The Incredible Regulatory Burden of the Obama Presidency

Posted by Tina

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Every enterprise expects to have a certain amount of paperwork but keeping the cost of such work to a minimum is smart business. When it reaches the point where it is a drag on profitability something must be done to streamline operations and efficiency. When government imposes too much regulation this burden, red tape, acts as a discouragement to business because it cannot be streamlined for efficiency. It is also an added expense for taxpayers who must pay government workers to process the paperwork. It is also costly to consumers who are charged higher prices on products. Everyone loses!

The threat of higher taxes and even more regulation is looming as a new year approaches. Unless Congress acts taxes will go up for everyone and for business next year. Investment taxes will go up putting even more strain on job creators. Is it any wonder business is reluctant to expand or hire? They have no idea what new regulations and taxes will cost. They don’t want to hire and train people only to be forced to let them go a few months later. This uncertainty means that Americans without jobs have little hope of finding a job in the near future.

Consider the plight of this American the next time someone says that Barack Obama deserves another term as president:

Since abruptly losing her $312 weekly unemployment check in June, Laurie Cullinan has depleted her savings, sought food from the Salvation Army and lit candles to save electricity.

If she can’t find a job this month, the Royal Oak, Mich., resident worries she’ll be evicted from her apartment, an unthinkable prospect for the 52-year-old, who enjoyed a solidly middle-class lifestyle until she lost her office-manager job two years ago.

“What am I going to do if I’m homeless?” says Cullinan, who collected unemployment for 1 years. “My mind won’t let me comprehend that.”

Cullinan is among about 1 million long-term unemployed Americans whose jobless benefits are phasing out this year as the federal government reels in Great Recession lifelines that provided unemployment checks for as long as 99 weeks in many states. By year’s end, another 2 million will see their checks cut off sooner than Cullinan’s were, because extended unemployment benefits will end beyond the standard 26 weeks that states pay for.

This woman is suffering so that Obama and his socialist buddies can play a Marxist game called spread the wealth. So far that spreading game isn’t spreading toward the millions of Americans that find themselves in Laurie Cullinan’s position.

This administration is a failure…and a disgrace.

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15 Responses to The Incredible Regulatory Burden of the Obama Presidency

  1. Jim says:

    Nice try, but wrong. Laurie Cullinan is suffering because so many jobs have been outsourced, many to China. People like Romney are the ones who have profited from outsourcing, while people like Laurie have been hurt. The “job creators” should only get a tax break, when they actually create jobs.
    The solution is exactly the opposite of what Romney proposes, we need to increase taxes on the upper income earners, keep taxes on the middle class low and as I’ve said before, impose tariffs on imported products. This will bring jobs back to the USA and help people like Laurie get back to work.

  2. Tina says:

    Laurie Cullin is not out of a job because of outsourcing. Her job was lost because of this stagnant and dying economy. But many jobs have been lost to outsourcing and for many reasons. American companies face an unfair advantage in the global economy. Their taxes are the highest in the world and their employment costs are higher. But these aren’t the only reasons. We have lost jobs to other countries where the people have sought education and training and have a strong work ethic. Too many Americans are lacking in job skills and education. People in India and China welcome the opportunity to earn and, having come from lands with little opportunity, have the incentive to produce. We have also lost jobs in this country because of the government failure to pass trade agreements. This means that emerging countries are buying their goods from Canada, India, China…even Brazil instead of America.

    Romney did not outsource jobs Jim. Romney was involved with companies that ALSO do business in other countries. Romney’s record of success saving businesses that were already failing is 85%. He helped those businesses to save and create jobs in America as the companies survived and grew. He also saved the Salt Lake Olympics when it was economically in the dumper and badly managed. His leadership gave the games $100 million in surplus funds.

    Please explain to me how taking money in the form of taxes from people who have extra money will help to create jobs in the private sector. Tell me please how taxing the small business owner, the people responsible for most jobs in America, will help to create jobs.

    I want the full explanation…how will raising taxes on job creators help them create jobs?

    This country has had and continues to impose tariffs on goods imported to America from countries with a distinct advantage. New tariffs were recently imposed on China:

    http://www.renewableenergyworld.com/rea/news/article/2012/07/u-s-imposes-dumping-tariffs-on-chinese-vietnamese-wind-towers

    The U.S. Commerce Department set tariffs as high as 73 percent on imports of wind towers from China and as much as 60 percent on similar goods from Vietnam, adding further restrictions on clean-energy imports from Asia.

    Trade agreements have always included tariffs and quite often they hurt American consumers:

    http://www.fff.org/freedom/1094d.asp

    The U.S. also has import quotas on beef from Australia and Argentina, on butter from Europe, and on cotton from Egypt. No matter how tight the quotas, some farm groups are never satisfied: the Clinton administration recently proposed imposing tariffs of over 100 percent on peanut butter imports from Canada as a means to protect high American peanut prices.

    Congress is imposing over 8,000 different taxes on imports via the tariff code. While the average American tariff is now around five percent, some tariffs are in the stratosphere. Low-priced watches are hit with an average tariff of 151.2 percent. Tobacco stems must pay a 458.3 percent tariff. Tariffs on some low-priced shoe imports are 67 percent.

