Americans know how to use the moving van to escape high taxes.
By ARTHUR LAFFER and STEPHEN MOORE
Excerpts:
With states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich. Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the "fair" way to close his state's gaping deficit.[Commentary] Chad Crowe
Mr. Quinn and other tax-raising governors have been emboldened by recent studies by left-wing groups like the Center for Budget and Policy Priorities that suggest that "tax increases, particularly tax increases on higher-income families, may be the best available option." A recent letter to New York Gov. David Paterson signed by 100 economists advises the Empire State to "raise tax rates for high income families right away."
Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.
The barrage of tax increases proposed in President Barack Obama's budget could, if enacted by Congress, kill any chance of an early and sustained recovery.
Historians and economists who've studied the 1930s conclude that the tax increases passed during that decade derailed the recovery and slowed the decline in unemployment. That was true of the 1935 tax on corporate earnings and of the 1937 introduction of the payroll tax. Japan did the same destructive thing by raising its value-added tax rate in 1997.
The current outlook for an economic recovery remains precarious. Although the stimulus package will give a temporary boost to growth in the current quarter, it will not be enough to offset the combined effect of lower consumer spending, the decline in residential construction, the weakness of exports, the limited availability of bank credit and the downward spiral of house prices. A sustained economic upturn is far from a sure thing. This is no time for tax increases that will reduce spending by households and businesses.
Sen. Obama deserved his win. He organized the best campaign and ran his playbook to perfection. As The New York Times reports today, it was a near-flawless run.
As for the Senate, it looks as if the Democrats will have a 56- or 57-seat majority--the latter would be the same as Bill Clinton enjoyed during his first two years as president. The number 56 assumes that Norm Coleman will hold on to his tiny lead after a Minnesota recount, that Gordon Smith will similarly prevail in Oregon, that Saxby Chambliss either won enough votes (50%) to avoid a Georgia runoff or will win the runoff, and that Alaskans will vote for another Republican if and when Ted Stevens is carted off to jail. (Would Sarah Palin resign her governorship to run for the Senate?) The number 57 presumes that one of these apparent Republican victories will fall through.
It will be no small victory for Republicans to deny Democrats a filibuster-proof 60-seat supermajority or even a working one of 58 seats if you add Arlen Specter and Susan Collins to the Dem caucus. It means debates over union card checks and the Fairness Doctrine will at least get a public airing. I don't think Democrats want a public airing on those and other issues.
October 8, 2008 Tax Increase
October 6, 2008 7:30 AM
National Review Online NRO
Standing Still and Falling Behind
On business-friendly tax reform, the rest of the world is passing us by.
Of late, U.S. economic policy has been dominated by responses to short-term crises — the Wall Street bailouts, the economic-stimulus bill, and post-hurricane spending. Whether or not such interventions make sense, they divert attention from the urgent need to bolster America’s long-term competitiveness in the global marketplace.
While U.S. fiscal policy has been directionless, many of our international competitors have initiated dramatic tax reforms that put them at a distinct advantage for attracting outside investment and attendant job growth. Consider that 12 of the 30 nations in the Organization for Economic Cooperation and Development have capital gains tax rates of zero; meanwhile, Congress is dithering about extending our 15-percent capital-gains tax rate. And note that while numerous industrial countries — including Australia, New Zealand, and Sweden — have abolished their death taxes, the U.S. death-tax rate is set to jump to 55 percent in 2011.
Even where the U.S. has instituted encouraging reform — such as the dividend tax rate cut of 2003 — it lags behind its peers. Most OECD countries have lower tax rates on dividends when you measure the total combined corporate and individual burdens. The combined U.S. dividend-tax rate is 49 percent including state taxes — substantially higher than the OECD average of 43 percent.
August 22, 2008 Tax Increase
Wall Street Journal
We Can't Tax Our Way Out of the Entitlement Crisis
Given the hearty support Democratic presidential candidate Barack Obama received in Europe last month, he must have noticed the surprise and skepticism among some Germans when he asked that Europeans contribute more for defense. Many Europeans argue they cannot afford such an additional expenditure.
They are right. And therein lies a cautionary tale for the United States, because continental Europe has been following something like Mr. Obama's plans for spending and taxes.[We Can't Tax Our Way Out of the Entitlement Crisis]
Mr. Obama has revealed his plans in stages. First, on his campaign Web site, he indicated he would solve the long-run solvency of Social Security (a good thing). In a Sept. 21, 2007, op-ed in Iowa's Quad-City Times, he ruled out benefit cuts to achieve solvency and looked first to payroll taxes (a bad thing). Last week, on this page, his economic advisers clarified his evolving tax proposals.
