(See original post)

Don Burnard

September 23, 2010

We’ve been discussing the extension of the Bush tax cuts and the deficit hawks’ counterintuitive love of extending the tax cuts for the billionaires who make up their base, even at the cost of $700 billion during the next decade. The same old claptrap and fear that they’ve been peddling, along with the outright lies and revisionist history seem to be the only thing they have going in answer to our plight.

They’ve been peddling this crap since the FDR years to try to stifle any innovation in the way we do things in America.

The betterment of the better off is their only concern and the rest of us can pound sand as far as they are concerned. Unfortunately, too many people seem to be buying into this against their own self-interest. They scream about how we need to get back to the Founding Fathers’ view in our country. I would humbly point out that the major belief behind the American Revolution, which everyone seems to forget, was that every American was equal, and that there should be no ruling class in this country. Evidently, they didn’t get the memo in the GOP and corporate world.

These days, the constant drumbeat on the right is that the only way to create jobs is by giving the richest of our citizens the lion’s share of the economic pie. This started with the discredited trickle-down economics of the Reagan administration and culminated with the Bush tax cuts, which were introduced against the advice of his top economic advisers and led to the no growth, no jobs, economic-imploding decade that we’ve experienced and continue to experience.

None of the promises that were made have come to pass for anyone other than the very top of the economic food chain. Their answer to this conundrum? More of the same!

The main effect that the Bush tax cuts had was to reduce government revenue and to double the deficit that they are now crying crocodile tears over. If you need further proof that they have learned nothing in the past 10 years, look no further than Ohio’s John Kasich, whose “plan” to deal with the hardships in our state is to do away with the state income tax and to cut regulations for businesses, including the financial sector that made him a multimillionaire under some nebulous plan that he refuses to release (like his tax returns). Instead, we’re given the same patented, vague GOP promises, couched in sound bites about how our well-being is their No. 1 concern.

How long are we going to keep falling for this people?

I’ve been called a Socialist, Communist, and lots of other cutesy buzzwords by tea partiers and wealth managers who cry that Obama and I want to redistribute wealth in this country.

Let’s take a look at some more of those pesky facts. President Obama’s tax cuts benefited more than 95 percent of Americans, and the average taxpayer will receive a nearly $3,000 tax cut this year, up nearly $1,000 from last year. According to the Citizens for Tax Justice, the lower 20 percent of income earners (up to $19,972 in 2009) received an average of $604.

Under the Bush tax cuts, they received an average tax cut of $22, according to the Center for Tax Policy. The next 20 percent (up to $38,000 in 2009) got an average tax cut of $628 as compared to $360 under the Bush tax cuts. Ninety-seven percent of small business owners receive tax cuts under the Obama plan. Yes, the same small business owners that Mitch McConnell loses sleep over. Except under the figures that Mitch uses, these include movie stars, athletes, law firms and many others that the average person doesn’t think of as small businesses.

The Center for Budget and Policy Priorities says that a family of four in the exact center of the income spectrum will pay 4.6 percent of their income in taxes this year under Obama’s tax cuts, and will average a 10 percent increase in their refund. Under Bush, in 2005, 66.7 percent of all U.S. corporations paid no income tax. Didn’t the Supreme Court decide that corporations are people? How come you and I didn’t get that deal? And we want to go back to this? Perhaps in the next column we should look at where the real wealth distribution is going. It might surprise some of you tea and Kool-Aid drinkers.

E-mail columnist Don Burnard at letters@toledofreepress.com.

(See original post)

Ernest Dumas

September 23, 2010

If you distilled the congressional elections in Arkansas down to their essence, it would be this: Republicans own the sound bites and Democrats own the issues.

But that is not how it looks, is it? Republicans utter their sound bites, all variations of the theme that Democrats want to tax and spend while they want to cut and save. Even Rep. John Boozman, the Senate candidate, can make it sound plausible.

The Democrats meantime are afflicted by the old disease of Democrats, at least in this region: terminal timidity. Voters would love their issues, but the Democrats temporize, apologize and offer a halfhearted defense of their and their party's stand on the big issues. They don't sound like they are terribly more knowledgeable about the issues than the Republicans. Well, state Sen. Joyce Elliott in the Second District sounds pretty sure of things, but that's it.

Sen. Blanche Lincoln has found her voice on a few things like Social Security and the goofy plan embraced by Arkansas Republicans to shift taxes dramatically from the rich and corporations to the middle class through something hilariously named the Fair Tax. But she doesn't take Boozman on energetically on the big issues.

