Obama’s new budget is a bad joke

Just as we expected it would be.

Phillip A Klein takes a look at it and compares it to Obama’s promises on entering office. Here’s his takeway:

Obama spent most of last year lecturing the country on how he supported a so-called “balanced approach” on deficit reduction. Time and again, he said he was ready to make real changes to Medicare, Medicaid and Social Security if only Republicans were willing to budge on the revenue side. He repeated this in a lot of speeches and insisted that behind the scenes he was really, really, ready to cut a deal with the GOP during the debt limit talks. But he never presented a tangible plan that could be scored by the CBO and evaluated next to Rep. Paul Ryan’s plan to reform entitlements and put the nation on a sustainable fiscal course. He had his chance with this budget. Instead, Obama decided to forgo tough choices so he could attack Republicans during an election year.

Bear that in mind: we have a president far more interested in his own electoral fate than the fate of the nation.

Meanwhile, James Pethokoukis accuses Obama of doubling-down on class warfare in this budget:

Here’s pretty much all you need to know about Obamanomics: In 2011, the Obama White House suggested raising the top dividend tax rate to 20 percent from 15 percent. Keeping the dividend rate at a relatively low level, the White House said, “reduces the tax bias against equity investment and promotes a more efficient allocation of capital.” Makes sense, right? Basic economics.

Yet in his brand-new, 2013 budget, Obama calls for taxing dividends as ordinary income, essentially raising the top rate all the way to 39.6 percent. And then when you tack on the 3.8 percentage point Obamacare surtax — and an additional 1.2 percentage point itemized deduction phase-out for high-end taxpayers — the rate rises to 44.6 percent.

So apparently Obama is now in favor of a greater bias against equity investment (and in favor of debt) and promoting less efficient allocation of capital. And this helps create an economy “built to last” in some way?

Of course, it doesn’t. Not at all. More like “built to fail.” Then again, Obama’s new budget isn’t about economic growth or cutting debt or creating a “built to last” economy. The Obama campaign is built around the idea of reducing inequality. So in his budget, Obama takes the populist whip to the wealthy and to business…

And to people who depend on dividends for their retirement, whether directly or through pension funds. Including the middle class.

Why does Barack Obama hate retired people?

(Crossposted at Sister Toldjah)

Can we call them “Socialists” yet?

Harking back to some of the worst excesses of the New Deal, six Democratic members of the House lead by Denis Kucinich (D-UFO) and all but one members of the Congressional Progressive Caucus, have proposed an additional tax on oil companies to be levied when profits rise above “a reasonable level”:

The Democrats, worried about higher gas prices, want to set up a board that would apply a “windfall profit tax” as high as 100 percent on the sale of oil and gas, according to their legislation. The bill provides no specific guidance for how the board would determine what constitutes a reasonable profit.

The Gas Price Spike Act, H.R. 3784 (PDF), would apply a windfall tax on the sale of oil and gas that ranges from 50 percent to 100 percent on all surplus earnings exceeding “a reasonable profit.” It would set up a Reasonable Profits Board made up of three presidential nominees that will serve three-year terms. Unlike other bills setting up advisory boards, the Reasonable Profits Board would not be made up of any nominees from Congress.

The bill would also seem to exclude industry representatives from the board, as it says members “shall have no financial interests in any of the businesses for which reasonable profits are determined by the Board.”

And, of course, “reasonable” would be in the eye of the beholder: in this case, appointees of Barack Obama, renowned class warrior and Socialist. What could go wrong?

Of course, this isn’t about the economic ignorance of the members sponsoring the bill; they’re leftist Democrats, progressives. It’s practically an unwritten law that you have to give up any understanding of basic economics to join that club. The idea that these profits can be returned to shareholders, including pension funds and individual middle-class Americans, many on retirement, via dividends and capital gains is immaterial. And don’t even think of suggesting that these oh so unreasonable profits could be used to expand the business or explore for more oil –or both!– thus creating jobs.

Like I said, to join the club, you have to forswear any economic common sense.

No, this bill, which will never pass the House or even get out of committee, is nothing more than an election year appeal to the worst of Americans populist instincts: class warfare, punishing those “evil” oil companies, and looking for a scapegoat for high gas prices rather than understanding the Law of Supply and Demand. Oh, and already-high federal, state, and local taxes.

It’s all about pandering to people’s frustrations, so they won’t blame the real cause: the radical and against-all-reason natural resources policies of the Democrats and their environmentalist allies that keep us from developing the vast resources we have.

It’s the political equivalent of “Look! It’s Elvis!”

