Christmas shopping and tax revenues

Last night I thought of a way to explain how tax revenue can go up in a very simple way.  It can be compared to Black Friday in the retail world.  Okay, so you may be wondering how can people spending money in a shopping frenzy be compared to the government collecting taxes.  First of all, the reason it is called Black Friday is because until that day, retail corporations are in the red.  The amount of sales on this day is when they actually show a profit.  As you ponder that for a second, think of the reason why they show a profit, people spend money.  When they were afraid that people would not have the money to shop, they were concerned about being able to show a profit.  So, what do they do to increase their revenue?  Did they raise the prices so that they would make more money on the items that were sold?  Less items sold but at a higher price so they make money on what is sold?  Nope, they did the total opposite, they reduced their prices so that more people would come into the stores and shop.  They may not have bought as much as they did in previous years, but with more people spending money the stores did see a profit.  Thus, by lowering the tax rates the tax revenues will be raised because the lower tax rates will encourage companies to hire more people who will in turn pay taxes.  They will be producers and produce tax revenues rather than only consuming products paid for by tax revenues.

Here is a reminder of how taxing some higher cost items impacted the economy. http://wp.me/plU1X-tw

On a totally different subject here is one thing to remember about budgeting, they start at current levels and increase spending from there.  They spend the money in the current fiscal year to make sure they can show they need the money so they do not have to cut from current spending levels, even when budgets cuts are requested.

Also, for those who say that some should pay a higher rate, remember you can donate to the IRS.  Are you doing that or deep down do you think everyone else but you should pay more but you use the royal we?

Taxation without Representation

We learned those words at an early age.  We learned about the tea parties at an early age.  We all have the mental image of a bunch of men dressed as Indians throwing boxes off of a wooden ship.  But, did we ever really grasp what was going on that caused the men to feel like they had no choice but to revolt and to show their anger by doing this?  I don’t think so.

Even now, as I have embraced the Tea Party ideals, I never really got it.  I read something this weekend about the Stamp Tax that suddenly made things fall in place for me.  The Stamp Tax was a tax on paper.  It meant that every single piece of paper was taxed no matter what its use.  Think about even in this digital age how much paper we touch on a daily basis.  What if you had to pay a special tax (on top of every other tax) for that piece of paper.  Now think back to how much paper was used 30 years ago and if all that paper was taxed.  Don’t just think of paper as sheets of paper.  Think about newspapers, magazines, books and how about playing cards.  Yep, a special tax just on those type things.  As I read this, I realized that Obamatax is exactly the same as the Stamp Tax, except it is a special tax (on top of every other tax) on medical devices.  You know, crutches, prescription drugs, OTC drugs, Tampons, and even band aids.  Remember that the Director of Health and Human Services has the ultimate authority to decide what can be done in regards to Obamatax.  If the tax isn’t there now, it will be coming to you soon.  Because that is the other part of it.  The reason for the taxes are to support the overspending by the government.  As they say history repeats itself.  Look up why the Stamp Tax was needed by England if you don’t believe that.

Growth in states with no individual income tax

I wrote this comment on The Conservative Treehouse and after I posted it there, I realized that it would make a great post on this blog.  It is a way to look at the effectiveness of lower tax rates.  The thought started with me realizing that a great point to make in favor of lower tax rates is that the states that picked up the most seats in the Electoral College based on the 2010 census were Texas and Florida.  When I wrote this comment, I checked my facts and figures and realized that the majority of seats gained were in states with no state individual income tax.  Then, I wondered about the remaining states who do have a state income tax and noticed that they were all right to work states.  Finally, I looked at the states that lost seats to see if they either had no state individual income tax or were a right to work state.  Thus, the following comment was created.

When liberals talk about higher tax rates, look at the growth in states that have no individual income tax. A fast simple fact to use is that Texas, Florida, Nevada, Washington gained 8 seats in the electoral college because of growth over the last 10 years and the don’t have state individual income tax. Over 60% of the changes in the electoral college were gains by states that have no state individual income tax.

As a side note, the other states that each gained a seat were Arizona, Georgia, South Carolina and Utah, which are all right to work states. Interestingly, the only right to work states that lost seats were Iowa and Louisiana.