    The U.S. Tariff Code looks like a variable value-added tax that was concocted in a lunatic asylum. The tariff on brooms is 42.3 percent, thereby safeguarding dust and dirt; the tariff on flashlights is 25 percent, thereby encouraging people to break their noses in the dark; the tariff on cheap scissors is 23.6 percent, thereby encouraging taxpayers to shred their IRS tax forms with their bare hands instead of cutting them neatly into little squares.

    One of the favorite examples of the new protectionists of an industry that needs more protection is the textile industry. Textiles have already been heavily protected for over 200 years, and are today our oldest infant industry. The U.S. imposes import quotas on over three thousand different textile and apparel products, including tampons, typing ribbons, tarps, twine, towels, tapestries, and ties. Mexico in 1989 was allowed to ship the U.S. only 35,292 bras per year not even enough to cup the neighboring city of Brownsville, Texas. U.S. textile trade policy is based on the sage insight that clothes are among the most dangerous objects that a nation can import thus justifying stricter import controls on socks, nightgowns, and hankies than on pistols, rifles, and deadly chemicals.

    On the other hand, eliminating tariffs between our country, Canada and Mexico has had a positive effect in all three countries:

    http://www.ustr.gov/about-us/press-office/press-releases/archives/2002/january/nafta-partners-speed-elimination-tariffs-

    Canada and Mexico are the United States largest trading partners. With the 2002 reductions, Mexicos average tariff on U.S. goods will fall from the pre-NAFTA average of 10 percent to under one-half of one percent. Each day the NAFTA parties conduct nearly $1.8 billion in trilateral trade. Zoellick noted that NAFTA has greatly benefitted the American economy:
    The longest period of economic growth in U.S. history came in the aftermath of NAFTA. Since NAFTAs implementation, U.S. exports to Mexico and Canada now support 2.9 million American jobs 900,000 more than in 1993. Such jobs pay wages that are 13 to 18 percent higher than the average American wage.When the Congress approved NAFTA in 1993, trade between the United States and Mexico totaled $81 billion. In 2000, U.S.- Mexican trade reached $247 billion nearly half a million dollars per minute.U.S. exports to our NAFTA partners increased 104 percent between 1993 and 2000; U.S. trade with the rest of the world grew only half as fast. Today the United States exports more to Mexico than to Britain, France, Germany, and Italy combined.

    Protectionists on the far right and globalists on the far left do not understand or support principles that create job opportunity and business. American business can compete and create jobs but to do so they have to be able to compete. High taxation and expensive complex regulation are the biggest job killers, Jim. American’s also need to realize that competition means they have to sharpen their skills and work ethic.

    Find information about tariffs and trade here:

    http://dataweb.usitc.gov/prepared_reports.asp

    http://www.usitc.gov/research_and_analysis/tradeshifts/2010/index.htm

  3. Peggy says:

    More food for thought.

    =========

    The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See

    Why is the economy going to collapse? Have you ever been asked that question? If so, what did you say? Sometimes it is difficult to communicate dozens of complicated economic and financial concepts in a package that the average person on the street can easily digest. It can be very frustrating to know that something is true but not be able to explain it clearly to someone else. Hopefully many of you out there will find the list below useful. It is a list of 70 numbers that show why we are headed for a national economic nightmare. So why does the title of the article single out Barack Obama? Well, it is because right now he is the biggest cheerleader for the economy. He is attempting to convince all of us that everything is just fine and that the economy is heading in a positive direction. Well, the truth is that everything is not fine and things are about to get a whole lot worse. Certainly others should share in the blame as well. Congress has been steering the economy in the wrong direction for decades, the “too big to fail” banks have turned

    Wall Street into a pyramid of risk, leverage and debt, and the Federal Reserve has more power over the financial system than anyone else does. Our economy has been in decline for quite a while now, and soon we are going to smash directly into an economic brick wall. Unfortunately, a lot of Americans are in denial about this. A lot of people out there doubt that an economic collapse is coming. Well, if you know someone that believes that the U.S. economy is going to be “just fine”, just show them the list below.

    The following are 70 facts that Barack Obama does not want you to see….

    Full list here:
    http://theeconomiccollapseblog.com/archives/the-u-s-economy-by-the-numbers-70-facts-that-barack-obama-does-not-want-you-to-see

    Senator Coburns Wastebook guide to government spending:
    http://www.coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=b69a6ebd-7ebe-41b7-bb03-c25a5e194365

  4. Chris says:

    Tina: “Their taxes are the highest in the world”

    Why do you continue to repeat this after I have already shown you it isn’t true, especially when you consider the extremely low *effective* tax rate that most corporations actually pay?

  5. Tina says:

    http://www.usnews.com/opinion/blogs/economic-intelligence/2012/04/02/worlds-highest-corporate-tax-rate-hurts-us-economically

    World’s Highest Corporate Tax Rate Hurts U.S. Economically
    By Joseph Mason
    April 2, 2012

    United States-based companies and hardworking Americans face a steadily growing problem, one oddly self-imposed by Uncle Sam. Our current tax system puts businesses and workers at a competitive disadvantage in the global market and discourages companies from investing in operations here at home.