But, let us not forget, it’s also about control and power. These are, after all, progressives, social democrats. Some are full-blown Socialists. It’s their belief that only government can fairly (in their definition, again) distribute wealth. They may not be Marxist, and are thus willing to allow the shareholders to still own their companies, but government has first call on “your” money, to do with what it will. You can keep whatever they decide is reasonable.

Which is why I put “your” in quotes.

In their world, you are not a free citizen with unalienable rights, but a dependent who must wait to see how much of what you earn government will let you keep.

So, while this bill may be a bit of populist red meat that will never pass, it has a very real and very pernicious-to-liberty philosophy behind it.

And it’s another example why the Democrats should never win another election again.

via Jammie Wearing Fool

RELATED: Pirate’s Cove has suggestions for other “reasonable boards.”

(Crossposted at Sister Toldjah)

See 20-20? Dial 9-9-9? Which plan is the right plan? — Updated

One of the big issues on the Right side of American politics is large-scale tax reform: not just tinkering with rates or eliminating this or that deduction, but massive changes that would amount to junking the current byzantine progressive tax code that punishes wealth creation and saving and hobbles our economy by replacing it with something much simpler and, in the mind of most Americans, much fairer. Generally a flat income tax or a “fair tax” — a national sales tax.

Today Governor Rick Perry issued his proposals for tax reform to spur economic growth — the 20-20 Plan:

The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.

This simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs. By eliminating the dozens of carve-outs that make the current code so incomprehensible, we will renew incentives for entrepreneurial risk-taking and investment that creates jobs, inspires Americans to work hard and forms the foundation of a strong economy. My plan also abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses.

My plan restores American competitiveness in the global marketplace and provides strong incentives for U.S.-based employers to build new factories and create thousands of jobs here at home.

First, we will lower the corporate tax rate to 20%—dropping it from the second highest in the developed world to a rate on par with our global competitors. Second, we will encourage the swift repatriation of some of the $1.4 trillion estimated to be parked overseas by temporarily lowering the rate to 5.25%. And third, we will transition to a “territorial tax system”—as seen in Hong Kong and France, for example—that only taxes in-country income.

20-20 would also end the taxation of Social Security income, qualified dividends (It’s unclear what “qualified” means here), and long-term capital gains. A family of four would see their first $50,000 of income exempt from taxes, and the end of the death tax would mean that small family businesses wouldn’t have to be broken up to meet taxes.

One thing not often noted in reports I’ve seen is that 20-20 would cap spending would both cap spending at 18% of GDP, the modern historical average for tax revenues, and seek a balanced budget amendment. I consider these strong selling points, a simple fiscal restraint will take advantage of normal economic growth to balance the budget.

20-20 is in reply to Herman Cain’s 9-9-9 plan, which would impose a 9% personal income tax, 9% corporate income tax, and 9% national sales tax.

Let’s stipulate three things at the beginning: either plan would be better than the current mess, both have their strong points, and both have criticizable aspects.

Cain’s plan has been accused of disguising a Value-Added Tax (VAT) as a corporate income tax, and for giving the government an added revenue stream by creating both an income and a national sales tax.  I also have constitutional questions about a national sales tax: where is the federal authority to tax any sales transactions, especially if they stay within the boundaries of a single state?

Supporters, on the other hand, correctly point out that Cain’s plan is a transitional phase to a single Fair Tax.

Perry’s plan, meanwhile, retains more deductions (home mortgage, charitable, &c.), which leaves room for special interests to game the system, as they do now. However, I don’t think it’s likely, politics being the art of the possible, that one will be able to eliminate the home mortgage exemption, for example, especially in bad economic times. In that regard, 20-20 may be more practical than 9-9-9.

So, which is better? I’m not sure (no one would ever accuse me of being a numbers-guy), but, like Dan Mitchell, I lean toward 20-20 because it aims for the same goals while avoiding the VAT and tricky constitutional questions. And I’ll note the Club For Growth has endorsed 20-20.

Like I said, though, in the end, either would be better than what we have.

Which do you prefer?

LINKS: Ed Morrissey on the Perry conference call about 20-20. Tom Maguire thinks it’s a gimmick. Perry supporter Bryan Preston provides more details.

PS: I looked through the Romney site and could find no mention of a tax reform plan. If I’ve missed it, please post a link in the comments and I’ll add an update.

UPDATE: Okay, I found Mitt’s tax plan. It’s on page 37 of his Plan for Jobs and Economic Growth. The first thing I see is that it retains the current marginal rates and sets a “flatter, fairer, simpler structure” as a long-term goal. Ummm…. No, thanks.

