Taxing The Rich Doesn’t Work

 

“Tax The Rich” is a major theme for Democrats and it was certainly apparent last night in the vice presidential debate. The Obama/Biden team is wrong and there is no $5 trillion Romney tax cut for the rich. Even the Brookings Institution has pulled back from that charge.
We are coping with the worst economic and jobs recovery in modern times, and the Romney/Ryan plan is to reward success, and create opportunity, growth and jobs. This will be done by increasing take-home pay for the middle class, and incentives for investment and risk-taking.
When liberals shout tax the rich, conservatives must remind them that the Romney/Ryan plan includes a strict dollar cap on special tax deductions. It will most likely be $20,000 limit that will be even lower for top earners who get a marginal tax-rate cut. It’s a huge revenue-raiser, at lower tax rates.

GOP Needs Only 8 Votes To Continue All Bush Tax Cuts

The Congressional Blue Dog Coalition today released a letter signed by 31 House Democrat which advocates extension of all the Bush era tax cuts which are scheduled to expire in January. The letter says the nation is facing the worst economic decline since the 1930’s Depression, and it urges caution in raising taxes during a recession. The conservative and moderate Democrats believe keeping all the tax cuts will help stimulate the economy and help small businesses. Some of the Blue Dogs want a temporary tax cut while others are advocating a permanent extension. Continue reading

The Hypocrisy of Sen. Howard Metzenbaum and a Tax Lesson from LeBron James

"Fighting the Unbeatable Foe" is the biography of the late Sen. Howard Metzenbaum (D-OH). Author Tom Diemer of the Cleveland Plain Dealer praises the Senator for battling major corporations and deregulation. For the tax avoiding Metzenbaum, the real foe was the Internal Revenue Service.


The late U.S. Senator Howard Metzenbaum (D) and basketball star LeBron James are both well known names in Ohio, and they have an important message for the nation on tax policy. Metzenbaum served on Capitol Hill from 1974 until 1994, and died at the age of 90 in 2008. Continue reading

Rangel Trial Will Focus on Corporate Favors From Tax Committee, Former Chairman Sought $30 Million Donations

February 2009, the President and Rep. Charles Rangel (D-NY) are shown in the East Room of the White House. In the center is the late Sen. Ted Kennedy (D-MA). This was Rangel's highpoint. The next month he would lose his Chairmanship of the most influential committee on Capitol Hill.


The House Ethics Committee yesterday released an in-depth report on its 21-month investigation into the financial dealings of Rep. Charles Rangel (D-NY). Rangel is the former Chairman of the powerful Ways and Means Committee, and the report describes how he used that role to request contributions of $30 million a piece from many of the nations top corporations. The recipient was his vanity project at City College of New York (CCNY) which was intended to be similar to a presidential library. Continue reading

Why We Need to Kill The Death Tax

Whitemarsh Hall outside of Philadelphia was constructed in 1921 by J.P. Morgan's partner, Edward T. Stotesbury. It was then America's fifth largest home, and his other residences were "El Mirasol," the first Spanish style mansion in Palm Beach, Florida, and Wingwood House, his 80 room “cottage” in Bar Harbor, Maine. Stotesbury's 150 servants rotated between various residences and maintained his private railroad car, yacht and fleet of luxury automobiles. Whitemarsh Hall was over 100,000 square feet, and it had 147 rooms, 24 fireplaces, three elevators with access to six different levels (three below, three above), a movie theater, barber shop and wine cellar that remained fully stocked through out Prohibition.


The death tax is now back on top of the legislative agenda. As part of George W. Bush’s 2001 tax cut, the estate tax was reduced gradually and this year it is zero. The death duties will go back into effect next January unless Congress acts, and the old 55% rate will return. Continue reading

Legislative and Political Update: In Major Policy Shift, Democrats Will Extend Bush Tax Cuts

 

Senators Evan Bayh (D-IN), Joe Lieberman (CT) and Ben Nelson (D-NE) were among lawmakers discussing merits of extending the Bush tax cuts. Lieberman advocates it for the middle class, but Bayh, Nelson and Kent Conrad (D-ND) want all of the tax cuts extended. The liberal website Daily Kos said “Conrad, Bayh, and Nelson are whores for the wealthy.” If Democrats “extend those tax cuts for the wealthy, unions will be gone, progressives will be gone.”