Entitlements: The day of reckoning is coming for the costs we're running up to keep Social Security, Medicare and Medicaid benefits flowing. Judgment will be painful — as in a 150% increase in our current tax bills.
In an analysis prepared for Republican Rep. Paul Ryan, the Congressional Budget Office outlined the ghastly details:
"The tax rate for the lowest tax bracket," the CBO told Ryan, "would have to be increased from 10% to 25% (or 150%), the tax rate on incomes in the current 25% bracket would have to be increased to 63% (or 152%); and the tax rate of the highest bracket would have to be raised from 35% to 88% (or 151%)."
The top corporate tax rate would also move from 35% to 88%.
I don't know what I like more about this article. The fact that Massachusetts citizens are pushing for a repeal of the income tax, or the fact that bureaucrats are going bonkers with the prospect that they might succeed. From the Boston Globe:
A group of antitax activists launched a campaign over the weekend to abolish the state income tax, setting the stage for a contentious public battle if the measure is added to the ballot this fall.
After pushing a similar initiative that almost passed six years ago, a group called the Committee for Small Government is back for another round, asking voters to end the income tax and save the average taxpayer $3,600 a year. The group, led by libertarian Carla Howell, is almost certain to gather the 11,000 signatures needed to put a question on the November ballot.
To say that state officials are worried about the prospect would be an understatement.
Community, political, and business officials are grasping for words such as "chaos," "devastating," and "catastrophe" to describe the scenario that would unfold if the measure passes.
Are there any Club members in Massachusetts who can give me the local scoop on this? Send me an email at aroth@clubforgrowth.org (please assume that I'll publish your comments on the blog).
May 15, 2008 Tax
Democrat Party's Latest Proposal For A Tax Increase
YAHOO!.News
Democrats propose taxes to fund veterans' benefits
By ANDREW TAYLOR, Associated Press Writer Tue May 13, 7:59 PM ET
WASHINGTON - House Democrats are proposing a tax surcharge on millionaires to pay for a big increase in education benefits for veterans of the war in Iraq, lawmakers said Tuesday.
The plan, if accepted by rank-and-file Democrats, would clear the way for a vote Thursday on a long-stalled war funding bill that would pay for military and diplomatic operations in Iraq and Afghanistan into next spring.
Conservative "Blue Dog" Democrats blocked a vote last week over Democratic leaders' attempts to add an additional $51.8 billion over the next decade for veterans education to the $183.8 billion war funding tab. They insisted on finding a way to pay for the new benefit without simply adding to the deficit.
An Open Letter to the Missouri Senate: Give Taxpayers the Chance to Vote on Spending Limit Amendment
Dear Senator:
On behalf of the 7,300 Missouri members of the National Taxpayers Union, I urge you to support House Joint Resolution 70, which would allow taxpayers the chance to vote on a constitutional state spending limit. This important bill passed the Missouri House in April, and your approval would place the amendment on the fall election slate. Referring HJR 70 to the ballot could result in one of the strongest victories for Missouri taxpayers in 2008, and we urge you to support it.
If approved by voters, the state spending limit outlined in HJR 70 for general revenue funds would be set at the rate of inflation plus Missouri's population growth. The amendment is not designed to radically slash funding for state services. Instead, limiting state spending increases to "population plus inflation" will keep the government's rate of growth at an affordable level. Because the plan does not have a "ratchet-down" mechanism during recessions, the state's budget will still rise every year -- but at a more prudent pace.
Furthermore, HJR 70 wisely plans for times of economic downturn by creating a Cash Operating Reserve Fund and a Budget Reserve Fund made up of surplus revenues collected beyond what the spending limit allows. Once the funds reach specified percentages, the remaining revenue would be used to lower the state income tax rate. Combined, these aspects provide the flexibility to accommodate changes in Missouri's fiscal picture while still protecting taxpayers. HJR 70 further helps taxpayers by requiring voter approval of new taxes and fees before the revenue from such hikes can be added to the appropriations growth limit.
Maine Pushes through Nanny State Tax Increases; Says, Who Cares About Personal Freedom?
by Gerald Prante
Back when cigarette tax increases were justified by politicians on the grounds of paternalism (even though they really just wanted more money), critics argued that the same argument could be applied to other unhealthy activities and products like candy bars or soft drinks.
But such criticisms were dismissed as being scare tactics and unrealistic.
But now the nannies at groups like the totalitarian Center for the Science in the Public Interest are having their voices heard in the push towards even more state control over our lives (largely through tax policy), much like the American Cancer Society has done over the past two decades on cigarette taxes.
Of course, all of this is in the name of public health. (You as an adult aren't smart enough to make up your own mind about what to drink.)