    On Sunday, April 1, Japan lowered its corporate tax rate, leaving the United States with the highest effective rate among developed countries: 39.2 percent.

    http://articles.businessinsider.com/2012-05-04/markets/31567901_1_corporate-tax-rate-tax-code-special-tax-provisions

    America’s High Corporate Tax Rate Hurts Everyone
    Laura Tyson|May 04, 2012|

    BERKELEY The United States now has the highest statutory corporate-income tax rate among developed countries. Even after various deductions, credits, and other tax breaks, the effective marginal rate the rate that corporations pay on new US investments remains one of the highest in the world.

    In a world of mobile capital, corporate-tax rates matter, and business decisions about how and where to invest are increasingly sensitive to national differences. Americas relatively high rate encourages US companies to locate their investment, production, and employment in foreign countries, and discourages foreign companies from locating in the US, which means slower growth, fewer jobs, smaller productivity gains, and lower real wages.

    http://blog.heritage.org/2012/04/02/morning-bell-the-highest-taxes-in-the-world/

    Morning Bell: The Highest Taxes in the World

    There arent many American-owned companies more iconic than Anheuser-Busch, the famous producer of Budweiser beer based in St. Louis, Missouri. That was true up until 2008, when the Brazilian-Belgian company InBev executed a hostile takeover of the historic brewer, leading to layoffs of more than 1,800 workers.

    Unfortunately, conditions in the United States are growing ripe for even more takeovers like these to occur, especially now that the nations corporate tax rate is officially the highest in the world.

    As of yesterday, the U.S. corporate tax rate of 39.2 percent claimed the worlds top spot, edging out Japan which recently lowered its rate from 39.5 percent to 36.8 percent. (The U.S. rate includes the 35 percent federal rate plus the average rate the states add on.) Thats well above the 25 percent average of other developed nations. Heritages Curtis Dubay explains the impact on companies based in the United States:

    This gaping disparity means every other country that we compete with for new investment is better situated to land that new investment and the jobs that come with it, because the after-tax return from that investment promises to be higher in those lower-taxed nations.

    Our high rate also makes our businesses prime targets for takeovers by businesses headquartered in foreign countries, because their worldwide profits are no longer subject to the highest-in-the-world U.S. corporate tax rate. Until Congress cuts the rate, more and more iconic U.S. businesses such as Anheuser-Busch will be bought by their foreign competitors.

    Unfortunately, in the face of this tax rate, the Obama Administration is proposing measures that will make matters even worse for U.S. companies. Last week, Vice President Joe Biden proposed a global minimum tax in a wrongheaded effort to encourage companies to invest in the United States instead of overseas. Just like the rest of President Obamas corporate tax policy, it will just make matters worse punishing firms that seek new opportunities in growing markets by taxing their earnings in those developing markets even more heavily than theyre already taxed. The net result will be to make it even more likely that the companies assets would go up for sale to overseas firms in order to escape the Obama tax penalty. Unfortunately, Americas workers pay the price for this destructive tax policy. Heritages J.D. Foster explains why:

    Economists and policymakers increasingly understand that while the tax is paid almost exclusively out of profits that would otherwise go to the shareholders, the true economic burden falls primarily on workers.

    The reason is simply that the higher the effective corporate tax burden, the higher the hurdle rate on corporate investment. (The hurdle rate is the minimum rate a business must earn on investment to make the investment.) The higher the hurdle rate, the less investment takes place. The less investment takes place, the slower labor productivity grows, and the slower labor productivity grows, the slower wages grow.

    http://www.tax-rates.org/california/corporate-income-tax

    California has a flat corporate income tax rate of 8.840% of gross income. The federal corporate income tax, by contrast, has a marginal bracketed corporate income tax.California’s maximum marginal corporate income tax rate is the 10th highest in the United States, ranking directly below Maine’s 8.930%.

    In short, Chris, because it is absolutely true.

  6. Jim says:

    “Romney did not outsource jobs Jim.”
    Well, yeah he did. You should read up on the Burlington Coat factory, which imported clothing from China, some of which was made of Dog and Cat fur. Yes, Romney was selling us Dog and Cat fur from China.

    “Please explain to me how taking money in the form of taxes from people who have extra money will help to create jobs in the private sector. Tell me please how taxing the small business owner, the people responsible for most jobs in America, will help to create jobs.’

    Ok, lets go over this again. Businesses and business owners (like Romney) should only get a tax break, when they actually create jobs. Reinvest in your business, hire new people, then you get a tax break, otherwise you pay a higher tax rate.
    Romney is the poster boy of why tax cuts don’t create jobs. Romney pays a very very low tax rate, and then takes his profits and invests them overseas. This doesn’t help American workers one bit. Now I’m not saying that he doesn’t have the right to do what he wants with his money, however if he is going to turn his back on America, he should pay a much higher tax before he moves it to a offshore bank.

    Think back to the 1950’s, back when the tax rate was much, much higher. American was very prosperous back then.

