Category Archives: Taxes

Cato Institute looks at Herman Cain’s 9-9-9 plan (Republican Debate 10-19-11 Part 4 and 5 video clips)

October 25, 2011 – 12:37 am

Cato Institute looks at Herman Cain’s 9-9-9 plan

pt 4

pt 5

Herman Cain has a lot to say about his 9-9-9 plan as do others in the debate above. I also enjoyed Cain’s comments on the Occupy Wall Street crowd in the clips above. Below is closer look at it.

Cain 9-9-9: Huge Tax Haul from VAT

Posted by Chris Edwards

The Herman Cain campaign released details of the revenue expected to be collected from his 9-9-9 tax plan. Here are the estimates for 2010:

  • $701 billion from the 9 percent personal income tax.
  • $753 billion from the 9 percent retail sales tax.
  • $863 billion from the 9 percent business VAT.

Yikes! By far the largest tax haul under the Cain plan would be from the business VAT—a tax which would be hidden from most voters.

By the way, the Cain business tax is not a tax on “corporate income,” as some media stories are identifying it. The new revenue data makes it clear that it is a tax on all value added by all businesses in the nation—corporate, partnership, and proprietorship.

Sorry Mr. Cain, I think your tax plan gives the federal government far too much room to grow in coming decades as entitlement cost pressures increase. I’d suggest dropping 9-9-9 and going with my 15-15-15 tax plan. After that, you could move on to proposing a detailed plan for spending cuts, as candidate Ron Paul has delivered.

By Everette Hatcher III | Also posted in Cato Institute | Tagged , , , , | Comments (0)

Romney wants to eliminate Capital Gains Tax for everyone except those who are real job creators

October 22, 2011 – 9:14 am

Obama: Raise Taxes, Capital Gains – “For Purposes of Fairness”

Everyone knows that if you eliminate the capital gains tax then those who are wealthy will put more money into creating jobs. However, Mitt Romney feels so guilty about being wealthy that he has proposed eliminating the capital gains for everyone except for those making over 200,000 dollars.

  • OCTOBER 21, 2011, 7:08 P.M. ET

Romney’s Guilty Republican Syndrome

A leading GOP contender defines ‘rich’ as $200,000 in income. Funny. So does President Obama.

As the GOP casts about for a response to Occupy Wall Street, at least one prominent Republican isn’t sweating it. In the war over class, Mitt Romney is already waving a white flag. And therein lies one of his chief liabilities as a Republican nominee or president.

The Occupy masses don’t have a unified message, though the Democrats embracing them aren’t making that mistake. President Obama helpfully explained that the crowds in New York and elsewhere are simply expressing their “frustrations” at unequal American society. The answer to their protests is, conveniently, his own vision for the country. If wealthier Americans and corporations are just asked to pay their “fair share,” if “we can go back to that then I think a lot of that anger, that frustration dissipates,” said the president.

Associated PressGOP Presidential candidate Mitt Romney on the trail

This is a campaign theme in the making, and one with which Mr. Obama has already had plenty of practice. Congressional Democrats, too, see the value of pivoting off Occupy Wall Street to build an election-year class-warfare argument.

Senate Majority Leader Harry Reid’s latest answer to any spending proposal is a “millionaire’s surtax,” which he intends to make Republicans vote against ad nauseam. Labor unions, liberal activist groups—all see an Occupy opportunity to refocus the blame for a faltering economy away from President Obama and to greedy, rich America.

But here’s the other big prize, from the White House’s perspective: The man they most expect to become the Republican nominee, Mitt Romney, is already running from this debate. Mr. Romney, they see, is in the full throes of Guilty Republican Syndrome.

It’s a curious illness, even if its source is clear: success. Mr. Romney is a multimillionaire, and through his own hard work. It’s a great American story, yet the Republican is paralyzed at the thought of what his opponents might do with it in a 9% unemployment economy. Democrats have already pounced on his time at Bain Capital, accusing Mr. Romney of “stripping down” companies and “laying off” employees for profit. The press has run exposés on his privileged upbringing, his “oceanfront” vacation home, his use of private jets.

Even his Republican opponents, who should know better, are lobbing anti-wealth pot shots. Herman Cain has taken to comparing his own “Main Street” business experience to Mr. Romney’s “Wall Street” past. Rick Perry is running an ad that hits Mr. Romney on his state health-care plan but ends with this bit of class: “Even the richest man can’t buy back his past.”

Having initially fought these caricatures, Mr. Romney has since begun to exhibit all the syndrome’s symptoms. He’s put forth a 59-point economic plan that eliminates the capital gains tax—but only for people who earn less than $200,000 a year. He’s declared, at a New Hampshire town hall (and at every other opportunity): “I’m not running for the rich people. Rich people can take care of themselves. They’re doing just fine.” He’s developed a form of Tourette’s that causes him to employ the term “middle class” in nearly every sentence.

Related Video

James Taranto on how Mitt Romney’s guilt as a millionaire feeds Democratic class warfare.

Mr. Romney is clearly hoping that his own passive form of class warfare will head his opponents off at the blue-collar pass. Really? The 2012 election is shaping up to be a profound choice. Mr. Obama is making no bones about his vision of higher taxes, wealth redistribution, larger government.

