by | ARTICLES, ECONOMY, FREEDOM, TAXES
The Heritage Foundation just released its 2012 Index of Economic Freedom. The United States is ranked….10.
Top 10 Countries
SEE ALL RANKINGS
For over a decade, The Wall Street Journal and The Heritage Foundation, Washington’s preeminent think tank, have tracked the march of economic freedom around the world with the influential Index of Economic Freedom. Since 1995, the Index has brought Smith’s theories about liberty, prosperity and economic freedom to life by creating 10 benchmarks that gauge the economic success of 184 countries around the world. With its user-friendly format, readers can see how 18th century theories on prosperity and economic freedom are realities in the 21st century.
The Index covers 10 freedoms – from property rights to entrepreneurship – in 184 countries.
So much for the Land of the Free, eh?
by | TAXES
The White House recently named Jack Lew his new Chief of Staff after the departure of Bill Daley. While Obama championed Mr. Lew’s work in the State Department as the chief budget officer and deputy secretary of state, he omitted the fact that prior to the State Department, Lew was the chief operating officer at Citibank during the height of the housing boom. His job was directly tied into the mortgage industry. In fact, he received nearly a million dollar bonus shortly after the government bailed out Citigroup as well as more than a million in compensation in 2008.
The Washington Times covered Lew’s Citi job and compensation in 2010. It is unconscionable that Obama chose not to disclose the relationship in 2012. Considering all the hate from the Left regarding greed and overcompensation, where is the outrage toward Mr. Lew?
by | TAXES
The “unconstitutional power grab”, which rightly describes Obama’s (non) recess appointments on Wednesday is another alarming move in a string of examples as to why we need to make sure we do not re-elect him the the presidency
Quite frankly, as a lifetime CPA, I welcome a split government: a president from one party and Congress from another. Laws don’t get passed except in the occasion that they have true bipartisan support. This type of inaction is actually quite good for the economy – something we desperately need right now – because businesses can plan long-term and individuals can have a sense of security.
The Clinton period was a perfect example of how this worked because spending bills were stifled and tax laws were not changed significantly. The economy became strong and budget surpluses resulted, precisely because the Republicans deadlocked him in Congress. But in this current political climate, we can’t benefit from split government because of two critical things that are different from the Clinton Era.
The first is the tax sunset. Bush tax cuts implemented in ’01 and ’03 are all scheduled to end in 2012 and revert to the prior tax rates. Inaction by Congress will result in the largest tax increase in memory, across the board and at all levels. Although the Democrats are fond of saying the tax cut benefits fell disproportionately to the higher income earners, this is clear demagoguery – because the financial pain to be felt in the middle and lower classes once the tax cuts expire will be monumental. Subsequently, the economy will also tank.
The second difference – and more important as evidenced on Wednesday – is that the president has been able to effectively pass laws which Congress has not passed through the use of the Executive Order and his government agencies. For example, in October, Obama announced new programs to aid college students to repay their federal loans, veterans to find employment, and homeowners make their mortgage obligations. All three initiatives were done by Executive Order rather than by legislation. He remarked, “We can’t wait for Congress to do its job. So where they won’t act, I will. We’re going to look every single day to figure out what we can do without Congress.” Such an attitude is reinforced by the White House campaign called “We Can’t Wait”; this puts forth directives from the Executive Branch, claiming that inaction by Congress requires action from Obama.
Regarding Obama’s use of government agencies, two striking examples of many come to mind. First, limitations on emissions were passed as a set of rules by the Environmental Protection Agency (EPA), which implemented almost in its entirety the cap and trade bill which failed in the Congress. Similarly, the National Relations Labor Board (NLRB) has been passing rules that are virtually as onerous as the card check, which have failed to get through Congress.
It should also be noted that due to the aggressive use of governmental agencies to execute actions meant to be carried out by the legislature, the term “QUANGO” will become much more common and vernacular. QUANGOs, which stands for “QUasi-Autonomous Non-Governmental Organizations” will continue to undermine our government’s checks and balances, and we will see in America the parallel mistakes being made in Great Britain today. Among the most offending QUANGOs are the Federal Reserve, the NRLB, the EPA, and the the Federal Trade Commission.
Typically a Democrat second term would be fine in tandem with a Republican Congress because a government that does nothing is the key to economic success. But with this current administration, it’s a perfect storm for catastrophe; Obama would have four more years to implement all his absurd policies in whichever way he sees fit. With his campaign now in full swing, this strategy was boldly confirmed with his appointments.