(Crossposted at Sister Toldjah)

Why isn’t this man at Treasury?

That’s the question I ask myself every time Rep. Paul Ryan (R-WI) speaks about America’s economic and fiscal problems. Then I remember it’s because we have a (Social) Democratic, corporatist president who prefers someone who is either an admitted tax-cheat or an incompetent.

But I digress.

In the video below, Congressman Ryan describes the three qualities needed in a reformed tax code that is aimed at promoting real economic growth and a return to prosperity: fairness, competitiveness, and simplicity.

Take that, progressives.

And I’m kidding a bit in the headline; while I suspect Ryan would be superb at Treasury (or any economics related job in a new administration), I’d rather he stay in the House as a powerful committee chairman for a good, long time in order to be in place to put the brakes on crazy spending schemes.

Via Dan Mitchell, who has some good comments on Ryan’s video.

(Crossposted at Sister Toldjah)

Why California is circling the drain: the Amazon Tax Effect

I’ve written before of the self-defeating, bloody-minded stupidity underlying my state’s recent passage of a law forcing internet retailers with in-state affiliates to collect sales tax. (The “Amazon tax,” for short.) A few days ago, Portfolio.com provided a good example of the unintended consequences of this law with the story of a young, successful entrepreneur who left for Texas because the business environment here wasn’t worth the trouble:

Unnecessary Paperwork: The state mandates that all businesses that gross over $100,000 a year set up an account where they report quarterly on the sales tax that customers pay for goods sold. Although her company sells services, which are not taxed, rather than goods, the state told Douglass she would still have to fill out the laborious paperwork four times a year.

•     “When I closed the account (by going into a local office and spending nearly an hour explaining my situation), they forced it open again and sent me a nastygram explaining that I would owe fines for not filing the quarterly report,” wrote Douglass.

High Taxes Plus Business Fees: The state charges an income tax of 10 percent on all income over $47,055, which comes on top of federal income tax of 25 percent on income over $34,000. On top of that, state residents pay sales tax ranging from 8 to slightly over 9 percent.

•     “I paid enough in income tax for 2010 to the state of California alone to hire another new worker for my business,” wrote Douglass.

The state also charges an annual fee of $800 for a business to be a corporation in California.

The Amazon Tax: The final straw for Douglass, though, came when Jerry Brown, the state’s governor, signed a budget that included the so-called “Amazon tax.” The argument is that if Amazon has affiliates in California it has to collect sales tax. Douglass, who sells products on Amazon as a modest side business that yields a “few thousand dollars per year,” is one of the affiliates. Amazon cut California affiliates out because of the law, and according to Douglass, both she and the state of California lost out because of Brown’s move, since she paid income tax on the money she made via Amazon.

Douglass notes that she chose Texas because because it is one of only four states (the others are Nevada, South Dakota and Wyoming) that has no personal income tax, plus no corporate income tax.

(Emphases added)

In other words, not only did a state desperately in need of new jobs lose out on at least one (and how many others at other companies?), but the state didn’t just not get new revenue, it lost existing revenue, an outcome anyone with sense would have foreseen.

Times are bad enough without Sacramento aiming a shotgun at the state’s feet and pulling the trigger.

via Big Government

(Crossposted at Sister Toldjah)

Yet another reason I like Marco Rubio

Leadership and clarity. The Senator from Florida gets it: austerity alone isn’t the answer, though spending cuts and future discipline are essential. The federal government must also do those things necessary to create economic growth, which will in turn create jobs and the revenue the government needs to pay down the debt — without raising taxes.

Leadership and clarity, my friends:

California’s “Amazon tax” a colossal bust — UPDATED: repeal referendum?

I wrote a couple of weeks ago about the shortsighted stupidity shown by Governor Brown and the Democrat-dominated legislature when they passed a bill forcing Amazon to collect sales tax on sales made through California-based affiliates: Golden State, stupid state.

Now more evidence has piled up to show how dumb an idea this was. From Board of Equalization member and former state senator George Runner, here’s a list of the businesses that have ended their affiliate programs in California:

6pm.com
Amazon.com
Audible.com
B&H Photo & Electronics Corp.
Backcountry
Barware.com
Beach Trading Co.
BeautyBar.com
BedBathStore
Benchmark Brands Inc.
CSN Stores
Diapers.com
Drugstore.com
Endless.com
Fabric.com
Gaiam
GiftBaskets.com
Hayneedle
Higher Power Inc.
Lacrosse.com
Muscle and Strength
MyHabit.com
Northern Tool
Overton’s
Overstock.com
PC Connection
Potpourri Group
Quidsi
ShindigZ.com
Shoebuy, Inc.
Shopbop
SmallParts.com
Soap.com
The Tire Rack
Thinkgeek.com
Total Gym
Wine Enthusiast
Woot.com
Zappos.com

Be sure to check out Runner’s post for some choice quotes from now-former affiliates.