While checking the the states and their state income tax, I learned that Texas has no corporate income tax, but does have a gross margins tax. No wonder I have been hearing about so many corporations leaving California and New York for Texas.

By the way, inquiring minds want to know, where’s BO?

With his desire to not raise taxes but to increase revenues, I began to wonder more about how things are with his family.  Then, I realized that I haven’t seen pictures of Bo lately.  With all the traveling instead of cutting expenses, I began to wonder what is going on with Bo.  Who is taking care of him with all the jet setting the Obamas are doing?  I tried to find a recent picture of Bo with the family.  The latest one I found was one of him participating in the Easter games.  Hmmm, is Bo no longer needed as a photo op?  I wonder about this for the simple reason that many say that you can see a lot about a man’s character by how they interact with their dogs.  Now that the dog isn’t needed as much, we don’t see the photos of him.  So, how does this tie into my comment about his promise in December not to raise taxes?  Well, the language has changed to say increase revenues.  Where do revenues for the government come from? Taxes or fees, which in a way are a form of taxation.  So, unless they have figured out a way to raise raise revenue without raising taxes.  Obama has once again gone back on his word.  Just like he did when he said he was going to save a dog from death row rather than getting a pure breed.  Sure, Teddy gave him this dog, but he could have still saved another dog’s life.  Instead, he made this breed of dog into a hot ticket for others for a while.  Until Bo wasn’t trotted out as often because he wasn’t needed.  Just like when Obama needed to reach an agreement in December, he agreed to extend the current tax rates for two years.  Now, just a few months later, when the lower tax rates are no longer needed, he is pushing to increase the tax rates as he wanted to do in December.  Once again, just like Bo.  He really didn’t want to get a dog but had to because of something he said.  Now, that Bo did what he needed to do, he is only brought out when needed for pictures.

Just like Bo, so are the current tax rates.

 

Obama, when Carter taxed the rich, it hurt the middle class, why are you trying to do it again?

Sounds like Obama is taking a page out of the tax plans that Carter had in the 1970s, the only problem is that they didn’t work then and they won’t work now.  I know I have written before about the impact that Carter’s tax plan to tax the rich by taxing them when they bought new yachts to raise more tax revenue.  Guess what, it didn’t work.  People would decide to stick with their current yacht or do without out.  So, who did it impact, the middle class.  Yep, all those companies that employed people to build the yachts could barely stay above water because no one was buying what they had made so they had to lay off workers.  You know the workers who typically were middle class taxpayers.  Got to say that Carter’s plan worked fantastically for improving the economy, if his plan had been how to increase unemployment.

Now, Obama has decided to go after the evil corporate jet owners and have them pay more taxes.  If it is corporations, I will remind you that they don’t pay taxes because this is a cost of doing business and as an expense has to be offset by revenue, which is what they receive from their customers for providing products or services.

I found this interesting post that is a great explanation of the problems with taxing the rich.

 

Updated to add first post about Carter and the yacht taxes.

Political thoughts of the day

This morning I woke up to hearing a comment being said about how great it is that Obama is willing to quote scripture and talk about Easter when it isn’t politically correct to do so.  I wanted to scream at them, what about last year when he refused to acknowledge the National Day of Prayer, and if I remember correctly cancelled it.  Don’t you find it interesting that he is more Christian than last year?  Hmm, I wonder what the difference can be?  Could it be that he has announce is once again in campaign mode since he just announced that he is running for a second term?

Enough about the pResident, because I actually have been thinking about Trump running for President lately.  But, before I talk about Trump, I will say that I really like Sarah Palin, but there is one little point about her that is making me feel like she won’t be a strong enough President. It is the fact that she picks venues to speak at and interviews to give that are safe.  Many times, she is preaching to the choir.  Maybe it is something that the choir needs to hear, but it is still a bit too safe for me.  I can see why she doesn’t want to deal with the LSM, but at the same time, if she can’t deal with them on her terms then how will she be seen as strong enough by other world leaders.  I just don’t feel like she can hold her own as the leader of the free world.  Until I see an interview that is not in a safe venue, I can’t support her as President.