Obama’s declared,“I refuse to take ‘No’ for an answer. I’ve said before that I will continue to look for every opportunity to work with Congress to move this country forward. But when Congress refuses to act in a way that hurts our economy and puts people at risk, I have an obligation as president to do what I can without them”.
Ah, Obama claims necessity. And as William Pitt the Younger aptly observed: ”Necessity [is] the plea for every infringement of human freedom. It was the argument of tyrants; it was the creed of slaves.”
In fact, it was confirmed on Friday by the White House press secretary, Jay Carney, that Obama acted preemptively. “So the President acted because Congress wouldn’t, and it was clear that Congress wouldn’t — and numerous senators have made clear they won’t,” Carney said. “And we have to have that: these independent agencies exist for a reason, and the president believed that it was essential to make sure that that agency could function.” Banking on an uninformed electorate and a Congress with a conveniently short memory, to hell with the Constitution and precedent in law!
With this abuse of public trust, and with the urgent issues, upcoming laws, and higher taxes we face, we must find the Republican candidate – imperfect though he may be – who can win the Presidential election and restore integrity, fiscal sensibility, and respect for our Constitution to the highest office and our country.
by | HYPOCRISY, SOCIAL SECURITY, TAXES
One of the most common means by which politicians deceive their constitutents is by referring to Social Security as a either a tax or as a retirement system — but usually only as the politics or issues of the day suit them.
We have politicians who stand strongly behind the concept that Social Security must be maintained because it’s a retirement system that people pay for. I certainly believe, as FDR did when he started Social Security, that this is a forced retirement system. As such, it is critical that the entity managing it (the federal government) include Social Security’s actuarially calculated expenses in the current year. By not doing that with their accounting, they are able to simultaneously mischaracterize Social Security as a tax.
If Social Security is truly a retirement and disability plan, it is patently unfair to also consider Social Security collections as a tax that is paid. This is hypocrisy to the citizens contributing toward their retirement. Therefore, when you hear a politician calling Social Security a tax, understand that such a description qualifies it as an entitlement supported the general revenue fund. It can’t be both. The true Social Security Fund, as it is currently being collected and paid out, has been stolen from the taxpayers.
Social Security as a retirement plan has lost its meaning along the way. Yes, benefits promised to recipients have been much more than the amounts taken from pay. For that reason, and for the way by which Social Security is accounted by the government, the system is broken. Nevertheless, we must fundamentally maintain the view that Social Security is the way by which people pay for their own retirement — if we are to fix the imbalances.
The way to lead Social Security back to health is to convince people that the amounts taken from their pay is protected and truly going to their retirement by reclaiming the Social Security Fund so it reflects that reality. Often when it’s realized how little income tax many people pay, the focus typically goes on to how much people do pay toward Social Security. This is not altogether a bad thing. With citizens trying to retire at the age of 65 but often having life expectancies until 90, people need to contribute more money to their retirement.
We need to restore Social Security to a level of sustainability by moving it back to being a path to retirement, view it as a forced retirement system, and hold it accountable in that regard. By modifying the system to be more like present-day 401ks, people can better realize the amount that they are actually putting in. In doing that, more people will ultimately be happy with their Social Security accounts and will also make a mockery of such recent legislation as the payroll tax holiday.
If though, the powers that be continue to insist Social Security is a tax, then the fact becomes that people are really not paying for their own retirement. Therefore beneficiaries are not entitled to anything other that what Congress on a whim decides, because it is subject to the general revenue fund via tax revenue. This would be an outrageous outcome. It turns Social Security into a means by which the people are dependent on government to provide a modest stipend by extracting money from us.
by | TAXES
Forbes had a wonderfully scathing expose on Senator Harry Reid’s millionaire tax myths. Senator Reid declared on December 6th,
Millionaire job creators are like unicorns. They’re impossible to find, and they don’t exist… Only a tiny fraction of people making more than a million dollars, probably less than 1 percent, are small business owners. And only a tiny fraction of that tiny fraction are traditional job creators…Most of these businesses are hedge fund managers or wealthy lawyers. They don’t do much hiring and they don’t need tax breaks.”
Thankfully, the good people at Forbes have the sense and sensibility to actually read IRS data and they swiftly came to the unsurprising conclusion that Senator Reid’s assertions are blatantly and patently false:
Millionaire tax filers earn almost a quarter trillion dollars from their businesses. They must hire hundreds of thousands of employees to do so.
and
A 1.9 percent surcharge on millionaires would raise at most eleven billion dollars. By today’s standards, this is chump change, within the federal budget’s rounding error. The millionaire’s tax is not about balancing the budget. It is about gaining political advantage through the use of envy and greed (two of the seven deadly sins).Why would Harry Reid tell such whoppers, which are so easily disproved?