Mr. Romney has generally espoused the opposing view—smaller government, fewer regulations, opportunity—but only timidly. This hobbles his ability to go head to head with the president, to make the moral and philosophical case for that America. How can Mr. Romney oppose Mr. Obama’s plans to raise taxes on higher incomes, dividends and capital gains when the Republican himself diminishes the role of the “top 1%”? How can he demonstrate a principled understanding of capital and job creation when latching on to Mr. Obama’s own trademark $200,000 income cutoff?

At a town hall in Iowa Thursday, Mr. Romney took it further: “For me, one of the key criteria in looking at tax policy is to make sure that we help the people that need the help the most.”

These are the sort of statements that cause conservative voters to doubt Mr. Romney’s convictions. It also makes them doubt the ability of a President Romney to convince a Congress of the need for fundamental tax reform. If anything he owes a debt to Newt Gingrich, who in a recent debate gave him a taste of how politically and intellectually vulnerable he is on this argument, asking Mr. Romney to justify the $200,000 threshold.

Mr. Romney’s non-responsive response included five references to the “middle” class and another admonition that the “rich” are “doing just fine.” Mr. Obama can’t wait to agree, even as he shames Mr. Romney over his bank account.

Mr. Romney isn’t the first Republican to develop Guilty Syndrome, and one option would be to form a support group with, say, George H.W. Bush. A better cure might be the tonic of Ronald Reagan, who never let his own wealth get in the way of a good lower-tax argument. Reagan’s message, delivered with cheerfulness and conviction, was that he wanted everyone in American to have the opportunity to be as successful as he had been. If Mr. Romney is looking for a way to connect with an aspiring American electorate, that’s a start.

Write to kim@wsj.com

By Everette Hatcher III | Tagged , , , , | Comments (0)

With Govt Spending at 41% of GDP should President Obama try to raise taxes?

October 21, 2011 – 3:07 pm

Cato Institute: Government spending is 41% of GDP

I love the Cato Institute because they give us the facts that liberals just can’t refute. Instead of trying to raise our taxes, President Obama should be cutting spending.

American Government Spending: 41% of GDP

Posted by Chris Edwards

My good friend Kathy Ruffing at CBPP takes me to task for testifying that government spending in the United States is 41 percent of GDP, which in my view is a very high and harmful level.

Kathy says that recent U.S. spending data is “exaggerated” because of the recession, and indeed, spending has soared not only here, but in most major countries because of the unfortunate popularity of Keynesian pump-priming theories. My point was that the American smaller-government advantage eroded both during the Bush growth years and during the Obama recession years, as seen in Figure 2 of my testimony.  

Kathy noted that the OECD data I used are different than U.S. national income accounts data published by the Bureau of Economic Analysis. Well, that’s right. Every country has quirks in the way they do their national income data. The advantage of using OECD data is that the economists at the OECD adjust for these quirks and create spending data that is comparable across countries. If Kathy has more accurate international comparisons, I’d love to see them.

Finally, Kathy says that just because American government spending divided by GDP is about 40 percent, that “doesn’t mean that government controls about 40 percent of the U.S.economy.” I don’t agree. She means that government does not produce 40 percent of gross domestic product, which is true. The broader figure of 40 or 41 percent includes not just government production but government transfers. And transfers do entail government control over resources because both the taxing and spending activities involved in transfer programs distort private sector behavior. Thus, the government misallocates resources both when it “produces” useless solar power activities in its own labs and when it subsidizes failed private solar companies.   

Anyway, thanks to Kathy for raising the important issue of the overall size of government because it is something that the policy community should focus more attention on. For data geeks, the OECD has all kinds of cross-country comparison data here. Government spending is Table 25.

Federal Spending per Household Is Skyrocketing

Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute.

The federal government is spending more per household than ever before. Since 1965, spending per household has grown by nearly 162 percent, from $11,431 in 1965 to $29,401 in 2010. From 2010 to 2021, it is projected to rise to $35,773, a 22 percent increase.

INFLATION-ADJUSTED DOLLARS (2010)

Download

Federal Spending per Household Is Skyrocketing

Source: U.S. Census Bureau, White House Office of Management and Budget, and Congressional Budget Office.

Chart 1 of 42

In Depth

  • Policy Papers for Researchers

  • Technical Notes

    The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

  • Authors

    Emily GoffResearch Assistant
    Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
    Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor

By Everette Hatcher III | Also posted in Cato Institute, President Obama, spending out of control | Tagged , , , , | Comments (0)

Heritage Foundation Scholars respond to Obama debt reduction proposal (Part 6)

October 19, 2011 – 9:19 am

I love going to the Heritage Foundation website for articles like this:

Obama’s Debt Reduction and Tax Proposal

Heritage Responds to Obama’s Debt Reduction and Tax Proposal

Mike Brownfield

September 19, 2011 at 11:16 am

Heritage’s experts watched President Barack Obama’s debt reduction and tax increase proposal. Here are their immediate reactions:

_______________

Obama Vague on “Buffett Rule”

President Obama wants tax reform to adhere to his newly formulated “Buffett Rule” which states: Families and small businesses making more than $1 million should not pay a smaller share of their income in taxes than a middle income family.

But the Congressional Budget Office shows that Buffett Rule is already in effect. The highest earners pay more than double the amount of taxes as a share of their income than middle income earners. The top 1 percent of earners currently pays 29.5 percent of their income in all federal taxes while middle income families pay 14.3 percent.

