Why Congressional Republicans Should Go Over Fiscal Cliff

There has been some talk within some talking head shows about the Congressional Republicans and President Obama, and talking about the Fiscal Cliff. Within this talk it has been brought up that President Obama has the upper hand when it comes to talks on the Fiscal Cliff.

The first reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that the President has no authority over fiscal matters. Only Congress has that authority. Thus, Congressional Republicans should just ignore the President on these matters since the President is talking about doing things in which he has no authority to do it. Congress “creates” and passes the laws, and President either signs them into law or veto’s them. President is not involved in creating these laws at all.

The second reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that President Obama talked about going back people being treated equal, having the same laws apply to them, and have the same shoot. The Republicans can point out that in order to be consistent with these things that President Obama ran on is to go over the Fiscal Cliff. Going over the Fiscal Cliff will make it so that all citizens are affected equally instead of only part of citizens being affected and others not being affected. This would prevent people being treated equally and this would limit people having the same shot.

The third reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that President Obama talked about going back to the Clinton economic policies. So the Republicans should point out that the bush Tax cuts were based on lowering the tax rates of all Americans by lowering them from what Clinton had them. So point out that in order for President Obama to say anything about Clinton economic times and policy, it would be necessary to get rid of the Bush Tax Cuts that applied to all Americans. This would mean going over the Fiscal Cliff.

The fourth reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that Congressional Republicans were elected by their constituents, which can either be a district for the House of Representatives or a state for the Senate, and this implies that they support their position on this issue (unless majority of constituents say otherwise). They are elected Representatives, and they do not have to worry about how other people in other states think, or other districts, but only the people they are sent to Washington to represent them before the nation.

The fifth reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is a mix of the second reason,  third reason, and fourth reason. This is based on how President Obama supposedly has a “Mandate” from the American people. The Congressional Republicans may point out that they have a “Mandate” from their own constituents like the President does as well. The Congressional Republicans may point out that President Obama’s “Mandate” is about people being treated equally, and people would not be treated equally if one group of Americans have their tax rate raised while another group does not have their tax rate raised as well. The Congressional Republicans may point out that President Obama’s “Mandate” is to go back to the economic policies of Clinton and not George W. Bush, so get rid of the Bush Tax Cuts, which means going back to the tax rate under the Clinton Administration which means going over the Fiscal Cliff.

Advertisements

Romney with Income Tax and Capital Gains Tax

There was a time in which Mitt Romney ran for the Republican party nominee for President of the United States of America. During some of this time during the campaign there was one narrative taken against Mitt Romney about him showing his tax returns. In showing these tax returns they would see where he got his money, since Romney is said to be a wealthy person, and also to see how much of his money was taken by the federal government or state governments and at what rate he was taxed by these agencies.

It was found that Mitt Romney had no income for an income tax to apply to, but he did have a capital gains for a capital gains tax to apply. These are both taxes, but they are not one and the same type of taxes. Like Baltimore and Annapolis are in the state of Maryland & Baltimore and Annapolis are different from one another, so too are Income and Capital Gains both Taxes, Income and Capital Gains are different from one another. Income Taxes and Capital Gains Taxes are categorically different from one another. They specifically apply to things that meet certain criterion, and these criterion differentiate on where they apply and where they do not apply. It would be similar to how you have a fork and a spoon, and they come in a set of silverware. They are both equal in being silverware, but the fork is not the spoon and the spoon is not the fork, but silverware fork and silverware spoon are silverware.

So what is the problem? Here is one article talking about the difference from an economist. Here is a reply, in some sense, to the first article.

The first point, and most important point, which the Supreme Court has said itself, which is that the power to tax is the power to destroy. The first article points out the difference between an income tax and a capital gains tax. So these are different powers of destruction being applied to two different sub groups.

“What is a capital gain, and how can we distinguish it from ordinary income? The answer seems simple. If you have a job, the money you are paid for your work is ordinary income. If you buy an asset at one time and sell it later for a higher price, the profit you made from holding it is a capital gain.”

