Deficit and Tax Policy
DEFICIT
How Hard Would You Work If I Kept Almost Two-Thirds of Your Money?
This week it was announced that Democrats in the Senate want to legislate a 3% tax on income over $1 million to raise federal revenues and decrease the nation's budget deficit. This tax would be in addition to the higher income tax rates that will result from the cancellation of the Bush tax-rate reductions and, according to Stephen Moore at the Wall Street Journal (http://on.wsj.com/m8boKE), could push the top federal income tax rate over 60% of earnings.
In arguing this proposal the pundits, politicians, and wonks will, without fail, discuss the importance of two economic propositions: the Laffer Curve and Hauser’s Law.
Only an Irrational Company Would Put Itself at a 13% Disadvantage to Choose to Add Jobs in America
Look at the graph below and it is easy to see what is wrong with that picture.
Combined Corporate Tax Rate
The US government is signaling to business that if they have a choice there are better places than the U.S. to invest new jobs and grow. Any first year financial analyst would recognize that the return on investment needed to invest in America must be at least 13% better than other OECD (Organization of Economic Co-Operation and Development made up of countries with established, emerging, and developed economies committed to global development) countries in order to make sense.
The U.S. Loses When States Wage Battle Against Each Other to Bring in Business
In times of trouble, Americans should work together to solve our problems; fighting amongst each other just creates more troubles. While the U.S. has been brought to its knees by the worst economic period since the Great Depression, states continue to fight with each other to attract businesses. Their weapon of choice, the state-level corporate income tax rate.
Perception vs. Reality of Corporate Taxes, Why is There a Difference?
Debt, Deficit, Taxes are the talk of the town right now. Whether government spending and taxes are too high or too low is a confounding issue. Right now there is a consensus that the current corporate tax rates scare away foreign business and push U.S. companies into investing abroad. Neither of these actions helps the U.S. get out from under its mound of debt. In all of the confusion, there is a solution that helps both businesses and the U.S.
The Debt Ceiling & the Missed Opportunity in Social Media
Like many Americans I have become fed up with the debt ceiling debate. How many more articles do we need to read about potential solutions that go nowherein the contentious nature of today’s Washington? The situation got so out of hand that President Obama and House Speaker Boehner spoke directly to the American people to drive support for their plans. The President specifically said “I’m asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your member of Congress know.” Calls and emails to the White House and Congress surged, but it seemingly has had little impact, if any at all.
Cutting Through the Spin: What Obama’s Budget Reveals
By Charles Kadlec
This blogpost originally appeared on Forbes.com, February 20, 2012.
The federal budget is a dense document totaling hundreds of pages of numbers. Yet, for all of the digital precision, the use of various “base line” budgets, numbers that span 11-year time frames and other arcana known only to Washington insiders and budget mavens obscure more than they reveal about what the federal government is up to.
To cut through the haze and spin, I chose to focus on President Obama’s “Proposed Budget”, and to compare all projections with actual 2011 levels. I came away with four observations:
No such thing as a temporary tax break
Oh, temporary tax breaks, music to the ears of their beneficiaries and the bane of CBO Director Douglas Elmendorf who must make budget projections accounting for them.
If it weren’t for the recent explosion in the number of tax breaks, they wouldn’t be such pesky pieces of economic policy. In 1998, there were only nine temporary tax breaks. By 2009, there were 73; meaning that in more than 10 years the number of temporary tax breaks built into the tax code has increased by 711%.
California and Washington Are Fond of Fixing Their Spending Problems by Taxing the Rich
As the entire country (except for that area known as Washington, D.C.) works to get out of this financial rut, we are starting to see the same economic problems on the local level as we have seen on the national level.
Last week California Gov. Jerry Brown announced that the Golden State has a projected deficit of $15.7 billion. At least it wasn’t the same as our national deficit of $1.3 trillion.
Obama – A Failed Experiment
By Richard Callahan
Job creation almost nil, unemployment increasing, the left is angry, the right is up in arms and the center is grumbling. What is wrong with this great experiment that promised so much?