The President and his staff surely know this so the Buffett Rule likely refers to something else. It is impossible to say for sure since, as usual, the President’s plan is light on details. One likely direction the President may propose when details come out is to equalize the taxation of capital gains with the taxation of income for millionaires. The President wants the top income tax rate to be 39.6 percent like it was before the Bush tax cuts. And that’s just for starters. Perhaps the Buffet Rule would  then raise the capital gains rate to that level. This comes after three years of the President claiming he only wanted to raise the capital gains rate to 20 percent.

So kind of surtax on high earners is not a new idea. Then Speaker of the House Nancy Pelosi wanted one to pay for Obamacare. It went nowhere then when Democrats controlled both houses of Congress so it has no chance of passing now. The President proposes to further tax the rich not because he wants his class warfare policies to become law, but so he has a talking point for his re-election campaign.

Should the President’s misguided Buffett Rule become law who would lose more?  Millionaires or the economy? The so-called coddled rich, or America’s workers? The cost of capital would rise considerably. This would make it harder to businesses to expand and add new workers. It would also hamper entrepreneurs looking to get their ideas off the ground. And even if President Obama and Warren Buffet can “afford to pay a little more” it’s not like this money is just lying around idly in mattresses – it’s already at work invested in some way in the economy, whether it’s cash in the banking system which keeps the nation’s finances moving, or invested in businesses which create jobs.  Pulling money out and putting it into government spending will not help the economy. Ultimately the Buffett Rule would result in fewer jobs for American workers and lower wages for those employed. The punitive effect the rule would have on American workers is hard to reconcile with the President’s supposed new focus on job creation.

Curtis Dubay

 
By Everette Hatcher III | Also posted in President Obama, spending out of control | Comments (0)

Heritage Foundation Scholars respond to Obama debt reduction proposal (Part 5)

October 18, 2011 – 9:18 am


I love going to the Heritage Foundation website for articles like this:

Obama’s Debt Reduction and Tax Proposal

Heritage Responds to Obama’s Debt Reduction and Tax Proposal

Mike Brownfield

September 19, 2011 at 11:16 am

Heritage’s experts watched President Barack Obama’s debt reduction and tax increase proposal. Here are their immediate reactions:

_______________

Here’s How to Pay Your “Fair Share,” Mr. Buffett

President Obama proposes the “Buffett Rule” to make sure the rich pay their “fair share.” However, there is already a system in place for Mr. Buffett and all the other millionaires and billionaires to pay more without a new job-killing tax hike.

Here’s how. Warren and his rich pals can go to this website:http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm

There they can follow these simple instructions for sending more of their money to the Treasury to reduce the national debt:

How do I make a contribution to the U.S. government?

Citizens who wish to make a general donation to the U.S. government may send contributions to a specific account called “Gifts to the United States.” This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States. Money deposited into this account is for general use by the federal government and can be available for budget needs. These contributions are considered an unconditional gift to the government. Financial gifts can be made by check or money order payable to the United States Treasury and mailed to the address below.

Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 622D
Hyattsville, MD 20782

Any tax-related questions regarding these contributions should be directed to the Internal Revenue Service at (800) 829-1040.

It is as simple as that. Now how can we stop seeing poor Warren every time we turn on the television incorrectly whining about his taxes are lower than his secretary?

Curtis Dubay

Where Will the Tax Hike REALLY Go???

Obama’s economics are at times stunning.  Proposing tax hikes in the midst of the highest and most persistent unemployment in decades is stunning.  Doing it to pay for a massive jobs package is also stunning.  But for a moment, set all that aside.

Set aside the terrible effect these tax hikes would have on jobs in America.  On investors.  On job creators.  On American competitiveness.  Set aside the cigarette tax that went to pay for expansion of SCHIP at the very beginning of the President’s term. Set aside the 18 new or increased taxes in Obamacare.  Set all that aside and consider this.

Do you believe for one simple moment that these new taxes will be used for paying down the deficit?  Or do you believe that past is prologue? The President’s own jobs package is proof: New taxes go to pay for new spending.

Alison Fraser

By Everette Hatcher III | Also posted in President Obama, spending out of control | Comments (0)

Pictures and video of Occupy Arkansas March of 10-15-11

October 18, 2011 – 7:29 am

Dan Mitchell is right about the “Occupy Wall St crowd”

Here is some video and pictures of the Occupy Arkansas March of October 15, 2011 followed by an excellent article by Jason Tolbert. Steve Brawner has rightly said:

For now, the Occupy movement doesn’t seem to be offering a lot of concrete solutions for the nation’s problems, and until it does, it won’t accomplish much.

In this video clip there is mention of the peaceful march. It was peaceful but one of the targets, the Bank of America, did get attacked with a large rock that busted the window out front.

Tea Party envy

Posted on 16 October 2011

By Jason Tolbert

Few will deny that the Tea Party has had a dramatic impact on politics the last couple of years. What has been interesting to watch is the reaction from the left, which has gone from dismissing them, to demonizing them, to finally trying to copy them.

The Tea Party — which stands for Taxed Enough Already — began around the country on April 15, 2009. Although it is a movement made up of a number of viewpoints, its participants are united behind one simple idea — taxes are too high and government spending is too big.