IN THIS REPORT JournoList Scandal, Inside The RNC, Estate Taxes, Anti-War Conservatives, Netroots Nation, Abolishing the Republican Party, and reports from Florida, Illinois, Kentucky, Missouri, New Jersey, North Dakota and West Virginia.
JOURNOLIST SCANDAL: The JournoList story remained at the top of the news all week. The importance for the right wing is the confirmation it provides of liberal bias in the news media. There would be few complaints if the JournoList participants were all editorial writers. However, members of this group were reporters who supposedly were providing an unbiased accounting of events.
Sarah Palin called them “sick puppies” after it was revealed they were trying to generate attacks on her in the summer of 2008. They were sharing ideas on how to damage her candidacy before she gave her first speech.
Now these journalists admit their goal was to attack her, and their ideas dominated the media in the Fall of 2008. In the past these “progressive journalists” claimed they did not let their political allegiances influence their reporting, but that will be hard to claim in the future.
Tucker Carlson of Daily Caller writes:

We discovered members of JournoList working to coordinate talking points on behalf of Democratic politicians, principally Barack Obama. That is not journalism, and those who engage in it are not journalists. They should stop pretending to be. The news organizations they work for should stop pretending, too.

HUFFINGTON POST: David Bourgeois’ current article is entitled “Why The Republican Party Must be Abolished.” Bourgeois is a contributor to New York magazine and the Village Voice, and says:

The GOP has not just become the Party of No, it’s become an example of how a party shouldn’t run the country. Republican leaders in the House and Senate have worked dubiously in the past two years to keep Americans unemployed and the economy stagnant. This isn’t pundit bloviating, simply a fact. . . Obama, in the eyes of Congressional Republicans, can do nothing right. It doesn’t deserve to lead. The GOP should implode, become a marginal party on the fringes of American society like the Libertarian Party or the LaRouche movement.

Another Bourgeois article is entitled: “Democrats on Track to Increase Congressional Majority Come November: Sean Hannity on Suicide Watch.”
WORLD NET DAILY: This popular website is best known for the attention it devotes to President Obama’s birth certificate. WND readers describe themselves as “very conservative,” but editor Joseph Farah is now advocating foreign policy views which are usually heard on the left.
He wants the United States to pull out of both Iraq and Afghanistan. In his current column, Farah says:

For the life of me, I cannot begin to understand our objectives in either Iraq or Afghanistan any more. Because I appreciate the sacrifice our men and women are making over there, it is with a heavy heart that I make this proclamation. But enough is enough. . . I’m just stunned by how little debate is raging in America over these quagmires. Where is the anti-war movement when we really need them? I admit I was a supporter of both of these campaigns. I was obviously wrong. The Taliban is as active today as it was in 2001. . . I know most of the U.S. troops in Iraq are scheduled to leave at the end of August. But will they come home? Will they go to Afghanistan, where the war is escalating? Will they leave as scheduled at all? No one seems to know. No one seems to care. I care. I say bring the troops home now.

REINSTATEMENT OF ESTATE TAXES: A major initiative for liberals in the months ahead will be reinstatement of the estate tax. The primary sponsors of this effort are Sen. Bernie Sanders (VT) and Rep. Jim McDermott (D-WA). The tax disappeared during the Bush administration but it is set to return at its pre-2001 level of 55%.
Sen. Sanders has an article in the current issue of The Nation entitled “No To Oligarchy.”
It is about his recently introduced “Responsible Estate Tax Act” (S.3533) which he claims will raise $318 billion from the wealthy. Sanders is a self-described democratic socialist, and is the first person elected in Senate history to identify as a socialist.
Sen. Jim DeMint’s (R-SC) amendment to permanently repeal it failed last week by a 59 to 39 vote. DeMint says reinstatement will cost 500,000 jobs. He made that claim based on a study by the former director of the Congressional Budget Office.
DeMint also discussed a study demonstrating that permanently repealing the death tax could create 1.5 million jobs. Sen. Sanders neglects to mention that the death tax often forces families to sell businesses, DeMint claims.
Many of these families do not have enough cash to pay the tax, and studies described how the owners of small business such as gas stations are forced to sell. These businesses provide them with a middle class living, but their wealth is tied up in the assets that generate their annual income.
NETROOTS NATION: This annual convention of liberal bloggers is now meeting in Las Vegas and 2,100 activists are in attendance. In discussing their strategy for this year, Netroots founder Markos Moulitsas said:

My motto in 2002 when I first started was “More Democrats” because we were in the minority. Now we have big majorities and we’re realizing that big majorities aren’t really the solution to the lack of effective governance in this country. So we’ve evolved from “More Democrats” to “Better Democrats.”
We’ve realized that we can upgrade. We can either take out incumbents in primaries and push some of them in to early retirement, or if they know they’re going to have a primary, get them to alter their behavior. Rep. Jane Harman (D-CA) is an example of someone who was terrible, but when she got a primary challenge that was half-way credible, she got a lot better. And that’s what he want to see. Even Sen. Blanche Lincoln (D-AR) got a lot better.

INSIDE THE RNC: Several publications are reporting that former Sen. Norm Coleman (MN) is planning to challenge Michael Steele’s re-election as Chairman of the Republican National Committee next January. On CNN yesterday with Wolf Blitzer and James Carville, Coleman said “We’re not going to talk about that now.” He then proceeded to talk about it.
Steele defeated incumbent RNC Chairman Mike Duncan on sixth ballot in January of 2009 by a vote of 91 to 77. Steele is in hot water for suggesting U.S. troops should not be in Afghanistan. Bush political adviser Karl Rove called Steele’s comment “boneheaded,” and Liz Cheney said he should resign.
Coleman was a frequent target of anti-war activists in liberal Minnesota. He was one of three GOP Senators who opposed the Bush surge in Iraq, and lost to Sen. Al Franken (D) by only 312 votes. If a third party libertarian candidate had not been in the race, Coleman would have been re-elected in 2008.
Republican National Committeeman David Norcross, 73, is stepping down at the RNC meeting next month. In 1976 he was the GOP nominee who unsuccessfully challenged the fourth term of liberal Sen. Harrison Williams (D).
Williams later wished Norcross had defeated him because he became the first Senator in 80 years to be sent to federal prison. Norcross is Chairman of the RNC’s Rules Committee, and previously served as NJ GOP Chairman, RNC General Counsel and head of the Arrangements Committee at the 2004 Convention.
FLORIDA: PPP today has a survey on Sen. Bill Nelson’s (D-FL) 2012 re-election race. Nelson has 46% compared to former Gov. Jeb Bush’s (R) 44%. Nelson has a huge 49% to 28% lead over appointed Sen. George LeMieux (R). Jeb Bush has never expressed an interest in a Senate race, and LeMieux hasd high negatives among Republicans because of his association with Gov. Charlie Crist.
ILLINOIS: Former Rep. Dan Rostenkowski (D) of Chicago, who served from 1958 to 1994, is seriously ill with cancer. For 14 years he was chairman of the powerful House Ways and Means Committee. On September 26, 1960, Rostenkowski was in the CBS studio in Chicago to view in person the first ever televised Presidential debate between John Kennedy and Richard Nixon.
Unaware of the stark differences on camera, Rostenkowski later said “I was under the impression Kennedy lost the debate.”
The book Chicago and the American Century describes how he secured billions of dollars for his city and state. In 1996, Rostenkowski, 82, pleaded guilty to charges of mail fraud and was sentenced to 17 months in prison.