Not only will Sacramento not collect any new sales tax money from these companies, but it has lost all the income tax revenue it was already collecting from the affiliates at a time when California is suffering from record debt and deficits. And it will hurt those families and small businesses making a bit of money from their affiliate relationships.

As the great Strother Martin said in Butch Cassidy, “Morons! I’ve got morons on my team!”

UPDATE: Well, this is interesting. A movement has started to place a repeal measure on the ballot If it survives the vetting process, I give it a good chance of passing.

Edit: Speaking of morons, I need to learn to proofread my subject lines for spelling.

(Crossposted at Sister Toldjah)

Golden state, stupid state

Regular readers know I often recommend books in my posts. If you’ve ever clicked on the links, you also sent a few pennies my way, due to my participation in Amazon’s “affiliate program.” I got even more if you actually bought something. It never amounted to much, just a few dollars a year, but it enabled me to get something here and there on Amazon that I might otherwise have passed on, thanks to you.

Now Amazon is shutting that program down, thanks to the State of California:

Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

That was part of an email I received yesterday from Amazon. The law in question is AB 27 X1, part of a budget deal to produce a balanced budget as required by law (and so legislators can start getting paid again, once the final budget is signed). Brown and the Democratic majority expect this extension of the sales tax to bring in about $200 million. I’d like to know what they were smoking, because Amazon hasn’t needed the revenue from Affiliates in years, but kept the program running as a way to build goodwill and customer loyalty. Since they didn’t need the revenue, and since California has now raised the cost of the program to more than Amazon was willing to pay, the company did what was predictable by anyone except a California Democrat — they pulled the plug. Sacramento won’t see a dime of that $200 million.

But wait, it gets better!

While my earnings were small potatoes (1), quite a few people made a business out of sending customers to Amazon. According to Moe Lane, California collected about $124 million in income tax revenue from people in the referral program. So, not only will they not get the $200 million, but they’ll lose the income tax money, too.

Genius, sheer genius. 

I’ve long said that to be a liberal Democrat requires one to forget even the basics of  economics; this would be the tax policy equivalent. Common sense tells you that, if you make the cost of business too high, the business will go away. We’ve already seen a lot of that in California, and this is another example because taxes and tax-handling are a cost of business.

California may once have been “The Golden State,” but the people who run it are treating it like the goose that laid the golden eggs, instead. Keep it up, and they’ll soon learn its moral.

The hard way.

LINKS: William Jacobson calls it the Revolt of the Amazon Kulaks. At Afterthoughts, Brandy feels like she’s been fired. Stacy McCain says Amazon has “gone Galt” and left Zimbabwe-on-the-Pacific. Katy Grimes of The Washington Examiner thinks this bill will cost California 25,000 small businesses. Way to go, Democrats! 

Footnotes:

(1) Well, really just a single, tiny potato…

(Crossposted at Sister Toldjah)

California: If we can’t tax you, we’ll let the other guy do it!

Really, I sometimes wonder if Democrats oligarchs  in the state legislature are issued fake mustaches so they can twirl them and laugh maniacally as they find new ways to shove new taxes down our throats.

The latest comes as a result of our annual battle over the state budget, which is due June 15th. The Democrats will have no problem passing the budget, since it requires only a simple majority and they control both chambers (1). But, they still have to come up with the money to pay for that budget, since there’s a statutory requirement that it be balanced.

Now, the governor and and his legislative allies want a special election to impose new taxes to help fund that budget. (They call them “extensions of existing tax hikes,” but, since those are set to expire no matter what, they’re really tax hikes.) A special election requires a two-thirds vote of both chambers, and the Republicans are holding out, creating an impasse; correctly, in my mind, but we’ll come back to that.

So, faced with solid opposition, what does Senate President Pro Tem Darrell Steinberg do? He calls for the political equivalent of an end-around play, introducing a law allowing the counties to impose income taxes:

Counties, school districts and community colleges would have broad authority to seek taxes on income and a vast array of products including cigarettes and alcohol under a bill approved by the California Senate on Friday.

