An Easy, Obvious Fix In the Tax Code

The solution is to take a cue from the tax code, which allows married couples filing jointly to earn more before a higher rate kicks in, accounting for the fact that both adults can be breadwinners. Congress removed marriage penalties for highly paid professionals long ago, and it is past time to give this basic consideration to working-class Americans.

Child care assistance — inherently pro-work, but with the largest marriage penalties due to the high cost of childcare — is the perfect candidate for reform. Moreover, state lawmakers have significant discretion over the program and can enact desperately needed reforms. First, increase the program-eligibility threshold of family income for working-class married couples to account for the reality that two adults will earn more than one adult. Then, phase out the benefit slowly to reduce the financial hit to recipients as they earn more or get married.

https://www.realclearpolitics.com/articles/2020/12/16/a_simple_policy_fix_to_encourage_two-parent_homes.html

Who's the Greediest of All

Someone might want to tell Hillary Clinton that greed and envy are two of the seven deadly sins. She's guilty of both.

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Her revised tax plan‎ would raise the estate tax to as high as 65% -- up from 40% today. She would also apply the hated death tax to as many as twice the number of estates.

It's one of her dumbest ideas yet — which is saying a lot. It won't raise any revenue to speak of. It's a bow-tied gift to estate tax lawyers and accountants. Many studies have found that the cost to the economy of taxing a lifetime of savings more than ‎outweighs any benefits. It actually could end up costing the Treasury money by reducing investment in family businesses that are a major engine of growth for our economy.

But Hillary wants to take us back to the 1970s. According to a Wall Street Journal analysis, the plan would "impose a 50% rate that would apply to estates over $10 million a person, a 55% rate that starts at $50 million a person, and the top rate of 65%, which would affect only those with assets exceeding $500 million for a single person and $1 billion for married couple.

What Hillary doesn't get is this: Anyone who's smart enough to make half a billion dollars is smart enough to find a way to dodge this confiscatory tax. That's the whole history of the death tax — the very rich never pay it."
http://www.investors.com/politics/columnists/bernie-clintons-massive-tax-hike-is-based-on-greed-and-envy/

Corporate Taxes Hurt All of Us

The dirty little secret of the corporate income tax is that corporations don’t really pay taxes. They are not living beings that know they are being taxed. Rather, shareholders shoulder the burden in the form of reduced dividends and lower stock valuations.

If a company’s “effective” tax rate (after deductions and credits) is 27%, that is what shareholders pay. And they pay that whether they own 10 shares or 10 million shares, and whether the shares are in a standard account or in an IRA, 401(k) or pension fund.

http://www.usatoday.com/story/opinion/2016/05/24/tax-inversions-corporations-ireland-jack-lew-barack-obama-editorials-debates/82992264/

A lot of these taxes are paid by those who buy the products - "corporate" taxes are just a sneaky way pols take our stuff from us at gun point.

Business Taxes Are A Sign of Stupid

As free-market economist Alan Reynolds of the Cato Institute recently noted, government interest rates were rock bottom in the 1930s. That's because the Fed and most other central banks were way too tight.

Even worse today, having stuffed banks with excess reserves, central banks in Europe and Japan are punishing those banks with negative interest rates. They're also punishing savers. This is not good policy.

What we have now in these uncertain times is not so much a monetary problem as a major fiscal problem. In particular, corporate tax rates must be slashed in the U.S. for large and small businesses. We also need full cash tax expensing for new investment and an end to the double taxation of foreign profits.

http://www.realclearpolitics.com/articles/2016/04/01/slash_corporate_taxes_first_then_yellen_can_normalize_130163.html

The case for lower business taxes is just obvious.  One of the many maddening things about US politics is no one's even talking about the potential growth in reducing business taxes and/or the way a 4% growth rate would heal the federal government's death spiral.

Taxes, Remember Those?

But it is hard to see why conservatives wouldn’t be excited about what Cruz and Paul have put forward. It’s what tax filers have been waiting decades for:

First, the Cruz/Paul plans would give America the lowest tax rates since the income tax was devised 100 years ago. For this reason, these plans are estimated by the Tax Foundation to grow the economy by a gigantic $2 trillion extra GDP per year after 10 years. That’s exactly the opposite effect of the Clinton and Sanders plans.

Second, both the Cruz and Paul plans eliminate almost all deductions and credits — which is how they get the rate so low. The IRS could be dramatically shrunk in size. Don’t forget, when there are fewer deductions, there are fewer ways to cheat on your taxes. The lower the tax rate, the less incentive to cheat, which means greater voluntary compliance.