When this group burst onto the scene, they were dismissed by most as a flash in the pan — little more than Republicans disgruntled over President Obama’s landslide 2008 election.
But then curiously they did not go away. So instead, we were told that they must be right-wing extremists or, worse, racists. But little to no evidence of that ever turned up.

A recent poll conducted by Talk Business and Hendrix College showed that at least in Arkansas the Tea Party movement is quite popular, with 41 percent having a favorable view compared to 37 percent with an unfavorable view. Among self-identified independent voters, the favorable rate goes up to 50 percent and unfavorable, 30 percent.

So if you can’t beat them, imitate them. By all appearances, that is what the new Occupy Wall Street movement is attempting to do. But they are going about it all wrong.

For one thing, Occupy Wall Street and their local spin off protests, Occupy Arkansas and Occupy Little Rock, have little idea what they are protesting. It appears to be a group of angry liberals spurred on by liberal groups such as MoveOn.org and labor unions that are mad about the general poor state of the economy.

Videos from the organizational meetings in Little Rock showed them debating what they are upset about and what they want to advocate.

But they did not let that get in the way of a good march. So perhaps I could offer some suggestions, lest this new group become little more than an urban hiking club.

First, if Occupy Wall Street really wants to be as effective as the Tea Party, the protesters should learn from the Tea Party’s successes. The Tea Party’s primary influence has been to move the political discussion to the right. They have done that by not just holding big rallies and marches but by getting involved in the political process, many for the first time.
Occupy Wall Street could do the same thing by moving the political discussion to the left.

Republican officials became increasingly aware that a move toward the middle could get them a primary Tea Party challenger forcing them to battle a flank from their right. The mere threat of that has been strong enough to force most of them to shift markedly to a more conservative position.

If Occupy Wall Street wants to have the same impact, they should quit marching on the stock exchange and corporate headquarters and move their attention to the White House and the statehouse. If they want to shift the country to their left-leaning positions, go recruit some primary opponents for some moderate Democrats. Candidates definitely will listen then.

Second — and this is key — the OWS folks should figure out what they are for and keep it simple. The Tea Party’s success was largely because it was organized around one simple idea with broad appeal. It is not hard for many to understand that Americans are over taxed and that government has grown too big.

If Occupy Wall Street figures these two things out, perhaps they will have success. In the meantime, my Tea drinking friends, sit back and enjoy the show. After all, imitation is the sincerest form of flattery.

____________________

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Crowd at Occupy Arkansas pales in comparison to annual pro-life march

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Occupy Wall Street vs. Steve Jobs

COUNTER-DEMONSTRATION: At Kappa Sigma house in Fayetteville. The Drew Wilson photo above went viral last night — at least in Arkansas e-mail and social media users — after the Fayetteville Flyer posted it in coverage of an Occupy Northwest Arkansas demonstration in Fayetteville. The 1 percent banner was unfurled briefly on the Kappa Sigma frat […]

Big Bad Wall St Corporations

I found this article interesting from the Wall Street Journal: OCTOBER 10, 2011 The Corporate Exec: Hollywood Demon Nazis are getting old, moviemakers don’t want to offend foreign audiences, so corporate types top the list of evil stereotypes By EDWARD JAY EPSTEIN It is not surprising that pop-culture protesters are now intent on occupying Wall […]

Jim Lendall of “Let them Pay” Guillotine fame shows up at “Occupy Arkansas” group meeting

Left leaning blogs like Blue Arkansas have praised the “Occupy Arkansas” but I wonder if they know about some of the crazy things the leaders of this movement have said. Jason Tolbert noted on October 7, 2011: Max Brantley with the Arkansas Times reports on the efforts currently under way to organize an “Occupy Arkansas” […]

 

These pictures are from liberal Blue Arkansas website:

Marching on in front of B o A….

From Katherine Purcell:

From Scott White: Chanting “This is no recession; this is a robbery” on march to Capitol. #occupylittlerock #ows

More from Katherine!   “we are the 99%”

From @ms.cameralady!  The 99% Arrive at the Capitol in Little Rock!

Ebony Blevins…”Arriving at the Capitol”

More from Ebony “The Capitol Steps”

By Everette Hatcher III | Also posted in Current Events, spending out of control | Tagged , , , | Comments (0)

Milton Friedman:Republicans are wrong to oppose payroll tax reduction (Part 2 of Friedman interview with John Hawkins)

October 17, 2011 – 8:50 am

Image Detail

 Milton Friedman and Ronald Reagan

John Brummett is critical of Republicans for opposing the payroll tax reduction and I have to agree with him on this.

In an interview shortly after the Bush Tax Cuts passed Milton Friedman was asked:

John Hawkins:Do you think George Bush, with the economy being as it was, did the right thing by cutting taxes?

Milton Friedman: I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, “How do you hold down government spending?” Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.

_______________________

Here is some more of the interview:

Written By : John Hawkins

John Hawkins:I’d like to switch to a different area here. The economy certainly did well in the Clinton years except for the recession that started right at the end of his term. Was that because of Bill Clinton’s policies, a continuation of the success of Ronald Reagan’s policies, or something else?

Milton Friedman:I think it was #1 a continuation of the Reagan policies and #2 an indication of the virtues of a President of one party and a House and Senate of the other. That’s the best combination for economic growth…

John Hawkins:Because they hold down spending?