The bill, which Senate leaders say will pressure Republicans to support the governor’s tax plan, gives the local entities power over taxes that currently only the state Legislature can impose. The Senate passed the bill after Republicans, and a handful of Democrats, refused to support a measure sought by Gov. Jerry Brown to place extensions and increases of current state tax rates on a special election ballot. That measure needed a two-thirds majority vote from the Senate.

The special election measure would have asked voters this fall to extend and increase personal income and sales taxes, along with the vehicle license fees, through June 2016. But Democrats in the Legislature altered the plan so that if voters rejected the measure, most of the taxes still would have been imposed for the remainder of 2011-12 fiscal year.

The article goes on to point out that Steinberg is playing hardball (with our paychecks as the ball) to pressure the Republicans to accede to a special election (2). But implicit is the threat to send the bill to the Assembly, where I’m sure it will pass easily. And there are several problems with this:

First, We The People made our will clear about new taxes in 2009, when Prop 1A was crushed 65-35. The voters sent a very loud, very clear message to Sacramento that we are taxed enough, thank you, so instead please do your jobs and come up with a budget that meets existing revenues. Instead, they either want another expensive special election (3) to ask us the same question we only just answered, or they’ll let the counties and school districts do it (to us). This is not only “playing hardball” with Republican legislators, it is also a slap in the face of the voters who’ve already made their will plain.

But arrogance is often a trait of oligarchy, so I guess I shouldn’t be surprised.

The second problem is with the very idea of giving county boards of supervisors, school districts, and community colleges the power to tax — they’ll go right ahead and do it. Sure, they’ll have to call an election, but all they’ll wind up doing is encouraging the most productive elements of society to move elsewhere. This only gives wastrel government more money to waste and helps them avoid dealing with massive waste and inefficiency by encouraging them to rob their constituents. It’s like giving an alcoholic the keys to the liquor store.

Finally, the fundamental objection is this: We are taxed enough. California has an income tax with eight rates. The top two tiers pay 10 and 11 percent, respectively. Now, you might think only the wealthy get hit with these rates. Well, in California, we have a different idea of “wealthy.” The second highest tax bracket, 10%, starts at $47,055. Yes, you can make less than 50 grand a year, and Sacramento thinks it only fair that you fork over 10 percent. And let’s not forget sales taxes that range from 9.25% to 10.75%.

And Brown, Steinberg, and the Democrats want more, one way or another.

The real problem here isn’t that taxes aren’t high enough, it’s that nearly 40 years of Democratic control of the legislature have lead to insane spending and borrowing, as well as unsustainable public employee pensions. Instead of a bloody-minded obsession with raising taxes, the legislature should be bending all its efforts to creating the conditions here that will stop the flight of businesses from California and encourage others to come here: fewer regulations and lower costs to do business. And they should be easing the way for intelligent exploitation of our natural resources, including the billions of barrels of oil estimated to sit off our coast. All of these would create jobs that would bring in revenue without having to raise taxes.

Instead, we get political gamesmanship and an unwillingness to see that the Golden State is going the way of the goose that laid the golden eggs.

Footnotes:

(1) And see what that’s gotten us? Let this be a warning to the rest of you.

(2) More money we can’t afford to spend.

(3) I think they learned it from the EU: “You’ll keep voting until you give us the answer we want, peasant!”

(Crossposted at Sister Toldjah)

Seven reasons why tax increases are not needed

The Center For Freedom and Prosperity has put out another of it’s “Econ 101″ videos, which cover various topics explaining why limited government, low tax, and controlled spending regimes work better than… Well, what we have now.

This video, narrated by Piyali Bhattacharya of Young Americans for Liberty, gives seven reasons why increasing taxes is a bad idea:

1. Tax increases are not needed;
2. Tax increases encourage more spending;
3. Tax increases harm economic performance;
4. Tax increases foment social discord;
5. Tax increases almost never raise as much revenue as projected;
6. Tax increases encourage more loopholes; and,
7. Tax increases undermine competitiveness.

And here’s Piyali:

We should keep these in mind as the budget debates in Congress go forward.

via Dan Mitchell at Big Government, where he gives links to related videos you may be interested in.

(Crossposted at Sister Toldjah)

Why a flat tax is a good idea

I believe I’ve posted this before, but, since tax season is fast approaching with all its wrangling over this rule and that deduction, I thought it worthwhile to offer again. In it, the Cato Institute’s Dan Mitchell explains how a flat tax would work and why it would be better for the country than the current Byzantine system we have:

And, speaking of those Mitchell mentions who benefit from the current tax code, I’m sure the tax-prep industry would just hate this.

via International Liberty

(Crossposted at Sister Toldjah)

California: Brown’s austerity budget?

