Radioactive Communist Zombies

The Deficit Lie

Veronique de Rugy points outin The Corner that the deficit is going up, predicted to be larger next year by $150 billion for a total of $1.4 trillion (That's TRILLION).  As Ms. de Rugy points out (links original):

This is bad news for the American people, not only because more deficit is bad and unemployment remains high (even Krugman is down), but also because the administration and the Deficit Commission are already setting the stage for increased taxes in the future.

The narrative goes like this: The deficit is getting worse because of a lack in tax revenue, and while we don't have recommendations about how to cut spending, we can tell you right now that we need more taxes.

But tax revenues are not the problem, spending is the problem.  Yes, tax revenues are down a little, but spending is way up.  As Ms. de Rugy states (pdf file):

In 2009, the government added [to the deficit] an additional $592 billion: $245 billion for the financial bailout and $347 billion for stimulus spending.

That increased the deficit 209%

Now the solution that is going to come out of Washington will not be to cut spending.  Spending is like a drug to politicians.  The more they spend, the more they want to spend.  No, the "solution" will be higher and/or new taxes.  This will, of course, according to economists in the Obama Administration, shrink the economy further.

Which will cause the tax revenues to decrease and cause the deficit to increase which will cause there to be calls for more or higher taxes.  Until we're Greece.

If You Like the IRS, You'll Love Obamacare

Thanks to Obamacare (a/k/a the Affordable Care Act a/k/a three lies in one) the IRS will have to grow, become more intrusive, and spend more taxpayer dollars.  And that's according to an IRS official:

Though the IRS's main mission is to collect taxes, it has been given a key role administering health insurance premium subsidies, tax credits for small businesses, assessments on employers and the mandate that beginning in 2014 everyone obtain insurance.

"I have no doubt the IRS is capable of administering social programs, including health care," [Nina E.] Olson said. "But Congress must provide sufficient funding and the IRS itself must recognize that the skills and training required to administer social benefit programs are very different from the skills and training that employees of an enforcement agency typically possess."

I, for one, welcome our new health care overlords . . . the IRS.  (Yes, that's a joke.)

So, you think insurance forms are bad now, wait until the IRS starts making them like 1040s.  Long form.

So now the IRS will be in your life whenever you need health care, not just April 15th.  How's that hope and change working for you? 

Your Taxes Will be Going Up

Remember when then-candidate Obama promised that if you earn less than $250,000 a year your taxes won't go up?  Well, unless Congress and now-President Obama act (which is looking less and less likely), if you pay federal income taxes (I know, about 40% of you don't), your taxes will be going up.

Hows that?  SmartMoney writer Bill Bischoff reports:

The current six rate brackets of 10%, 15%, 25%, 28%, 33% and 35% will be replaced by five new brackets with the higher rates of 15%, 28%, 31%, 36% and 39.6%.

So even the lowest tax bracket is going up by 50% to its Clintonion level.  And the 15% bracket is almost doubling.  This is truly "soak the poor" courtesy of cash-hungry Spendocrats

In addition, capital gains taxes are going up for everyone.

So, what Obama lying?  Naw, couldn't be, could it.

UPDATE: I should have said "Hat tip: Instapundit" but it was early and I was tired.

Welcome to the World of Obamacare and Its Taxes

Today a new federal tax on tanning services kicked in to help pay for Obamacare.  And, like everything to do with Obamacare, it's a complicated nightmare.  As the Wall Street Journal reports (sub required):

It's a universal truth in Washington: There's no such thing as a simple tax. Free tans at video-rental stores might be taxable, but tanning services offered by health clubs mostly aren't, thanks to a late exemption. Ultraviolet tans are taxed. Spray tans aren't. Tanning salons are fretting over how to calculate unlimited memberships that combine taxed and non-taxed tans. Customers, meanwhile, have been racing to cram in tanning sessions to avoid the levy.

The 10% tax was ran through the IRS sausage grinder and came out with lots of interesting rules:

In June, the Internal Revenue Service released regulations spelling out how the tan tax will work, sending a shudder through parts of the industry.

Among the new details: "qualified physical fitness facilities" that include access to tanning beds as part of their membership fee won't be subject to the tax.

That means customers at Sun Tan City in Owensboro, Ky., will pay 10% more for a dose of ultraviolet rays. But if they go to Anytime Fitness 100 yards away, and tan inside one of its two beds, they'll escape.

"My jaw dropped," said Rick Kueber, founder and chief executive of Sun Tan City, a 124-outlet chain based in Elizabethtown, Ky. Then he got to thinking. "If I had six treadmills in each of my stores, can I call myself a health club?"

Apparently not, there are IRS rules against that.

So, what can we learn from this?  Easy: Obamacare is going to be a complicated, expensive, and cause a lot of pain for a lot of people.  I mean, how hard is to to tax tanning services?  Think about how the IRS is going to muck up getting your PSA tested.

Welcome to the wonderful world of Obamacare.

U.S. Corporate Tax About to be The Highest.

Not only does the U.S. lead the world in the having one of the worst tax systems out there, but soon it's corporate tax may be the world's highest.

Right now, at 39.2%, the U.S. is only beaten by Japan's 40%.  But Japan is, according to some, about to cut their corporate tax rate to try to help their economy:

Within the pages of the Democratic Party of Japan's newly released economic "growth strategy" report, one section outlined a plan to slash corporate tax rates by up to 15 percent.

The problem is, capital is mobile.  And it will go where there is the least resistance to making more money.  If the U.S. hopes to compete in the world, it needs a corporate tax rate that is competitive with our competition.  Perhaps even a very low or zero corporate tax rate.