Third, because the Cruz and Paul plans are “border adjustable”: Imports are taxed at the flat rate when they are brought into the U.S., but American products sold abroad are not taxed at all. This would level the global playing field for American manufacturers, tech firms and drug companies and bring these jobs scampering back home. Trump’s tariff ideas could be put back on the shelf, and those who want “fair trade” should celebrate.

http://www.investors.com/politics/viewpoint/stephen-moore-which-candidate-has-the-fairest-tax-plan-of-all/

The Experiment of Federalism

Connecticut has the second-highest property tax in the nation, ranking 49th out of 50. The Tax Foundation ranks Connecticut 42nd out of 50 in terms of tax climate (Massachusetts ranks 24th), and second highest in terms of state and local income-tax collections per person.

Massachusetts? It dropped its corporate tax to 8 percent from 9.5 percent and has a flat income tax of 5.15 percent. Connecticut, on the other hand, jacked its corporate tax to 9 percent from 7.5 percent and its top income-tax rate to 6.99 percent from 5 percent.

These are sizeable differences in favor of Massachusetts. Taxes don't matter?

And the dirty little secret is that the pension and health-care benefits of the government unions -- which dominate Democratic state politics -- are roughly 50 percent unfunded. This spells many future tax hikes. GE's Immelt knows it.

http://www.realclearpolitics.com/articles/2016/01/16/taxes_chased_ge_out_of_connecticut_129345.html

A great test case - burden the citizens with a union for government workers that extracts punitive benefits from the citizens they "serve", which forces tax increases, and then watch and see what happens.  Growth?  Innovation?  High paying jobs?  Figure the odds.

No "Corporate" Taxes

To my mind, this is why we should get rid of the corporate income tax--and the charitable tax deduction as well. Companies spend an enormous amount of time and money trying to structure their activity to get favorable tax treatment. Non-profits and labor unions engage in elaborate games to push as far as possible without actually breaking the law. And unelected bureaucrats are given enormous power to tell people what is and is not allowed--decisions that may have more to do with their personal feelings about the activity than the actual law. Then we all spend more time and money going into court to fight about it.

When government has power, it will be abused. Sometimes that's the unavoidable side effect of something we need to do. But this isn't. It's time to junk the entire elaborate system.
http://www.thedailybeast.com/articles/2013/06/12/when-the-personal-becomes-political.html

No corporate income would be best.

"Corporate income taxes" don't tax corporations, they tax the people that buy stuff from corporations. They also create mal-incentives that make every corporation less efficient - cost of avoiding tax consequences and costs of not bringing a product to market that might otherwise be marketable but for the tax consequences - and thus harm all consumers.

In addition, there are the perversions of govt power that result whenever politicians put tax deductions and exclusions up for auction.

Tamny on IRS Non-Scandal

"As James Bovard put it in a Wall Street Journal op-ed earlier this week, a politicized IRS has been the norm since at least the 1930s. To presume otherwise is naïve, so while it's perhaps good politics for President Obama's opponents to be political about the IRS's revolting doings, any righteous indignation seems overdone. Any government entity is going to be political, and because the latter is true, it's hard to assign scandal to what the IRS was doing.

"It seems the better answer is to acknowledge what's more of a certainty, that the IRS itself is the scandal. Not asked enough before and after the news about our tax authority is how a nation uniquely founded on skepticism about politicians and government could have ever created something like the IRS."
http://www.realclearmarkets.com/articles/2013/05/17/the_irs_non-scandal_calls_for_a_national_sales_tax_100324.html

Red States

Perhaps this is how economic liberty can be saved in the USA.

"Among the 10 fastest-growing metro areas last year were Raleigh, Austin, Las Vegas, Orlando, Charlotte, Phoenix, Houston, San Antonio and Dallas. All of these are in low-tax, business-friendly red states. Blue-state areas such as Cleveland, Detroit, Buffalo, Providence and Rochester were among the biggest population losers.

"This migration isn't accidental. Workers and business owners are responding to clear economic incentives. Red states in the Southeast and Sunbelt are following the Reagan model by reducing tax rates and easing regulations. They also offer right-to-work laws as an enticement for businesses to come and set up shop. Meanwhile, the blue states of the Northeast, joined by California, Minnesota and Illinois, are implementing the Obama model of raising taxes on businesses and the wealthy to fund government "investments" and union power.

"The contrast sets up a wonderful natural laboratory to test rival economic ideas.

"Consider the South. We predict that within a decade five or six states in Dixie could entirely eliminate their income taxes. This would mean that the region stretching from Florida through Texas and Louisiana could become a vast state income-tax free zone.