If she and the Democratic House candidates did take them on and found the simple and effective way to do it, Boozman, Tim Griffin, Steve Womack, Rick Crawford and Beth Anne Rankin would get the votes of diehard Republicans and no more.

Let's take the two big issues — health-care reform and the permanent extension of the Bush tax cuts. The Republicans — I think all five stand united on this — say that on both issues the Democrats are just out to raise people's taxes during bad times. Great sound bites, and the evidence is that they have worked. But let's see who is right on the facts.

First, extension of the Bush tax cuts, which expire on Dec. 31: Congress may act by then but if it does not it will be the urgent first thing on the agenda when the new Congress is sworn in with all these Republicans. The tax cuts, which went mostly to people with very high incomes, define the Republicans. They were the signal achievement of the six-year Republican reign in Washington — that and two wars.

The Democrats support, though timidly, President Obama's plan to extend the reduced tax rates from the Bush years and Obama's own tax cuts that were included in the 2009 recovery act except for single people earning more than $200,000 a year and couples earning more than $250,000. Those taxpayers would continue to get all the tax cuts enjoyed by the other 98 percent of Americans but not the extra tax cut of about 3 percent that Bush and the Republican Congress gave them in 2001 and 2003.

All five Republicans, as best as I can tell, support the Republican plan embodied in SB 3773. It would continue the extra tax cut on the rich and virtually eliminate the tax on great estates, but it would not continue the Obama tax cuts for middle- and low-income working families that were embodied in the earned income and child tax credits.

So how will each of those work out for Arkansas families? Boozman, Griffin, Womack, Rankin and Crawford would force more than 98 percent of Arkansans to pay more taxes than they would pay under the Obama/Democratic plan. (Congressman Mike Ross of the Fourth District supports both plans.) Citizens for Tax Justice applied the tax rates under each plan to the latest Treasury Department summary of the filings of the roughly 1.2 million Arkansans who filed income tax returns.

Here is how much more or less in taxes a family in each category of Arkansas tax filers will pay on average under the Republican plan than under the Obama/Democratic plan:

Lowest 20%: $178 more

Second 20%: $120 more

Middle 20%: $165 more

Fourth 20%: $39 more

Next 15%: $0

Next 4%: $27 less

Richest 1%: $22,048 less

Only the richest 5 percent would fare better under the Republicans, a whopping $22,048 for the average millionaire. Nearly everyone else fares better under the Democrats.

See how Boozman and the rest defend that? All that they can truthfully say is, those are the people we represent. They couch it differently. Those richest 5 percent are small businessmen who create the jobs for everyone else, they say. But that is simply and provably not true.

Oh, yes, what about those high taxes under the new health-care reform law?

Most Arkansans will pay neither higher nor lower taxes. But some 280,000 families will be eligible for substantial tax cuts — the tax credits for families that earn less than 400 percent of the poverty line (roughly $88,000 this year for a family of four). Some 130,000 families who have no insurance now will claim the tax credits, which will be applied directly to their insurance premiums, when they or their employers purchase insurance under the low-cost state exchanges. Another 150,000 who are insured now will have their taxes lowered to help pay for their insurance when they enter the exchange. Families USA calls it the biggest middle-class tax cut in history. Republicans are committed to repealing it.

The real tax increases? Fewer than 18,000 of the richest Arkansans will pay a higher Medicare tax — less than 1 percent — and also pay the little Medicare tax on their unearned income for the first time. They are the taxpayers who now enjoy the lowest effective tax rates of everyone.

How would you like to defend that posture? You would stick with the sound bite and hope the other side lies doggo.

Economists Warn Of Consequences If Cuts Not Extended

September 22, 2010 Wednesday
By Katy O'Donnell

More than 300 economists are sending Congress a letter today in support of extending the 2001 and 2003 income tax cuts for all taxpayers "in order to prevent a devastating blow to America's fragile economic recovery."

The letter, sent under the auspices of the National Taxpayers Union, features economists from a wide range of colleges and research centers throughout the country, in addition to experts from conservative groups such as the American Enterprise Institute and the Reason Foundation.

The Bush tax cuts, set to expire at the end of this year, have become a hot-button issue for the midterm elections, dominated by voter anger over both a weak economy and burgeoning deficits.