But, of course, the Democrats would never cut taxes for evil corporations.  Even to grow the economy.

Middle Class Taxes Are Going Up

Remember Obama's middle class tax cuts (about 40 seconds into the video) from the campaign?  Heck, how about him not raising middle class taxes?

Well, forget all that.  According to one Democrat, middle class taxes are going up:

A top House Democrat said Tuesday that tax increases will eventually be necessary to address the nation's mounting debt, raising a difficult election-year issue as Democrats fight retain control of Congress.

In the near term, House Majority Leader Steny Hoyer raised the possibility that Congress will only temporarily extend middle-class tax cuts set to expire at the end of the year. He pointedly suggested that making them permanent would be too costly.

And if you don't extend tax cuts, taxes will go up!

"Raising revenue is part of the deficit solution, too," Hoyer said.

Yes, it can be.  But how about stop spending so much money?

Spending by the Democrats has skyrocketed since 2006, when you put them back in power because you were mad the Republicans were spending too much.

All taxes will have to go up to pay for the largess of the Democrats, capital gains taxes, income taxes and payroll taxes.  At least for those who pay taxes.  And that's most likely . . . you.

The Coming Double-Dip

Just when you thought the economy might be recovering (ignoring the recent jobs data), Art Laffer comes along to burst your bubble.  Writing in today's Wall Street Journal(sub possibly required) Dr. Laffer tells that we're in for a gloomy future:

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

And all those tax hikes are going to hammer the economy come 2011:

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be . . . The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet. 

In other words, 2011 is going to be the start of the double-dip recession.

Of course, it doesn't have to be.  Government could not raise taxes and try spending less.  Like in New Jersey, for instance.  But you people decided you wanted Democrats in charge and now you are getting what Democrats always bring when in power: higher taxes, less growth, more regulations, less growth, less freedom and less growth.

How's that hope and change working out for you? 

Convoluted Candy Tax

In their efforts to close a budget gap (caused by the last unsustainable budget they passed) the Washington State Legislature (controlled by, of course, Democrats) decided to place a tax on candy.  But the problem comes: what exactly is candy?  Unlike you and me (I know it when I see it) the government has to come up with a definition.  The Washington Policy Blog has the definition the State of Washington will use:

"'Candy' means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. 'Candy' does not include any preparation containing flour and does not require refrigeration."

And to further complicate things, there is a table of which candy has to have the tax paid on it and which does not (huge Excel file).  The file lists 3,267 different candies and whether they are taxable or "exempt."  And for some reason, licorice is exempt.

So some bureaucrat in Olympia had to sit down and decide for each type of candy sold if it was taxable or exempt.  Wonder if the tax will pay the expense of administering it?

Oh, and they also put a tax on bottle water.  Wonder what the definition of that is.

More Nasty Suprises in Obamacare

The more we learn about the monstrosity of Obamacare, the worse it gets.  We already talked about middle class tax hikes and mandates on business.

Now Don Brunell of the Association of Washington Business lets us in on a few more features of this bill.  And they aren't good.

First of all, there is now a 3.8% federal tax on the proceeds of selling your house.  Don't know if that's profit or all of the proceeds (meaning, if your house doesn't appreciate 3.8%, you're in the hole).

And another provision of Obamacare requires businesses to send 1099 forms to any other business they do $600 worth of business in a year.   This is especially onerous because that means businesses will have to fill out hundreds if not thousands of 1099s for businesses such as the folks they buy their office supplies from.  Credit cards are going to be a nightmare because you'd have to keep track of each and every business and ensure you send a 1099 to those you happen to exceed $600 of purchases from.  Like gas stations where company vehicles might be refilled could easily exceed $600 a year (a tank of diesel for a semi truck runs as much as a couple hundred dollars).  As Brunell says, this is a costly new burden on employers just as they are trying to recover from the Great Recession.

Who's idea was it to pass this abomination?  Oh yeah, the Democrats.  Hope you all remember that come election day.

Eliminate the Corporation Tax

I was going to write about the kids sent home from school for wearing American flag shirts on Cinco de Mayo.  But Drudge and Instapundit are all over that.

So we'll talk taxes, instead.

Michael Boskin writing in today's Wall Street Journal (sub required) says we need to eliminate the tax on corporations:

[L]ittle attention is being paid to fixing the most growth-inhibiting, anticompetitive tax of all: the corporate income tax. Reducing or eliminating the corporate tax would curtail numerous wasteful tax distortions, boost growth in both the short and long run, increase America's global competitiveness, and raise future wages.

The problem is, according to Boskin, is capital is mobile, and it goes where it's most productive.  But with the U.S. tax code, that's not America:

[T]axes tend to be borne by the least mobile factor of production. Capital is much more mobile globally than labor, and the part of the corporate tax that is well above that of our lowest tax competitors will eventually be borne by workers. In a growing economy, the lower investment slows productivity growth and future wages.

Meaning corporations don't pay taxes, people pay taxes in the form of higher prices and lower wages.

Reducing or eliminating the negative effects of the corporate tax on investment would increase real GDP and future wages significantly. Junking both the corporate and personal income taxes and replacing them with a broad revenue-neutral consumption tax would produce even larger gains. Nobel Laureate Robert Lucas concluded that implementing such reforms would deliver great benefits at little cost, making it "the largest genuinely true free lunch I have seen."

Our bollixed up tax systemis a great drain on our economy.  Yes, the government needs taxes to fund the necessary Constitutional functions of government.  But it doesn't need to social engineer with the tax code.  And not punish productivity.

But rather the opposite is happening as Obama talks about raising taxes and Obamacare increases costs for corporations.  Which will just be further costs borne by workers.