April 27, 2008 Tax
Wall Street Journal
Property Tax Revolt
April 26, 2008; Page A8
Governor Janet Napolitano to raise taxes by $250 Million.
Arizona has been hit hard hit by the real-estate bust, with the average home value down 17% in a year and a record number of foreclosures. So Democratic Governor Janet Napolitano has devised a clever way to revive the housing market: Raise property taxes.
Last week Ms. Napolitano vetoed a bill that would have made a two-year suspension of the state property tax permanent. "It's untimely. It's untenable. It's unwise," she said of her untimely and unwise veto. So as housing values slide, Arizonans next year will get walloped with an extra $250 million property tax bill.
Arizona is one of a growing list of states and big cities looking to raise taxes on homes to close budget gaps in 2008 and 2009. Housing values are expected to decline by $1.2 trillion this year, according to Global Insight Inc., an economic consulting firm, and that means tens of billions of dollars in lost taxes.
Arizona’s public universities have proposed issuing $1.4 billion in bonds for a university building program. The universities have been asking the legislature for this money for a few years, but the construction downturn provides an opportunity to market it as a “Construction Stimulus Plan.” This plan is fundamentally flawed.
First, any stimulating effect will come too late. Proponents of the program say it would “immediately create 14,438 jobs for construction workers.” But the spending would be done over several years, so most of this work would occur long after the markets have corrected themselves.
Second, the commercial construction industry doesn’t need stimulating. According to Arizona State University’s Realty Studies Department, the value of new commercial building permits in the state is only down two percent compared to a year ago and the value of industrial permits is up.
I just got this email from Rep. John Campbell (R-CA-48).
Rep. Campbell Seeks Original Co-sponsors for the Put Your Money Where Your Mouth Is Act
There are many liberals who espouse the virtues of big government and say that they would be willing to pay more taxes. I feel they should have the ability to put their money where their mouth is. That is why I am introducing the Put Your Money Where Your Mouth Is Act, which would amend the Tax Code to allow individuals to make voluntary donations to the federal government above and beyond their normal tax liability. The bill would even place a line on the IRS tax form to make it easier for them to do so.
Leaders should be willing to do things before they would ask others to do them. Let’s give them a chance to do the honorable thing and pay extra taxes before asking others to do the same.
Washington – Obama’s speech on the economy today demonstrates a pervasive ignorance about the causes underlying the current crisis or a deliberate attempt to hoodwink the American people. Topping his list of reasons for the housing crisis were the absence of a big-government regulation scheme, “tax cuts for the wealthy,” and the war in Iraq. Few reputable economists would concur with this fanciful thesis.
“On the contrary,” said Club for Growth President Pat Toomey, “a lighter regulatory hand and lower taxes for all Americans played a key role in the economic growth the country has experienced over the past twenty-five years. With the country on the verge of a recession, it is tempting to forget the success of the past two decades and a half, but only last year, the market was climbing to new heights. This economic growth, low unemployment, and better standard of living were a direct result of less government, not more.”
Obama holds up FDR’s big government New Deal as a model for how America should respond to the current economic challenges, but he neglects to mention that FDR’s platform of massive government spending, sky-rocketing taxes on the “wealthy,” and invasive regulations crippled Wall Street and Main Street alike and plunged the country into a second depression in 1937—a depression within the Great Depression.
“Now Barack Obama is determined to repeat the mistakes of the past, proposing a slew of new tax hikes and an entirely new regulatory regime that is bound to stifle the innovation and dynamism that has been so integral to the growth and success of the investment banking industry,” Mr. Toomey continued. “This dynamism has lowered the cost of capital for American companies, created a vast array of investment options for American savers, and created thousands of great jobs for American workers.”
“In times of economic challenges, there is a tendency to overreach and call on the government to save the day, failing to realize that reckless government solutions usually cause more harm than good. This was the case with Sarbanes-Oxley, and it will most likely to be the case with any rush to impose additional regulations on investment banks.”
January 12, 2008 Tax
Center for Constitutional Government
Brazen Bureaucrats
Proposed health coverage for domestic partners violates separation of powers
Extending health benefits to domestic partners of government employees is a fiercely contentious issue. Arizona voters decided last year not to prohibit such benefits, but efforts to create them have come up empty in the state legislature.
No problem, says the Department of Administration, a state executive agency: we'll mandate insurance coverage for domestic partners of state employees and retirees by bureaucratic fiat. And it did just that in a proposed rule filed last November 30 to expand the term "dependent" to include domestic partners.
State agencies are not omnipotent; our state Supreme Court has ruled that agencies "have no common law or inherent powers-their powers are limited by their enabling legislation."State law gives the department authority to administer insurance for state employees-but no fewer than six statutes clearly define "dependents," all of them encompassing spouses and children but clearly not domestic partners.