"Three of these states—Florida, Texas and Tennessee—already impose no income tax. Louisiana and North Carolina, both with bold Republican governors and legislatures, are moving quickly ahead with plans to eliminate theirs. Just to the west, Kansas and Oklahoma are also devising plans to replace their income taxes with more growth-friendly expanded sales taxes and energy extraction taxes. Utah, while not a Southern state, leads the tax-cutting pack under Republican Gov. Gary Herbert."

http://online.wsj.com/article/SB1000142412788732453200457836205372283299 
8.html?mod=WSJ_Opinion_LEADTop

Growth and Jobs? Or Taxes?

"Having complained that Romney's investment income isn't taxed enough, Nocera went on to bemoan the wealth required for admission into the Forbes 400. Though a $75 million net worth placed you among the 400 back in 1982, today it's $1.1 billion. Not surprisingly, Nocera thinks inequality of achievement is unfair, and because it bothers him, he wants politicians to do something about it.

"Of course Nocera's anti-Forbes 400 rant misses two basic points. First, he wails about the inequality that this elite billionaires' club represents, but fails to acknowledge that the team picture from the '82 edition of the 400 is almost totally different from the one that exists today. In short, most of the club's members from 30 years ago are not members now, and a major reason they're not is thanks to the willingness of people like Romney to invest in the very entrepreneurs whose success has knocked most of the initial members out of the club. In possession of the envy gene, easily one of the most impoverishing in existence, Nocera is implicitly saying that he doesn't care if tomorrow's innovators lose out on funding thanks to increased taxation on investors; just so long as the members of an ever-changing Forbes 400 aren't getting richer."

http://www.forbes.com/sites/johntamny/2012/09/30/joe-nocera-is-wrong-mitt-romneys-tax-rate-should-be-zero/

Does anyone really think a nation can tax itself to prosperity?  Or legislate itself to prosperity?  For all of Obama's so called brilliance, he dabbles in nonsense.  He seems to have no grasp at all of what drives wealth creation of why liberty created the best living conditions for everyone.

No Credibility

"The deficit for fiscal 2012, which ended on Sept. 30, came in at about $1.1 trillion, marking the fourth consecutive year that the nation has posted a trillion-dollar-plus spending gap. Contrary to what Dick Cheney said when he was vice president, deficits do matter.  

"Under the most recent budget plans of House Republicans and Obama, the federal government will spend from $40 trillion to $47 trillion over the next decade. Yet in the current negotiations, Boehner has called for only $800 billion in spending cuts and Obama $400 billion, most of which would be pushed off until 2022 or later -- tantamount to saying they won't happen at all. Neither side's long-term spending plans envision a balanced budget in the next 10 years."  

http://www.bloomberg.com/news/2012-12-18/obama-and-boehner-both-reckless
-spenders.html

How can anyone take these buffoons seriously?

"Politics is the art of the possible." Which is why it is so pathetic. Politics cannot accomplish anything worth accomplishing.

"Whatever you think about the decline of rates under President George W. Bush, it made the U.S. tax system more progressive by reducing the burden on middle- and lower-income people. That's one reason that singling out high-income earners for increases this time will yield such little revenue: All of us paid higher taxes then. It wasn't just the swells at the top of the income pyramid.

"Even if government could attain the revenue levels of seven years ago, it wouldn't come close to covering spending, which crossed the $3 trillion mark, in inflation-adjusted dollars, in 2009. Neither
Republicans nor Democrats are suggesting reducing total year-over-year spending.

"Both the president and members of Congress worry that rapid spending cuts would cause a new recession or slow down the recovery. Such fears are overstated.

"In the 1990s, Canada, for instance, reduced debt-to-GDP ratios through an aggressive combination of actual, year-over- year spending cuts and higher taxes. The result wasn't malaise but a burst in activity."

A Chicken In Every Pot, A Loophole for Every Constituency

"For that matter, how many of the ordinary Americans signing on to the Fix the Debt initiative want to sacrifice their mortgage-interest deduction or exemption for employer-provided health-care benefits? There is a constituency for every loophole. More than half the lobbying in this country is related to the tax code, which is just one of the many reasons to strip it down to its bare essentials, like a couple of flat rates.  
"Based on past efforts, and limited success, in attacking deductions and exemptions, the best we can probably hope for is something Republican presidential nominee Mitt Romney proposed: a cap on itemized deductions for high-income earners. If that's what reform looks like, the tax code will continue to encourage inefficient behavior to the detriment of the economy."
http://www.bloomberg.com/news/2012-11-14/my-name-is-uncle-sam-and-i-m-a-
debt-a-holic.html

What Does "Rich" Mean?