KENTUCKY: In a Braun Research poll out yesterday, Rand Paul (R) has a 41% to 38% lead over liberal Attorney General Jack Conway (D). Conway defeated moderate Lt. Gov. Dan Mongiardo (D) in the primary, and the GOP should be grateful Conway won.
Mongiardo came within 1% of winning this seat six years ago, and according to the Braun Poll, Conway is being supported by only 55% of Democrats. Rand Paul has reversed himself on several issues, and has now endorsed Mitch McConnell (KY) to continue as the Senate Republican Leader.
MISSOURI: The St. Louis Post Dispatch poll for the open U.S. Senate seat gives the GOP a small lead. The survey was conducted between July 19-21 , and it gives Rep. Roy Blunt (R) a 48% to 42% lead over Secretary of State Robin Carnahan (D).
Rep. Ike Skelton (D-MO), the Chairman of the House Armed Services Committee, has a difficult re-election campaign against State Sen. Bill Stouffer (R). Skelton, 78, has a large cash advantage and is a 17 term incumbent. He avoided President Obama’s recent visit to Kansas City. Chuck Todd of NBC says if Skelton loses it means Republicans will take control of the House.
NEW JERSEY: The national outlook for Republicans is excellent, but a few of the districts they once emphasized have now been removed from their target list. Gov. Chris Christie (R-NJ) carried the 6th district last November, and various rating agencies had listed it as “Leans Democratic.”
That has now been shifted to “Solid Democrat” because there was an upset in the GOP primary. Tea Party endorsed candidate Anna Little won by just 84 votes, but has not been successful in raising money. Little has $16,000 in cash on hand compared to the $4.1 million held by Rep. Frank Pallone (D).
NORTH DAKOTA: The election is four months away, but Republicans have already scored a big win. Liberal Sen. Byron Dorgan (R) and his seat will easily be captured by Gov. John Hoeven (R). For the past six months Congressman Earl Pomeroy (D) has been trailing State Rep. Rick Berg (R), who has a 7 percent led in the most recent survey.
Sen. Kent Conrad (D), the Chairman of the Budget Committee, is not up for re-election until 2012, but he has already significantly shifted his views. He now wants to extend the Bush tax cuts for those making over $250,000. ”
Conrad says Congress shouldn’t allow taxes on the wealthy to rise until the economy is on a sounder footing. Sens. Ben Nelson (D-NE) and Evan Bayh (D-IN) agree with him. The Daily Kos says “Conrad, Bayh, and Nelson are whores for the wealthy.” If Democrats “extend those tax cuts for the wealthy, unions will be gone, progressives will be gone.”
WEST VIRGINIA: Former GOP State Chairman John Raese has entered the Senate race. He spent $2.2 million of his own money on his 2006 challenge to the late Sen. Robert Byrd (D). Raese admitted he has a “quirky sense of humor,” and referred to appointed Sen. Carte Goodwin (D) as “Carte Blanche.”
Raese is a mining company operator (Greer Industries) who also owns local radio stations. Former Secretary of State Betty Ireland will not be a candidate, but Raese will be challenged in the primary by State Sen. Clark Barnes. A Rasmussen Poll out yesterday gives Manchin a 51% to 35% lead over Raese.