These are two different types of actions that individuals have with one another. One person works for another and gets paid for this work and gets taxed for their work. Another person sells a property for more than it was previously worth and makes a profit that is taxed. So we notice two different types of activity and how the government is taxing these activities. What is noticed is that those people who partake in the activity of capital gains get taxed at a percentage of 15%, and those who partake in the activity of income activity are getting taxed at a percentage of 35%.

Now some of the issues that people had were that Mitt Romney did not pay the income tax rate, but he payed the capital gains tax rate. One of these rates was lower than the other. This does not exactly appear to be what people were upset itself, since it appeared that people were upset about the first but that Mitt Romney is also a wealthy person who is considered to be part of the 1%. It was both of these conditions that made it so that people looked down upon Romney for not being forced to give up 35% of his property by being forced to give up 15% of his property, based on his activities with other people. Mitt Romney followed the law by paying the taxes his taxes based on his activities, which were not in the category of income but in the category of capital gains, even though either which way he would have been taxed. He just didn’t have to be taxed in one way over another, in which one happened to be less than another.

Now let me ask you, does it appear to be wrong that certain activities should be taxed less than other activities? For example, say that we have someone who partakes in activities which harm 49 people out of 50 people, and we have someone who partakes in activities which harm 1 person out of 50 people. Which activity, if both of these activities are legal, would you think one should be taxed more than another? Remember, the ability to tax some activity is the ability to destroy that activity.

The question becomes which activity do we want to be taxed, and how much do we want to tax that activity? Either income has a higher tax rate than capital gains, or income has a lower tax rate than capital gains, or income tax rate is equal to capital gains. If income has higher rate than capital gains, then government is giving less incentive for income activities. If income has a lower tax rate than capital rates, then government is giving more incentive for income activities. If income tax rate is equal to capital gains, then government is giving equal incentive for both activities Thus, either government is giving less incentive for income activities, or government is given more incentive for income activities, or government is giving equal incentive for both activities.

The question becomes, which tax bracket do you want to destroy? Do you want to destroy the activity of capital gains or income? When people ask for a tax increase, they want to destroy people or prevent the activities of people. So those people who are considered to be wealthy are people we want to destroy by making them give up more of their property. But this also holds with those people who are not wealthy.

Now if we want to treat people equally, give them all the same shot, have the same rules apply, then make them equal in their activities. A person gets a shot at either income activity or capital gains activity. Not everyone is built for income activity or capital gains activity. You might not be good at a 9-5 job for 5 days a week in a year. You might not like that job, and not just good at that type of activity. Maybe you are better at having some property and being able to sell it for more than you obtained it for. People have different talents, and so some people are more aligned with either one or the other, and some people are of both sides. We would be telling those who are better at capital gains activity that we don’t like that and we think they should be punished for their ability (if not outright luck). Same would hold with those who do income activities.

Fiscal Cliff and Tax Increase

You might not have heard, but there is this “Fiscal Cliff” that the federal government is coming to. One of the big points about it is that if we do not come to a deal by the end of December, on January 1st everyone’s taxes will increase. President Obama happened to make the point that everyone’s taxes will increase, especially the 98% of Americans that make under 250,000 dollars.

Here’s my question: So what?

What does it matter that 98% of Americans, or every American, is going to have their taxes go up? Close to half of Americans don’t even pay income tax, while of course paying other taxes like those who do pay income tax have to pay these other taxes as well. What does it matter now that the poor class, the middle class, and the rich class, all have to pay more money now?

Last I checked this was the United States of America, and in this country people are expected to pay into the system instead of getting something from the system without paying in. Well, the system is having tough times and *everyone* has to pay more. This means that the poor class, middle class, and rich class have to pay more. There is no class of American to be exempt for this. We are a nation united and not a nation divided where one class has to put in and another does not. Let everyone pay more since things are very tough right now.

Think about the type of America that Obama wants to have for a second. He wants one group of Americans to pay more, while of course you can thank this one class of Americans for most of the things that the government does for people, since it comes from their wallets. He does not two other groups of Americans to pay more money, even though a sizable portion of those groups do not even have any “skin in the game”, and yet get all the benefits of the game.

Does it sound like fairness and equality when you force the one group that already puts the most into the system, while also being vilified, pay more while the other groups are not putting in or not putting in more, while also vilifying the group that does put into the game?