The LA Times has an interesting article today about incoming Governor Brown’s proposed budget – interesting mainly for what it hints at and leaves out, and secondarily for a bit of media bias. First, the proposal:

Gov.-elect Jerry Brown is laying the groundwork for a budget plan that would couple deep cuts to state services, including university systems and welfare programs, with a request that voters extend temporary tax hikes on vehicles, income and sales that are set to expire next year.

The blueprint Brown will unveil when he takes office early next month also is expected to take aim at several tax breaks and subsidies that have been fiercely guarded by the business lobby in Sacramento, according to people involved in budget discussions with the incoming administration.

Among the breaks are multibillion-dollar incentives for redevelopment projects and hundreds of millions of dollars of “enterprise zone” credits meant to encourage investment in blighted neighborhoods. Also targeted is a recent change to state business tax formulas that has saved corporate California roughly $1 billion.

The combination of austere spending and extended tax hikes is designed to confront both parties and their allied interest groups with painful choices that Brown says are necessary to truly resolve the state’s massive budget problems. He intends to take swift action, using the political capital of a new governor to confront a deficit that could easily subsume his governorship.

In a symbolic gesture to garner the trust of a skeptical public, Brown has already pledged to cut his own office budget by 25%.

First promising sign: the Governor-elect recognizes we’re in a deep mess and cannot keep spending the way we have been for the past 25 years :

California state spending has outgrown the state’s tax base by 1.3 percentage points annually for 25 years. Simple arithmetic dictates that in lieu of constant tax increases, this perpetuates a deficit.

From 1985 to 2009 state GDP in California grew by 5.5 percent per year, on average (not adjusted for inflation). Annual growth in state spending was 6.8 percent, on average. Three spending categories have dominated this spending spree: public schools, cash assistance and Medicaid. Making up half of state spending, they are outlets for traditional redistributive welfare state policy.

(h/t Wyoming Liberty Group)

Back to the Times article, Brown plans to ask for cuts to California’s welfare, public school, California State University, and University of California allocations. He also wants to change or eliminate special enterprise zones (areas of lowered taxes to encourage local hiring) and the way a particular tax is calculated for businesses. Finally, he wants voters to approve an extension of onerous tax increases enacted a few years ago, which will expire with this fiscal year.

It’s a mixed bag, with something to tick off everyone. By one theory of politics, that means he must be doing something right. Teacher’s unions and the universities, for example, will hate the cuts to education. But, let’s be blunt here: CSU and UC students, even after recent fee hikes, are still heavily subsidized and charged nowhere near market rate for what they get. And higher education is a public good, not an unalienable right. If the state can’t afford to keep subsidizing it at current levels, then logic dictates cutting back. And it’s not as if public school performance in California has warranted giving the teachers unions more, instead of forcing some competition and choice into the system, as has New Orleans.

The proposals to cut back business enterprise zones will surely anger business communities, but the article mentions (but does not cite directly) studies arguing that those zones have not had the desired effect. Shouldn’t fiscal conservatives be open to the idea of ending programs that don’t work, even if they are ones conservatives sympathize with?

One of the greatest obstacles Brown’s proposals face is the extension of tax rates. California is already one of the mostly highly taxed states in the nation, one of the reasons businesses and people are leaving for other states that don’t punish success nearly as much. Here in the Golden State, if you make more than $47,055, but less than a million, you pay the second-highest rate, 9.55%. Sales tax in Los Angeles county is 9.75%, which is a 1.5% premium over the state rate of 8.25%. And auto registration fees (the dread car tax, which was part of why Gray Davis lost his job in 2003) is 1.15% of the car’s value. Brown is hoping that spending cuts will persuade a skeptical and angry public to extend these tax rates in a special election in return for deep spending cuts. We’ll see.

The devil, of course, is in the details, and Brown’s representative was deliberately vague, probably not wanting to show his hand in advance of what is sure to be a hard fight in the legislature. Here are some questions I have for the once-and-future governor:

• Are these spending cuts permanent reductions in bloated state spending, or just a temporary cutback until the economy picks up, at which point we’ll go on a binge again?
• When would the extended tax rates expire? When the economy recovers, will you consider tax cuts to stimulate economic growth?
• Will you push for an increase in school choice to break the stranglehold of the teachers unions and make sure we’re getting value for the money we put into education?
• What will you do to reform California’s regulatory environment, which helps make this state the worst in which to do business?
• What will you do to curb the corrupting influence of other public-employee unions?

