Two Heartening Responses to Seattle’s Self-Destructive Tax Grab

May 4, 2018

There’s hope for Seattle, yet.

International Liberty

I wrote last July about how greedy politicians in Seattle, Washington, were trying to impose a local income tax.

That effort has been stymied since there’s anti-income-tax language in the state constitution (Washington is one of nine states without that punitive levy), but that doesn’t mean the city’s tax-and-spend crowd has given up.

There’s a proposal for a new scheme to impose a “head tax” on successful companies.

The top three percent of the high grossing businesses in Seattle will carry the load of Seattle’s proposed employee head tax. Backers are calling it the “Progressive Tax on Business.” The tax will apply only to those companies with $20 million or more annually in taxable gross receipts as measured under the City’s Business and Occupation tax. The city estimates that will be 500 businesses. …the tax is based on total revenues and not net-income. …Councilmember Mike Obrien has been pushing…

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French President Approaches Cliff, Steps on Accelerator

January 19, 2016

France has been dirigiste since Louis XIV centralized all power under him, and the French leadership has been trapped in that intellectual straitjacket ever since. The idea of lowering the burden of government and letting market forces work is probably inconceivable to President Hollande — and most of his people.

International Liberty

When I wrote back in 2012 that France was committing fiscal suicide, I should have guessed that President Hollande would get impatient and push for even more statism.

Sure enough, the BBC reports that France’s President has a new plan. The ostensible goal is to reduce unemployment, but the practical effect is to expand the size and scope of government.

President Francois Hollande has set out a €2bn (£1.5bn) job creation plan in an attempt to lift France out of what he called a state of “economic emergency”. Under a two-year scheme, firms with fewer than 250 staff will get subsidies if they take on a young or unemployed person for six months or more. In addition, about 500,000 vocational training schemes will be created.

Needless to say, if subsidies and handouts were the key to job creation, France already would have full employment.

In reality, real jobs are created

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The Value-Added Tax Should Be Political Poison for Advocates of Limited Government

January 15, 2016

Tweeted this last night, but it’s worth its own post. There’s a lot to like about Ted Cruz, but his insistence that his new tax plan doesn’t contain a VAT, thus giving advocates of big government another revenue stream, is an annoying dodge. I wish he’d drop it, and the VAT.

International Liberty

It’s not my role to pick sides in political fights, but I am very interested in trying to make bad ideas radioactive so that politicians won’t be tempted to do the wrong thing.

This is why I’m a big fan of the no-tax-hike pledge. The folks in Washington salivate at the prospect of getting more of our money, but they are less likely to act on their desires if they’re scared that breaking their promises means they’ll lose the next election.

It’s also why I want the value-added tax (VAT) to become a third-rail issue. Simply stated, it would be a catastrophic mistake to give Washington an additional source of tax revenue. Especially since the European evidence shows that it’s a money machine to expand the welfare state.

Given my concerns, I was understandably distressed that two lawmakers (and presidential candidates) who normally support smaller government, Rand Paul

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The Value-Added Tax: A Nixonian Scheme to Fund Bigger Government

November 21, 2015

The VAT is to me an obviously bad idea, especially as long as there is also an income tax. But why Senators Cruz and Paul would support one is way beyond me.

International Liberty

In early 2013, a reader asked me the best place to go if America suffered a Greek-style economic collapse.

I suggested Australia might be the best option, even if I would be too stubborn to take my own advice.

Perhaps because of an irrational form of patriotism, I’m fairly certain that I will always live in the United States and I will be fighting to preserve (or restore) liberty until my last breath.

But while I intend to stay in America, there is one thing that would make me very pessimistic about my country’s future.

Simply stated, if politicians ever manage to impose a value-added tax on the United States, the statists will have won a giant victory and it will be much harder to restrain big government.

But you don’t have to believe me. Folks on the left openly admit that a VAT is necessary to…

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The Case Against the IRS and the “Progressive” Income Tax

December 16, 2014

Tax reform along the lines of some sort of flat tax or a national sales tax, along with reduction in the size of government, would go a long way towards generating prosperity here again. It would also make statist heads explode — a win-win situation!

International Liberty

Genuine tax reform would be the second-best fiscal policy reform to boost economic growth.*

With a simple and fair tax system, we could get rid of high tax rates that penalize productive behavior. We could eliminate the double taxation that discourages saving and investment. And we could wipe out the rat’s nest of deductions, credits, exemptions, preferences, exclusions, and other loopholes that bribe people into making economically unwise decisions.

