2009 Tax Stinkers

Howard Gleckman has posted on The Ten Worst Tax Ideas of 2009. The TaxProf lists his favorites, here are mine:

8. Obama’s Middle-Class. This is a rerun from last year, but it is too good to leave out. The President thinks we will somehow reduce the deficit and fix the tax code without raising taxes by a dime for those poor souls making a quarter million dollars-a-year or less. Unfortunately, that's 95 percent of us. Can’t wait to see how he does it.

4. California. It claims to be the fifth largest economy in the world but can’t pass a serious budget, and can’t govern itself. It is the poster child for dysfunctional state governments and fiscal crises everywhere

3. The homebuyer credit. Congress started the year by giving away $8,000 in subsidies to "first-time" homebuyers, as many as 74,000 of whom, it turned out, never quite got around to buying a house. Then, it extended the boondoggle to current owners who buy up. Bottom line: People who were already going to buy will get billions of dollars in government subsides. But you gotta make those real estate agents happy

The problem with the Obama’s pledge not to raise taxes on the middle class is that it just doesn’t pass the smell test. You can’t go off the social agenda deep end without raises taxes to break the fall. Then there is the fact that if that stinker Cap & Trade passes it is the middle class who will be overwhelmingly impacted. Don’t even get me started on the VAT and the middle class. No offense but when I buy something I find out what it costs right up front. When my government is trying to sell me something, I want the cost right up front. Which brings us to…

California is living proof that the path to Hell is paved with good intentions. In the Land of Perpetual Good Deeds every good deed is now being punished. The citizens of the state tried to turn their state in to a social utopia and what they ended up with is a fiscal cesspool. You really can tax, spend and regulate yourself out of business and now that California has reached the end of the road they still aren’t willing to take the necessary actions that will allow the state to (slowly) rebuild. They deserve their lot.

The Homebuyer’s Credit speaks for itself. It was just another government program that “enticed” people to buy something that they were already planning to buy. Oh, and like every other government program it is rife with fraud. Double whammy.

Actually, taxes are an easy target for ridicule. Problem is, when you spend, you tax, so we’re far more likely to see more stinkers in the years to come.

h/t Ed Driscoll

What Happens When the Bill Comes Due?

Via Memeorandum:

After twenty-five years working in the banking industry I've seen it thousands of times-that moment when the bills are due and there isn't enough money to pay them. The vast majority of people are not deadbeats and the vast majority of people will pay their bills no matter what it takes. In the real world, when the bills come due people will adjust their lifestyle in order to meet their obligations.

The real world does not exist within the halls of Congress. That's because they are playing the game with other people's money. When the bills come due in Washington they simply spend more of your money. Unfortunately, you and I aren't giving the kids in Washington enough money to keep them in the lifestyle to which they have become accustomed to so it is time to pony up.

According to the New York Times, the VAT is back on the table:

The favored route of economists is known as a value-added tax, which is a tax on goods and services that is collected at every step along the production chain, from raw material to a consumer’s shopping bag. Similar to a sales tax, it generally results in consumers paying more for the things they buy. The revenues could be used to pay for health care or other social programs, or just to pay down existing debt.

Like universal health care, every other industrialized country in the world already has a value-added tax (as do about 100 emerging countries). And also like universal health care, this once-taboo policy option has recently been invoked, at times begrudgingly, by many prominent Washingtonians, including the House speaker, Nancy Pelosi; John Podesta, who was co-chairman of President Obama’s transition team; and two former Federal Reserve chairmen, Alan Greenspan and Paul A. Volcker

...a tax on goods and services that is collected at every step along the production chain, from raw material to a consumer’s shopping bag. In simply terms, the price of everything you buy for your family goes up and up and up until finally, it reaches you, and you then pony up your "fair share" for spineless politicians who don't have the balls to play by the same rules imposed on the rest of us. So much for Obama's promise not to raise taxes on the middle class.

Our politicians don't think that we will stand for having services scaled back in order to pay down the deficit. But in our personal lives, we cut back on things that we consider 'essential' all the time. We brown bag it to lunch, eat dinner at home, drive our car until the wheels fall off.
And maybe Washington should clean up its own house before it asks us for more:

The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available. (emphasis added)

When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000. (emphasis added)

I don't think that it is unreasonable to tell our representatives that they can forget about getting one more penny from us until they start spending the money we've already given them more responsibly.

So Much For Not Increasing Taxes On The Middle Class

From Bloomberg:

John Podesta compared the nation’s current budget crisis to the situation former
President Bill Clinton faced in 1993 and said some form of a value-added tax is “more plausible today than it ever has been.”

“There’s going to have to be revenue in this budget,” said Podesta,
Clinton’s former chief of staff and co-chairman of President Barack
Obama’s transition team, said in an interview on Bloomberg Television’s
“Political Capital with Al Hunt,” airing today.

A so-called consumption tax would “create a balance” with European and
Japanese economies and “could potentially have a substantial effect on
competitiveness,” said Podesta. Value- added taxes in Europe and Japan encourage
savings by taxing consumption.

So the VAT (value added tax) is coming and it is being championed by John Podesta. Value added taxes, or consumption taxes are regressive. A little over four years ago Podesta said this on taxes:

The theoretical possibility that higher and progressive tax rates can impede
human capital formation has been used to justify a switch away from a
progressive tax regime to some form of a flat tax. However, we believe that a fair tax code ought to be progressive, and therefore the goal ought to
be to keep labor tax rates low (while raising sufficient revenue) within a
progressive regime. By providing capital income with a tax preference, we are
necessarily shifting the tax burden onto income from work and hence the return
to skill accumulation.

Only a liberal could believe that what a faltering economy needs is a progressive income tax coupled with a regressive consumption tax. Taxing wealth, Podesta believes that capital gains should be taxed at the same rate as income, discourages investment. Taxing goods makes lower and middle class families to poor to save. It is a lose/lose proposition.

Podesta talks about "fairness" but while a value added tax may be fair, everyone gets screwed, bringing it in now is economic suicide. Employment is at 9.8%, American families are struggling, and this administration thinks that this is time to add 15% to the cost of groceries? Or a gallon of gas? Don't forget, this is even before Cap & Trade kicks in and prices skyrocket thanks to that government debacle.

What happened to Obama's pledge that he wouldn't raise taxes on 95% percent of Americans and why aren't the idiots who believed him speaking out? In the real world, families are cutting back and doing without. The administration needs to exist by the same rules as the rest of us. If it doesn't have the money to implement a pet project than the project doesn't get implemented.

It is time that the administration figure out that the American taxpayer is not the pot of gold at the end of the rainbow. We are tapped out.