    I feel we should go back to the Reagan tax rates. We need more investment in America, which will create more jobs.

  7. Tina says:

    Jim: “You should read up on the Burlington Coat factory, which imported clothing from China, some of which was made of Dog and Cat fur. Yes, Romney was selling us Dog and Cat fur from China.”

    Ooooooh…how terrible. People have been sleeping with pillows and comforters stuffed with goose down and feathers since the beginning of time. People wear clothing made from mink, rabbit, alligator, and snake. Indians and other native tribes always used skins for clothing…whats the big deal?

    Unions are the only ones protesting low priced clothing made in China People who want and need clothing at a price that they can afford could care less.

    Burlington Coat Factory was going out of business…probably because they couldn’t compete with products made in China…when Bain agreed to save the company. The union was striking at the time and as unwilling to negotiate as the teachers union in Wisconsin recently. Union bosses have been winning more and bigger salaries and benefits for American workers for decades but they were too stupid to realize they were selling their workers down the river. UNION workers HAVE TO COMPETE,,,just like business has to compete. Union workers better figure this out or they will just keep losing jobs to outsourcing and business failure.

    Burlington has employees in America:

    http://www.glassdoor.com/Overview/Working-at-Burlington-Coat-Factory-EI_IE114.11,34.htm

    http://www.glassdoor.com/Overview/Working-at-Burlington-Coat-Factory-EI_IE114.11,34.htm

    At Burlington Coat Factory, we understand how important good benefits are to you and your family. And that’s why we provide a full menu of medical and lifestyle benefits to eligible associates and their dependents, including:

    Medical
    Dental
    Life Insurance
    Disability
    Dependent Care Spending Account
    Paid Time Off (vacation, sick time, holidays)
    Associate Discount
    Associate Assistance Programs
    401(k) Profit Sharing
    Associate Referral Bonus Program
    Service Awards
    Training Programs
    Corporate Fitness Facility

    “Businesses and business owners (like Romney) should only get a tax break, when they actually create jobs. Reinvest in your business, hire new people, then you get a tax break, otherwise you pay a higher tax rate.”

    The tax code has never worked that way. Business is taxed on profits. Business has an incentive to hire in terms of taxes because employees represent a cost which brings down their taxable profits. Your formula would set up a great opportunity to avoid paying taxes…hire a couple of people before tax time and let them go after. Businesses wouldn’t want to do that but if you gave them a way to save on tax expenditure (and the price of their product and profits) they would!

    You still haven’t explained how Obamas idea of taxing people who create jobs (those who earn over $200. – $250 K) will create jobs. don’t feel bad Obama can’t answert that either. It’s class warfare not a viable plan to put Americans back to work.

    “Romney pays a very very low tax rate…”

    Sure…he just arbitrarily decides what he wants to pay. Don’t be an idiot! He pays every penny that is due according to the tax code. He pays at a lower rate because he doesn’t get a salary. He pays tax on interest and dividend income. He pays according to the tax code our legislators designed. The tax rate on investment income is low because our legislators KNOW that jobs come from investments. It’s low because they KNOW that retirement accounts are invested in stocks and retirees (elderly fixed income folks) are paying tax on the returns of these investments.

    “(Romney)…then takes his profits and invests them overseas.”

    You and I don’t have any idea where Romney has his money invested. He might have some invested overseas but so what. Do you have a personal retirement plan? If so have you ever taken a look at the many companies where your money is invested? You’d probably be surprised to find that you too are invested overseas.

    Romney (Bain) saved a number of companies that were going under. That means he took a financial risk to help businesses, and the employees that worked for them, to survive and thrive. His investment of cash and his advice took companies that would probably close and made them viable once more. They went on to open new stores and hire more people. Businesses like Staples and Sports Authority. His success rate was around 80%. He also lost money on the 20% that failed.

    “…if he is going to turn his back on America”

    Jim…there is no evidence that Romney has “turned his back” on America. That is pure Saul Alinsky political trash talk. Are you aware that Romney gave all of his fathers fortune to charity when he inherited it? Are you aware of their charitable giving?

    http://www.forbes.com/sites/edwindurgy/2012/05/17/an-inside-look-at-the-millions-mitt-romney-has-given-away/

    From AIDs Action to the Wright Museum, Romneys charities of choice are diverse; in fact, through 2010 the Tyler Foundation had made grants to nearly 100 distinct organizations. Many of the donations have gone to youth programs or health related charities. Of the bunch, the following are Mitt Romneys top 10 favorite philanthropic targets in terms of total dollars awarded by the Tyler Foundation since 2000:

    1. The Church of Jesus Christ of Latter Day Saints: $4,781,000
    2. Brigham Young University: $525,000
    3. The United Way: $177,000
    4. Right to Play: $111,500
    5. The George W. Bush Library: $100,000
    6. Operation Kids: $85,000
    7. Center For Treatment of Pediatric MS: $75,000
    8. Harvard Business School: $70,000
    9. City Year: $65,000
    10. Deseret International: $50,000
    Weber State University: $50,000

    All told, we have accounted for nearly $18 million of charitable giving by Mitt Romney to date, roughly 8% of what we currently estimate his net worth to be…

    He has also truly served in the community. In the State of Massachusetts he took no salary as governor. He took no salary as president of the Olympics.

