Our Dear Ruler gave a little speech yesterday at an advanced battery plant in Michigan. The man had some really innovative ideas on how to turn this economy around. Are you ready for them?
* Extend the payroll tax holiday
* More infrastructure spending on roads
* Pass trade deals
* Patent reform
* Jobs for returning veterans
Sound familiar? It should. These are the exact yak squeeze that Obama has been touting for months, some of them for years. But don’t worry .. he says that in the coming weeks, he is going to roll out some more proposals. I wonder if those proposals will come before, after or during his 10 day vacation to Martha’s Vineyard? At any rate … along with these stale economic ideas we also got some stale wealth envy soundbites from Dear Ruler. For example, he actually said in this speech yesterday, “We can’t ask the middle class to bear the entire burden … Everybody’s got to chip in. That’s fair. We learn that in kindergarten.”
* The top 1% of taxpayers earn about 20% of the income and yet they pay 40% of all income taxes collected.
* The top 5% of taxpayers (those earning at least $159,610) pay more in taxes than the remaining 95% of taxpayers combined.
* More than half of Americans, 51%, don’t even pay income taxes!
Middle class Americans are not in the top 5% of taxpayers earning $159,610. Yet that 5% pays more in taxes than the other 95% … and Barack Obama is worried that middle class Americans are going to “bear the entire burden”? You can’t reason with this type of logic.
I tweeted my disgust over this “middle class bearing the entire burden” nonsense and a followers asked me: “IF you were in congress and we could get REAL&immediate cuts to the federal budget would you agree to taxes?” The answer is not only no but hell no. And the reason is simple; tax increases are not going to generate more revenue. How hard is this for libs and progs to understand? Taxes affect behavior. I will now brilliantly provide you with, not one, but two examples.
* From the Center for Individual Freedom: In 1980, the top income tax rate was 70%. The top rate is now half that, at 35%, yet the portion of the nation’s income taxes paid by the top 1% has more than doubled from 19% to 38%.
* Walter Williams explains the economic effects of the luxury tax imposed on the early 1990s: Back then, Congress told us that the luxury tax on boats, aircraft and jewelry would raise $31 million in revenue a year. Instead, the tax destroyed 330 jobs in jewelry manufacturing and 1,470 in the aircraft industry, in addition to the thousands destroyed in the yacht industry. Those job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. The net effect of the luxury tax was a loss of $7.6 million in fiscal 1991, which means Congress’ projection was off by $38.6 million. The Joint Economic Committee concluded that the value of jobs lost in just the first six months of the luxury tax was $159.6 million.
It’s simple … increasing taxes on the filthy rich isn’t going to turn the tide of our economy, considering our enormous spending habits. If Obama gets his way and the Bush tax cuts expire for the evil rich and their tax rates rise, this will generate $750 billion over the next ten years. These are static figures, meaning that you can’t account for the fact that people will change their behavior because of their tax increases, therefore decreases the projected amount collected. Anyway, so this $750 billion breaks down to $75 billion a year. Our government currently spends $3.7 trillion a year, which breaks down to about $10 billion PER DAY .. and this doesn’t consider the fact that spending WILL increase over the next decade. So we’ve got this $75 billion per year from these evil rich people, and we’ve got the government spending money at a rate of $10 billion a day. It doesn’t take a rocket surgeon to figure out that we could only pay for one week of government spending with an increase of taxes on the evil rich.
But back to this speech … Barack Obama wasn’t done. He couldn’t get through a speech without talking about those evil corporations and the need for them to pay their fair share! He said in his speech yesterday: “It means making sure that the biggest corporations pay their fair share in taxes.” Corporations already pay $300 billion a year in income taxes at the highest corporate income tax rate in the world of 35%. In fact, did you know that even though we have the highest rate among OECD nations, we collect less revenue than the average OECD nation? Could it have anything to do with high tax rates punishing behavior? But what Barack Obama and the progs always forget is that corporations don’t actually pay taxes, individuals do. In fact, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax. So any call for raising taxes on corporations is a call to raise taxes on the very Americans who consumer their products. Not exactly good for our economy. Here’s another point to consider … raising corporate tax rates also has a negative impact on the very middle class Americans that Obama is worried will “bear the burden.” Don’t take it from me. Take it from some experts who did the research.
For instance, this December 2010 paper by economists Aparna Mathur and Kevin Hassett shows the link between corporate tax rates and the average manufacturing wage (in U.S. dollars) for 65 countries over a period spanning 1981–2005. They find that there is a clear negative link between the two, suggesting that higher corporate tax rates lead to lower worker wages. They test this theory using regressions controlling for a bunch of other factors, and find that a 1 percent increase in the corporate income tax leads to an almost 0.5–0.6 percent decrease in hourly wages.
The bottom line is that Barack Obama doesn’t have a clue as to how to get this economy going. He believes that the more government is involved, the better. He believes that the more he can punish the achievers, the more votes he can win in 2012. He believes that his government knows better than the free market capitalists who drive this economy.