January 10, 2008 Tax
From Small Business and Entrepreneurship Council
"Sales Tax Fairness" Bill is a BIG Revenue GrabDecember 28, 2007
Congressman William Delahunt (D-MA) has sponsored the "Sales Tax Fairness and Simplification Act." It sounds good, doesn't it? But it is anything but good.
It is, instead, an attempt to get Congress to approve a massive revenue grab by various state and local politicians.
The summary of the legislation explains: "Grants the consent of Congress to the Streamlined Sales and Use Tax Agreement (Agreement), the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002.
December 14, 2007 Tax
Center For Economic Prosperity
It All Adds Up: Unnecessary Spending in the Arizona Budget
Center for Economic Prosperity
Choose It or Lose It
Low tax states demonstrate path to economic success
The choice is stark, according to a new report by economists Art Laffer and Steve Moore published by the American Legislative Exchange Council. State policymakers can choose growth and prosperity or they can choose economic hari-kari.
During the 1990s, Arizona chose growth and prosperity. Where Arizona's total state and local tax burden had risen to 11.8 percent by 1991, it has since fallen to 10.3 percent. The result has been phenomenal growth and unparalleled peacetime economic opportunity for this state.
Michigan, on the other hand, has chosen a different path in recent years. While that state historically had a lower state and local tax burden than Arizona, its governments now tax away 11.2 percent of its citizens' incomes.
November 21, 2007 Tax
Stephen Slivinski
Arizona Issue Analysis #170
Executive Summary
The primary cause of this year's fiscal deficit is excessive government spending. State spending has grown far more than needed to keep pace with Arizona's growing population.
Whereas population has grown by only 36 percent, government spending has grown by 63 percent.1 Contrary to some reports in the media and the legislature, the mild recession has not left the state withering on the vine. The current state budget is the largest in Arizona's history.
The cure for the deficit is not to raise taxes, shift earmarked revenue from other accounts, issue bonds, or use budget gimmicks. Those are temporary solutions at best. The long-term, sustainable, and responsible solution to a bloated budget is to rein in spending.
If government spending had increased at a rate consistent with population growth since 1990, there would not be a deficit today. Instead, legislators would be debating what to do with a $217 million surplus.
This study identifies more than $233 million of spending cuts in the general fund that the legislature should consider.
Some of the programs are identified for elimination because they exceed the bounds of a properly defined role for government, such as the Arizona Commission on the Arts.
Some programs are redundant, and others could be reduced, privatized, or devolved to the local level. These spending cuts can be achieved without challenging federally mandated spending or substantially altering the way education and health care are currently provided in Arizona.
The future savings from this belt-tightening should be returned to taxpayers. Money left in state coffers will inevitably be spent.
Finally, strict budget rules should be enacted to ensure that future budgets do not increase faster than the rate of population growth. A spending cap would force legislators to reassess the state's priorities on a more frequent basis, keeping the budget and the state tax burden at manageable levels.
November 5, 2007
Stadiums Built With Taxpayer Money Go Way Overboard
Andrew Moylan of the National Taxpayers Union has recently released a report on the growing finanical burden placed on taxpayers due to rising subsidies for sports stadiums.
This at a time when the Comptroller General of the U.S. is touring the country, talking to "anyone who will listen to the unsustainability of present spending.
Charlie Rangel Loves Fidel Castro and Redistribution
Touted as the "mother of all reforms", this confiscation scheme is probably the all time leader of legalized thievery from those who pay taxes to give to Rangel's slackers and the millions of others who already receive huge sums of other people's hard earned dollars.
Under the guise of relieving the millions who pay the Alternative Minimum Tax (AMT)this cruel deception would indeed do that but it would do it by first letting the 2003 tax cuts expire which would jump millions way up to begin with in order to pay for the huge payments this would give to those receiving the badly misnamed Earned Income Tax Credit (EITC).
No one has ever earned one penny from this welfare program which has become a major tool for typical Democratic deceit.
Rangel wants to double the maximum welfare payment from the present cash payment 0f $4300 to $8600, just from having a job and at least 1 dependent, like millions of others do but who do not get one cent for the job that they hold.
This program should be called the Unearned Income Tax Credit (UITC)
Besides the cash payment these recipients get, they also get a refund on all social security taxes paid, all income taxes paid and all Medicare taxes paid.
So later in life, when they get receive their social security check, and get Medicare payments, it will have been paid for by another hard working taxpayers.
