TAX POLITIX
The Politics of Taxes
Shrinking Nest Eggs
The Tax Foundation has a new report out regarding the consequences of not extending the Bush tax cuts: Retired seniors could be among the hardest hit, since they rely most on investments and savings. Lawmakers have been warning for months about the income-tax consequences for working families, including penalties on marriage and a reduction in child tax credits. But those living off investment income would see not only their 401(k) and savings accounts taxed at higher income rates, but also...
Sage Observations from Cato
James Dorn at the Cato Institute makes a great case for how and why our government is going in the wrong economic direction. Some of his points are as follows: "Economic growth depends on institutions that reward saving and investment, that expand individuals' choices, and that protect private property rights, allow free trade, and safeguard the value of money. Policies that lead to higher taxes, more debt, socialized health care, costly regulations, protectionism, and unstable money undermine...
Cafe Hayek on Government Spending and Job Creation
As I've mentioned before on this blog, my friend Don Boudreaux has a great website with a fellow economist, Russ Roberts: www.cafehayek.com. Roberts was recently thinking aloud about the correlation between government spending and job creation. He does a nice job taking to task some of the Keynesian ideas on the topic. Toward the end of his piece, Roberts rightly identifies one of the main reasons for our current sluggish economy: "The simplest answer is that businesses are not investing....
Why Stimulus Doesn't Stimulate
Robert Higgs published a thoughtful essay a few days ago in the Sacramento Bee. Higgs reminds us of a basic economic lesson that Obama has yet to learn: consumptive spending is not nearly as stimulative as investment spending. Higgs rightly cites a sharp decline in private investment as the reason for the economic downturn. Obama is compounding this cycle by perpetuating a feeling of uneasiness and uncertainty with his plans to raise taxes and regulations on business owners. And with Congress...
NY Income Drops
Reuters reports a drop in the personal income of NY residents for the first time in 70 years: "The recession put a 3.1 percent dent in the personal incomes of New York state residents, who endured their first full-year decline in more than 70 years, according to a report released Tuesday. Paychecks or net earnings tumbled 5.4 percent, while dividends, interest and rent slid 8.4 percent, to a grand total of nearly $908 billion, the state comptroller's report said. Not only did New Yorkers'...
Smart Move by Dems
I don't say it very often, but I have it hand it to them Dems. The House vote taken today on whether or not to adjourn the House before deciding on the fate of the Bush tax cuts was a smart one. 39 Dems voted with the Republicans, making it a narrow 210-209 vote but ultimately adjourning. What they did was take the seats that are on the bubble in this election and have them vote against adjournment. Then those Democrats can go back to their districts and say to their constituents and print in...
Extending Tax Cuts on Investments?
Now this looks promising as a step in the right direction. The AP is reporting that 47 House Democrats are breaking rank and urging Congress to extend tax cuts on investments. This means keeping the current rates on capital gains and dividends. A letter purportedly sent to House Speaker Pelosi states the following: "Raising taxes on capital gains and dividends could discourage individuals and businesses from saving and investing," said the letter, dated Friday and released Tuesday. "We urge...
The Small Business Bill
In an attempt to placate voters, President Obama signed into law the new $ 30 billion small business bill full of lending and tax credits, which he misleadingly calls tax cuts. This program will only provide some minor and temporary benefits to businesses and will hardly impact our much-needed economic recovery. Unlike politicians who only plan for the next election, businesses engage in long-term planning. The only sensible program would be to extend the Bush tax cuts for the long haul, so...
Tax Tricks and Economic Recovery
The WSJ is reporting this evening that Congress has decided to delay voting on the status of the Bush tax cuts until after the election. While they lay the blame on Republicans, the truth is that the Democrats are running scared in the late stages of election season and incumbents don't want their vote to go on record. This further impacts Americans and small businesses who will have to wait to know how their taxes will be affected next year. Mark Zandi, chief economist of Moody's Analytics,...
Limbaugh Was Right
Seems that El Rushbo was correct when he chose to vote with his feet last year and leave New York City. Back in early 2009, Limbaugh warned that impending tax hikes on New York City residents would crush a top income earner like himself, and cited these taxes as the reason why he was leaving NYC for good. Now there's even more proof that's true. According to a recent study by the Tax Foundation, if Obama's tax plan is adopted by Congress, "state, local and federal levies would result in a top...
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