covello, Economy, Frank DeMartini, inflation, recession, Taxes, Timothy Geithner, Unemployment
posted by Frank T. DeMartini @ 4:01 PM
12 Comments:
Another a great job Frank. These facts are going to be hard for some people to swallow. The worse part is the lowest bracket, the poorest people in our country will all be hurt the worse, a 50% increase in income tax rates on the lowest bracket, that's crazy!!! This with the increase in Medicare, the cut in half of the child care credit. This all will hurt our lowest wage earners most. He raised taxes on the poor the the first month in office with the tobacco tax, that really hurt low income people because they have the highest percentage of smokers.
Like you said all this run away spending didn't do anything for the economy. Then with this increase in taxes next year it really could send us over the edge. Hoover and Roosevelt just kept raising taxes. The top marginal rate was 90% by the end of Roosevelt's presidency!!! With every tax increase the economy got worse. When will this facts of economics be taught in public schools. I hope we don't have to go through another great depression again to prove it!!!!
Ofcourse I agree with you and Craig. Too many people are still unable or unwilling to understand the seriousness of Obamas plan to ruin America. He knows exactly what he is doing. All facts and history are available to him and the many ,many people who he has appointed. They clearly do not have Americas best interest at heart. By the time the rest of the country finally admits it to themselves it will be too late to stop the real depression. What more evidence is needed to show that Obamas intentions are NOT what the liberals believe? There has never been a time in my life more painful than watching the purposeful destruction of our country and the free market system. Shame on all who refuse educate themselves or to even pay attention.
KK if this is truly the most painful time of your life where you believe a politician has led you down the golden path you've been gravitating through life with your eyes slammed shut!
In answer to your "raising taxes on middle class", the political mouthpieces and TV ads claim in various graphics that Obama would "raise taxes on middle class." In fact, Obama's plan promises cuts for middle-income taxpayers and would increase rates only for persons with family incomes above $250,000 or with individual incomes above $200,000. I don't know where you sit but from my view that is NOT middle class.
As long as we've brought this subject up kids someone please tell me how allowing Bush's tax cuts to to be extended fits in with the pay as you go plan. Where in the budget can we accommodate for a further decrease in revenues? Is there some financial windfall I'm not aware of where those dollars are not needed to impact the growing deficit any longer?
I hate to sound like I'm always defending this current administration because there is much I find fault with them. I just abhor stories filled with sound bites that veer from the true picture.
One more clarification point.
Billy, the President did not raise the tobacco tax congress did.
Yes, but it was his suggestion and he signed the bill. If he signs the bill, he is breaking his promise. And, Deborah, admit he has broken many of them, starting with G-Bay and continuing on an almost daily basis.
Frank I already said there are a number of issues I stand on objection to, as I have with most of the prior administrations. To say he is breaking promises on a daily basis is a grave exaggeration and only speaks to where your mindset is. There isn't a single thing this man will do that many of the participators here won't find fault with. To repeat a prior quote: If he walked on water many would say "what?? he can't swim???"
I, like many of the moderates out there, think he has done some good and some bad. His passing grade for me is a C+. However I am not viewing him with the same high level of scrutiny as you. He's got at least 2 more years at this so I will reserve total judgement till then. I merely want all of the debates on him to based on fact and not on rhetoric, hyperbole or lies. That seems like a daunting task for me these days. As always Frank I appreciate the opportunity to participate here and always look forward to each new topic matter and the subsequent discussion therein.
Part 1 of 2: It is “morality” (standards by which we live) that is the issue. How disappointing that we raise up another “valid” distraction, “not One Single Dime”, compelling, well written, supremely documented, factually elaborated, appealing to the selfish and honorable interests of all, and authored by people we respect dearly but trivial in comparison, not a canard (a deliberate misleading fabrication) but rather a predictable journey into the political ideologies of a wonderful circle of pedestrian “group think” who have not ruminated for any length of time on the difference between “objective” and “subject”, well articulate recently. The answer is simple, cut spending and taxes both by 50%. Moral authority is never retained by any attempt to hold on to it. It comes without seeking and is retained without effort.
And there is our inability to articulate the mission and goal of principled capitalism. Spirituality is absent. We have a poor understanding of the evil in our ranks or have at least not as yet demonstrated it. We lack the courage to confront twisted and tortured ill will as it is continuously revisited. We have no grasp of the meaning, implications, progress or goal of Sal Alinsky or Cloward and Piven as their doctrine steam rolls us into trivial discussions about meaningful distractions, anything except corrupt “progressivism.” One cannot forget that progressivism was once a political orientation of those who favor progress toward better conditions in government and society. Who can argue with that?
One need not be troubled any longer for to understand this currently tainted ideology one must only realize that Republicanism has become “progressivisms light.” Have you not noticed that “Conservatism” is the new ideology and the left finds it so threatening it must eradicate it? Why, because it is the rebirth of “core’ republican beliefs (pristine progressivism could share the same spotlight). Who is the enemy? We are our own enemy!