I’m sure there are a lot more questions, but these are a start — as is Brown’s plan. We’ll see what comes out in the details in the months ahead.

TANGENT: The article does a pretty good job with the basics, but still reflects the LA Times’ pro-Democrat, pro-progressive bias. When discussing portions of Brown’s proposal that the business community might not like, it mentions only opposition with no word about people who might be hurt by the changes. When talking about cuts to welfare and education, we get pity-words about students and the poor, with no attention given to the effectiveness of those programs — unlike we see in the discussion of enterprise zones.  Not egregious, not outrageous, but sadly typical.

(Crossposted at Sister Toldjah)

Paul Ryan gets it

This video has been making the rounds on the Internet, and I have to join in. The Republican congressman from Wisconsin defends the passage of the compromise tax package last night and refuses to let the perfect be the enemy of the good:

A lot of people are boosting Ryan for vice-president or even president in 2012, but I’d be thrilled if he remained chairman of the House Budget Committee for the next ten years. We need sane voices in the legislature, too!

LINKS: Jennifer Rubin is impressed.

For the record

I’m in favor of the tax compromise that recently cleared the Senate, and have been from the start, for these reasons.

I also believe some pundits and pols I respect on the Right who opposed the deal have fallen into the trap of letting the perfect be the enemy of the good.

(h/t Jen Rubin)

November’s Porkers of the Month

We have joint winners for this month’s Porker Award from Citizens Against Government Waste and Reason.TV: Senators Tom Carper (D) of Delaware and George Voinovich (R) of Ohio, who want to raise the federal gasoline tax 135% so they and their buddies can use even more of the Highway Trust Fund for purposes for which it was never intended, such as hovercrafts.

No, really:

Congratulations, gentlemen. Well done!

(Crossposted at Sister Toldjah)

Andrew Jackson on taxation

From President Jackson’s farewell address:

It is well known that there have always been those amongst us who wish to enlarge the powers of the General Government, and experience would seem to indicate that there is a tendency on the part of this Government to overstep the boundaries marked out for it by the Constitution. …There is, perhaps, no one of the powers conferred on the Federal Government so liable to abuse as the taxing power. …Congress has no right under the Constitution to take money from the people unless it is required to execute some one of the specific powers intrusted to the Government; and if they raise more than is necessary for such purposes, it is an abuse of the power of taxation, and unjust and oppressive. …Plain as these principles appear to be, you will yet find there is a constant effort to induce the General Government to go beyond the limits of its taxing power and to impose unnecessary burdens upon the people. …There is but one safe rule, and that is to confine the General Government rigidly within the sphere of its appropriate duties. It has no power to raise a revenue or impose taxes except for the purposes enumerated in the Constitution, and if its income is found to exceed these wants it should be forthwith reduced and the burden of the people so far lightened.

Hmmm… Maybe President Obama should spend more of his time studying his predecessors than his golf swing.

via Dan Mitchell

(Crossposted at Sister Toldjah)

Gray Davis: Jerry Brown will try to raise taxes

That’s the informed opinion of California’s former (and reviled) governor about the likely future under the Once and (maybe) Future Governor. From the Fresno Bee:

Former Gov. Gray Davis, no stranger to special elections after being recalled in 2003, said Wednesday that California is likely to face another special election next spring.

Davis pointed to billions in tax revenue set to expire next year, creating a deep hole in the next budget. He said that would force a conversation about whether to extend current, higher tax rates on income, sales and vehicles – and that such a conversation would involve the voters.

“The next governor will have to have a special election given the additional revenue shortfall we’ll face because of the temporary tax increases expiring,” Davis said in a phone conversation.

“Next governor” is a code phrase for “Jerry Brown,” since Whitman herself has said no way:

I saw today that former Governor Gray Davis says that if Jerry Brown is elected, we will have a special election in the spring to ask voters for even higher taxes. Talk about March Madness! More taxes in a recession. And Gray Davis ought to know; he was Jerry Brown’s right hand man for years. Voters, you are warned. Jerry Brown will bring more spending, more taxes and more lost jobs to California.

And that isn’t just campaign rhetoric: businesses and individual job creators are already fleeing California, in large part because of high taxes. When you add together the unemployed, the under-employed, and those who have given up looking for work, California’s jobless rate reaches 22%, according to that bastion of extreme right-wingnuttery, 60 Minutes:

Just last year, California voters crushed Proposition 1A, which would have imposed a special tax increase. With the state in worse shape now than it was then, only spending addicts such as Brown and Davis could seriously believe the people would approve new taxes. The only way the (once) Golden State will get out of this mess is by cutting spending, reducing taxes, and eliminating regulations that encourages job creators to take their business elsewhere.