    The Romney’s have been blessed…maybe it’s because they are also giving people and they believe in charitable service.

    “Think back to the 1950’s, back when the tax rate was much, much higher.”

    Tax rates were high coming off a devastating world war I wouldn’t recommend that as a way to get America working again.

    In the fifties we also didn’t have the big social programs (^)% of the federal budget). We didn’t have complicated regulatory burdens and public sector benefits burdens….both of which are killing state budgets.

    You’re right about the Reagan era. Romney is closer to Reagan in terms of tax rates, jobs, and investment in America than Obama. Obama is a classic redistribution machine…a model that when taken to its logical conclusion will make us all moderately poor (With a few elitists running government and living high on the hog).

    Government spends money. (Obama plan)

    The private sector makes money grow into wealth and opportunity. (Romney plan)

    Under Obama we end up with debt, a stagnant, failing economy, and fewer and fewer job opportunities.

    Under Romney we will see the economy grow, slowing of debt to debt reduction, wealth and job creation…and tax revenues flowing to government from a growing tax base and profitable companies.

    America NEEDS Romney. He’s the ONLY choice for a prosperous America

  8. Post Scripts says:

    Jim there is an element of truth in what you said…

    From ABC’s Goodmorning America….

    “…a recent investigation by the Humane Society found that what’s labeled and advertised as faux fur isn’t always fake. In testing a sampling of coats, they found that 24 out of 25 samples were mislabeled — most contained the fur of a raccoon dog, a dog that looks like a raccoon.

    Wayne Pacelle, CEO of the Humane Society of the United States, found the news that fur advertised as fake can actually come from dogs outrageous.

    “The images that we have seen in China are truly chilling — animals literally skinned alive for a product where we have an alternative this day in age,” he said.

    The Humane Society collected the coats they tested from a variety of major retailers, including Lord and Taylor, Saks Fifth Avenue, Macy’s, Burlington Coat Factory and JC Penny. They discovered that celebrity clothing lines were also at fault — real fur was found in clothing from Jay-Z’s RocaWear line, P Diddy’s Sean John label and Beyonce Knowles’ House of Deron brand.

    “I think what we have found is that the industry at the design level and retail level just isn’t paying attention, they are asleep at the wheel,”

    Let us take one more look…all these places got taken by Chinese imports:

    Lord and Taylor
    Saks Fifth Avenue
    Macy’s
    Burlington Coat Factory
    JC Penny
    Jay-Z’s
    RocaWear
    P Diddy’s
    Sean John
    Beyonce Knowles’ House of Deron brand.

    Which one of the above would not mind their clothing line being associated with dog fur? So why were they so stupid? Why do business with China after all the crap the Chinese have sent us? Why would they not do a simple test on their own to insure the quality of their merchandise?

    I hope the women that bought this crap are sickened over it and they burn their coats on the steps where they bought them.

    But, trying to make some connection to this scandal and Mitt Romney is too much of a stretch for a reasonable thinking person. He was too far removed from the ordering of dog fur from China, now that part just doesn’t hold up. We have to reasonable here.

  9. Libby says:

    “Under Romney we will see the economy grow, slowing of debt to debt reduction, wealth and job creation…and tax revenues flowing to government from a growing tax base and profitable companies.”

    Can you tell us how this is going to work? Romney hasn’t.

    It’s so odd. All these laissez-faire principles to which you cling, in defiance of hundred of years of proof that they spawn hellish economic insecurities … Romney makes vague, and plauditory references to them, but he (and you) cannot explain how, this time, it’s going to work out good.

  10. Chris says:

    Tina, it is absolutely NOT true that the “effective” corporate tax rate is 39.2%. The marginal tax rate is that high, but according to some estimates, most corporations are actually paying less than one third of that. From Time:

    “According to the Wall Street Journals recent study of Congressional Budget Office numbers, corporations are paying an effective rate of 12.1%, the lowest in at least 40 years. So why are some of the biggest and most powerful entities in our society getting away with paying so little? The story is complicated, but the biggest factor in the recent collapse in corporate tax receipts appears to be a set of tax breaks built into recent stimulus efforts.

    In 2010 and 2011, companies were allowed to deduct the full cost of the purchases of new equipment, while normally these costs would be expensed over several years. In 2012, this deduction will go down to 50% and be eliminated altogether thereafter, causing the effective tax rate to return to roughly the 25.6% average effective tax rate corporations paid since the late 1980s, according to CBO forecasts.

    Of course that 25.6% number is still quite a bit lower than the nominal tax rate of 35%, the highest in the world behind only Japan. So why arent corporations paying what the law says they should? Certainly, some are. According to Howard Barnet, a tax attorney with Carter Ledyard & Milburn, it all depends on what kind of corporation you are. He says that large, multinational corporations have many more strategies available to them to reduce tax burdens than smaller, domestic firms do. Pile on top of that all the tax goodies that politicians like to lavish on their favorite industries like tech, manufacturing, and real estate and, its a small subset of domestic companies left holding the bag, Barnet says.