The economists call failure to extend the cuts an "anti-stimulus," asserting that allowing marginal tax rates to rise would place "heavier burdens on the working class and wealthy alike" and handicap an already tentative economic recovery. The letter also demands legislation to keep the estate tax from returning next year at a 55 percent top rate, which would happen if Congress takes no action.

The letter warns that "even confining tax hikes to wealthier individuals will have deleterious effects, as households earning more than $210,000 account for one of every three dollars in consumer outlays."

The plea also factors in one issue rarely raised in the current tax cut debate: the time Americans expend simply complying with an already tedious, paperwork-heavy code, pegged at 2.4 billion hours for individual taxpayers this year by the National Taxpayers Union. The letter declares that "this loss of time and associated costs (estimated at more than $100 billion) would only be made worse" by Obama's proposals on the estate tax, limitations on itemized deductions, and phasing out personal exemptions.

Meanwhile, the liberal policy group Citizens for Tax Justice tried to counter a letter toSpeaker Pelosi signed by 31 House Democrats who called for an extension of all the Bush tax cuts. In a release, the group challenges the letter's claim that the taxpayers who would lose their cuts under Obama's plan "are responsible for 25 percent of national consumer spending." These taxpayers' share of pretax income, the group asserts, is only 21 percent, and much of that is saved, not spent. In other words, the math "doesn't really pan out," according to Steve Wamhoff, legislative director of CTJ, who said he hopes the group's report causes some of those Democrats to change their position.

(See original post)

09-21-10

By Arthur Delaney

Most House Democrats who want to keep the soon-to-expire Bush tax cuts for the wealthy represent districts where the share of taxpayers rich enough to pay higher taxes under President Obama's tax plan is below the national average.

Obama wants to keep the cuts for all but the top income brackets -- individuals and families making more than $200,000 and $250,000 a year, respectively. Of 31 Democrats who signed a letter supporting the tax cuts, 22 represent districts where less than 2.1 percent of residents would see higher taxes under Obama's proposal, according to a new report by Citizens for Tax Justice.

"They don't seem to be coming from particularly rich districts, so it makes you wonder, 'Who are they representing?'" said CTJ's Steve Wamhoff in an interview with HuffPost. "Why are they doing this? The polls are against them. It's not poll-driven. It's not in the interest of their constituents. It's baffling."

Supporters of the tax cuts have said they're just looking out for the economy. "Given the continued fragility of our economy and slow pace of recovery, we share their concerns," wrote the 31 Democrats in their letter. "While those in the highest income brackets comprise only two to three percent of American taxpayers, economists estimate that they are responsible for 25 percent of national consumer spending."

The CTJ report takes aim at the 25 percent claim: "This assertion is not only wrong; it is impossible. The richest 2.1 percent of taxpayers account for about 21 percent of total pretax cash income. But their share of total personal consumption is certainly not higher than their share of total income. In fact, it is considerably lower, because they save a much higher portion of their after-tax income than less well-off Americans."

Many of the House Democrats who support extending the tax cuts, all of which will expire after December if Congress does nothing, opposed reauthorizing extended unemployment benefits back in May, when they said the economy was too strong to justify adding to the deficit. HuffPost asked one such Tax Cut Democrat about the apparent contradiction over deficit spending, since the cuts would add billions to the deficit.

"The economy was growing at the end of December 5.6 percent. It's now growing at 1.6 percent," said Rep. Gerry Connolly of Virginia (who supports the cuts but has not signed the letter). "Many economists say that if you raise taxes on the upper-income brackets, it will shave half a point off of GDP."

(See original post)

Editorial

September 15, 2010

If this year's election is about the economy, voters would be wise to listen to a congressman who's been there.

Republican Pat Toomey.

The former congressman has spoken and written extensively about Social Security and corporate taxes.

His solution: End both.

Toomey recently came in for criticism when he told the Pennsylvania Press Club "I've never said I favor privatizing Social Security."

He may never have used those exact words, but Toomey is a proponent of ending Social Security as it now stands by allowing younger workers to invest part of their Social Security contribution in private markets. He has written and spoken about it extensively.

In his book "The Road to Prosperity," Toomey wrote that he would allow older workers to keep their Social Security accounts while having younger workers switch a portion of their Social Security payments to private accounts.

Toomey said privatization, which President George W. Bush unsuccessfully pushed in 2005, would provide a dramatic improvement on Social Security's low investment return, and would offer today's workers "the promise of more retirement income in the decades to come."

Sounds wonderful on paper, but removing any money from Social Security jeopardizes a system that, with a few minor tweaks — increasing the earnings cap, phasing in a higher retirement age and incorporating means testing — could be self-sustaining for another 75 years.

