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Appeasing RINOs, Tax Demagoguery, and the Fiscal Cliff

Written on Sunday, December 30, 2012 by

fc

 

In my last pre-election column, Vote Romney/Ryan: a final plea for principle and realism, I urged Patriots to vote Romney, but evidently I was not heeded.  In my post-election column, A Democrat’s Thanksgiving Satire, I put myself in the shoes of a Democrat gloating  over all those who helped make November a leftist triumph.

Among other things, both talked about the imbecility of those who claimed that they would stay at home or vote Libertarian to “send a message” to the Republicans.  But as I asked, what message would actually be received?  I also gave the likely answer: leftism wins elections, so let’s move further left.  A subset of this is: since a greedy tax-gouger like Obama won the Presidency, evidently voters are OK with still more “taxes on the rich”.  Also, as noted, Romney told America: if you want free stuff, then vote for the other guys.  51% of American voters said: OK.

And of course, we somehow have John Boehner as a Speaker, although his propensity to appease has given him the nickname of Neville (as in Chamberlain).  So should there have been any doubt that the “message” he has received is, Obamacare is the “law of the land”, and that they should wave the white flag on tax increases.

Please remember all this next time when a Pharisee or Ron Paul supporter prattles about “sending a message”.  It’s a big con.

The “rich” already pay the most tax!

When it comes to taxes, the rich already pay the most taxes, and I’ve documented this in various columns.  Recent support comes from Kiplingers, a popular non-partisan financial magazine, in an article Where Do You Rank as a Taxpayer?, December 10, 2012.  You should see the chart for yourself, but in summary: the top 1% (>$369,691) pay 37% of all taxes while earning only 19% of all income.  Note that this income threshold, which includes many small business owners, is a lot less than $1 million and $1 billion, despite Obama’s cheap, envy-mongering demagoguery against “millionaires and billionaires”. The top 50% (>$34,338) pay 98% of taxes but earn only 88% of income. The bottom 50% earn 12% but pay only 2%.  Yet a lot of them would have voted for Obama, and agree with him that the “rich” don’t pay enough!

The Republican Party is not known as The Stupid Party for nothing. So few of them have been articulate about why conservatism is better for Americans in general, whether rich or poor, black or white.  These tax figures should be explained in every media interview, but how often do we hear Republicans articulate this?  See Bill Whittle describe how it should be done in this great speech:

Insidious leftist taxes on the poor

Now this considers only income tax.  There are indeed insidious hidden taxes that hurt the poor disproportionately, as Thomas Sowell points out in Taxing the Poor.  One is inflation, which may as well be a tax since it drops the purchasing power of one’s money just as surely as overt taxation.  Poor people are less able to buy inflation-resisting assets like gold, stocks, or real estate.   The other horrible tax on the poor is loss of benefits—food stamps, housing subsidies, etc.—as they earn more income:

“Someone who is trying to climb out of poverty by working their way up can easily reach a point where a $10,000 increase in pay can cost them $15,000 in lost benefits that they no longer qualify for. That amounts to a marginal tax rate of 150 percent– far more than millionaires pay.”

That means they lose money by working.  This is an insidious poverty trap—a perverse disincentive to work.  But Dems are happy—welfare recipients are reliable Dem voters.   This is just another example of The Left vs. the Poor.  But if the Republicans don’t articulate this—that the Dems want to keep the poor in poverty to keep their votes—they will continue to be slandered as “caring only about the rich”.

Tax rates vs. tax revenues

Also, tax hikes never raise as much revenue as hoped.  The “rich” get tired of being fleeced by the greedy government, as documented in Taxpayers and Employers Shrug. An example that has come to light after I wrote that is the great French actor Gérard Depardieu emigrating from France to escape the new greedy socialist government and their 75% tax rate on their “rich”.

Obama himself knows this only too well.  Once http://www.weeklystandard.com/blogs/obama-vs-obama_576524.html he said, “the last thing you want to do is raise taxes in the middle of a recession because that would just suck up – take more demand out of the economy and put business further in a hole.”

Also, during a debate with Hillary Clinton in the Democratic primaries, liberal moderator Charlie Gibson informed Obama that when capital gains tax rates were dropped, the revenue from this tax went up.  But Obama insisted that tax rates should be raised for “fairness”.  This shows he doesn’t care about revenue at all, but his leftist ideology.

 

Obama’s current intransigence is not about stopping the Fiscal Cliff.  On the contrary, he is happy for the economy to fall off as long as the Republicans can be blamed (his own vacations won’t be jeopardized, even though they cost American taxpayers 24 times more than the British royal Family costs UK’s taxpayers).  Furthermore, he is deliberately trying to fracture the Republican opposition, as Charles Krauthammer points out.

It’s the spending, stupid!

While the tax information above is important, the great economist Milton Friedman pointed out that the real measure of danger-from-government is spending.  This needs to be paid for!  If current taxes don’t suffice, then the spending will be paid for by inflation, or by kicking the can down the road: leaving a huge debt for the next generation to pay.  Obama of course has presided over record debt, and shows not the slightest inclination to rein in spending.  Yet this is one power that Boehner and the House have: Article 1, Section 7 of the U.S. Constitution, generally known as the “origination clause,” states: “All Bills for raising Revenue shall originate in the House of Representatives.”  But they let Obama walk all over them.

The following should explain better than anything how unserious our political leaders are: US Budget for Dummies:

  • U.S. Tax revenue: $2,170,000,000,000
  • Fed budget: $3,820,000,000,000
  • New debt: $ 1,650,000,000,000
  • National debt: $14,271,000,000,000
  • Recent budget cuts: $ 38,500,000,000Let’s now remove 8 zeros and pretend it’s a household budget:
    • Annual family income: $21,700
    • Money the family spent: $38,200
    • New debt on the credit card: $16,500
    • Outstanding balance on the credit card: $142,710
    • Total budget cuts so far: $38.50

Yet Obama wants to raise the debt ceiling yet again. This is like that family going to the bank and demanding an increase in their credit limit, while presenting no plan to rein in its out-of-control spending.

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