Category: tax policy

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free trade & free markets tax policy

How Not To Be in Pictures

Everybody wants to be in pictures, it’s said. Michiganders, who’ve been funding moviemaking with their taxes for years, should try digital cameras and YouTube. The state’s governor, Rick Snyder, has proposed a new budget slicing and dicing the state’s generous (read: foolhardy) film subsidy and tax credit system.

This is called a “blow to Hollywood.” One nifty headline dramatizes the new situation: “Michigan to Hollywood — Get Off My Lawn,” with photo of Clint Eastwood on the porch of his Gran Torino house, wielding a shotgun.

Over the top.

Tax credits and tax subsidies given only to moviemakers are wrong on several grounds, as I’ve argued before (see “Knot Cannibalism” and “Cinema Without Subsidy”). Of course, the red tape and high taxes associated with setting up any business are wrong, too. You may say that the state’s gotta raise funds, but it most definitely shouldn’t kill the geese that lay the eggs, golden or Technicolor.

Taxes should apply equally, all around. Low taxes evenly spread will entice businesses — including moviemakers — into an area, if other locales remain over-taxed and confusing.

Some will cry “jobs!” but the word isn’t magic. Real jobs can be measured. Michigan’s subsidies created mainly temporary part-time jobs for Michiganders. According to a commissioned study, “Michigan spent $378,240.74 per job in 2008; $586,779.18 per job in 2009.”

No film incentive, it turns out, “has generated as much revenues as it has taken from the treasury.”

Cut. Print.

This is Common Sense. I’m Paul Jacob.

Categories
tax policy

A Chill Hits Illinois

That big bump in the night? It was the sound of a massive new tax increase dropping on the backs of Illinois citizens and businesses.

Not long after midnight, Wednesday morning, mere hours before the newly elected legislature was to be sworn into office, the state’s lame-duck legislature voted to increase the personal income tax by a whopping 67 percent and the business income tax by nearly 50 percent.

That’s lame, all right.

Governor Pat Quinn, who had campaigned in favor of a smaller increase, will sign the bigger tax hike. “Our fiscal house was burning,” he said in its defense.

Is the fire now out?

Well, there sure is a lot of smoke, and where there’s smoke, there’s . . . a lot of people making a quick exit.

Remember, people can vote with their feet. “Leaving Illinois,” a study by the Illinois Policy Institute, points out that between 1991 and 2009 Illinois lost one resident every ten minutes.

That’s $16.9 billion in lost state and local tax revenue.

So Wisconsin Governor Scott Walker was quick to offer a safer haven. “In these challenging economic times while Illinois is raising taxes, we are lowering them.”

As William Brodsky, chief executive of CBOE Holdings Inc, argues, “Merely throwing tax dollars at a broken system, without overhauling the expense side of the ledger, compounds the problem. . .” Bemoaning Illinois’ lost tax advantage in attracting business, Brodsky remarked, “They don’t come here for the weather.”

This is Common Sense. I’m Paul Jacob.

Categories
tax policy

Philly Bloggers Beware

Do you live in Philadelphia? Do you blog? Have you earned a penny or more from your blog page? Then don’t click away!

Stick around a minute even if you blog in some other town, because today’s installment is about the lengths to which tax mongers might go to mulct or muzzle you.

The Philadelphia government has begun sending letters demanding dough to bloggers who report even trivial revenue from their blogs. The city wants $300 for “business privilege” licenses. Marilyn Bess is one recipient. Her blog MsPhilly Organic earned about $50 over the last few years.

Sean Barry also got the city’s letter. His own blog, Circle of Fits, has been deluged with some $11 in revenue over the last couple of years. He, too, had dutifully reported the blog-generated boodle on his tax returns.

What did these electron-stained opinion-purveyors do to deserve this special attention? Nothing but fail to read every last jot of the city’s tax code — and every last secret inter-department city government memo about when to go after local bloggers — before setting fingers to keys.