What is the primary, the only go-to response (except “No” or “Stop”, extremely valid) when the credits of conservative beliefs proffered in any argument prevailed? Racism, capitalism, oil…! And now taxes or Israel, or “who are our enemies.” On certain issues we are cowards, and as someone once said, what we lack is a common man’s understanding of Trust, Expectations and Christian love.
Rather we enshrine ourselves in a hair shirt, slap on the salve of repudiation of almost any “ism”, greed, embrace responsibility for slavery for which this generation had no part, (stop it, of course evil will always exist in some rotten corner of humanity) and try to be loved into the winner’s circle by the opposition. The moment there is suspicion about our motives, everything we do becomes tainted and that is the objective of Sal Alinsky. And if you doubt what he preaches just remember “the end justifies the means.” It won’t work. Truth begets hatred. Success breeds envy. And the only thing one can expect from the dominated is respect. After they respect you, all of the “feel good stuff” flowing from love will follow, not before…and respect can happen without conflict and war, or what is the “fight for their minds and souls” all about?
Our problem is not that we do not know what is right, what is moral, what is spiritually truthful (in search of that “truth” thing), no our issue is embracing it, accepting our flawed humanity, correcting it, practicing it, not wasting (the operative word here is “wasting”) a micro ounce of atonement, gathering all energy for the monumental task ahead, while we march purposely forward toward our discernible goal, our manifest destiny intended for all who embrace the dogma of a Christian Divine Providence (that nondenominational philosophy on which America was founded). If atheism now qualifies as a “sacred” belief, then why is it allowed to be perpetuated in our public schools by the wrongheaded misinterpretation of separation of Church and State?
Part 2 of 2: The spiritual, morality issue is a quagmire, not at all addressed. It takes a soul to confront the false prophets, for they are overwhelming. We complain vehemently about unions. Unions own 39% of GM. They own 55% of Chrysler. The Federal Government has imposed union rules for federal contracts. The Unions are exempt from Cadillac H’Care taxes. The Unions have Craig Becker on the NLRB. And Obama is pushing “card check.” Can anyone list a single victory for private enterprise? And you know, specifically those in the movie industry, that we hear continuously, and rightly so, of the unprincipled effects of corrupt unionism. But do we ever hear about the shady book keeping, the Art Buckwald suit against Paramount, or the numerous civil suits against the movie industry who always produce accounting books that prove, without a doubt, movies never, ever, without exception made a profit. And if Unions are so terrible, and the unprincipled ones with outrages working conditions and greedy unsustainable bloated legacy and entitlement benefits most certainly, definitely are, why are there Guilds (doublespeak, tactful euphemism for unions) for screen writers, director’s, producers and actors? Something about objective vs subjective, or not in my backyard!
Has anyone at this blog sight ever had the courage, the conviction, the sense of reason, to confront the extreme fringes of the religious hypocrisy of the tarnished fringes of America’s , our nations faith based communities? You know it well. We understand the Muslim religion and Radical Muslimism. The up close and personal experience was 9/11. And then the silence is sickening. And one would bet you do not have the slightest idea of what we are talking about. Surprise me.
We must not lose faith in humanity. Humanity is an ocean; if a few drops of the ocean are dirty, the ocean does not become dirty. It is Cloward and Piven who elucidated the principle that to organize the community into their vision of social justice (not to be confused with equal justice) we must first disorganize it, collapse it and rebuild it in their image.
And what exactly have you folks, talented beyond belief in my humble opinion, taught us about these three snake oil merchants, Sal Alinsky, Cloward and Piven. And following on the heals of this Marxists re-branded philosophy (don’t call it Marxists or we might know it for what it is) we know not the pain and sacrifice that will be required to succeed (or maybe we do…thus the stutter step).
And we complain vehemently about taxes. Why, it is easier than embracing our responsibility for the very existence of this counter solution to our lack of fairness and charity. Why are good companies like Apple, Intel, Microsoft, Oracle, IBM, HP, Beckman and the list is very long, without the strangling tax restraints and conflicts of unprincipled unions? We left England over this issue with passion of purpose, (passion of purpose is defined by what you are willing to lose as the price of what is sacred) long absent, hidden or just disguised, in this current struggle.
Unprincipled capitalism and unprincipled unionism is evil. The history, not fairly visited on this blog, is mired in racism, greed and unethical practices on both sides. Complaining when it doesn’t go your way just does not cut it. He who passively (passively includes the good people who do nothing) accepts evil is as much involved in it as he who helps to enable it. He who accepts evil without protesting against it is really cooperating with it. And we speak here not about external but internal corruption. He who condones evil is just as guilty as one who perpetuates it. Remember, “it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven.” Rich, poor, wealthy, ethical and honorable are not mutually exclusive unless you are blinded, distracted by the single, mercenary measuring stick of the shekel…..or taxes.