Milton Friedman:Yes, you have a deadlock. You can’t get any major spending programs through because one party or the other will oppose it. That’s why we have what looks like a paradox. The Clinton administration, in terms of the budget, has one of the best records of holding down spending. Spending went up less under Clinton than almost any other President.

John Hawkins:So do you think if we had Democrats controlling the House and Senate we’d have much less spending from the Bush administration?

Milton Friedman:If the White House were under Bush, and House and Senate were under the Democrats, I do not believe there would be much spending.

John Hawkins:That may be true. Switching directions again, Europe has been moving towards a single currency. Do you think that’s a wise move for all the states, some of them, or none of them? Why so?

Milton Friedman:We’re in the midst of a wonderful natural experiment. You have a really different arrangement with the euro than we’ve ever had historically. We’ve had many cases in which a number of countries have used the same currency. That’s when they’ve used gold or silver as money. But each individual country has been able to control the content of its own money. So while they were using the same commodity as currency, they were always in a position to determine what the terms of exchange were between their own currency and the other currencies.

But the euro is a very different arrangement. For the first time in history, we have essentially an independent central bank for a considerable number of distinct political entities. I, in advance, was very negative about it and have been very negative & pessimistic about it. We’ll see how the Europe plan does on the one hand and on the other, how the other countries of the world, the UK, the United States, Japan, which are linked together by flexible exchange rates, we’ll see how they do.

So we’ll have a really nice, natural experiment just as before the Soviet Union dissolved, we had a natural experiment comparing socialism and capitalism.

John Hawkins:If the euro were to replace the dollar as the medium of exchange, if everyone bought and sold their goods in euros instead of dollars, would that have an impact on the US economy?

Milton Friedman:The success of the United States will depend on how much it can produce at home, how much it can sell abroad, what it buys from abroad. It’s of less importance whether it is denominated in dollars or euros.

John Hawkins:So in the end, that is really not going to make a big difference one way or the other…

Milton Friedman:That’s not going to make a great deal of difference. What’s going to make the difference is the productivity of the different countries. But personally, as I say, I believe the Euroland is going to run into big difficulties. That’s because the different countries have different languages, limited mobility among them, and they’re effected differently by external events.

Right now for example, Ireland and Spain are doing very well, but on the other hand Germany and France are doing very poorly. The question is; “Is the same monetary policy appropriate for all of them?” Germany and France on one hand and Ireland and Spain on the other: it’s very dubious that it is. That’s why you’re having increasing difficulties within the Euroland group. As you probably know Sweden, which had not joined the European Monetary Union, voted down doing so and will keep its own currency.

John Hawkins: It was 56% to 42%so they voted it down by a good margin. Switching gears again here, in your opinion, what caused us to pull out of the Great Depression? Was it Roosevelt’s policies, WW2…

Milton Friedman:Roosevelt’s policies were very destructive. Roosevelt’s policies made the depression longer and worse than it otherwise would have been. What pulled us out of the depression was the natural resilience of the economy + WW2.

You know, it’s a mystery as to why people think Roosevelt’s policies pulled us out of the Depression. The problem was that you had unemployed machines and unemployed people. How do you get them together by forming industrial cartels and keeping prices and wages up? That’s what Roosevelt’s policies in the New Deal amounted to. Essentially, increasing the role of government, enhancing the monopolistic position of labor, and creating as I said before the equivalent of price fixing cartels made things worse. So most of his policies were counterproductive.

John Hawkins:Fast forward to today and there are a lot of Democrats & people on the left out there who say, “Why don’t we just have exorbitant taxes on the rich and minimal taxes on everyone else”? What would that do to the economy?

Milton Friedman:That would eliminate the rich.

John Hawkins:Right. Would it have a negative effect on economy overall?

Milton Friedman:Well, who would provide the funds, the capital, and the entrepreneurship for the new industries? In a world in which there were no rich people, how would you have ever gotten the capital to produce steel mills or automobile plants? You can do it through the state, but the world tried that with the Soviet Union.

It’s an interesting thing. If you ask yourself, “what tax system would be best for the low income group,” it’s the opposite of what they’re saying there. It would be a system with a maximum amount of taxation rather than a minimum. If you look at the taxation system in China for example, which is now doing very, very, well, that’s exactly what it is. In Russia you now have a 20% flat tax which is having the effect of increasing revenues rapidly and also stimulating production. You cannot help the poor by destroying the rich.

John Hawkins:If we don’t “fix” Social Security, what sort of impact is it going to have on the economy in say 10-20 years?

Milton Friedman:Well, Social Security is having a bad effect now through the tax system. But ya know, when Adam Smith was told that the British loss at Yorktown would be the ruination of Britain, Adam Smith replied, “Young man, there’s a deal of ruin in a nation.” So, we’re a very strong country, lots of able people, lots of active entrepreneurs, and so the Social Security system will be a burden, but it won’t destroy the country.

I think it will be changed of course. I think there is a great and growing pressure towards privatizing Social Security, converting it into individual accounts. We’ve been moving that way indirectly through 401ks and the equivalent retirement accounts. I think Mr. Bush will go back to his emphasis on privatizing Social Security. I think there’s a good chance it can be done. It has been done in a considerable number of countries around the world. There’s no reason why it couldn’t be done here.