Tax Picture Bleak Again
State of Arizona Budget-Another Huge Increase
On July 2nd, 2007 The Goldwater Institute reported that the Arizona state government will spend, in its latest budget, which began on July 1, $27 billion dollars or at the rate of $855 per second.
The Institute goes on to report the following:
Spending for fiscal year 2008, will see an increase of $ 1 billion dollars over 2007.
"Over the last 10 years, the state budget has increased 112 percent, which far outpaces state personal income growth or the increase in population plus inflation," said Steve Voeller, president of the Arizona Free Enterprise Club.
Generally inflation has averaged less than 3% per year over the last 10 years which would total in the neighborhood of 25- 30%, yet according to the report above, state spending in Arizona has increased 4 times the average.
We must insisting that government spending as a percent of the total state income be reduced and held to a specific amount.
Excessive spending pulls capital out of the private sector and when used for excessive government spending is harmful to the general population.
May 7, 2007
Tax Increases Ahead: The Impact of the House Budget Resolution, By Congressional District
by Shanea Watkins, Ph.D.
Shanea Watkins writes for the HERITAGE FOUNDATION, the origin of this article.
Click here to see the cost in your state and district.
Arizona's 8 districts are the center state of five states shown there.
On March 29, the House passed its fiscal year 2008 budget resolution. The House's budget, if implemented, could increase taxes significantly over the next five years, in turn decreasing job growth, reducing personal income, and weakening the economy. This paper presents state-by-state and district-by-district projections of the likely impact of the House's budget resolution on the tax burden, jobs, and economic growth.
Taxing Results of the House Budget Resolution
The House leadership has proposed to increase spending over the next five years. Given the leadership's avowed commitment to paying for spending increases, tax revenues will have to rise. Which taxes will have to rise is unclear, as budget resolutions are notoriously short on details. However, the failure of House leaders to include any language addressing the expiring Bush tax cuts of 2001 through 2004 indicates that they could intend to end these tax cuts.[1] This, in turn, means that the House leadership could be allowing American taxpayers to assume a large and expensive tax increase upon the expiration of these tax cuts.
The House budget resolution has the potential to cost the average American taxpayer an additional $3,026 in taxes. In addition to the increased tax burden, Americans could also see their personal income decrease by an average of $502 dollars due to a weaker economy. Moreover, the budget resolution could damage employment growth, causing about one million fewer jobs to be created, and has the potential to damage economic output by over $100 billion nationally. The average cost of the House budget resolution to each congressional district amounts to the potential loss of 2,284 jobs that would have otherwise been created and a loss in economic output by an average $240 million.
The culprit for these negative impacts is higher taxes. Many economists believe that higher taxes, particularly on capital, cause the level of private investment to fall, thereby slowing productivity improvements and weakening the earning capacity of households. Wages and business earnings, which are closely tied to productivity, would fall as well.
Again, the budget resolution does not contain a detailed tax plan. However, the resolution also is silent on the most important tax policy change since 2001: the expiration of the tax law changes from 2001 through 2004 over the next four years. This paper presents estimates of the potential impact that allowing the Bush tax cuts to expire would have on Americans.[2]
Estimating Economic Effects of Tax Increases
This paper uses an earlier dynamic analysis of the 2001 and 2003 tax acts as a basis for estimating how allowing the Bush tax cuts to expire is likely to affect the U.S. economy. In that dynamic analysis, analysts in the Center for Data Analysis (CDA) at The Heritage Foundation used two models to estimate the economic and budget effects of permanently extending provisions of the Bush tax cuts. They used the CDA microsimulation model of the federal individual income tax and Global Insight's short-term U.S. macroeconomic model.[3] CDA analysts simulated the economic and budget effects of allowing a number of the provisions of the 2001 and 2003 tax acts to expire in 2010.[4] They did not include alternative minimum tax (AMT) relief, which the House leadership also proposes, in their analysis. They measured the economic and revenue effects presented against the Congressional Budget Office's baseline economic and budgetary projections.[5] Those projections assume normal levels of economic, population, and employment growth over the next five years. Those also assume the expiration of all provisions of the 2001 and 2003 tax acts at the end of calendar year 2010.
National estimates from this CDA analysis became the basis for the state and congressional district data in the attached tables.[6] CDA analysts aggregated additional data used for this subnational analysis. State population estimate data were obtained from the Census Bureau,[7] and personal income data were obtained from the Bureau of Economic Analysis.[8] Data on economic output by state were also obtained from the Bureau of Economic Analysis,[9] and employment data were collected from the Bureau of Labor Statistics.[10]
CDA analysts allocated these state estimates across congressional districts using data from the American Community Survey.[11] Specifically, data were collected on total population, total non-farm employment, median household income, and aggregate income[12] for each congressional district.[13] Each of these figures was used to calculate the district's shares of the state tax increase, personal income loss, job loss, and loss in gross domestic product (GDP).