"Of course, one can argue that these changes follow the precepts of social justice: Rich people and rich regions should pay more. Yet being "rich" means different things in different places, due to vast differences in costs of living. The cost of living in New York and Los Angeles, for example, is so high that the adjusted value of salaries rank in the bottom fifth in the nation. In other words, a couple with two children with a $150,000 income in Austin or Raleigh may be, in terms of housing and personal consumption, far "richer" than one making twice that in New York or Los Angeles."
http://www.forbes.com/sites/joelkotkin/2012/12/04/the-blue-state-suicide-pact/

Taxing the "rich" isn't as easy to do as it is to say.

Meddling Makes Messes

"We think companies can do what they want with their cash, but it's
certainly rare to see a public corporation weaken its balance sheet not
for investment in the future but to make a one-time equity payout. It's
a good illustration of the way that Federal Reserve Chairman Ben
Bernanke's near-zero interest rates are combining with federal tax
policy to distort business decisions."
http://online.wsj.com/article/SB1000142412788732470510457814901251417737
2.html?mod=opinion_newsreel

The issue is incentives. The incentive to perform financial gymnastics
with ridiculously high dividend rates is very high. Having a low
dividend tax reduces double taxation of the same profits, and encourages
behaviors that are sound for a healthy corporation.

Taking the Compassion Out of Jobs Growth

"Most people understand why taxing those who create jobs (generally upper-income people) will mean the creation of fewer jobs. Economists may argue about how many jobs will be destroyed for any given tax increase on job creators, but no one who understands the law of supply and demand will argue that there is no effect. Likewise, most people understand that a business that has to endure many expensive regulations will not have the funds to create as many new jobs or will be forced to increase prices for its products or services to cover the cost of the regulations. Higher prices mean fewer sales and, hence, fewer jobs. None of the above is rocket science, so most people "get it."

Current U.S. gross domestic product (GDP) is $15.6 trillion. If the economy grows at an average of 2 percent annually over the next eight years (in real dollars), GDP will be $18.3 trillion in 2020. (In reality, the economy has grown at an annual rate of about 2 percent since the end of the current recession in the spring of 2009, and now it is growing at less than 2 percent.) However, if the economy grows at an average rate of more than 4 percent, as it did from 1982 through 1989 under Ronald Reagan or from 1995 through 2000 under Bill Clinton), GDP will be about $21.4 trillion in 2020, or almost 20 percent larger in real terms than at a 2 percent growth rate."

Read more: RAHN: Tax-raisers lack compassion - Washington Times http://www.washingtontimes.com/news/2012/oct/15/tax-raisers-lack-compassion/print/#ixzz29asITWtr
Follow us: @washtimes on Twitter

There's nothing so hard about this formula - if it's more expensive to employ people, fewer people will be employed. You don't hire a lawn man because it costs "too much". What if you could get 10 hours of lawn work done for five dollars? You'd be hiring! It's too obvious. Thus, it makes one question the motives of those who are smart enough to see this simple truth, but behave as if it were not true.

Point Taken About Taxes

If the welfare claimants that Mr Romney has in mind were to move into low paid jobs, they would begin paying federal income tax at 10 per cent on the first $8,700 of taxable income (after the standard personal deduction of $5,950), or if they were married and filing jointly, on $17,400 (with a joint deduction of $11,900).

That means a single person moving from welfare to work would pay only 10 per cent tax on an income of $14,650, and a married couple could earn $29,300 per year and still pay only 10 per cent income tax. The next tax bracket is 15 per cent, and that applies to married couples earning up to $70,700 a year.

So there is nothing like the tax disincentive to go from welfare to work in the US, as there has been in Britain, where even a quite low wage could involve losing a quarter of your earnings in tax.

http://www.telegraph.co.uk/news/worldnews/mitt-romney/9559659/Mitt-Romneys-message-is-good-it-just-needs-restating.html

This is such a non-inspiring election, there's almost no good writing out there on the topic.  "None of the above" should be able to defeat this President.  Bewildering.