Almost 4 years ago an eloquent, energetic, charismatic political outsider, Barack Hussein Obama, burst upon the scene. He arrived at a time of great economic turmoil and dissatisfaction with the regime in power and promised sweeping change. He promised change from an economic downturn gripping the country. He promised new, forceful leadership in which all citizens of the country would be united as one and prosperity and economic vibrancy would once again be restored. He promised American international leadership and the restoration of the American dream. Sadly, his promises have proven to be empty rhetoric and his policies have wreaked destruction on the unity of America, it's economy and the hope of so many Americans who believed his false prophecy.
Data Matters: The 1986 Tax Reforms
By Tammy Frisby
This blogpost originally appeared on Advancing a Free Society, on June 12, 2012.
This week’s installment of Data Matters features data presented by Tammy Frisby, a research fellow at the Hoover Institution who also teaches in the political science department and public policy program at Stanford.
This week on Capitol Hill, there was renewed attention to the looming Taxmaggedon (or Taxmageddon; take your pick), which involves, among other pending tax code changes, the scheduled expiration of lower tax rates on income, dividends, and capital gains, and the end of the extended payroll tax holiday. There is now more public talk from senators and members of Congress about using the threat of Taxmaggedon in January 2013 to build a legislative coalition for a sweeping tax overhaul that would preempt the economic and political damage that Taxmaggedon would wreak.
Can we prevent a debt-driven economic collapse without reforming entitlements?
By James D. Agresti and Dustin Siggins
If the U.S. government continues with its current tax and spending policies, children born this year will be saddled with a crippling publicly held debt that is more than twice the size of Japan's by the time they turn 30 years old. This grim picture, projected by the Congressional Budget Office (CBO) in its newly published annual long-term budget outlook, expects U.S. publicly held debt to grow from 73% of GDP by the end of 2012 to 247% of GDP by 2042.
Worse still, the CBO projects that current policies will continue to drive the U.S. deeper into debt, and by the time today's newborns reach 38 years of age in 2050, the major federal healthcare programs and Social Security will consume all federal revenues, leaving nothing for any other function of federal government or even interest payments on the national debt.
Obama Drowns in Red Ink
This article originally appeared on the National Review Online on October 19, 2012
"Today I am pledging to cut the deficit in half by the end of my first term in office,” President Obama boldly declared on February 23, 2009. He added that this “means taking responsibility right now, this administration, for getting our spending under control.”
Among Obama’s parade of disappointments, this vehicle may be the most dangerous.
With the Vast Deficit, Where is Our Economy Headed?
The federal deficit, currently $1.1 trillion, is now about 7 percent of our economy or gross domestic product (GDP). Although the deficit was even higher by this standard in 2009, at 10.1 percent of GDP, both figures are historically high numbers in the post-World War II era, according to the Congressional Budget Office’s most recent Monthly Budget Review.
When the government borrows on the scale that Washington has been doing over the past decade, it reduces the funds available for private lending and therefore the investment activities that fuel the economy. Concerned observers have raised the possibility, unless substantial deficit reduction occurs, of a long-term trend of higher interest rates and slow growth.
Congressional Budget Office releases Economic Outlook, 2013-2023
By Bea Kath
The Congressional Budget Office (CBO) released a report to show how Obama’s tax hikes, signed into law last month, will affect the federal government’s fiscal outlook.
Here are some highlights:
Get The Facts
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"Tax-Reform Peril" New York Post via Manhattan Institute
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"An Inferior Tax Cut" Wall Street Journal
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"Would Another Repatriation Tax Holiday Create Jobs?" Heritage Foundation
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"10 Graphs that Prove that the U.S. is a Low-Tax Country" American Progress
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"The Moment of Truth" National Commission on Fiscal Responsibility and Reform
ENGAGING WITH OTHERS
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October 22, 2012
Paul Krugman: 'The Public Really Doesn't Care' About The Deficit
Cody, on Huffington Post -
October 16, 2012
Branstad announces tax cuts
Moss, on KCCI -
October 10, 2012
Hey Romney, Here's A Comeback To Obama's $5 Trillion Tax Cut Canard
Moss, on Forbes -
October 17, 2012
11 Things The GOP Doesn't Want You To Know About The Deficit
Bill, on Huffington Post -
September 11, 2012
We Need a Bipartisan Effort to Fix the Economy
Collin, on US News