The Return of the Tax Exiles: The UK's Biggest Export Has Been its Wealthy Citizens

PHOTO: The Right Honorable Lady Victoria Hervey, 33, is the elder daughter of the 6th Marquess of Bristol. Her social life is a staple of the British photo-tabloids. To avoid UK taxes, she was brought up in Monaco and has no intention of ever being a full time UK resident.

The most popular activity of the British photo tabloids is making fun of the aristocracy, and Lady Victoria Hervey is an easy target. Last winter the socialite told the Daily Telegraph she had been contemplating the homeless problem.
Lady Victoria’s recommendation was for poor people to follow her example, “It’s so bad being homeless in the cold weather. They should go somewhere warm like the Caribbean where they can eat fresh fish all day.”
The bad news for the tabloids is that the aristocracy has been declining for decades. It is far more than the weather that has sent Lady Hervey and her family to Monaco and Los Angeles. Her story is an excellent example of the decline of the British empire, as well as the fiscal danger now impacting U.S. states such as California, New York, New Jersey and Illinois.
Wealthy Residents Have Fled New Jersey and Other High Tax States
Similar to the UK, these states thought taxing wealthy residents was the answer to their fiscal woes. They have since learned the wealthy have other options. Gov. Chris Christie (R-NJ) has repeatedly emphasized that as taxes have gone up in his state, the wealthy have relocated. The state had a $98 billion surplus from 1999 to 2003.
Then New Jersey significantly raised taxes on the wealthy, and between 2004 and 2008 they ended up losing $70 billion. The Garden State has America’s heaviest tax burden. Now Gov. Christie is trying to make massive cuts in the state budget because all the revenue projections were wrong.
The UK’s Upper Class Exodus
The New Jersey lawmakers should not have been surprised because taxing the wealthy an inordinate amount has rarely worked. Denis Healey, who was the UK’s Chancellor of the Exchequer from 1974 to 1979, was correct when he predicted “howls of anguish” from the rich. He was referring to the tax increases made by the Labour governments in the 1960s and ’70s.
The result was a huge decline in Britain’s income when the upper class fled. The UK’s biggest export turned out to be its wealthy residents. The first to leave were the rock musicians, and Dave Clark immediately followed through on his promise to abandon the UK.
The Rolling Stones had no desire to leave but they could not cope with the tax bill and were forced to relocate to France. George Harrison of The Beatles wrote the song Taxman when he learned his rate would be 98%.
Michael Caine, Tom Jones and Rod Stewart moved to Los Angeles, while Roger Moore and Ringo Starr went to Monaco. Phil Collins and David Bowie escaped to Switzerland. John Lennon and Freddy Mercury wound up in NYC. Sting went to Ireland and Sean Connery to Spain.
Other popular destinations were Hong Kong, Dubai and Singapore. About six million UK citizens now live abroad. They all have to prove they spend less than 91 days a year in Britain. Mick Jagger has been doing that for 25 years. The threshold in the U.S. is four months and it is six months in other European nations.
Margaret Thatcher Stopped The Brain Drain
Many members of the upper class including Lady Hervey’s family returned in the 1980’s. The so-called brain drain of the late seventies was reversed by the 1979 election of Prime Minister Margaret Thatcher. The 80% and 90% tax rates were abandoned, and the tax paid on income and investment earnings was capped at 40 per cent.
However, they also have to cope with a 20% VAT (Value Added Tax) and gas costs $6.50/gallon. After eight years in exile, Michael Caine returned and blasted the Labour Party for ruining the UK’s movie industry.
The UK was not alone. Belgium has long been a haven for rich of France. President Nicolas Sarkozy is now trying to cut taxes to get them back. Berlin is pursuing wealthy Germans who hold Swiss bank accounts that shield hundreds of billions of euros.
Lady Hervey and the Tax Exiles
It is easy to make fun of Lady Hervey and her frequent appearances in the London social scene. The tabloids call her Lady V, and she has been romantically linked to Prince Andrew and Lord Frederick Windsor of Kent. Her modeling photos for Dior and Elite are always displayed prominently, and she received no sympathy when her trust fund was cut off.
Lady V is a celebrity in London, but is ignored in Los Angeles. Nevertheless, LA will remain her home and she has no intention of ever being a full time UK resident. She believes National Health Insurance ruined the country, and the UK’s fiscal outlook remains dismal.
The UK has a new government, but it inherited one of the largest budget deficits in the world and they are coping with a larger structural deficit than they thought. Similar to the 1970s, a popular solution could be tax exiles.
In April of this year the tax rate went back up to 50% for individuals earning more than $235,740 annually. Now even members of the House of Lords are once again about to abandon Britain. Many of them also want to avoid inheritance taxes.
The new tax hike will not impact Lady Hervey’s family, but similar to the past, the UK’s standard of living will continue to decline.

The New Bank Tax

Obama’s new bank tax was announced during the State of the Union Address and it will inevitably be passed on to consumers. The President says this is a way to recoup money dished out to banks as part of the TARP bailout. The truth, though, is that those banks already paid-back the bailouts, with interest; the real deadbeat offenders are Freddie Mac, Fannie Mae, Chrysler and General Motors, who have yet to repay their debt. This chart demonstrates who has paid. Obama is taxing those who paid back taxpayers, and exempting those who have not. Businesses passing on costs to their consumers is an Economics 101 principle which is unkown to an administration where only 5% of the decision makers have ever held a job in a profit making business.
The GM’s exemption is the result of a failure to change the original legislation. It mandated that if any TARP was not recouped by the resale of the “troubled assets”, the deficit would come from the financial industry. This meant GM was exempted since the money used to nationalize most of that company was taken from the fund originally designed for bad mortgage loans and to keep derivatives off the market.