Congressional district shares were calculated as follows:
1. The estimated tax increase for each congressional district was calculated using median household income. First, the average median household income was calculated for each state. This number was then used to create an adjuster for each congressional district based on how its median household income compares to this calculated average. For example, if the median household income in a congressional district was $36,000 and the state average was $30,000, the district had a median income that was 20 percent higher than the state average ($36,000/$30,000 = .20). Because tax burden is based on income, the state tax increase figure was allocated to each congressional district using this income adjuster. Using the example above, and assuming that a state's taxpayers can expect an estimated tax increase (based on average income) of $1,500, a taxpayer residing in this congressional district would have an actual tax increase that is 20 percent greater, or $1,800 (($1,500 x .20) + $1,500 = $1,800).
2. Loss of personal income, at the state level, was calculated at the aggregate level, representing the total amount of personal income that could be lost across the entire population of the state.[14] Each congressional district's share is calculated as the proportion of people residing in that congressional district. For example, if the total personal income loss in a state was $1,000 and a congressional district comprised 10 percent of the state's population, people in that congressional district could expect to lose $100 in personal income ($1,000 x .10 = $100).
3. Non-farm employment for each congressional district was calculated by subtracting the number of people working in farming, fishing, and forestry from the total civilian employed population aged 16 or older. The percentage of non-farm employees in each congressional district was then calculated by dividing this number by the state's non-farm employment. Each congressional district's share of job losses was assumed to be equal to the proportion of non-farm jobs held in each district. For example, if a state could expect to lose 2,000 jobs as a result of the House budget resolution and a specific congressional district employed 15 percent of the state population, that congressional district could expect to lose 300 jobs (2,000 x .15 = 300).
4. Loss in gross domestic product was estimated as a state total, representing the total amount of estimated growth in GDP that a state could lose as a result of the House budget resolution. Because GDP and income are highly correlated, each congressional district's share of GDP was assumed to be equal to the proportion of aggregate income found in that congressional district. For example, if a state could expect to lose $100 million in GDP, or economic growth, and a congressional district accounted for 20 percent of that state's aggregate income, the congressional district could expect to lose $20 million in economic output ($100 million x .20 = $20 million).
Conclusion
As it currently stands, the House budget resolution proposes to allow the Bush tax cuts to expire, which could potentially cause the average taxpayer to face an additional $3,026 in taxes. Further, allowing the Bush tax cuts to expire could cause great damage to the economy, reducing both job creation and economic growth.
Shanea Watkins, Ph.D., is Policy Analyst in Empirical Studies in the Center for Data Analysis at The Heritage Foundation.
The Recently Updated 2007 Report was released on April 23, 2007
Like all those that have come before it the news is not good.
We will be providing addiotional details in the coming days.
SOME INTERESTING SCENES AND ACTION SHOTS FROM THE TUCSON-PHOENIX AREA
Democrats Try To Change Rules in Effect since 1822 To Hide Tax Increases and Other Legislative Shenanigans
Tax and spend Democrats keep piling on one deception after another.
This article first appeared in Human Events
By John Boehner
John Boehner is the Republican Minority Leader for the House of Representatives.
This week, House Republicans were united in backing down an attempt by Democrats to rewrite House rules to make it easier to raise taxes on middle-class families and increase government spending without having to vote and be held accountable. We stared them down, and we won.
House Republicans used a series of procedural motions designed to bring business on the House floor to a halt. Democrats are already pushing to raise taxes on every American, not to mention the billions and billions in excessive, unnecessary spending. Now they want to duck responsibility for it? We won’t let it fly.
House Speaker Nancy Pelosi listens to a question during a news conference before a fundraising lunch for U.S. Rep. Jan Schakowsky, D-Ill., in Chicago, Friday, May 4, 2007. (AP Photo/Charles Rex Arbogast)
At issue are a series of House rules that have served Congress well since 1822, and are based on a manual Thomas Jefferson wrote for himself to use while President of the U.S. Senate. The last time they were changed was 185 years ago -- when Jefferson was still alive and James Monroe was President. Every Congress since has been able to operate under these rules, which allow the minority party to expose flaws in and make substantive improvements in legislation considered on the House floor. Every Congress, that is, until the 110th.
Republicans have used the “motions-to-recommit” (MTR) allowed by House rules to amend and substantially improve the weaknesses in underlying Democratic bills. They’ve enabled Republicans to pass measures protecting innocent American passengers from being subject to frivolous civil lawsuits when they report potential terrorist activity (prompted by public outrage over last November’s “flying Imams” incident). They enabled us to protect U.S. military recruiters from discrimination by federally-funded colleges and universities, to strengthen terrorist screening programs, and more. All with the support of rank-and-file Democrats.