    It would seem, then, that whatever your concept of fairness is with regards to personal tax rates, the corporate tax regime in America is blatantly unfair, with some corporations not paying enough and others shouldering too heavy a burden. Our current system, however, will probably not continue much longer. While 2012 will be a year of gridlock in Washington, tax reform will be on the top of the agenda for the President and Congress after the election, with corporate tax rates and loopholes a major target of reform.

    http://business.time.com/2012/02/06/the-corporate-tax-rate-is-at-its-lowest-in-decades-is-big-business-paying-its-fair-share/#ixzz22nOfJrQ9

    The top ten most profitable corporations are paying even less than 12%:

    “A recent NerdWallet study found that the top ten most profitable American companies paid an average of 9% of their pre-tax earnings in taxes to the U.S. federal government last year. These same companies reported an average tax provision of 32%.”

    http://www.nerdwallet.com/blog/markets/2012/corporate-taxes-only-9-percent/#.UCANU01lS2B

    And remember, corporate profits are at an all-time high:

    “Despite high unemployment and a largely languishing real estate market, U.S. businesses are more profitable than ever, according to federal figures released on Friday.

    U.S. corporate profits hit an all-time high at the end of 2010, with financial firms showing some of the biggest gains, data from the federal Bureau of Economic Analysis show. Corporations reported an annualized $1.68 trillion in profit in the fourth quarter. The previous record, without being adjusted for inflation, was $1.65 trillion in the third quarter of 2006.

    Many of the nation’s preeminent companies have posted massive increases in profits this year. General Electric posted worldwide profits of $14.2 billion, while profits at JPMorgan Chase were up 47 percent to $4.8 billion.

    Corporate profits steadily increased last year as companies continued holding onto record amounts of cash and other liquid assets while cutting costs, laying off workers and wringing more productivity — defined as the amount of output that comes from an hour of work — from remaining staff, even as the recession eased.”

    http://www.huffingtonpost.com/2011/03/25/corporate-profits-2011-all-time-high_n_840538.html

    I would be in favor of restructuring the tax code so that big corporations don’t get to pay a lower tax rate than smaller ones. Is that a compromise you can get behind, Tina?

    Obama has proposed a compromise that is even more generous to the right: lower the marginal tax rate from 35% to 28%, but close loopholes so that corporations actually pay the whole 28%:

    “Obama announced a proposal Wednesday to overhaul the country’s corporate tax structure. Under the terms of the new plan, the president will seek to eliminate many of the corporate tax breaks that American companies enjoy. Obama proposes lowering the top marginal corporate tax rate to 28 percent from the current 35 percent…

    …The Obama administration hopes closing the loopholes will offset revenue lost from lowering the tax rate.”

    http://www.huffingtonpost.com/2012/02/22/obama-corporate-tax-breaks_n_1293512.html

    What do you think about these ideas, Tina? I think President Obama’s compromise is a step in the right direction.

  11. Tina says:

    I have posted the links to webpages that give the details of Romney’s policy proposals. You’ve had the opportunity to easily satisfy your curiosity on at least two occasions right here at PS.

    This is an election cycle. The big ideas will be rolled out in speeches at the convention. But Romney can’t give us much more than broad policy ideas anyway. No candidate can. The fleshing out of policy ideas gets handled in the Congress, as you well know.

    Obama wants to raise taxes on those who are most likely to invest their money and create jobs.

    Romney doesn’t think raising taxes on these people makes sense in this economy.

    Hope and Change wasn’t exactly what I’d call detailed policy but you certainly were prepared to jump on that band wagon. This has resulted in a disastrous worsening of the recession for most Americans that have been hurt.

    I have told you how lowering tax rates on job creators would grow the economy and create jobs countless times.

    You cannot tell me how raising taxes on “the rich” people will grow the economy and create jobs.

    “All these laissez-faire principles to which you cling, in defiance of hundred of years of proof that they spawn hellish economic insecurities…”

    And what “hellish” economic insecurities would that be?

    Libby it is simple common sense. I know you are not so dense that you cannot get a few very simple concepts.

    The Obama administration has been pretty hostile to business and the wealthy…except for those few corporatists that play ball with him (GM, Imelt, Buffet…the guilty rich in Hollywood, certain health care and insurance companies, and AARP). I posted the chart of excessive changes in regulation under Obama. These and the new healthcare mandates and taxes have created great uncertainty. Increased spending, added debt, and monetary policy also add to the uncertainty. None of this has made business people feel comfortable to invest in their companies or to hire.

    Government needs to make those people feel optimistic to change their behavior. As for history…there is a long trail of success in America and it all happened when government was supportive of business including keeping taxes low:

    w.heritage.org/research/reports/2003/08/the-historical-lessons-of-lower-tax-rates

    There is a distinct pattern throughout American history: When tax rates are reduced, the economy’s growth rate improves and living standards increase. Good tax policy has a number of interesting side effects. For instance, history tells us that tax revenues grow and “rich” taxpayers pay more tax when marginal tax rates are slashed. This means lower income citizens bear a lower share of the tax burden – a consequence that should lead class-warfare politicians to support lower tax rates.

