As long as this machine keeps working, Obama has all the resource he needs.
Posted on 12/06/2012 7:34:40 AM PST by Kaslin
The fiscal cliff negotiations seem to be foundering on Barack Obama's insistence on higher tax rates on high earners and House Republican leaders' insistence on opposing them. The president believes he has a mandate from voters for his position, and House Republicans believe they have a mandate from voters for theirs.
The real argument here is over the size and scope of government. Under Barack Obama, federal outlays -- the technical term for federal spending -- have increased to 24 and 25 percent of gross domestic product.
That's a higher level of federal spending than in any year since 1946, when we were demobilizing after World War II. And the Obama budgets envision federal spending to continue at such levels more or less indefinitely.
This is an inevitable result, some Obama backers argue, of our aging population. Spending for entitlement programs for the elderly -- Social Security and Medicare -- are on a rising trajectory, and so the federal government simply must absorb a higher percentage of the economy than in the last two-thirds of a century.
Let's adjust the trajectory, House Republicans argue, by reforming the entitlements. Obama has given lip service to this idea -- but has offered no specifics.
He seems to be paying attention to those Democrats who oppose any changes in entitlements. Just raise taxes, they seem to say, and entitlements can keep rising as scheduled.
The problem is that, as historian Paul Rahe wrote earlier this year, "we no longer have the resources to support the entitlement state. We can certainly raise taxes, as President Obama and the Democrats intend to do, but that does not mean that in the long run we will take in more revenue -- and it is massively increased revenue that the entitlement state needs."
Rahe seems to have history on his side. To see why, take a look at the Economic Report of the President 2012, Appendix B, Table B-79, on page 412, which shows federal receipts -- the technical term for revenues -- and outlays as a percentage of gross domestic product for every year from 1939 to 2011, with estimates for 2012 and 2013.
Over that period of nearly three-quarters of a century, federal receipts have never exceeded 20.9 percent of gross domestic product. That was the number for the war year 1944.
The highest number since was the 20.6 percent of GDP in 2000, the climax of the dotcom boom. In the Obama years, federal receipts have hovered at 15 percent of GDP.
That's just because tax rates are too low, Obama backers reply. Just raise the rates on high earners, and the problem will be solved.
Actually, high earners don't make enough money to close the current budget deficit. You'd need to raise taxes on middle-income earners too.
But we have had higher income tax rates in most of the years since World War II. What history and Table B-79 show is that even much higher rates -- like the 91 percent marginal rate on top earners imposed from the 1940s to the 1960s -- have never produced federal receipts higher than 20 percent of GDP.
Why is that? As the late Jack Kemp liked to say, when you tax something, you get less of it. When the government took 91 percent of what the law defined as adjusted gross income over a certain amount, not many people had adjusted gross income over that amount.
According to a Congressional Research Service study, the effective income tax rate on the top 0.01 percent of earners in the days of nominal 91 percent tax rates was only 45 percent. Others have pegged it at 31 percent.
In the 1970s, when the top rate on wage and salary income was 50 percent and 70 percent on investment income, high earners spent much of their time and energy seeking tax shelters. The animal spirits of capitalists, to use John Maynard Keynes' term, were directed less at productive investment and more at tax avoidance.
But don't European nations extract more in taxes from their citizens? Yes, but through consumption taxes like the value-added tax. But those taxes tend to be regressive, and in this country sales taxes have been the province of states and localities.
Barack Obama and the Democrats may well get higher tax rates. But it's not likely that high tax rates can ever generate enough revenue to fund unreformed entitlement programs.
Lower tax rates actually yield HIGHER tax revenue.
But the Democrats don’t care about that.
Obama explained why when he was on the campaign trail:
It’s about REVENGE.
Duh.
Since this has been stated indirectly by The Bozo, and since it has been shown that it is NOT a revenue raiser but a targeting of a group, where is the cry for Equal Protection under the law?
Democrats have never been in favor of Equal Protection. Never.
Starbucks owners say they gladly pay more taxes.
Starbucks Asks for Five Buck Donations to Help Obama Economy
October 04, 2011
BEGIN TRANSCRIPT
RUSH: Get this. Starbucks is gonna start accepting donations to help the economy. According to the AP: “Starting Nov. 1, Starbucks will begin collecting donations of $5 or more from customers to stimulate US job growth through its ‘Jobs for USA’ program.”
www.chicagotribune.com/business/breaking/chi-starbucks-to-change-accounting-practices-pay-more-tax-in-uk-20121206,0,6556727.story
chicagotribune.com
Starbucks to change accounting practices, pay more tax in UK
Reuters
7:22 AM CST, December 6, 2012
Coffee chain Starbucks said it could pay up to 20 million pounds more in tax as it announced plans to change its accounting practices, surrendering to criticism from lawmakers, campaigners and the media.
A Reuters examination of Starbucks accounts published in October showed the company had reported 13 years of losses at its UK unit, even as it told investors the operation was profitable and among the best performing of its overseas markets.
“We are making a commitment that we will propose to pay a significant amount of corporation tax during 2013 and 2014 regardless of whether our company is profitable during these years,” Starbucks UK managing director Kris Engskov said in the transcript of a speech sent to Reuters.
“We are still working through some of the calculations, but we believe we could pay or prepay somewhere in the range of 10 million pounds in each of the next two years in addition to the variety of taxes we already pay.”
Geithner: White House ‘absolutely’ Willing to go off ‘fiscal cliff’
(WASHINGTON) — Treasury Secretary Timothy Geithner on Wednesday said the Obama administration is “absolutely” prepared to go off the looming “fiscal cliff” if Republicans do not agree to raise tax rates on the wealthy.
http://www.wlsam.com/default.asp
http://www.freerepublic.com/focus/f-news/2964329/posts
http://www.freerepublic.com/focus/f-news/2964236/posts
http://www.freerepublic.com/focus/f-news/2964763/posts
McConnell: Let's See If Democrats Want To Vote On Geithner's Laughable Bill -- Reid Objects
As long as this machine keeps working, Obama has all the resource he needs.
Looks as if Obama&Co think trickle down poverty is a good thing.
Obama and the Dems know this is true as well as I do. Whenever I hear them go "Tax the rich", I know what they are *really* saying is "tax the middle class".
They are dishonest to the core...
the infowarrior
Lower tax rates actually yield HIGHER tax revenue.
Lower tax rates may have some benefits but HIGHER tax revenue is not one of them! That was the conclusion of the analysis that I posted at this link. In addition, I am yet to find one credible economic study that purports to show evidence of any income tax cut that has ever paid for itself. I have posted a table of the ones that I have thus far found at this link. Following is that table:
If you know of any credible economic study that purports to show evidence of any income tax cut that has ever paid for itself, please post a link to it. Likewise, please let me know any specific numbers or conclusions in my analysis that they disagree with.
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