John Hawkins:Are there any political websites you’d like to recommend to our readers?

Milton Friedman: No, I don’t really follow any political websites. I think they’ll do better reading the Wealth of Nations(laughs)…

John Hawkins:Last but not least, is there anything else you’d like to say or promote?

Milton Friedman:I’d like to promote lots of things. I’d like to promote elimination of drug prohibition. I’d like to promote parental choice in education through vouchers. Those are two things I think are very urgent and important. They’re both more important than the harm which Social Security will do.

I think that our policy with respect to drugs is fundamentally immoral and it’s really disgraceful that we cause thousands of deaths in South America because we cannot enforce our own laws. If we could enforce our own laws against consumption of drugs, there would be no drug cartels in South America. There would be no — nearly a civil war in a place like Columbia.

Similarly, I think the performance of our school systems is disgraceful. I think roughly a quarter of the population never graduates high school. We have a lower level of literacy today than we had a hundred years ago. That’s not despite, but because of the poor schools, particularly in low-income areas.

But I think that’s enough for you. It has been nice to talk to you.

John Hawkins:Thank you for your time Mr. Friedman.

If you’d like to find out more about Mr. Friedman, you can do so at the Milton & Rose D. Friedman Foundation & the Hoover Institution.

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Myth:Conservative Herbert Hoover responsible for Depression When I grew up I always heard that the conservative Herbert Hoover was responsible for the depression. Is that true? The Hoover Myth Marches On Posted by David Boaz In the New York Times today,  columnist Joseph Nocera quotes a book published in 1940 on Herbert Hoover and the Great Depression: […]

 

Milton Friedman Friday:(“Free to Choose” episode 4 – From Cradle to Grave, Part 6 of 7)

I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen worked pretty well for a whole generation. Now anything that works well for a whole generation isn’t entirely bad. From the fact __ from that fact, and the undeniable fact that things […]

 

Milton Friedman discusses Reagan and Reagan discusses Friedman

Uploaded by YAFTV on Aug 19, 2009 Nobel Laureate Dr. Milton Friedman discusses the principles of Ronald Reagan during this talk for students at Young America’s Foundation’s 25th annual National Conservative Student Conference MILTON FRIEDMAN ON RONALD REAGAN In Friday’s WSJ, Milton Friedman reflectedon Ronald Reagan’s legacy. (The link should work for a few more […]

 

Social Security is a Ponzi scheme (Part 10)

Milton Friedman – The Social Security Myth Uploaded by LibertyPen on Mar 5, 2010 Using Social Security as his prime example, Professor Friedman explodes the myth that the major expansions in government resulted from popular demand. In a speech delivered more than 30 years ago, he directly relates this dynamic to today’s health care debate. […]

 

Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 4 of transcript and video)

Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 4 of transcript and video) Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 4 of 6.   Volume 6 – What’s Wrong with our Schools Transcript: It seems to me […]

 

Tax increases are not the way to go

Tax increases are not the way to go, but the president doesn’t get that. Liberals love tax increases. Seven Reasons Why Tax Increases Are the Wrong Approach Uploaded by CFPEcon101 on May 3, 2011 This Economics 101 video from the Center for Freedom and Prosperity gives seven reasons why the political elite are wrong to […]

 

Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 3 of transcript and video)

Free to Choose by Milton Friedman: Episode “What is wrong with our schools?” (Part 3 of transcript and video) Here is the video clip and transcript of the film series FREE TO CHOOSE episode “What is wrong with our schools?” Part 3 of 6.   Volume 6 – What’s Wrong with our Schools Transcript: If it doesn’t, they […]

 

 

By Everette Hatcher III | Also posted in Milton Friedman, spending out of control | Tagged , , , , | Comments (0)

Heritage Foundation Scholars respond to Obama debt reduction proposal (Part 4)

October 14, 2011 – 9:17 am

Ernest Istook at the Saint Paul Tea Party Rally 4/16/2011 Part 1

Ernest Istook, US Congressman, Heritage Foundation, http://www.heritage.org, spoke at the Saint Paul Tea Party Rally 4/16/2011. Hosted by North Star Tea Party Patriots, and Sue Jeffers.

I love going to the Heritage Foundation website for articles like this:

Obama’s Debt Reduction and Tax Proposal

Heritage Responds to Obama’s Debt Reduction and Tax Proposal

Mike Brownfield

September 19, 2011 at 11:16 am

Heritage’s experts watched President Barack Obama’s debt reduction and tax increase proposal. Here are their immediate reactions:

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Who Really Is Paying Obama’s Latest Tax Hikes

Over half of President Obama’s deficit reduction plan announced today would come from tax increases – to the tune of $1.5 trillion – on families and businesses earning over $250,000 a year.

His plan singles out both industries and individuals, such as oil companies and corporate-jet owners. This is a worn out, faulty proposal for a tax system that needs major restructuring rather than a few fine-sounding flourishes. Taxing those who Obama calls the wealthiest of Americans won’t solve our deficit problem – and it certainly won’t solve our spending problem. The top 10 percent of earners in America already pay about 70 percent of federal income taxes. And adopting the flawed deficit reduction proposal of taxing the wealthiest Americans would require mathematically unfeasible tax rates.