    Conversely, periods of higher tax rates are associated with sub par economic performance and stagnant tax revenues. In other words, when politicians attempt to “soak the rich,” the rest of us take a bath. Examining the three major United States episodes of tax rate reductions can prove useful lessons.

    1) Lower tax rates do not mean less tax revenue.
    The tax cuts of the 1920s

    Tax rates were slashed dramatically during the 1920s, dropping from over 70 percent to less than 25 percent. What happened? Personal income tax revenues increased substantially during the 1920s, despite the reduction in rates. Revenues rose from $719 million in 1921 to $1164 million in 1928, an increase of more than 61 percent.

    According to then-Treasury Secretary Andrew Mellon:

    The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.

    The Kennedy tax cuts

    President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).

    According to President John F. Kennedy:

    Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.
    The Reagan tax cuts

    Thanks to “bracket creep,” the inflation of the 1970s pushed millions of taxpayers into higher tax brackets even though their inflation-adjusted incomes were not rising. To help offset this tax increase and also to improve incentives to work, save, and invest, President Reagan proposed sweeping tax rate reductions during the 1980s. What happened? Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).

    According to then-U.S. Representative Jack Kemp (R-NY), one of the chief architects of the Reagan tax cuts:

    At some point, additional taxes so discourage the activity being taxed, such as working or investing, that they yield less revenue rather than more. There are, after all, two rates that yield the same amount of revenue: high tax rates on low production, or low rates on high production.

    2) The rich pay more when incentives to hide income are reduced.
    The tax cuts of the 1920s

    The share of the tax burden paid by the rich rose dramatically as tax rates were reduced. The share of the tax burden borne by the rich (those making $50,000 and up in those days) climbed from 44.2 percent in 1921 to 78.4 percent in 1928.
    The Kennedy tax cuts

    Just as happened in the 1920s, the share of the income tax burden borne by the rich increased following the tax cuts. Tax collections from those making over $50,000 per year climbed by 57 percent between 1963 and 1966, while tax collections from those earning below $50,000 rose 11 percent. As a result, the rich saw their portion of the income tax burden climb from 11.6 percent to 15.1 percent.
    The Reagan tax cuts

    The share of income taxes paid by the top 10 percent of earners jumped significantly, climbing from 48.0 percent in 1981 to 57.2 percent in 1988. The top 1 percent saw their share of the income tax bill climb even more dramatically, from 17.6 percent in 1981 to 27.5 percent in 1988.
    Harmful Spending & Complexity

    Lower tax rates are important, but they are not the only critical issue. Both the level of government spending and where that money goes are very important. And even when looking only at tax policy, tax rates are just one piece of the puzzle. If certain types of income are subject to multiple layers of tax, as occurs in the current system, that problem cannot be solved by low rates. Similarly, a tax system with needless levels of complexity will impose heavy costs on the productive sector of the economy.

    This WebMemo is excerpted from the author’s, Daniel J. Mitchell’s, Backgrounder, The Historical Lessons of Lower Tax Rates, published July 19, 1996. The original publication, found here, contains footnotes and numerous charts.

    Here’s the link to that original publication:

    http://www.heritage.org/research/reports/1996/07/bg1086nbsp-the-historical-lessons-of-lower-tax

  12. Tina says:

    Chris I didn’t say the “effective” rate was 39.2% so please don’t imply that I did (or that I was intentionally attempting to fool anyone) by opening with a sentence that suggests I did.

    Tax rates are what they are. Individuals also don’t always pay the rate their income demands depending on their legal deductions. Some people have interest and home deductions and deductions for each child. A single guy without a home and no kids will pay a bucket load more than his best friend with a home and kids even if they work the same job. Nobody screams about effective tax rates in his defense because they can’t demonize friends. Corporations have been made targets because the numbers are really big. Nobody thinks about what those profits have to buy so that the next years payroll will be met or new jobs at the new plant in the next state will be possible.

    America had better wake up about the role that companies play in their lives. Nobody like cheating and nobody likes employers that treat employees badly but most people are treated pretty decently in their jobs and never give any thought to what it takes to make their paycheck magically appear each payday.

    The “efffective rate” argument is meant to confuse or make people think someone is cheating when in fact they are doing what ANYONE would do. Everyone does what they can to keep their tax BILL as low as the law will allow.

    US corporate tax rates are still the highest in the world which means that companies have to do whatever they can to level the playing field with competitors that have a smaller tax (and regulatory) burden.

    “I would be in favor of restructuring the tax code so that big corporations don’t get to pay a lower tax rate than smaller ones. Is that a compromise you can get behind, Tina?

    In general yes. I’m not a tax expert, though, and I’m not an expert in international business. There may be issues related to taxation that would apply and that would help American workers that I’m not qualified to determine. I have always said the tax code should be simple and that tax rates should be kept as low as possible to maximize growth and prosperity. I think a rising tide does lift all boats…at least those that have owners willing to risk putting them in the water.

