Obama is trying to get tax hikes on "the rich" through Congress to pay for all his promises to other people. But his simplistic Leftist worldview seems to have prevented him from seeing who the people are whom he proposes to tax more. Who are the people earning over $250,000 a year whom Obama wants to hit? Income is a sort of a pyramid. There are a few very rich people at the top but most of "the rich" whom Obama wants to tax are near the base of the pyramid: fairly close to that $250,000 mark. And most of them are hard-working people: doctors, dentists, businessmen and professionals generally.
So will they just pay the extra tax and grin and bear it? If the tax increase were limited to paying 39.6% instead of 33% on any income above $250,000, those just over the mark might not think the change worth bothering about -- and sneering Leftist Jonathan Chait makes that point. But Chait fails to acknowledge that there is a lot more to Obama's tax proposals than the new top rate. Obama also wants to cut out a lot of tax deductions available to those earning over $250,000 and he also has proposed increasing their tax rate on capital gains and dividends from 15 to 20 percent. So many professionals will take a fairly big hit if they carry on as before. So lots of them will reorganize their affairs so that Obama gets exactly nothing extra from them.
And The Corner has a collection of emails from high earners that gives lots of detail about what many of them will do. One example:
"My wife and I are both pediatricians. We own our own practice together. We have one PA and 7 other employees. We each gross about $200 K a year. We have 3 young children at home, 2 of whom are not in school. We also employ an in-home nanny. My wife has been torn for years about not being at home for these children, which are our biggest investment in the future. We operate parallel S corporations as PC's, with a 50/50 ownership of the LLC that is our business. We file taxes jointly. After crunching some numbers concerning the President's tax hike proposals, I have come to the following conclusions. If the President's plan is enacted, we will do the following:
1. My wife will become a stay at home mother.
2. At least 3 of my 7 employees will be released.
3. The practice will downsize to a smaller office space, i.e. less rent.
4. The number of patients cared for on a daily basis will drop by 40%.
5. My wife will come out of the forced ER call schedule for good.
6. I will gross $249,999.00 a year, exactly.
7. The net income of our personal home will decrease by less than $10 K a year from where it would have been if we changed nothing.
So a lot of important service providers will reduce the services they provide in response to the simple-minded ideas of the simple-minded Leftist in the White House -- and America will be the poorer for it. Wealth is not money. Wealth is the goods and services that money can buy and reduced services available reduces the total national wealth. And that's no abstraction. As one of my medical correspondents notes:
"Seeing that almost half of doctors are women, and most are married and many have children, it should be obvious that many will reduce their hours worked. And with all the problems that Obama Care will create, there WILL be a shortage of doctor hours to care for patients. So EVERYONE will EQUALLY WAIT IN LONG LINES FOR CARE.
Another relevant excerpt which shows that the loss of wealth will be large:
"President Lyndon Johnson's administration was known for his War on Poverty. President Obama's will become notable for his War on Prosperity. We're speaking, of course, of Obama's plans to hike income taxes on the most wealthy 2 or 3 percent of the nation. He's not just raising the top rate to 39.6 percent; he's also disallowing about one-third of top earner's deductions, whether for state and local taxes, charitable contributions or mortgage interest. This is an effective hike in their taxes by an average of about 20 percent.
And soon the next shoe will drop - he'll announce that he's keeping yet another of his campaign promises: to apply the full payroll tax to all income over $250,000 a year. (Right now, the 15.3 percent Social Security tax only applies to the first $106,800 of income - you neither pay the tax on income above that, nor accumulate added benefit.) For many taxpayers in this bracket, this hike will raise their total taxes by about half. Finally, he's declaring war on investors by raising the capital-gains-tax rate to 20 percent. These increases are politically insignificant: The top 2 percent of the nation casts only about 4 percent of the votes, barely enough to attract the notice of even the most meticulous pollsters. But they have enormous economic significance. Those who earn more than $200,000 pay almost 60 percent of America's income taxes and account for a third of its total disposable income. If these spenders and investors are hunkering down, waiting for the revenuers to beat down their doors, their confidence will be anything but robust. Their spending will drop; they'll be unlikely to invest (except in new tax shelters)."
So Obama's increase in the tax rates could well bring about not an increase but a REDUCTION in the amount of tax revenue received.
Obama's attack on American oil producers
When there are huge cries for energy independence, Dumbo is doing his best to throttle the investment that could make it happen
Last summer, when the price of oil rocketed nearly to $150 per barrel, presidential candidate Barack Obama scored political points by calling for a windfall-profits tax on the so-called "Big Oil" companies. Obama's plan was to wallop them with extra taxes for every barrel they sold, so long as prices remained over $80 per barrel. By Inauguration Day, though, the global economic crisis and plummeting oil demand had driven prices to less than $30 per barrel, and with no windfall profits available to tax (and gas prices at the pump no longer an issue), the Obama team quietly dropped the idea. But now, in his proposed budget, Obama has found a new outlet for his desire to punish Big Oil-and, ultimately, the American public-with higher taxes.