On March 27, Congressional Quarterly (CQ) reported that: “Now that Republicans have shown they can use new House rules against the new Democratic majority that wrote them, the Democrats want new rules.” This week, Democratic leaders tried to make good on that desire, quietly moving to shut down Republicans without any notice and eliminate a rule that’s forced them to take some tough votes.
It’s a far cry from where they were last November when House Democratic leaders promised the most open, ethical Congress in history. Speaker Nancy Pelosi (D.-Ca.) said in December, “[W]e promised the American people that we would have the most honest and most open government and we will.”
And House Majority Leader Steny Hoyer (D.-Md.) told Congress Daily he wanted to give “opposition voices and alternative proposals the ability to be heard and considered on the floor of the House.”
Speaker Pelosi once went so far as to say she was willing to lose votes if it meant ensuring her House was the “most open, ethical” in history:
“In perhaps the biggest break from the current practices of GOP leaders, Pelosi said she would be willing to lose votes on the floor.”
“‘I certainly would not say that we can't bring things to the floor because we'll lose…’”
So much for being willing to lose some votes. Perhaps before they game the system by changing the rules to their liking, Democratic leaders should ask their own members why they are voting in droves for our Republican proposals.
Why are Democrats against Democracy? The attempted rules changes strike at the very heart of what it means to be a representative in United States Congress. The American people elect each Member to represent them with the knowledge that we all have the opportunity to actively participate and ensure their voices are heard. Scrapping rules that have existed since the first days of the republic designed to make sure the House remains a deliberative body -- and not simply a machine of the Speaker and Committee Chairmen -- would do lasting damage to the institution. I won’t allow it.
Democrats need to be held accountable for the tax-and-spend policies they pursue -- the high tax, high spend policies the American people do not want. House Republicans stood united to make sure that happens.
July 19, 2007
Americans for Tax Reform Lauds Gov. Blunt for Opening Up Missouri’s Books
Creates MAP – Missouri Accountability Portal allowing taxpayers to track government expenditures
On Wednesday, July 11, Governor Matt Blunt (R) of Missouri signed an executive order launching the Missouri Accountability Portal (MAP).
MAP is a database in which taxpayers can search how money is spent by individuals and individual businesses.
This move by Governor Blunt allows taxpayers to have a much more open view of how their money is being spent.
Hong Kong has had a flat tax for tax for several decades. Other countries are jumping on the flat tax bandwagon at a rapid pace.
In recent years 17 countries have introduced flat taxes, according to the World Taxpayers Associations (WTA), a coalition of 60 taxpayer including the National Taxpayers Union (NTU)-from 44 countries.
A single-rate tax would create a more simplified and transparent system. How we allocate our resource has as much to do with a healthy economy as to how much we spend.
Presently, this monstrously complicated tax code exists, more for the benefit of congressman to dispense favors to special interests, than it does to serve the needs of U.S. citizens.
The present system is a horror in both ways. It spends far too much and allocates resources poorly.
In the case of farm, dairy, sugar and other subsidies, it even takes our money redistributes much of it to rich barons in these areas which result in higher prices to consumers.
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Lately many countries have enacted systems with very low flat income tax rates ranging often from 10 percent to 13 percent.
Macedonia, Bulgaria, , Kyrgyzstan, Kazakhstan among have introduced flat tax rates of 10 percent over the past two years.
Others, Russia-13% in 2001, and 13% in 2004.
When Steve Forbes ran for president in 1996, he proposed a flat tax of 17% with a standard deduction and personal exemptions that exempted the first $36,000 of income for a family of four.
Virtually every one of these countries has been very pleased with yields to the government and overall performance.
October 18, 2007
Features of A Flat Tax
A single flat rate.
Most economists agree that when tax rates are too high they have a negative affect on on productive behavior, such as work, productivity, risk taking,(investing) and entrepreneurship.
Elimination of most preference which come in the form of deductions, credits, loopholes, subsidies and several other terms.
It would end double taxation. There would be no tax on:
Capital Gains
Savings
Dividends
No Tax on income earned outside the U.S.
July 6, 2007
Another Former Soviet Bloc Nation Adopts Flat Tax
A former Soviet Republic has recently declared independence. It is the nation of Moldova which either is called Pridenostrovie according to Daniel Mitchell of the Cato Institute.
Bigger news than the name change seems to be the fact that this country, poor and backward as it is, is showing the good sense to adopt a flat tax, reducing its rate from 15% to 10%
Actually, free market activity goes back to 1990. That was the beginning of free market thinking and action.