We will not advance until we “Live the change we seek.”
And of course you haven’t the slightest idea, or at least any thought about the main premise, of the two part recent comment. Please rent and watch the documentary “America’s Godly Heritage: Wallbuilders.” (available through Netflix) It is one hour of “facts” easily fact checked by the most ardent apostle of “truth.”
This documentary is about “America’s Founding Fathers and their views on Christianity (Human Values) and public policy are examined in this video. The beliefs of George Washington, Thomas Jefferson, John Quincy Adams and other founding fathers concerning the role of Christian principles (Human principles) in education and government are presented, accompanied by historical (“Facts” and “Truth”) American artwork. Also included are court cases (extremely compelling and “factual”) excerpts (spanning 160 years) in which Christian principles (Human Principles) are (were) tied to public policy (not anymore).”
It was in mid century when the Supreme Court began its assault on the logical, “fact based”, unsupportable (or purposefully misinterpreted) attack on the doctrine of separation of church and state. The founding fathers never intended this interpretation! And it was exactly at that moment in time every moral statistic available, the standards by which a culture, our culture, lives, the charts in this documentary are many and amazingly depressing, that the decline of “morality”, the decay of ethics, morals and principles, in America started in its unchanging journey “north (getting worse).”
One in inundated, swamped, flooded with facts, so dispense with the pro or con rhetoric and respond with appropriate consent or refusal “facts” as you have them. And maybe, at some point, it will become apparent by the dissection of the extremely successful ideologies of Sal Alinsky, and Cloward and Piven, the policy foundation of the “Reformation of America”, their track record of performance and results, is far more important, and barely analyzed, than “taxes.”
One can get honest, open and closed minded, passionate debate from both sides of this issue by reading the many comments of those who have reviewed this documentary. If you arrive at any conclusion at all without seeing it this documentary yourself, especially you Hollywood folks, you have cheated yourself, your intellect, your search for the “facts” and “truth” in both the objective and subjective sense.
We had a room full when we first observed this documentary. And when one watches this film, you Hollywood types must appreciate this, please replace the word “Christian Values” with “Human Values” to retard any knew jerk religiosity. We were all surprised, pleasantly, to discover a missing piece to this puzzle, a deep understanding of
“maybe” why our country is in the state of moral decline that we see, we are experiencing and dread. Our leaders are a product of their education….or why do children strap on bombs and blow up innocent people….they are taught” to.
Anonymous, what you offer here is a chance to reach outside of our own comfort zone and ponder something new. I, for one, will seek out this documentary you write of and see if it sheds as much clarity for me as it seems to have done for you.
A+
And in the beginning he was a liberal Democrat and an admirer of Franklin Delano Roosevelt.
Are there not ideas, ideals, concepts and ideologies, things more important, more pressing, more substantive, and more enlightening than “taxes?”
“Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.” “If we ever forget that we are One Nation Under God, then we will be a nation gone under.” “A people free to choose will always choose peace.” “One of the basic rules of living is not to be ashamed of our forefathers.” “Man is not free unless government is limited.” This thought in itself adequately addresses taxation. Can we venture into deeper thought?
“In The Face of Evil” (available through Netflix) one can move from the above reflections on “America’s Godly Heritage: Wallbuilders” to “Reagan’s War in Word and Deed” which “is a man and nation’s journey through the heart of darkness-and what that journey means for us today. This film is not (repeat is not) a biography of Ronald Reagan, but a hard hitting look at leadership and moral courage ( an issue very deserving of “currentism”). Based on Peter Schweizer’s acclaimed best seller “Reagan’s War,” the new feature length documentary (allows for fact checking) film “In The Face of Evil” chronicles the brutal conflict between totalitarianism and freedom as seen through Ronald Reagan’s forty-year confrontation with communism.
Vladimir Lenin said "Cinema is the most important of all the arts for us." (Remember, that which discrdits a man does not discredit his argument.) This should have a special significant to the those in the movie industry, those who have special skills and talents, the ability to extract much, much more from this creation, this cinematic effort, a area of expertise, exceptionalism and authority, which is in dire need of moral stewardship.
It is fair to compare this history to the present , asking ourselves, have we learned anything, is history repeating itself, and most importantly are we asking ourselves the right, the correct, the truthful questions, looking for “truth” , conformity with fact and reality.
And, at the end of the film, as the Twin Towers in New York collapse we know we are not on the “right” path. And he said, then in the 1950’s, he shifted to a Republican, “You and I have a rendezvous with destiny. We will preserve for our children this, the last best hope of man on earth…”
The issue today is not “Taxes.” The issue today is “We must love each other or die.”
The power of this film has been acknowledged in the technology, as each frame, a picture, is worth a thousand words. Please see it, view it in the context of “America’s Godly Heritage: Wallbuilders”, research it, put aside your political affiliation for long enough to see this film, and then reform, form your own conclusions.
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