    “Obama has proposed a compromise that is even more generous to the right: lower the marginal tax rate from 35% to 28%, but close loopholes so that corporations actually pay the whole 28%”

    That’s interesting. His budget proposal would have been a good place for something like that. If I remember correctly, not a single person in the Senate, Democrat or Republican, voted for his budget proposal. Had he been sincere….his budget would have passed with this proposal in it.

    From my perspective his sincerity in the matter is highly suspect. It’s in direct opposition to his core “spread the wealth” principle…take from those who have and give to those that have less (Or his constituents and base).

    His record is what it is…he may be just saying this in an election year to get votes. He can also say it and, for now at least, rely on Harry Reid to stop it in the Senate. he also says it without admitting that the Ryan plan, which he and his cohorts demonized without a single hat tip for Ryans proposal of lower tax rates and a simplified code.

    And by the way…Obama’s proposal has been a Republican goal for the entire tax code for decades. Dick Army was one of the representatives talking about it in the Bill Clinton years. Paul Ryan included it in his budget proposal that your party laughed at…Paul Ryan on the fiscal year 2013 budget:

    http://paulryan.house.gov/Top5Issues/fy2013budgettaxreform.htm

    The tax code is full of deductions, credits and loopholes that let politically-connected companies avoid paying taxes. Every dollar that businesses spend lobbying for a better tax deal is a dollar theyre not spending on making a better product. And, since every dollar hidden in a loophole doesnt get taxed politicians make up for this lost revenue by increasing overall tax rates. So we need to close these loopholes. The U.S. corporate income tax, incorporating federal, state, and local taxes, equals just over 39 percent, the highest rate in the industrialized world. On top of sending almost 40 cents out of every dollar earned to the government, businesses pay additional taxes including investment taxes and payroll taxes.

    The budget we passed in the House of Representatives calls for closing the loopholes and lowering the tax rates. The Presidents bipartisan Fiscal Commission proposed something similar. Its plan would reduce the corporate tax rate to as low as 26 percent, and to lower the top individual rate that many small businesses pay to as low as 23 percent. If we lower tax rates, does that mean the wealthy pay less in taxes? It does not if we close loopholes. The people who use most of the loopholes are those in the top tax brackets. The money parked in these tax loopholes is taxed at zero. If you take away the tax loophole and lower everybodys tax rates, that money is taxed. It is taxed at a fair, more simple, more competitive tax rate so they can compete in this global economy. The President, however, would allow the top marginal income tax rate to rise to nearly 45 percent in 2013. This would be a direct hit on Wisconsin small businesses and jobs because 90 percent of businesses in Wisconsin pay the individual income tax, not the corporate income tax. These small businesses employ more than half of all private sector workers.

    Individuals and businesses spend over six billion hours and $160 billion, every year, trying to understand and comply with the tax code. Congress should simplify the tax code, not just by closing loopholes, but also decreasing the number of different tax brackets. Fewer brackets, along with lower individual rates, will make the tax code less complicated, and let more people keep more of the money they earn. America has had tough recessions before and we know that the secret to growing jobs and prosperity in America are through the ingenuity and the hard work of our businesses of our small businesses, of our large businesses, of job creators. Our tax system should not reward people for coming to Washington and getting special favors. We want a tax system that rewards Americans for hard work, risk taking, entrepreneurship, investment and innovation. These ideas made America great in the past. We need these kinds of ideas going forward if we want to grow our economy in the future and compete in the 21st century global economy.

    The budget I helped write came before the House for a vote on March 29, 2012, and was passed by a vote of 228 191. I was encouraged that my colleagues voted in favor of The Path to Prosperity instead of continuing down the path of debt, doubt, and decline. Before voting to pass this budget proposal, the House had the opportunity to vote on President Obama’s budget proposal for FY2013. The House unanimously rejected the President’s proposal, by a vote of 0 414, a clear indication that Republicans and Democrats alike did not believe the President put forth a credible plan to address America’s challenges.

    The House has 240: Republicans; 191: Democrats; 0: Independents; 4: Vacancies

    The ideas are good…Obama, in my opinion, is blowing smoke to get elected.

    I am happy to know that you are in favor of one thing that Republicans and some Democrats through the years have attempted to give the American people for decades, a simplified tax code with lower rates!

  13. Libby says:

    “And what “hellish” economic insecurities would that be?”

    Well, these market crashes we’ve been having every twenty years or so … before that we had a long stretch (from the one big war through the other) of nascent socialism (no crashes) … and before that, for about two hundred years before that, we had market crashes every twenty, thirty years. And all our founding propoganda notwithstanding, there was no “getting ahead”. The rich were rich, and the poor were poor, and that was it.

    Some of us have been paying attention … and some of us HAVE NOT.

  14. Libby says:

    “This woman is suffering so that Obama and his socialist buddies can play a Marxist game called spread the wealth.”

    Or … our socialist state (such as it is) allowed these people to survive, unemployed, for a year and a half. That’s quite helpful, really. But it can’t go on forever. The office manager is going to have to go back to office work.

    And if she had managed an office in the financial services sector, I think she’s going to remember upon whose watch the seeds of her economic demise were sown.

    But you keep plugging away, Tina.

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