Category: Taxes

… by the socialist rhetoric spewed forth by NYC Mayor Bill de Blasio. For example, from his State of the City address on 1/10/2019:

“Here’s the truth, brothers and sisters, there’s plenty of money in the world. Plenty of money in this city,” the mayor said, flanked by screens with graphs of productivity outpacing compensation. “It’s just in the wrong hands!”

Referencing the graphs presented during his speech, the fact that worker productivity increases does not necessarily mean that wages should increase. In many cases productivity increases are being driven by competition, which drives prices down instead. The result is the same: people can buy more with their earnings. Also, to suggest that the government should force the redistribution of money earned by individuals involved in free trade is contrary to the foundations of capitalism and our country. People in America are free to contract with each other for goods, services and labor, and the exchange should be dictated by mutual agreement of the parties involved. For the government to come along after-the-fact and alter the exchange is patently wrong.

Such statements by de Blasio simply shows his ignorance of economics. However, an understanding of economics is not required to succeed as a socialist politician; all that is required is a 51% share of the population who don’t understand economics, either.

de Blasio also makes the statement:

“… This country has spent decades taking from working people and giving to the 1 percent …”

This is nothing but socialist rhetoric designed to inflame the senses. The truth is actually the other way around: the top 1% of earners in the United States paid 35.7% of all income taxes in 2016. From other perspectives: less than 5% of tax returns paid more than 57% of all taxes; barely 17% of tax returns paid 80% of all taxes. Out of more than 150 million tax returns for 2016, 50 million paid no taxes at all. Sounds instead like the “working people” are taking from the 1%!

Don’t be fooled by socialists; once they’ve taken the money from the “rich”, they’ll come after your money, too. After all, to someone else lower on the socioeconomic scale it is you who are the “rich” one…

…to the intents of the Democrats in the coming years: they have altered House rules to eliminate the 3/5 majority requirement to raise income taxes.

The goal of the Democrat’s tax strategy is simple: to purchase votes. The redistribution of wealth via taxes to support social welfare programs is a common means for politicians to use someone else’s money to buy voter loyalty. Unfortunately, many voters are simply too stupid to realize that wealth redistribution via taxation does not work.

The redistribution of wealth via taxes is a false reward for those so duped, for the process simply muddies the water of worker compensation. Do you really think that wages are not affected when employers are forced to provide additional benefits via government-sponsored wealth redistribution systems? Some bemoan the loss of “middle class” wages; could it be that some of these wages have been replaced with  benefits provided via employer taxation? And if the costs are forced to be absorbed my the employer – as many suggest – jobs will just move elsewhere. Think not? Ask Detroit.

Negotiating for these benefits directly with the employer (and realizing that wages will be affected) is a far better alternative. Using the government to obtain such benefits only adds government bureaucracy and overhead that ultimately reduces the value of such benefits. In addition, using force via taxation risks going too far and causing jobs to be lost entirely.

Be careful what you wish for… you might get exactly what you deserve.

California’s Gov. Brown has signed a legislative bill to prevent any new local taxes on “sugary” drinks (for 12 years, anyway). Why, you might ask, would California pass such a ban? After all, don’t they like taxing the public?

As a matter of fact, they do – and that’s why they passed the bill. A coalition that included beverage manufacturers had managed to place an initiative measure on the November ballot that would have required a 2/3 majority for any future taxes/tax increases (replacing the current simple majority rule). In return for the sugary drink ban being passed, the coalition agreed to formally withdraw the initiative.

Oh – and the public got screwed. If the ballot measure had gone through and passed, “sugary” drink taxes would have been banned anyway. In this case the only real winner is the beverage industry.

Fortunately, California has an initiative process that is open to all, not just the beverage industry. I hope that the estimated one million people who signed the petition for the initiative pick up the ball and run with it anyway. It would be poetic justice.

John F. Kennedy, and at one time the Democratic party, knew that tax cuts – for businesses as well as all individuals, even those in the upper income brackets – are good for the economy. He realized that the money spent or invested by companies or upper-income earners helped the economy grow strong. From his December 1962 address at the Economic Club of New York:

“Corporate tax rates must also be cut to increase incentives and the availability of investment capital. The government has already taken major steps this year to reduce business tax liability and to stimulate the modernization, replacement, and expansion of our productive plant and equipment. We have done this through the 1962 investment tax credit and through the liberalization of depreciation allowances — two essential parts of our first step in tax revision — which amounted to a ten percent reduction in corporate income taxes worth 2.5 billion dollars. Now we need to increase consumer demand to make these measures fully effective — demand which will make more use of existing capacity and thus increase both profits and the incentive to invest. In fact, profits after taxes would be at least 15 percent higher today if we were operating at full employment.”

“For all these reasons, next year’s tax bill should reduce personal as well as corporate income taxes: for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital.”

However, the Democrats of today – even those of Kennedy family heritage – have forgotten this simple lesson in the desire to deny the Republicans any acknowledgement of success. From the comments made by Joe Kennedy III before the House on November 8, 2017 regarding the pending Republican tax bill:

“This bill asks Americans to scrape their bank accounts so the Trump Administration can turn around and use that money to give to the wealthiest among us …. So they can make tax cuts to corporations permanent…

A far cry from the beliefs of his great uncle, JFK.

(Thank you to the Americans for Tax Reform web site, which provided the idea as well as the links necessary to support this post.)

 

Because they, like “temporary taxes”, don’t exist either…

Proposition 55 would extend “temporary” tax for 12 years

Note the slight of hand with respect to taxes for a “specific” purpose, such as in this case for education reform. Gov. Brown had stated that the tax collected “must go to the classroom and can’t be touched by Sacramento politicians.” However, the Legislative Analyst’s Office (LGO) had found that only about half of the money went towards the education budget.

After all, it’s easy to circumvent such restrictions: just divert money from other funding sources back to the general fund. Here’s how that works:

Say you have a $100M budget for schools, but you need more money – both for schools and the general fund. No problem; pass a $100M tax bill ostensibly for schools only; then, stop providing 80M from the original school funding sources. Now the schools have 120M in funding ( 20M original and 100M school-only funds), and the balance saved of 80M goes back to the general fund. Presto-chango, Abra-cadabra, the money is now being spent on stuff you didn’t want to fund.

This works even if there is a clause in the tax bill that prevents reduction of school funding from current sources and levels. Since funding requirements increase each year (when was the last time they went down…), you provide those increases from the new tax revenue instead of from the general fund. Within a few years, the “school” tax money is back in the general fund and ready for government abuse.

Note, too, that the LGO predicted that state spending overall (not just for education) would increase as a result of this new tax – and it did. Never would have guessed that would happen…