And the first step is to vote Meg.

via Mayor Sam’s Sister City

Note: Davis talks about extending expiring taxes, but the linked Bee article also mentions “tax hikes.” You can be sure Brown and the legislature will want more than just what they currently have.

(Crossposted at Sister Toldjah)

Indexing the capital gains tax

Sounds like a snoozer of a topic, right?

Hey, wake up! It’s your money we’re talking about here!

That’s right. If you’re an investor (and everyone should be in some form, even in this lousy economic climate), then you’re being ripped off by the capital gains tax. Not only is it a form of double taxation that should be eliminated, but, even at the current relatively low rates, you still lose because of inflation. In fact, as this Center for Freedom and Prosperity video demonstrates, it is quite possible to pay taxes on a “gain” that is actually a loss:

It’s like getting mugged and then being forced to pay for the mugger’s cab fare. Some fun, eh?

More seriously, this kind of taxation eventually discourages investment, which hampers economic growth and job creation, something we just don’t need.

You can have your paycheck when we’re done with it

It’s annoying enough to have the government force employers to withhold money from one’s paycheck, but the new government in the UK wants to take it one step further. Under a new proposal, employers will send employees’ paychecks to the government, first. Then, when they’re done with it, the government will give what’s left to the employee:

The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.

The proposal by Her Majesty’s Revenue and Customs (HMRC)  stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid.

Currently employers withhold tax and pay the government, providing information at the end of the year, a system know as Pay as You Earn (PAYE). There is no option for those employees to refuse withholding and individually file a tax return at the end of the year.

If the real-time information plan works, it further proposes that employers hand over employee salaries to the government first.

And this from a Conservative government? Obviously the word means something different on the other side of the Atlantic than it does here.

Fausta points that this is how foreign employers pay their workers in … Cuba. The company gives the government the check, and Havana gives the campesino what’s left. Some may wonder what the substantive difference is between this and normal withholding. In my opinion, the difference is huge: while the government takes a cut under the withholding system, the check is still a matter between the employer and the worker. Under the Cuban-British model, the worker becomes dependent on the central government for his money, no matter where he works – or if he works at all, given welfare. It’s another way of turning a free citizen with his own property -in this case, a paycheck- into a ward of the state.

I can sympathize with the desire to make tax collection more efficient in order to get the money the government is owed, but maybe HMRC should consider something radical, such as a low-rate flat tax that will leave more money in the hands of the citizen, who will then use it to generate economic activity and, in turn, increased revenue for the government. That pesky little Laffer Curve in action, again:

But that kind of logic is alien to the statist, whose answer to every problem is the expansion of government power and its further intrusion into every aspect of one’s life, inevitably hobbling individual liberty. What next? Simply declaring everyone to be an employee of the State Crown?

LINKS: Ed Morrissey points out the many practical problems of this proposal, such as giving government access to everyone’s bank accounts. Power Line asks “Whose money is it?“

UPDATE: Dan Mitchell calls it “Orwellian.”

(Crossposted at Sister Toldjah)

(Video) I want your money!

From (oddly enough) IWantYourMoney.net, a trailer for their forthcoming documentary on government spending and the role of the federal government. Trust me, it’s much more entertaining than it sounds:

From the movie’s description:

Set against the backdrop of today’s headline – 67% of Americans don’t approve of Obama’s economic policies, the film takes a provocative look at our deeply depressed economy using the words and actions of Presidents Reagan and Obama and shows the marked contrast between Reaganomics and Obamanomics.

The film contrasts two views of the role that the federal government should play in our daily lives using the words and actions of Ronald Reagan and Barack Obama.

Two versions of the American dream now stand in sharp contrast. One views the money you earned as yours and best allocated by you; the other believes that the elite in Washington know how to best allocate your wealth.

One champions the traditional American dream, which has played out millions of times through generations of Americans, of improving one’s lot in life and even daring to dream and build big.

The other holds that there is no end to the “good” the government can do by taking and spending other peoples’ money in an ever-burgeoning list of programs. The documentary film I Want Your Money exposes the high cost in lost freedom and in lost opportunity to support a Leviathan-like bureaucratic state.

The movie releases October 15th, just in time for midterms. Quite the coincidence, that.

I’ll be looking for it.

(Crossposted at Sister Toldjah)