The recent reduction in tax rates is based on results that improved incentives for investors and citizens in general.
So now, add the former Moldova, to Russia, Georgia, Slovakia, Estonia, Latvia, Serbia Romania, and Ukraine, among nations who have a flat tax.
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Needed: A Flat Tax or Consumption Tax (FairTax)
Presently the Internal Revenue Code (IRC) contains more than 66,000 pages. It consists of more than 9 million words.
In 2005, Americans spent 6.4 billion hours complying with the IRC at a cost according to the Tax Foundation, a non partisan tax research organization, of $265 billion, an amount greater than this past year's federal deficit.
Americans who do their own taxes spend an average between eight an twenty seven hours completing the task.
In the early 1990's former Congressman Dick Armey Proposed a form of flat tax allowing a $13,100 standard deduction for adults and $5300 for each dependent child.
A family of four would have exempted the first $36,800 of income. After that a flat rate of 17% would apply.
In his 2000 presidential bid, Steve Forbes proposed a plan almost identical to Mr. Armey's except that the Forbes plan exempted the first $42,000 of income for a family of four.
The Forbes plan was designed so that the return could be done on a postcard size document with between 8 and 11 lines.
The exempted amount in both plans was based essentially on median family income in the U.S.
In just one aspect of a flat tax (revenues to the government) the data is overwhelmingly in favor of a flat tax to increase government revenues.
A properly planned CONSUMPTION TAX would almost certainly yield favorable results similar to the FLAT TAX results.
We will examine the FLAT TAX further and soon thereafter the Fair Tax which also has millions of supporters.
You may be asking how we could have such a mess especially when that mess is costing so much and at the same time curtailing wealth.
Congressional power is the simple answer.
Congress does not want to give up its right to dispense favors for reciprocal benefits.
Hard to believe that 535 individuals could have such control over 200 million of voting age.
Revenues have soared in some countries that have switched to a flat tax.
Others have had lesser but still highly satisfactory results.
Russia of all places has had one of these great success stories with the flat tax.
The Russian Federation, as it is properly called, saw revenues rise by 25.2% in the first year after the Federation introduced a flat tax.
The second year saw an increase of 24.6% increase, followed by a 15.2% increase in the third year.
Other countries that have adopted the tax with one flat rate are Serbia, Ukraine, Estonia, Latvia, Lithuania, Slovakia, Georgia (not the Peach State, of course) Romainia, Macedonia and the Czech Republic.
These are just flat tax countries in Eastern Europe.
Others like Hong Kong have enjoyed astounding prosperity with highly limited resources.
We will discuss Hong Kong separately within a short time.Why doesn't the U.S. have either a flat tax or a consumption tax?
Congressmen/women get reelected by dispensing money for favors.They do not want to give up that power as they grow rich in congress.
Estonia In 1995 Estonia initiated a plan that taxed companies and individuals at the same rate. The country exempted completely those with very low incomes.
At the time Estonia was a poor country. Its income was a small fraction of most of its Eastern Bloc neighbors.
Estonia has now passed some of its neighbors and has an economy that is growing at 11%. Three percent growth is normally considered healthy.
It adopted a flat rate of 26%. Our highest corporate rate is 35%. Our highest individual rate is 36%.
After several years Estonia dropped its rate for corporations and individuals to 22%. Revenues soared even more.
The Index of Economic Freedom published by the Heritage Foundation listed Estonia’s per capita GDP at $3951 in 2001. By 2004 the Index listed per capita income at $14, 555, the last year for which that body had compiled figures.
The CIA World Factbook has figures through 2006. Those figures list Estonia with GDP - per capita (PPP): of $19,600. (2006 est.) PPP stands for Purchase Power Parity.
For the sake of comparison Russia has PPP of $12,100 (2006 est.). Russia has had a large rise in Per capita income since the enactment of a flat tax butwith a much larger economy than Estonia's the per person increase is less dramatic.
Low, flat corporate taxes have drawn companies such as Microsoft, Johnson & Johnson, 3M, Colgate and Bristol-Meyers Squibb to Estonia.
Before the low flat tax foreign investment was 5% of GDP, it is presently up to 20%.
Dropping the tax rates put more money in the private sector, drew in new business including giant corporations-the kind usually vilified by big government advocates-yielded vastly increased government revenues and a huge increase in GDP, per capita income, purchasing power parity, and living standards.
Estonia is now scheduled to drop its rate further yet to 20% in 2009.
Yet the liberal brain is somehow able to live in denial as this the same action brings the same result over and over and over.
Liberals just cannot let go of the reality that oversized government has huge negative results for the general population, especially the poor.
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