President Obama and Democrats are going to get their tax increases. Does anyone doubt that? They hold all the cards in this game.
Will those increases work as they anticipate? Not a chance, but Democrats seem ever hopeful in their fantasies of a big government powered utopia. Yet Democrats stubbornly believe that abolishing Bush-era cuts and restoring the top Clinton-era rate of 39.6% will fix the nation’s many ills, returning us to Clinton-era prosperity.
There are several reasons why those tax hikes, at best, will do no good at all. The most obvious reason can be spelled out by asking the simple question, what is 39.6% of nothing?
If companies are dodging taxes, as Democrats claim, through loopholes or by moving overseas, how will tax hikes fix that problem? In actuality, tax hikes will make those problems worse, not better. As Bloomberg noted yesterday…
Google Inc. (GOOG) avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenues into a Bermuda shell company, almost double the total from three years before, filings show.
By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011.
Google is not alone in this, but they are worth noting because of the ardent support given by Google founders to the Obama Administration. It shows a willingness by the administration to look the other way where friends and supporters are concerned while attacking opponents. It shows, in other words, an administration which is inconsistent at best.
No surprise for Obama critics.
December 11th, 2012 at 5:13 am
Wonder if Obama is forcing Google to pay taxes on that money in Bermuda, much like they have gone after the thousands who have left the USA for Singapore and other tax havens? Oh, but their execs bundled money for Obama’s reelection…
December 11th, 2012 at 8:41 am
For an idiot like Obama, 39.6% of nothing equals 57 states.
December 11th, 2012 at 2:05 pm
If the 39.6% equates to nothing, then why all the ado of raising taxes? Your argument defeats itself.
If it’s fair to go after Google because they are as you say, ardent supporters of Obama, isn’t it just as fair or reasonable to go after corporations that are ardent GOP funders and supporters? Shouldn’t we take a closer look at Romney’s tax returns (oh, wait, he hid them from us didn’t he?) and end such practices for him and his like as well?
Are these the same “loopholes” that Romney was going to close, would acquire more revenue from the wealthy and be good for the economy without “taxing” them to acquire that same revenue which of course would be bad for the economy(or, something as equally stupid)? So, we’re to believe that if the corporate big dogs write a check because they’ve been “taxed”, that will crash the economy but if they write that same check because we’ve “closed loopholes” then that will be economically sound? But of course these “loopholes” which corporations and the Romney like people seem content with are kept secret while that 39.6% “tax” which you say will cost them nothing sends their blood to a boiling rage?
It’s as if you’re trying to validate Paul Krugman’s take that GOP’s plan is “full of magic asterisks. It’s not a real budget. It’s a fake document”.
December 11th, 2012 at 3:01 pm
“If the 39.6% equates to nothing, then why all the ado of raising taxes? Your argument defeats itself.”
Whats wrong with you ?
How is the argument self defeated when the argument is…”taxing the top 2 % wont help” ?
Must one slip the word “practically” in between “to” and “nothing” for you to get it ?
“Shouldn’t we take a closer look at Romney’s tax returns (oh, wait, he hid them from us didn’t he?)’
Liar, he showed 3 years.
How would you feel if I demanded you show me your whole lifes returns before I hired you ?
If I know certain loopholes have been closed I have a choice to avoid them, adjust my functions.
Theres no such choice in a mandatory grab.
Wise up
December 11th, 2012 at 3:06 pm
Ron,
The point is, that Republicans are asking for tax reform, which would be far more effective than simply raising taxes. This is exactly what the president’s own debt commission recommended! Tax reform can bring in more revenues by growing the economy, which is the ONLY way out of this fiscal mess.
December 11th, 2012 at 3:35 pm
“The point is, that Republicans are asking for tax reform, which would be far more effective than simply raising taxes.”
Thank you.
Its easy to forget the basics in this mess.
December 11th, 2012 at 3:54 pm
David, as I’ve previously explained in detail, neither history nor logic is on your side.
But once again, while Republicans are asking for tax reform, their specifics aren’t there so there’s no way of knowing how effective it would be. Their Potemkin village plan defies math, history, and common sense. It really is no plan at all. It’s an imposter of a plan that is mathematically flawed. It says we’ll raise $800 billion in revenue by closing loopholes but can’t name a single one while calling for spending cuts that are $500 billion short with the rest targeting Medicare and Social Security.