Inequality - "Totally Bogus Dude"

Conservatives argue that in an increasingly mobile world, high tax rates run ever more risk of driving businesses and jobs overseas. The central role of entrepreneurship is advancing economic growth, they note, and since most new ventures fail, the returns on successful ventures have to be very large if entrepreneurship is to flourish. They take umbrage at the suggestion that there is something wrong with success on a grand scale. And they worry that policy measures taken to directly combat inequality will have perverse side effects.
Both sides make good points. While I support moves to make the tax system more progressive, the reality is that inequality is likely to continue to rise, even with all that can responsibly be done to increase tax burdens on those with high incomes and redistribute the proceeds. Measures such as allowing unions to organize without undue reprisals and enhancing shareholders’ role in setting executive pay are desirable. But they are unlikely to even hold at bay the trend toward increasing inequality.  http://www.washingtonpost.com/opinions/lawrence-summers-changing-focus-to-inequalities-in-opportunity/2012/07/15/gJQATol4mW_story.html

This guy is smart enough to run Harvard University but his analysis is too lame for words.
-Exactly how does inequality of outcome hurt anyone?  In my book, when the bottom of the ladder is wealthier than it was - by a long shot - from the generation before, that's good.  I can't figure out a single way that inequality of outcome is either preventable or desirable.  Nevermind the fact that all the inequality folks are talking about resulted at the same time as massive amounts of government intervention into ... everything.  How could anyone even pretend that government intervention is the cure? 
-Allowing unions to organize more easily?  Unions are the weapons of inequality!!  The point of a union is to prevent those outside the union from being able to compete with those inside the union.  High union wages price out low skilled wage earners.  Unions are to inequality what the sun is to global warming.  Nevermind the fact that unions quite clearly render US corporations uncompetitive in the market place, with perhaps only the US's bizarre business taxes causing more harm.

Nor should we continue to permit tax-planning techniques that are de facto tax cuts only for those with millions of dollars of income and tens of millions in wealth.
This one is a real beauty.  It's a perfect example of both hubris and unbelievable naive thinking.  "We" don't set tax policy - politicians set tax policy and their priority in doing so is to ensure they favor those who will re-elect them.  It will have little or nothing to do with the right or wrong of it.  Nevermind the absurdity of saying "we should not permit" people to keep the money and property they earned (keeping in mind the life energy they spent to get the money).  If we can talk about what we can and cannot permit, how about we not permit politicians to take our lives, our liberty and out pursuit of hapiness ... oh yes, already tried that.  Scope of that failure increasing daily.

Simple Truth - Cannot Tax A Nation Into Prosperity

For most millionaires, federal tax rates -- the share of income taxed -- exceed 30 percent. Some rich have lower rates. Raising these rates is justified but wouldn’t balance the budget. The plan by Senate Majority Leader Harry Reid for a 5.6 percentage point surtax on incomes exceeding $1 million would raise an estimated $453 billion over 10 years. Deficits over the decade are realistically projected at $8.5 trillion.
http://www.realclearpolitics.com/printpage/?url=http://www.realclearpolitics.com/articles/2011/11/07/budget_fairy_tales_left_and_right_111957.html

OK, raise some taxes on people but don't pretend it solves the SPENDING PROBLEM!

Make the rich pay more, fix the tax code, WHATEVER!  That does not change the fact that there's a SPENDING PROBLEM!  It is called Medicare and it is a result of the fact that politicians designed a system of interventions in the health care system of this nation that guarantee it will produce less health at a higher total cost.

Growth is a result of liberty and the most predictable possible market conditions.  Stop the interventions.  We could still grow our way out of the mess.

Samuelson rightly concludes:
What liberals don’t say is this: Unless Social Security and Medicare benefits -- the bulk of the budget -- are reduced, we face three dismal choices. Huge, unsustainable deficits. Massive tax increases on the middle class, as high as 50 percent over 10 to 15 years. Or draconian cuts in the discretionary programs that liberals accuse conservatives of wanting to gut.

Tax Policy - Static v. Dynamic Analysis

BLUF:  tax policy influences behavior.  There's no way to know how a tax policy will precisely impact revenue because the changes result from different choices made when there are different tax incentives or dis-incentives.
http://online.wsj.com/article/SB10001424052970204002304576629481571778262.html?mod=WSJ_Opinion_LEADTop

Tax Code - Restart

Just as in the late 19th century, the tax code is now hopelessly arbitrary and unfair. It requires a complete overhaul.
http://online.wsj.com/article/SB10001424052970204422404576594471646927038.html?mod=WSJ_Opinion_LEADTop

How to raise the revenue necessary to pay the bills in a way that reflects ability to pay, but does not incentivise unnatural acts as the means to avoid paying?  It should be a tax code that does not result in billions in lost prodcutivity.  A tax code that can not be used as a tool for political calculus. 

Fair tax - when I read the book it made quite a lot of sense.

Flat tax - that would sure be better than what we have.

Corporate tax - wretched represser of economic activity, stupid.