Let us get some equality and fairness, lets all go over the fiscal cliff together. This way we are all paying into the system and paying our fair share.

I Haven’t Raised Taxes

Here is an interesting article based on President Obama’s interview on 60 Minutes.

“On CBS News’s “60 Minutes” Sunday night, President Obama said, “Taxes are lower on families than they’ve been probably in the last 50 years. So I haven’t raised taxes.”

As of Monday morning, neither the Washington Post’s Pinocchio-awarding Fact-Checker, nor the Annenberg Public Policy Center’sFactCheck.org, nor the Tampa Bay Times’ Pulitzer-Prize-winning Politifact.com had risen to this opportunity, so let us take a stab.

There are a variety of possible ways to measure the tax burden on American “families” over the past 50 years. Fortunately, Mr. Obama’s own White House Office of Management and Budget provides a spreadsheet that summarizes federal tax receipts from 1940 through the present. Fifty years ago, in 1962, federal tax receipts were $99.7 billion. In 2011, they were $2.3 trillion. Far from being at a 50 year low, the taxes extracted from American families last year were about 23 times what they were fifty years ago.

Okay, but aren’t there more families in America now than there were 50 years ago? Sure. The 1960 Census counted about 179 million Americans, while the 2010 Census counted about 309 million. The population hasn’t even doubled, but the federal government’s tax receipts have increased 23 times.

Okay, but what about inflation? President Obama’s own Office of Management and Budget tries to deal with that question by using something called “constant (FY 2005) dollars.” It’s not as trustworthy a measure as, say, the price of gold, but since the White House uses it, it’s worth at least a look. By this measure, federal taxes climbed to nearly $2 trillion in 2011 from about $660 billion in 1962. In other words, the taxes trebled, even as the population didn’t even double.

Remember, too, that 1962 wasn’t some kind of blissful Jeffersonian small-government era to which we can never possibly return. It was the height of the Cold War. President Eisenhower had only shortly before warned of the military-industrial complex. President Kennedy was going around giving speeches about how the tax burden was too high.

Okay, what about tax rates? By that measure, taxes aren’t at a 50-year-low, either. Don’t take my word for it: look at the chart from the Tax Policy Center operated by the Brookings Institution and the Urban Institute, two center-left think tanks whose work President Obama likes to cite when he claims that a President Romney would raise taxes on the middle class. Sure enough, in 1988 and 1989 the top marginal income tax rate was 28%. In 1990, 1991, and 1992 it was 31%. Today it is 35%.

Okay, that’s the federal income tax rate. But what about the payroll tax rate? Here, too the Brookings-Urban Tax Policy Center has a useful chart. In 1962 the Social Security payroll tax was 6.25%, applied to the first $4,800 in wages. There was no Medicare tax, because Medicare did not yet exist. In 2011 — even after the two percentage point temporary payroll tax “holiday” — the tax was 10.4% applied to the first $106,800 in income, plus a 2.9% Medicare tax that applies to all wage income, with no cap. The tax, in other words, has more than doubled since 1962.

How about the federal gas tax? Fifty years ago, in 1962, it was four cents a gallon, according to the Tax Foundation. It’s now 18.4 cents a gallon. Far from being at a 50-year low, it has more than quadrupled.

There is one measure — federal tax revenues as a percentage of GDP — by which taxes under President Obama have been at a 50-year low, at least according to the Office of Management and Budget. But if that’s Mr. Obama’s yardstick, then it also shows government spending and budget deficits have been at 50-year highs under Mr. Obama.

The second sentence of Mr. Obama’s “60 Minutes” claim — “I haven’t raised taxes” — is similarly slippery. Before Mr. Obama had been in office for a month he signed a law increasing the tobacco tax by $71 billion over 10 years. A 10% tax on tanning salons went into effect on July 1, 2010, a tax increase of $2.7 billion over 10 years. If Mr. Obama hasn’t raised more taxes, it hasn’t been for lack of trying; the only thing stopping him has been the Republican House of Representatives.