And given today's markets —investors lost an average of 40 percent of their retirement savings based on 2008 returns alone — the private markets argument is hard to make.

Toomey also has said he favors eliminating corporate taxes — a view that was the focal point of Congressman Joe Sestak's first commercial. The commercial uses a film clip from a July 20, 2007, CNBC broadcast in which Toomey said, "Let's not tax corporations. ... I think the solution is to eliminate corporate taxes altogether."

PolitiFact, the agency that checks the veracity of political ads, found the ad to be "mostly true." PolitiFact also said it gave the Toomey camp "the opportunity to say the candidate opposes zero corporate taxation, but the campaign did not do so."

Toomey spokeswoman Nachama Soloveichik, has said Toomey favors lowering business taxes, but recognizes that a zero corporate tax rate is "impractical."

He has, however, written that he favors a zero corporate tax rate.

Corporations already use loopholes to avoid paying taxes. If corporate taxes were eliminated completely, it would add $225 billion to the national debt every year.

And who would pick up that tax burden? The middle class.

According to Citizens for Tax Justice, Toomey's preference for a 17 percent Flat Tax would allow CEOs at bailed-out banks to pay nothing on Wall Street earnings "while 95 percent of workers would see a tax hike of roughly $3,000."

That's an impractical approach to fixing the economy.

Read more: http://articles.lancasteronline.com/local/4/289695#ixzz10CmKNw63

(See original post)

By Jim Zarolli

September 8, 2010

At least on paper, U.S. companies pay some of the highest corporate taxes in the industrialized world, and some members of Congress say cutting them is a sure way to jump-start the ailing economy.

But as with so many things about the tax code, the truth is a bit elusive.

The federal corporate tax rate is now 35 percent, and when state and local taxes are included, it rises to nearly 40 percent, according to the Organization for Economic Cooperation and Development. That’s higher than any other industrialized country but Japan.

In the 1960s, the United States boasted some of the lowest corporate tax rates in the world. But over time, more and more countries have cut business taxes as a way of helping their companies compete in a global economy, says Douglas Shackelford, professor of accounting and taxation at the University of North Carolina.

"If you want to create jobs here by attracting companies from overseas to invest here, and we want our American companies to expand here, then we should have a tax law that incentivizes them to do that," says Republican Sen. Judd Gregg of New Hampshire.

Gregg and Democratic Sen. Ron Wyden of Oregon this year sponsored a bill that would, among other things, cut the corporate tax rate to 25 percent.

But Steve Wamhoff, legislative director at Citizens for Tax Justice, says the tax burden on U.S. companies has been greatly exaggerated.

While the statutory tax rate is 35 percent, corporations benefit from numerous tax breaks, exemptions and deductions that bring their effective rate down to about 29 percent, Wamhoff says. That's about the median for OECD countries, he says.

For instance, companies get a huge deduction for domestic manufacturing expenses. "And they define manufacturing to include all sorts of crazy things like producing hamburgers for fast-food restaurants, writing software, extracting oil — things that we would not really call 'manufacturing,'" he says.

Globalization has given multinational companies a lot of new opportunities to cut their taxes. They can set up offshore subsidiaries to shift profits into low-tax countries. They can borrow money in the United States, take a tax deduction and then shift the money they borrow to a foreign division, Shackelford says.

"So you're incented to, you know, sign up advisers and structure a Cayman Islands entity and do all sorts of different things, and basically you could keep going and going and really get to a point where the tail is wagging the dog, in terms of really having your tax advantages alter how you might otherwise do business," says Larry Harding, president and founder of High Street Partners, which advises companies doing business overseas.

To Brad Miller, chief financial officer of Emptoris, a software company based in Burlington, Mass., the complexity of the tax code puts an enormous burden on companies. Take employee expenses: "So for example, your typical hotel room would be deductible. [But] to the extent they do something that's viewed by the IRS as entertainment, that's not deductible," Miller says. "I have to have a way of keeping track of those things and making sure that there's integrity to the way that each one of those different sets of costs are tracked."

Navigating through the tax code requires good tax lawyers and advisers, which can be beyond the reach of some companies, especially smaller ones.

The maze of exemptions and deductions has been built into the tax code over many years by Congress, Gregg says.

"If you're in a certain type of business, you feel you have a unique situation, you come to Congress, you make your case. And if you're successful the tax laws are often adjusted to reflect your position," he says.