How ironic for this speech – specifically its tax hikes component – to come on the heels of Obama’s speech on job creation? Never mind the President’s flawed assumption that the federal government can and should be in the business of creating jobs. But to propose taxing further the very Americans who should be the ones creating jobs in our economy flies in the face of logic. Rep. Paul Ryan (R-WI) summed up the situation well over the weekend:

If you tax job creators more, you get less job creation. If you tax investment more, you get less investment.”

Mr. President, America needs more investment and it needs more job creation. It needs Washington to get out of the way.

Emily Goff

This is not Tax Reform Mr. President

President Obama’s says he wants to debt committee to reform the tax code but raise taxes by $1.5 trillion at the same time. That isn’t tax reform. It is dressing up tax hikes in tax reform’s robes.

Tax Reform entails fixing the tax base so it does not favor certain economic behaviors or deter others. This is done by closing so-called “loopholes.” The revenue raised from eliminating those credits, deductions, and exemptions is then used to lower income tax rates and eliminate taxation on saving and investing to encourage more productive activity. The new and improved tax code should raise the same amount of revenue as the old code.

The new revenue would come from allowing the Bush tax cuts to expire for families and small businesses earning more than $250,000 a year, limiting deductions their deductions, and the President’s new “Buffett Rule” that would further raise these job creator’s taxes in some way which the President has not defined. He also wants to eliminate deductions, credits, and exemptions. This is a war the President is waging on success – as if so-called fat cats were the root of our spending problems.

The $1.5 trillion in higher taxes would grow the already bloated federal government by that amount. Congress never uses tax hikes for deficit reduction. It always uses the extra revenue to pay for new programs.

The brunt of these tax hikes would fall on job creators – businesses that employ workers and investors – that the economy desperately needs to start adding new jobs. Raising their taxes will only cause them to cut further back on their hiring plans or scrap them altogether. And without seriously tackling spending, taxes will have to rise perpetually.

The economy and the American people cannot afford the President’s government-growing, job-killing conception of tax reform.

Curtis Dubay


By Everette Hatcher III | Also posted in President Obama, spending out of control | Comments (0)

Brantley and Obama want to go after the big bad wealthy again but they happen to be the job creators

October 14, 2011 – 7:28 am

President Obama and other politicians are advocating higher taxes, with a particular emphasis on class-warfare taxes targeting the so-called rich. This Center for Freedom and Prosperity Foundation video explains why fiscal policy based on hate and envy is fundamentally misguided. For more information please visit our web page: www.freedomandprosperity.org.

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President Obama really does stick to his view that the wealthy need to rescue the rest of us on everything, but that view does not work. There are not enough rich people out there to solve our budget woes. Actually what has happened in the past when the government wants more money it starts off going after the rich, but when that does not bring in much money then the only alternative is to go after the rest of us.

Max Brantley argues on the Arkansas Times Blog that most of us are taxed too much so we must tax the rich more but that will not come close to bringing us to a balanced budget. However, it will destroy job creation.

The Millionaire Tax: Yet Another Job-Killing Tax Hike

By Curtis Dubay
October 11, 2011

Like the villain in a horror movie, the many-lived millionaire tax is once again back from the dead. Senate Majority Leader Harry Reid (D–NV) dusted off this economically frightening tax hike that has repeatedly failed to pass Congress to pay for President Obama’s jobs plan (American Jobs Act of 2011, S. 1660) after Senate Democrats rejected the tax hikes the President proposed to pay for his bill.

This is the third time in the past two years that congressional Democrats have proposed a millionaire tax. The first time it was a 5.4 percent surtax to pay for health care reform. The second time was in “the People’s Budget” released by the Congressional Progressive Caucus. It failed to garner much support either time.

If the third time is the charm for the millionaire tax to become law, the economy would suffer lasting damage and reduced international competitiveness. And American workers would bear the brunt of the pain.

Permanent Tax Hike on Job Creators

The millionaire’s tax would be a 5.6 percent surtax on incomes of married filers earning over $1 million starting on January 1, 2013. The surtax would kick in at $500,000 for individual filers, so it cannot be called a true millionaire tax. It would take the place of several tax hikes President Obama proposed to pay for his jobs plan, the biggest of which was capping the deductions of high-income earners.[1] It would raise approximately $450 billion over 10 years.

The millionaire surtax is contradictory to the stated aim of the President’s jobs plan, which is to create jobs. The tax hike would fall squarely on the very job creators that the President wants to add jobs and reduce their incentive to add new workers.

Taxpayers earning more than $1 million per year are investors and businesses that are directly responsible for creating jobs. Investors provide the capital to existing businesses and startups so they can expand and add new workers. Raising their taxes would deprive them of resources they could invest in promising businesses that are looking to add employees. Raising their tax rate would deter them from taking the risk to invest.

The President and his allies say often that only a few businesses would pay higher taxes under their soak-the-rich policies. But a recent study from President Obama’s own Treasury Department shows that 50 percent of the income earned by businesses that pay their taxes through the individual income tax code and employ workers would pay the millionaire tax.[2]

The millionaire tax is a direct blow to the pass-through businesses that employ the most workers. Higher taxes would deprive these important job creators of resources they could use to add new workers or pay their workers higher wages, and it would reduce their incentive for adding new workers. These impediments to economic growth and job creation would plague the economy permanently, while the questionable jobs policies the millionaire tax would pay for are temporary.