Announced last week, the president's budget aims to raise more than $31 billion from energy producers over the next ten years by assessing new levies, repealing existing tax deductions, and rejiggering accounting rules. Among the new charges is an excise tax on oil and gas production in the Gulf of Mexico, which the administration hopes will raise $5 billion over 10 years. Obama also wants to limit companies' ability to deduct their oil and gas drilling costs, thereby raising their taxable income. And he would impose a fee on non-producing oil and gas leases in the Gulf of Mexico on top of the rents and fees companies already pay for leases.
This last item supports a dubious claim made by Speaker of the House Nancy Pelosi and others during last summer's high-gas-price hysteria: that Exxon Mobil and its brethren were limiting supply and boosting prices by refusing to produce oil and natural gas from federal leases that they held. What the conspiracy theorists never mentioned was that companies must pay rents on leases whether they produce or not, and that companies buy leases from the government for the right to investigate whether the sites contain extractable resources. Often, of course, they don't contain enough extractable oil or gas to make drilling worthwhile, though the government keeps all fees and royalties. There are other instances in which leases are legitimately non-producing. Leaseholders must negotiate an expensive bureaucratic maze to gather the necessary environmental permits to begin exploration and drilling. That can take years. Moreover, environmental organizations like Earthjustice and the Sierra Club routinely take leaseholders to court as a way to sow delay and drive up energy companies' costs.
Perhaps the surest sign that Obama wants to go after the oil and gas industries is his proposal to make them completely ineligible for the manufacturing-tax deduction. Congressional Democrats have long sought this move, calling it a repeal of a special tax break that Washington supposedly gives the petroleum industry. The reality is just the opposite: the manufacturing-tax deduction is available to virtually every manufacturing industry in the United States, not just oil and gas producers. Denying the deduction to Big Oil won't snatch away an ill-gotten favor in the name of fairness; it will unfairly penalize an industry denounced in recent years for the sin of making money.
Corporatism: FDR's "right path" is alive and well! : "`I believe that President Roosevelt has chosen the right path. We are dealing with the greatest social problem ever known. Millions of unemployed must get their jobs back. This cannot be left to private initiative.' And, sure enough President Barack Obama's overall Budget will generate hundreds of thousands of new jobs in the Government sector, people who will be grateful voters in the next election. Here is the Washington Post's piece on that: I'll bet readers thought the opening quote above was perhaps by our President Barack Obama, an admitted admirer of the New Deal. Actually, it was Joseph Goebbels, Hitler's propaganda chief, in 1933, speaking admiringly of the New Deal as the way for National Socialism to follow."
Obama's audacious agenda: Who's paying for it? : "Audacity on steroids. How else to describe the Obama administration's fiscal 2010 budget proposal, unleashed on an American public so staggered by the events of the last few months that they cannot comprehend the magnitude of the plans Mr. Obama and his still-inchoate Cabinet have for the nation. The list of problems the new president has resolved to put right reads like a roll call of the loftiest policy ambitions of every administration since FDR. . That each of these projects failed to one degree or another would give pause to most administrations intent on tackling any one of them. By contrast, Obama has declared that, amidst the greatest financial crisis since World War II, he will solve all of them."
Stimulus bill is really lawyers' full employment act: "A law firm announced last week it was building a special legal team to help its clients acquire some of the $787 billion in the stimulus bill. `We recognize this is an extraordinary opportunity to help advance the interests of our clients,' said team leader Doug McGarrah of Foley Hoag LLP, with offices in Boston and Washington, DC. The clients will need all the help they can get, because deciphering the legal complexities of the stimulus bill is going to occupy lawyers for decades."
An uncharitable tax : "The federal government budget proposed by the president imposes higher taxes on incomes above $250,000. One of the provisions is that charitable donations would no longer be tax deductible. . Without a tax deduction, charitable donations get tax punished. When the beneficiaries of donations are the poor and other good causes, these suffer from fewer gifts. A tax on charitable donations hurts the homeless, the hungry, the wildlife that does not get preserved, the ignorant who do not get educated, and all humanity which loses knowledge and more of its natural legacy. When government taxes the rich like this, it taxes the poor."
Mormon polygamy: Your tax dollars at work: "One of the things I mentioned to Jessop was how I was convinced that Mormon polygamy, for the most part, could not survive without the active help of government. Officially none of the multiple wives are legally married - they are single mothers eligible for all sorts of financial aid from the county, state and federal governments. When you consider that the media age in polygamous Mormon communities is around 12 or 13 you will understand precisely how many millions of dollars politicians are willing to give the sect `for the sake of the children.' Jessop agreed and said: `You can't support three kids these days by yourself, let alone 28.' She confirmed that millions in taxpayer funds were flowing in to polygamous communities keeping the[m] alive. Jessup says that these communities have individuals whose job is to write up grant proposals and submit them to various levels of government. So housing rehabilitation grants, highway grants, educational grants, development grants, etc., pour into these communities. With virtually no separation of church and state in these communities, the church uses the millions showered on the local governments, for its own purposes. Arizona Attorney General Terry Goddard said that the polygamists `proved themselves the master of grant applications.'"
For more postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, SOCIALIZED MEDICINE, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)