I think she is in a great position to speak out and ensure that this country goes back to the roots of what the founding fathers wanted this country to be.  I once was told that while the Republic they founded was imperfect, it could be looked at as being imperfect for a reason.  I’m all about less government for the simple reason when we let the government do for us and for others, we lose a lot more than we realize.  When we expect the government to take care of the homeless, we lose a bit of the part of us that needs to care for others and want to help others.  I think that by letting the government do this, we have become too selfish to help others.  Speaking of this, and then I will return to my first comment, I think that the tax code should allow 100% deductions to charitable organizations no matter what income level you are at.  While people may give for the tax benefit at the same time they are thinking about doing for others, even if at a very small level.

I have been reading a lot of comments and blog posts that talk about Trump not even being a RINO but a Democrat in sheep’s clothing.  I can see how many can see this of him.  I am surprised that I find myself agreeing with him in what I am hearing from him. But, at the same time, I can see that he is probably more old school Democrat when there was a much thinner line separating the two parties when it comes to their platforms.  His donations to Democrats don’t bother me too much because it is due to two things.
The first is that he lives in very blue states, so it really is hard to support a Republican that can win.  The second is that at his level, he has to donate to those he thinks will win as a form of protection money.  I read that he had made a statement that there should be a 1 time tax on the extremely wealthy to help get us back on level ground economically.  I was disappointed to find out that he stated this in 1999.  (While I do find it interesting that he thought we needed to do that when Clinton was supposed to have been such a strong President when it came to the economy.  Actually, I realize that there was somewhat of a fake economy at the time due to dot coms and Y2K preparation that had increased salaries out of the normal range in some areas.)  But, without realizing the time frame of when he said it, I thought it made perfect sense for now.  I would want a protection to be made where it could only happen one time.  But, economically speaking, I do think in a way it would stimulate the economy if it put a lot of other long term tax deductions and spending cuts in the mix.  I say this because when the stock market crashed in 2008, most high end investors lost about 25% of the value of their investments.  I am sure that they would be willing to lose a portion of that in order to be put in the position to gain it back based on a better economy.  I know I usually say that taxes don’t stimulate the economy, but until we stop the spending and get rid of the debt, the economy is going to be standing still.

Finally, please put two and two together if you don’t realize this.  Corporations do not pay taxes.  Granted, they file long tax returns just like you do showing how much money they made, their deductions, and then the amount they have due and just like you this income is based on money that they have received for products and services rendered.  Here is the thing that I don’t think liberals realize.  The money they receive for products and services comes from consumers.  It may take a step or two before it gets to a individual consumer if they are a business to business service provider.  But, they figure in what they expect to pay for taxes into the cost of doing business and then put this in the cost that they charge the consumer.  So, you are basically paying a portion of their tax when you purchase any service or product from a corporation.  So, if you want to pay higher prices on your purchases than lets make sure that corporations pay more than their share of tax.  Or you can just send pay more when you buy items and tell the cashier to tell the corporation to apply this to their tax general ledger line items or you can pay the IRS more when you pay your taxes with a note that since you want to make sure corporations pay a higher tax, you have figured out this is the amount you would have paid the corporations for items if they had been charged at the higher rate.  Sounds kind of stupid doesn’t it.  Personally, I am wondering if the economy would thrive if corporations tax rates were greatly reduced.  I suspect it would because why state and local governments give tax breaks to corporations that move into their areas.

Tax Breaks for all?

I read this post on Michelle Malkin All or nothing: Stop the Obama tax increases

This is what Obama has said about giving the tax breaks to all.

Obama said giving the tax break to people earning more than $250,000 a year will cost the country $700 billion over the next 10 years.

This is what Michelle Malkin replies to that part of what he said.

All or nothing: Stop the Obama tax increases
By Michelle Malkin • November 8, 2010 09:53 AM

I’m going to keep repeating it until they stop saying it.

Republicans, you are not fighting for the extension of the “Bush tax cuts.”

You are fighting to STOP THE OBAMA TAX INCREASES.

All of them.