The GOP plan is a total scam or as the White House put it when Boehner presented it, “The Republican letter released today does not meet the test of balance”.
December 11th, 2012 at 4:42 pm
Liberal Left Wingers do not use the words “effective” or “reform”.
December 11th, 2012 at 6:32 pm
If a loophole is closed, simply instruct the accountant to find another one. If he (or she) cannot effectively do that, it is probably time for another accountant.
If closing loopholes extracts the same money from people as a tax increase they would be more upset.
When Romney extolled closing loophole as an alternative to a tax hike it should have come with a wink. His contemporaries certainly got it.
Also, the battle over “which” loopholes should be closed would have been a long one, even if it merely forced a minor amount of financial maneuvering.
December 11th, 2012 at 6:45 pm
Law of unintended consequences. Raise taxes, rich people move:
http://www.telegraph.co.uk/news/worldnews/europe/france/9738178/Frances-Jean-Marc-Ayrault-slams-flight-of-the-greedy-rich.html
One of the funny things about ignorant liberals, versed so well in Voltaire and Pavlov, is that they never got past single-variable equations.
December 11th, 2012 at 6:50 pm
Buzz,
Closing loopholes has many great consequences. One of the biggest is that is SIMPLIFIES the tax system, thus making it much harder to cheat and much cheaper to pay taxes since you don’t have to pay exorbitant accounting fees to get your taxes done.
The other advantage is that it reduces the efforts people put into tax avoidance. If you reduce the rate and simplify, people will pay their taxes and not try as these complicated tricks you see today.
Finally, lowering taxes helps new companies to start. A simpler, less complicated system makes if vastly easier for companies to start, and thus to create jobs.
December 11th, 2012 at 7:06 pm
Luckily, paying the accountant is a “business” expense.
The middle class generally only takes advantage of a few “loopholes” (which are generally only a small number of limited exemptions), but a person of means can take advantage of the more lucrative loopholes by having the flexibility to “move” money around.
This is nothing new, remember “income averaging”? That was simply a way of evading taxes, but it certainly wasn’t available to the working stiff, but anyone in business knew they could effectively lower their tax burden by either accelerating or delaying their “income”.
If closing loopholes “cost” the same as a tax hike don’t you think people would be more upset. They are not, simply because they know they can circumvent those changes. I don’t think you are proposing we close all loopholes, are you? If not, you are simply moving the target, which merely demands some “adjustments”.
December 11th, 2012 at 7:11 pm
Buzz,
You cannot use loopholes that do not exist. “Circumventing” where you cannot is called fraud. And companies are less likely to move capital offshore if tax rates are lower. This is Business 101 my friend.
And tax hikes REDUCE economic activity and can thus result in lower tax revenues. Tax reform increases economic activity and thus expands the tax base by creating new jobs. This is how we fix the problem ultimately, grow the economy so that federal revenues rise and the debt shrinks as a percentage of GDP.
As President Kennedy said when calling for tax cuts, “a rising tide lifts all boats.”
December 11th, 2012 at 8:09 pm
Buzz, if you parasites spent 1/4 th the time figuring out how to cut costs as you do on ways to tax people we’d all be… a lot happier.
December 11th, 2012 at 8:23 pm
Naw Micky, that would require personal responsibility. Liberals would never be happy in such a world.
December 11th, 2012 at 8:49 pm
Buzz…
loopholes give the business owner better flexibility.
You said that.
How is the government having more flexibility to take and use our money better ?
December 12th, 2012 at 8:31 am
Flexibility = not paying taxes.
Loopholes are disproportionally available to the rich, so in short, raising the tax rate results in the wealthy paying more, closing loopholes allows those with resources a “tool” to simply not pay.
Very simply, if loopholes “hurt” people would be more upset, but it is merely a minor obstacle to people of means.
December 13th, 2012 at 7:29 am
Speaking of that percentage of nothing calculation, Boehner is now willing to raise the taxes on the top wealthy even more than Obama wants as long as no taxes are raised on the top wealthy.
And the GOP really expects to be taken seriously?