Posted on 10/13/2008 12:22:25 AM PDT by Fred
At the center of Senator Obama's tax policy argument is that by raising taxes on the top 5% of income earners, we are only returning to President Clinton's 1993 tax increases. Let's for a moment leave aside that Obama really is looking to raise taxes on social security (above incomes of $103,000) and on everyone's capital gains, regardless of income. Rather, the Obama argument goes that because we had a relative economic boom following the 1993 tax increase, it's perfectly safe to raise taxes in 2009 as well.
Wrong. There is a major difference between 1993 and 2009 that Obama and McCain alike are both failing to articulate. In 1993, the U.S. was one of the world's lowest-tax countries, with Europe mostly at much higher rates, and most of the Asian economies too underdeveloped to be alternatives for investments and businesses. Eastern Europe was under a cloud of uncertainty and instability following the rapid demise of The Soviet Union on Christmas Day 1991. The 1993 tax increase left the U.S. as the leading free-market economy, albeit at a smaller margin than before.
As we enter 2009, the U.S. position in the world is extremely different than it was 16 years earlier. We are no longer the low-tax beacon of the major industrialized world. Numerous countries in Western Europe, Eastern Europe, Asia and elsewhere now have lower capital gains taxes than the U.S. The same goes for top marginal income tax rates, where Albania is at 10%, Estonia 13% and Russia 17%, just to mention a few. Here in the U.S., the current top rate is 36% for Federal, and if you live in NYC or California, you probably pay very close to 50% all-in. Our 15% long-term capital gains tax can't compete with the 0% rates in many other countries, but don't forget that many capital gains taxes aren't long-term, at which point you will pay 36% or higher.
The effect of the current high-tax policies is becoming an increasing disaster. 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. Have you noticed the lack of IPOs in the U.S. this year? For the first time in 30 years, there were no venture-backed IPOs. This has a significant impact to the standard of living here at home.
In this context, it is strange to listen to Senator McCain saying repeatedly that he wants to "Keep taxes low." Well, if taxes aren't low, why does he want to keep them? We have some of the world's highest capital gains and income taxes, so we are hemorrhaging investments and human capital to those places where they are not taxed as much.
So what is the 2009 recipe to strengthen the U.S. economy? Clearly McCain is wrong about "keeping taxes low" because they are already way too high. As for Obama, he proposes an outright train wreck in terms of forcing investors, businesses and high-wage earners abroad. Rather, we should once and for all abolish the capital gains tax – whether for short-term gains, or long-term. We should also become competitive with the fastest-growing economies in the world by cutting the top Federal rate to below Albania's 10% rate. Given that some U.S. states and local governments have combined rates of around 10%, it would be appropriate to abolish our Federal income tax altogether. This would stop the hemorrhaging of investments, businesses and talented individuals leaving our country.
What about the budget deficit, you say? Wouldn't abolishing the income tax and capital gains taxes reduce tax revenue? Of course it would. So the answer is to cut government spending correspondingly. The Federal budget now exceeds $3 trillion, or $10,000 per U.S. citizen, of which the Department of Defense is little over 20%. Big ticket items are Medicare, Medicaid and Social Security, for starters. Medicare and Medicaid in particular, are hugely inefficient and unnecessarily bureaucratic ways to induce people to over-consume health care services, and should be abolished in favor of lower taxes that would lead to a booming economy. The list goes on, but the Federal budget can be cut from over $3 billion to around $2 billion immediately, followed by another cut down to $1 trillion over time as Social Security payments dwindle in favor of a private 401(k)-style private system. The government can also raise funds by selling property, including land. After all, various agencies of the U.S. government is by far the largest property owner in the country, and could fill several years worth of budget gaps by auctioning off vast amounts of lands and buildings no longer necessary when we cut off the bureaucracy and the socialist apparatus currently consuming our tax dollars.
The "suprize" is many- MOST communities have not yet, or are now just starting to re-assess property taxes, and these drastic increases in value are going to double and triple peoples property tax bills, not to mention school taxes which are includedand are based on property values.
People who are now barely paying the bills and property taxes are going to be in for a big suprise over the next year or so.
For a lot of people, having to cough up 5-10,000 more at what ever time of year their municipality issues property tax bills will be beyond their means.
The stupid Sarbanes Oxley legislation has been bad too. In 2007 not one IPO was made. Not one!
We are killing the goose that lays the golden egg.
Good heavens, what state do you live in?? Taxes in Arizona on a $200K house are about $1500 per year, tops. California can be about the same depending on when you bought the house (last sale price is used to calculate taxes, which are still pretty low).