When pushing for tax reform, I normally cite the flat tax, but there are many roads that lead to Rome. I’ve also pointed out that other tax reform plans have similar attributes. Here’s what I wrote, for instance, when comparing the flat tax and national sales tax.

In simple terms, a national sales tax (such as the Fair Tax) is like a flat tax but with a different collection point.the two plans are different…

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Theater of the Absurd: taxes force Spanish theater to sell porn to stay open

December 5, 2014

“Detrás de la puerta verde?”

Here’s another wonderful example of the ridiculous situations created when a bloated, unsustainable social welfare state forces politicians to tax anything and everything they can think of in order to feed the beast. In this case, a Spanish theater that presents the plays of Spain’s “Shakespeare” has to sell pornography to reduce its crippling tax burden:

Crippled by colossal tax rates and falling ticket sales, the Spanish cultural sector is taking creative action to cut its tax bill, including one theatre which has changed its main business to pornography to avoid having to pay high taxes.

The tax charged on cultural performances in Spain has shot up from eight to twenty-one percent since 2011 as the government attempts to balance the books, and has drawn a broader range of products into the local VAT-like ‘sales tax’. Some have noted the uneven application of the new higher taxes, which have hit high culture but not erotica and magazines.

Theatre director Karina Garantivá said: “It’s scandalous when cultural heritage is being taxed at 21 percent and porn at only at 4 percent. Something is wrong”. Her company, which performs works by the “Spanish Shakespeare” Pedro Calderón de la Barca has decided to circumvent the new, punitive taxes by registering as a distributor of pornographic magazines – and is offering free performances.

Punters buying €16 worth of hardcore-swingers magazine Gente Libre from the company receive a ‘free’ ticket to a performance of the highly regarded 17th century comic drama El Mágico Prodigioso.

Garantivá said the law as it stands made theatres feel as if they were “in a straitjacket, suffocated”, and that “We want people to ask what kind of a society makes this kind of decision. That they compare pornography and Calderón … and reach their own conclusions”.

A tax on “cultural performances?” That might make even gentry liberals here howl in outrage.

Ms. Garantivá asks the right question in the above highlight, but I have to wonder if someone raised in Spain’s all-encompassing social welfare system could easily come to the right answer? The problem is welfare statism itself, which spends far more than it can afford and faces continual pressure to spend even more to support an aging population, while dealing with a declining birth rate. The government’s increasing tax demands thus fall on a shrinking tax base, taking more per person. It’s a recipe for economic stagnation at best and collapse at worst. It’s a growing problem confronting much of Europe, but the people most burdened by the taxes often shriek the loudest at any effort to cut taxes and benefits to more rational levels. And we’re not all that far behind.

Meanwhile, you also have to wonder about politicians who tax “Shakespeare” more than smut.


Canada Shows How to Eliminate the Tax Bias against Saving

October 24, 2014

This will drive lefties who like to point to Canada’s health system as a model for the US crazy, but they’re much more free market-oriented than we are these days in other areas, and they treat savings in a more intelligent fashion. There are some very good ideas in here we should emulate, as well as looking at the Australian and Chilean national pension models as a replacement for the failing Social Security.

International Liberty

Since all economic theories – even Marxism and socialism – recognize that capital formation is a key to long-run growth, higher wages, and improved living standards, it obviously doesn’t make sense to penalize saving and investment.

Yet that’s exactly what happens because of double taxation in the United States, as can be seen by this rather sobering flowchart.

So how can we fix the problem? The best answer, particularly in the long run, is to shrink the burden of government spending so that there’s no pressure for punitive tax policies.

Good reform is also possible in the medium run. Policy makers could implement a big bang version of tax reform, replacing the corrupt internal revenue code with a simple and fair flat tax. That automatically would eliminate the tax bias against saving and investment since one of the key principles of the flat tax is that income…

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Obama’s new budget is a bad joke

February 13, 2012

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?

January 19, 2012

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

October 25, 2011

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?

September 15, 2011

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

August 16, 2011

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

July 15, 2011

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?

July 12, 2011

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

June 30, 2011

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!

June 13, 2011

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

May 4, 2011

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

January 31, 2011

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?

December 29, 2010

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

December 17, 2010

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.