That’s a good question, and unfortunately, we won’t find much of an answer from Senator Reid or the mainstream media. As I have written on this topic before, thanks to Forbes for putting the right information out there. Be sure to read the article in its entirety.
by | POLITICS, TAXES
While Congress debated the merits of the two-month extension of the payroll tax holiday, no one mentioned the devasting economic impact this legislation will have on our small and large businesses, nor the tens of millions of dollars wasted by the Senate to come up with this hiccup.
Our Senate did a disengenous job at compromise merely to enable them to go home on vacation. There is absolutely no consideration of the havoc being wreaked on our economy and our businesses due to the instability that comes with not knowing what the tax rate will be in the long run. A one year extension is bad enough – does anyone seriously think that businesses will hire or that individuals will spend just because of another even a one year 2% reduction? But extending for only two months is far worse.
Even now, these companies with payroll will have to make changes and adjustments. They have been waiting with uncertainty as to how to proceed in the coming year – and we are mere days away from 2012. Forms cannot be printed, and when they are printed, around-the-clock overtime will result. The same is true with respect to accounting software. And how can a business institute any new changes to the tax schedule in a proper and timely matter? It’s ludicrous, not only regarding the nightmare of compliance and calculation, but also the inefficiency from all the extra man hours spent.
As a lifelong CPA, I can assure you that such a short-lived extension in the middle of tax season creates the absolute certainty that mistakes will be made– lots of them. Mistakes mean IRS penalties. The financial and wasted cost from our government sending out notices, following up, making corrections, and dealing with taxpayers fighting the penalties is a gross misuse of time and resources, all because Congress is incompetent and short-sighted. And then Congress and the IRS will spend more time writing regulations explaining the extent to which these penalties are to be abated.
More money will be spent than saved, with higher costs endured by our businesses; this extension is a sham.
by | ECONOMY, TAXES
A fresh perspective on the myth and the reality of income inequality in the United States.
Ronald Schmidt, professor of business administration at the Simon Graduate School of Business at the University of Rochester, says analysis of IRS data shows a “movement toward less inequality.” Schmidt talks with Bloomberg’s Ken Prewitt and Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance.” Listen here to Ron Schmidt’s interview this morning.
Update: For an exposition of Schmidt’s income inequality argument, click here
by | HYPOCRISY, OBAMA, TAXES
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by | SOCIAL SECURITY, TAXES
Dick Durbin has a love affair with Social Security. How else can one man continuously defend Social Security and mislead the country about its insolvency? He incessantly claims that Social Security does not add to the deficit. What he doesn’t tell you is that is he specifically and purposefully excludes accounting for the billions in promised future payments to workers.
And consider this: A company or organization earns $100.00 but spends $200.00. It only has to pay $100.00 now, while the other $100.00 is due for payment in the future. The question then becomes – to what extent is there an obligation to account for a method of repayment, should you have no money to do so? This is the very situation that Social Security is in. In contrast, the SEC is very explicit in saying that any company which tries to avoid accounting for obligation repayment will be considered to have issued a dishonest financial report.
Yet this is exactly what Durbin has been saying for years – when will he be brought to justice and held accountable for his outright lies?
by | ECONOMY, HYPOCRISY, TAXES
Other pundits are writing about tax cuts and wondering how aloud how the Republicans vote against a tax cut. The answer is simple: the temporary payroll Social Security tax reduction is not, never was, and never will be a tax cut.
There are many ways to look at the 2% reduction in the Social Security tax that is being collected. But effectively, it is no more than a spending increase all dressed up to look like a tax cut. The cost to taxpayers was $120 billion dollars. Congress simply decided to put more money into the hands of the lower and middle class. Rather than write a check, they made the 2% payroll decrease on the Social Security tax collection rate so workers could see a tangible benefit in their paychecks. But because it is temporary, and because it is limited, it has none of the effects of a true tax cut. As it’s been shown in history, most recently with the Making Work Pay tax credit for example, such temporary items have none of the stimulative effects on the economy. It served no purpose other than to create political turmoil among voters, party lines, and taxpayers.
What’s worse, no one is talking about the fact that the Democrats plan to pay for this holiday and its proposed extension ($265 billion), by levying a surtax on successful Americans earning over $1 million. This is legal plunder. It is redistribution of wealth at its core. Our government borrowed money directly intended for the Social Security Fund, and now wants someone else to pay for it. The so-called tax cut is really a net tax increase on the very Americans who are most responsible for job creation in this country. Just the effect of debating this nonsense in Washington continues to stifle businesses and harm our economy.