As property values have increased around here, the mill rates have gone down. Even though we pay an outrageous rate compared to most other places in the country, tax increases have always been slow & steady. Unless taxing authorities jump the amount that they spend, increasing home values shouldn't increase the bottom line on property taxes.
It annoys me when people say that after all the fuss, Clinton was not so bad. Well as bad as Clinton was and he was bad, he did not hate America. That alone should show that people are in a lot worse situation with Obama.
If it was not for family reasons I would be in TX right now. I would make a lot more there as a RN and save at least $10,000 in taxes a year. Maybe in four years but if Obama wins ( I don't think he will) I my not have a job here as a RN, no patients on job. Business and people are leaving here in droves.
I remember reading about this happening in central Indiana last year. Many fixed income homeowners had to sell out.
In Ridgefield, CT, the average house is above $500,000 and the property tax on such a house would be about $8,000 per year.
what a bum....and people still get taken in by this shyster...
Not here. Built house in 2000, could maybe get what I have i it today.
Yeah I got out of Ohio 25 yrs ago when Kucinich took Cleveland into bankruptcy.
Sadly my home state is becoming a junior version of Michigan.
There is something that is consitently missing in response to OBama’s plan to tax (punish) companies that send jobs “over seas.”
1)Companies don’t pay taxes. Taxes become a cost of doing business and raise the price of products and services. The tax burden trickles down to the consumer. WE pay the taxes.
2) The reason businesses relocate over seas is not primarily because of cheap labor. The market all companies want to compete it is the US. There is a lot of costs that are necessary to ship parts for assembly and ship products back to the US. The US is unfriendly to businesses in the TAX BURDEN department. TAXES create huge liabilities and require vast amounts of overhead in accounting and legal departments to legally follow the rules. The liability is significantly less overseas.
Raising taxes on big business drives up incentives to relocate overseas. But I don’t hear anyone making this case in the campaign.
Whenever the state wants to pave or do road constuction; everybody comes out against it, as they know soon after even the state repubs will want taxes for all their investment.
It works out pretty well actually if you are the kind of person who doesn't expect or want much from the govt. I have a 2400 sq ft cabin. I'd hate to think about what they'd soak me for in taxes if we had any.
No taxes, no regulation, law enforcement, extensive govt employees & services, comprehensive planning, ect ect. Alot more freedom the whole way around.
There is something that is consitently missing in response to OBama’s plan to tax (punish) companies that send jobs “over seas.”
1)Companies don’t pay taxes. Taxes become a cost of doing business and raise the price of products and services. The tax burden trickles down to the consumer. WE pay the taxes.
2) The reason businesses relocate over seas is not primarily because of cheap labor. The market all companies want to compete it is the US. There is a lot of costs that are necessary to ship parts for assembly and ship products back to the US. The US is unfriendly to businesses in the TAX BURDEN department. TAXES create huge liabilities and require vast amounts of overhead in accounting and legal departments to legally follow the rules. The liability is significantly less overseas.
Raising taxes on big business drives up incentives to relocate overseas. But I don’t hear anyone making this case in the campaign.
We are no longer the low-tax beacon of the major industrialized world. Numerous countries in Western Europe, Eastern Europe, Asia and elsewhere now have lower capital gains taxes than the U.S. The same goes for top marginal income tax rates, where Albania is at 10%, Estonia 13% and Russia 17%, just to mention a few. Here in the U.S., the current top rate is 36% for Federal, and if you live in NYC or California, you probably pay very close to 50% all-in. Our 15% long-term capital gains tax can't compete with the 0% rates in many other countries, but don't forget that many capital gains taxes aren't long-term, at which point you will pay 36% or higher.
The effect of the current high-tax policies is becoming an increasing disaster. 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. Have you noticed the lack of IPOs in the U.S. this year?
Obama doesn’t have a clue about economic development. Remember, he accomplished zilch as a community agitator other than advancing his own career. If the loons control all 3 branches, we’re screwed.
Obama doesn’t have a clue about economic development. Remember, he accomplished zilch as a community agitator other than advancing his own career. If the loons control all 3 branches, we’re screwed.
Whenever the state wants to pave or do road constuction; everybody comes out against it, as they know soon after even the state repubs will want taxes for all their investment.
It works out pretty well actually if you are the kind of person who doesn't expect or want much from the govt. I have a 2400 sq ft cabin. I'd hate to think about what they'd soak me for in taxes if we had any.
No taxes, no regulation, law enforcement, extensive govt employees & services, comprehensive planning, ect ect. Alot more freedom the whole way around.
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