Taxing the Rich: The Experience of George H. W. Bush and Bill Clinton

Earlier this week the Obama Administration rolled out a new economic forecast that added $2 trillion to deficit projections from 2010 to 2019. The new total is over $9 trillion and many experts believe the President will have to eventually raise taxes on the middle class. The administration is already intent on a significant tax boost for the wealthy, so it useful to review the past results.
The most memorable soundbite from his 1988 acceptance speech at the Republican National Convention was when George H.W. Bush said: “And I’m the one who will not raise taxes. My opponent now says he’ll raise them as a last resort, or a third resort. But when a politician talks like that, you know that’s one resort he’ll be checking into. My opponent, my opponent won’t rule out raising taxes. But I will. And the Congress will push me to raise taxes and I’ll say no. And they’ll push, and I’ll say no, and they’ll push again, and I’ll say, to them, ‘Read my lips: no new taxes.’”
He regretted the strong language four years later when the phrase was endlessly repeated by opponents Bill Clinton, Ross Perot and Pat Buchanan. A tax increase, which included a new top bracket of 31%, was necessary for Bush to obtain the 1990 Budget Agreement. Among those telling Bush to go along with the tax increase were OMB Director Richard Darman, White House Chief of Staff John H. Sununu, Gerald Ford, Paul O’Neill, and Lamar Alexander. The headline of the New York Post the next day read “Read my Lips: I Lied.” Bush was raising taxes rates on the upper brackets mostly by ending their deductions and exemptions. It didn’t work: Individual income taxes brought in 8.3 percent of GDP in 1989 and just 7.6 percent of GDP by 1992.
Even though Bush was breaking his word and this would end his political career, Bush went along with the compromise because the agreement contained deficit reductions and PAYGO. PAYGO required all future spending increases to be offset by decreases. It was thought that this would control all future increases and eventually the deficit would be wiped out.
PAYGO was in effect from 1991 to 2002, and while it sounded great, the Congress had fooled Bush because numerous loopholes were discovered to avoid its restrictions. Discretionary spending was totally exempted from PAYCO. That includes programs such as defense, education, environmental protection or 38 percent of federal spending. Noram increases in entitlement spending are also not covered. Anytime PAYCO presented a problem for Congressional spenders they just waived it. “PAYGO is like quitting drinking, but making an exception for beer and hard liquor,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Former President Bush now says the tax increase was one of his greatest regrets. He did not realize the PAYGO pledge was highly exaggerated and “I should have held out for a better deal.”
In fairness to Bush, PAYGO and statutory budget controls were useful in restraining entitlement increases. The situation would have been worse without them, but PAYGO was not the panacea portrayed by its advocates in 1990.
President Bill Clinton also broke his promise to pass a middle class tax cut but it had little impact on his popularity. The 1990 Budget Agreement did not reduce the deficit significantly and it remained a major issue in 1992. Independent candidate Ross Perot campaigned as a fiscal conservative. He had never held elective office and when his lack of experience was criticized in the presidential debates he responded “I have no experience in creating a $4 trillion debt.” Public opinion polls showed Perot with over 40% of the vote in June of 1992, and if the election had been held at that point Perot would have received a landslide 408 electoral votes. Republicans concentrated all of their fire on Perot in the Spring of 1992 and Bill Clinton was able to use this time to reduce his substantial negative ratings.
Similar to George H.W. Bush, Clinton’s solution to the deficit was a tax the rich plan. This was an essential part of his 1993 tax hike, which is similar to President Obama’s current proposal to raise revenue by increasing taxes on the top 5% of income earners.
No Republican voted for Clinton’s 1993 tax hike which passed the House of Representatives by one vote. It also took Vice President Al Gore’s tie-breaking vote to secure final passage in the Senate. Dozens of Democrats went down to defeat a year later for supporting the tax hike.
According to Dr. Alan Reynolds of the Cato Institute, “Clinton piled on another layer of high tax rates, 36 percent and 39.6 percent, while also greatly hiking taxes on Social Security benefits of working seniors. That failed, too: Individual income taxes brought in only 7.8 percent of GDP in 1993 and ’94, 8.1 percent in 1995. Federal revenues did not get much above the 1989 level until 1997 – when they rose because the capital-gains tax was cut.”
Similar to Bush, Clinton himself later admitted that taxes were increased too much. In fairness to Clinton, his tax hike took place when America was viewed as a low tax nation. Foreign companies were then coming to the United States because our taxes were lower than what they had to compete with at home.
This situation is far different today because so many other nations have now lowered taxes to foster economic growth. There has been no employment growth in places such as Silicon Valley in the last decade because U.S. companies are choosing to locate more employees in lower-tax areas such as China, India and Eastern Europe. This is another reason why President Obama’s tax proposals are unlikely to generate significant revenue.