As I noted on Friday, when voters got the chance to soak the rich in Washington state, they overwhelmingly rejected onerous, punitive taxes to redistribute wealth from private job creators and future private job creators to government schools and government health care programs.

Over the weekend, Obama said he is willing to have a “serious conversation” about temporary tax relief for all.

Yeah, we know how Obama’s Kabuki “conversations” end (reminder: smitten Smurfs).

The feint:

President Obama is not ready to cave in to Republican demands that Bush-era tax cuts must be extended to wealthy Americans.

Obama told “60 Minutes” that he is ready to work with Republicans on the hotly debated issue, but he stopped short of saying he is ready to compromise with the GOP.

“We’re gonna have to have a serious conversation about it,” he said in his first interview since Democrats were massacred at the polls on Election Day.

The dispute centers around whether to extend the tax cuts to families earning less than $250,000, which both parties want, or giving the cuts to all Americans, which the GOP wants.

Raising taxes for middle class Americans, the President said, “is the last thing we want right now.”

The cuts are set to expire by the end of this year.

Obama said giving the tax break to people earning more than $250,000 a year will cost the country $700 billion over the next 10 years.

Obama isn’t “giving” anything. He’s taking. And taking. And taking.

Obama and the Democrat ruling majority took trillions from wealth-creating Americans in the name of an “emergency situation”

He tripled the deficit.

Sold hundreds of billions of dollars in U.S. debt to China.

And now he’s worried about fiscal responsibility?

Here is what I say about it. Umm, remember when Carter decided to raise taxes on luxury items. You know the items that the wealthy can afford and buy so as a way to tax the wealthy that can afford those items the democrats decided to put a special tax on those items. Sounds great doesn’t it? Let’s get some taxes on the wealthy by taxing items that only the can afford to pay. One word – Yachts. Yep, Carter and the Democratic controlled congress decided to tax Yachts. And guess what happened, people didn’t buy yachts so they wouldn’t have to pay the taxes. So, the country lost out on the tax revenue. But, what is even worse is that this luxury tax that was to hit that 1% that earns more money so they should pay more than their share to the country actually hit the middle class who made the yachts.

From hubpages

Even when taxes are carefully crafted to only include the real rich, there can be a nasty surprise for the middle class and the nation as happened with the Carter Administration’s tax on yachts. After whipping up the publics’ emotions with their usual class warfare rhetoric (remember Carter’s campaign against the so-called three martini lunch deduction?) President Carter and his Democrat controlled Congress enacted a stiff tax on the purchase of yachts. Given that only the super rich can afford a yacht, this should have been the ideal tax on the rich. But the Carter Administration overlooked two things. First, the rich, like everyone else, hates to waste money. Second, and more important, while only the rich buy yachts, it is middle class workers who build yachts. As a result of the tax, most rich people did one of two things in that they either made do with last year’s yacht or purchased a new one abroad where the tax did not apply. In doing so, the small American yacht industry was destroyed (one New Jersey town whose economy was totally dependent on yacht building faced economic disaster) and associated jobs and income tax revenues (unemployed people generally pay little or no income tax) were lost. This little episode only served to further weaken the nation’s economy which, as a result of the misguided Keynesian taxing and spending policies of the Nixon and Carter administrations, was struggling under the dual burden of double digit inflation AND double digit unemployment.

The yacht tax fiasco, which even if it had been successful, was never projected to generate significant revenue. It was instead, driven more by a desire to punish the rich for their success than to raise revenue. However, the yacht tax is a clear demonstration of the truth of former President Regan’s observation that Washington doesn’t solve our problems, it IS the problem.

This is what is going on right now. Companies are worried about what taxes they are going to have to pay so they are not trying to grow their businesses, instead they are just trying to exist. This is impacting their workforce, which is trickling down to the middle class workers who either have been laid off and are job searching or who are terrified they will be laid off. Everyone is in a holding pattern right now trying to figure out what to do as Congress keeps adding taxes without realizing that it isn’t about giving us our money it is about letting us keep our money, spend our money to help boost the economy! Besides, just remember that if they decide to only allow those who make under $250,000 to keep their tax breaks, when will rich become $200,000, and then $50,000.