More Job Destruction

The millionaire surtax would also apply to capital gains and dividends. This would be yet another surtax on investment income, as Obamacare already applied an extra 3.8 percent tax. Combined with that surtax and the President’s policy of increasing the capital gains and dividends rate to 20 percent from the current 15 percent rate, the millionaire surtax would raise the total rate to 29.4 percent—a 96 percent increase over the current rate.

Higher capital gains taxes would further impede job creation because it would increase the cost of new capital for businesses looking to grow or replace worn-out capital. This would make it more expensive for businesses to buy the equipment, tools, and other things they need to employ more workers and make their current workers more productive. The end result would be fewer jobs and lower wages for American workers.

The President frequently calls his tax hike plans “tax reform.” But one of the goals of tax reform is to lower the cost of capital to improve economic growth and enhance job creation. Higher taxes on capital are opposed to the aims of true tax reform.

Highest Tax Rates in the World

The U.S. is generally regarded as a low-tax nation compared to other industrialized countries. This is one of the main factors that has allowed the U.S. economy to grow at a faster rate than other developed countries for decades and has made it the envy of the world. If the millionaire surtax becomes law, the U.S. would no longer enjoy the advantages of being a low-tax country.

After adding state and local income tax rates, the 39.6 percent top federal income tax rate long fought for by President Obama and his congressional allies, the higher Medicare surtax from Obamacare, and the new millionaire surtax, the average top marginal income tax rate in the U.S. would be 55 percent. A rate at that level would leave the average U.S. rate as the third highest among developed nations in the 30-member Organization for Economic Cooperation and Development (OECD). It would be behind only Sweden and Denmark.

Taxpayers in states with above-average top marginal income tax rates would compare even worse. In fact, taxpayers in Oregon, Hawaii, and New York would pay the highest tax rates in the developed world. Taxpayers in California, Iowa, New Jersey, Vermont, Maine, Maryland, Minnesota, Idaho, North Carolina, Wisconsin, and Ohio would pay higher rates than every developed country except Denmark.

Taxpayers in the nine states without state income taxes—and therefore with the lowest income tax rates in the U.S.—would still be taxed at a higher rate than in all but seven other developed countries. Their rates would be higher than traditional high-tax countries such as France, Germany, Italy, and Spain.

In the global race for investment and capital, the millionaire tax would make almost every other developed country more competitive than the U.S.

Real Reform

The millionaire tax would end up costing the U.S. economy more jobs than the President’s jobs plan it is supposed to pay for would ever create. It would ruin American competitiveness among other developed countries.

The President and his congressional allies are better off spending their time pursuing true tax reform, which would repair the tax base and lower marginal tax rates. That would mean dropping their class warfare policies for the good of the economy and the country.

Curtis S. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

By Everette Hatcher III | Also posted in Cato Institute, President Obama, spending out of control | Tagged , , , | Comments (0)

Bigger government hurts economic growth

October 13, 2011 – 2:04 pm

The Cato Institute videos are always good and these are no different.

 

New Video Has Important Message: Freedom and Prosperity vs. Big Government and Stagnation

Posted by Daniel J. Mitchell

The folks from the Koch Institute put together a great video a couple of months ago looking at why some nations are rich and others are poor.

That video looked at the relationship between economic freedom and various indices that measure quality of life. Not surprisingly, free markets and small government lead to better results.

Now they have a new video that looks at recent developments in the United States. Unfortunately, you will learn that the U.S. is slipping in the wrong direction.

Uploaded by on Oct 11, 2011

Continue the discussion at http://www.facebook.com/economicfreedom

For years the United States has been a world leader in economic freedom. But runaway government spending and burdensome regulations have caused a decline in economic freedom in the United States. If our economic freedom continues to fall, how will it affect our quality of life?

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The entire video is superb, but there are two things that merit special praise, one because of intellectual honesty and the other because of intellectual effectiveness.

1. The refreshingly honest aspect of the video is its non-partisan tone. It explains, in a neutral fashion, that Bush undermined prosperity by making government bigger and that Obama is undermining prosperity by increasing the burden of government.

2. The most important and effective argument in the video, at least from my perspective, is that it shows clearly that a larger government necessarily comes at the expense of the productive sector of the economy. Pay extra-close attention around the 2:00 mark.

It’s also worth pointing out that there are several policies that impact on economic performance. The Koch Institute video focuses primarily on the key issues of fiscal policy and regulation, but trade, monetary policy, property rights, and rule of law are examples of other policies that also are very important.

This video, narrated by yours truly, looks at economic growth from this more comprehensive perspective.

Uploaded by on Feb 17, 2009

Now that the so-called stimulus has been enacted, hopefully policy makers will turn their attention to policies that actually improve economic performance. This Center for Freedom and Prosperity Foundation video reviews the key finding in the Fraser Institute’s Economic Freedom of the World and explains that, contrary to the policies of Presidents Bush and Obama, smaller government and free markets are the way to boost economic growth. For more information: http://www.freedomandprosperity.org

________

The moral of the story from both videos is very straightforward. If the answer is bigger government, you’ve asked a very strange question.

By Everette Hatcher III | Also posted in Cato Institute, spending out of control | Comments (0)