The bill proposed by Wyden and Gregg would strip away most of these special provisions, in exchange for cutting the corporate tax rate.

At a time of rising public concern about the deficit, however, any move that would cut the tax rate would likely face plenty of scrutiny in Congress.

(See original post)

By Mike Zapler
mzapler@mercurynews.com
09/05/2010

WASHINGTON - News that President Barack Obama wants to make permanent a tax credit for research and development was met with a mix of hope and skepticism among advocates for Silicon Valley tech companies, who see it as a vital driver of innovation but have watched with frustration as lawmakers allowed it to lapse time and again.

Economists, business leaders and politicians have long warned that the U.S. is at risk of losing its status as the world's leading innovation hub - and that the country needs to act swiftly lest it lose out to global competitors like China and India.

Despite those fears, Congress allowed the R&D tax credit - one of the most basic ways the government can encourage the creation of new technologies - to expire at the end of 2009. It was the 13th time since the credit was established in 1981 that lawmakers and the president allowed it to lapse. White House officials say that Obama on Wednesday will ask that it be expanded and made permanent.

"It does get caught up in politics, which is not unusual for something that has to be renewed every year," said Betsy Mullins, a senior vice president for TechNet, a high-tech lobbying group. "I think there is a desire to get it done; it just comes down to how you pay for it."

The tax credit currently costs the Treasury an estimated $7 billion a year - not much compared with the $814 billion spent on the economic stimulus bill, but enough for it to get ensnared in budget politics. In addition to those cost concerns, this time the tax credit must overcome the contentious politics of the fall election season, in which Republicans are seen as reluctant to hand Obama and the Democrats a victory on anything that might aid their election prospects.

The credit includes several different formulas, but Obama would expand the most popular and simple one from 14 percent to 17 percent. The cost, according to news reports, would be about $100 billion over 10 years.

Even after such an expansion, the United States would lag behind many countries in the incentives it offers for research and development, said Robert Atkinson of the Information Technology and Innovation Foundation, a nonpartisan think tank. A recent report by the group found that the U.S. credit, before it expired, was less generous than the incentives in at least 23 other countries, among them India, Brazil and China. France's R&D tax credit is six time more generous than the U.S. credit.

Atkinson argued that Obama - who speaks frequently about the need to revamp the economy by fostering cutting-edge industries - should be proposing a major expansion of the credit. The president is reportedly considering the R&D proposal as part of a broader package of business tax cuts to boost the economy and encourage hiring.

"It's nice that the president is talking about making it permanent, but that's like playing yesterday's game," Atkinson said. The R&D credit has been allowed to lapse repeatedly, even though it has broad bipartisan support on Capitol Hill. Sens. Max Baucus, D-Mont., and Orrin Hatch, R-Utah, the top members of the Senate Finance Committee, have proposed increasing the tax credit from 14 percent to 20 percent of R&D spending above a base amount under the provision's most widely used formula.

A similar bipartisan measure was introduced in the House, and Rep. Anna Eshoo, D-Palo Alto, earlier this year collected 120 signatures from members of both parties for a letter calling for renewal, or preferably expansion, of the credit.

In California's U.S. Senate race, both Democratic Sen. Barbara Boxer and her Republican opponent, former Hewlett-Packard CEO Carly Fiorina, have endorsed making the R&D credit permanent.

Still, some critics call the credit a giveaway to big business and charge that it subsidizes R&D spending that would happen anyway. Half of the $6 billion in credits claimed in 2005 were by 549 corporations with sales over $1 billion, according to a report last year by the Government Accountability Office, an investigative arm of Congress.

Steve Wamhoff, legislative director for the liberal advocacy group Citizens for Tax Justice, told Reuters that the tax credit gives large, powerful companies "a windfall for things they already do." The GAO called for the credit to be revamped to encourage more research and development that would not have occurred otherwise. Some senators have said it should be realigned to benefit more small businesses.

Whatever its flaws, Atkinson said extensive economic research shows the credit works. His own group estimates that the credit spurs about $2 in private research and development spending for every dollar it costs the government, and about 70 percent of the spending goes to paying workers, making it an effective job creation tool. Noting that the U.S. has one of the highest corporate tax rates in the world, 35 percent, Atkinson said: "It's pretty clear we need to do something about our corporate taxes if we want to remain competitive," and he said expanding the R&D credit is one way to lower the tax burden on businesses. "Other countries wake up every morning asking how they can win this fight. We do not."