It would be a shame if voters fall for Mr. Obama’s misleading claim that their taxes are at a 50-year low. But who can blame the voters, or, for that matter, the fact-checkers, if even Mr. Obama’s opponent, Mitt Romney, buys into the idea. In the same “60 Minutes” program, Mr. Romney said taxes would remain essentially unchanged if he won. “I don’t want a reduction in revenue coming into the government,” Mr. Romney said.

It’s enough to make one nostalgic for George W. Bush, or at least to prompt one to wish for a politician who can articulate the tax issue not in terms of what it means for the government’s revenues but in the language of what it means for the individual.”

 

47% of Americans are the 99%

Since the Occupy Wall Street (OWS) Movement has started, the old term of 99% and 1% have shown back up. Similar lines of thinking where used by Karl Marx when he mentioned the 9 out of 10. This would turn out to be the 90%, and the 90% would be the 99% that OWS talks about all the time. The 10% would be the 1% that OWS talks about a lot.

Now Mitt Romney brought up some point about the 47% and the 53%. The 47% pay no federal income tax, the 53% pay federal income tax. Interesting part is that Mitt Romney was accused by Harry Reid of being part of the 47%, i.e. was accused of not paying federal income tax. But Mitt Romney is also accused of being part of the 1%, as well. Assuming that all of the 1% are the 53%, but not all of the 53% are the 1%, then some of the 99% make up the 53% as well. All of the 53% are the 1% and some of the 99%. So it follows that all of the 47% are the 99%, though.

So this means that a some of the 99% pay no federal income tax while all of the 1% by the federal income tax. This means that the 1% pay for most of the benefits that the 99% obtain. This means that the 1% have their money taken from them and redistributed to people that do not pay into the system, and those people that do not pay into the system complain about the 1% not paying more. Talk about biting the hand that feeds you. It is like a starving person complaining that a certain individual did not give them more food than they did were given.

But, of course, the 47% and the 53% both pay other taxes than the federal income tax. They both either pay for the gas tax, the cigarette tax, the sales tax, toll tax, or etc. But yet the 53% have to pay more in taxes than the 47%, and the 47% complain that the 53% do not pay more in income taxes. The 53% have more of a burden to bear in losing personal income than the 47%. This means that the 53% pay more to keep the system running, and the entitlements running, than the 47%. This would mean that the 1% pay more to keep the system running, and the entitlements running, than the 99%.

Think of it this way. There are 100 people, and 53 of these people unwillingly supplement the income of 47 people. The 47 people pay no federal income tax, and 53 people pay federal income tax. But both the 47 people and the 53 people pay other taxes besides the federal income tax. Interesting part is that Mitt Romney was accused by Harry Reid of being part of the 47 people, i.e. was accused of not paying federal income tax. But remember that all of the 1% are part of the 53 people, or 53%. This means the one individual has a lot more money, and because federal income tax makes the 1% pay more than the the rest of the 99%, this means that the 1 person is going to pay more to keep the system running than the other 53% or the 99%. One individual will pay more for the entitlements that the other 99 enjoy and want.

Entitlements Are Not Rights Opinion Piece

Interesting opinion piece from a newspaper. My slight edits will be in [brackets]

“Some people fail to grasp the simplest of concepts: We have a Bill of Rights. It spells out exactly the rights you have. And guess what? You don’t have a right to a home. You don’t have a right to three meals a day. You don’t have a right to a car. You don’t have a right to a college education. You don’t have a right to credit. And you don’t have the right of cradle to grave health care paid for by somebody else.

If you are disabled, there are already [federal] programs in place, some constitutionally questionable, that will help you out. But the majority of people in this country draw the line when the [federal] government tries to mandate that you have to purchase something or face a fine so they can make sure all people, be it of their own fault or not, are taken care of.

If you want to give to charities to care of everybody in this country, you are free to do so. If you are asked by your religion to give a certain amount of your income to your church, you are free to do so. But you are also free to not be demanded to give to charity if you wish not to.

And finally, if you don’t like the way this country is set up, and would rather pay a mandatory tax to government to make sure all your neighbors are taken care of, you are free to leave at any time. That’s what makes this country great.”

The only thing in the Bill of Rights which would be contrary to this, or even leaves open the possibility, is the 9th amendment.