Philadelphia’s pursuit of imaginary scofflaws may amount to just an obtuse lunge for hitherto unextracted funds. But the new protocol is also a weapon that could be selectively deployed, now or later, to harass bloggers who publish inconvenient words. Wouldn’t be the first time in our history that the power to tax has been turned to such ends.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy too much government

Social Security Beyond Retirement Age

Social Security turned 75 last week, and yet I saw few demands to retire the program.

Instead, pundits like Paul Krugman took the occasion to praise the septuagenarian boondoggle.

Krugman started boldly, saying that the program “brought dignity and decency to the lives of older Americans.” Huh? Social Security has indeed brought a steady income to retired Americans, many of whom would have had to rely on their children’s help to live out their last years. But Krugman doesn’t say that. Instead he implies that, before Social Security, old folks led indecent and base lives.

But think about this: Saving for yourself and living on a limited means is indecent? It lacks dignity?

Krugman also talks about the economics of the program, defending, for instance, its dual accounting method in a bizarre way. But mostly he steps carefully around Social Security’s biggest failings, which include the intergenerational swindle, providing bigger rewards-over-contributions to earlier retirees than to current recipients, and, by its nature, will take more from, and give less to, future retirees.

Most shockingly, though, he says this: “Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund.”

Krugman does all but state that the special account has money in it.

It doesn’t. The “trust fund” consists of IOUs from Congress. That’s it.

I guess Social Security is a program too important to Krugman to tell the truth about.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy too much government

Cinema Without Subsidy

Yesterday I insisted that states stop subsidizing filmmaking. Implied, I hope, was the notion that states needn’t provide tax credits to lure movie shoots to their state, either.

No sooner did I wrap up that argument (with the premature proclamation “end of story”) than I read a fine article on Show Me Daily about how “States Can Entice Businesses and Industries Without Credits.” The article begins talking about making films in Wisconsin, where the tax credits were just cut by two thirds. And yet the state has nabbed some major film efforts.

According to Show Me, “Wisconsin sets a great example. . . .” Every state has something going for it, unique locations, geography, architecture, people, climate, what-have-you. “Firms will locate” where they do for relevant reasons; “they don’t need to be bribed with generous incentive packages.”

But, but, but, but! some will sputter. Film companies are special firms. They start up, inhabit a location for a while, and then vamoose. State regulations and business taxation often makes it very difficult to shoot in a particular place. Filmmakers need special help around encumbering bureaucratic obstacles.

I’m sympathetic. For example, the business-and-occupation taxes that increasing numbers of states are instituting are horrendously burdensome: They take from gross revenues, of all things!

But the proper way around such counter-productive laws is outright repeal, setting up better state revenue programs . . . ones that are not so generally destructive of industry, including the film industry.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy too much government

A Plague Upon Small Business

Those who like Big Government tend to dislike Big Business. So it must be just an unintended effect that shiny, new government programs invariably harm small businesses, aiding big ones.

There are many examples of this. Today’s comes from the biggest new kid on the block, the new health care reform.

Who wins with it? Sure isn’t small business.

The increased paperwork and added regulations especially burden smaller operations. Big corporations can more easily eat the additional costs. Small businesses, on the other hand, have to expend a greater percentage of their gross incomes to meet new requirements, and this drain on their resources means that they can’t compete as well against the big guys, toe-to-toe in the marketplace.

Worse yet, even the special tax credits tossed in small businesses’ direction serve up a thorny mess of complexity and arcane paperwork. And while the credits are scheduled to evaporate, there appears no end to soaring costs.

Finally, the new IRS 1099 reporting requirements on business-to-business transactions of $600 or more will hit small businesses hard. These new required forms are in effect a tax themselves, because the extra paperwork will cost real money.

Is this any way to improve health care? No. It’s got nothing to do with health care. It’s just a way to increase the tax take and another way Big Government helps Big Business at the expense of the little guys.

And that’s sick.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy

But He Promised

Like the rest of us, politicians can honestly change their mind about an issue.

But when a presidential candidate “firmly” pledges to, say, never act to raise taxes of any kind on families earning less than $250,000 a year, and then reneges, that doesn’t quite count. And then when, soon after being elected, the politician pretends that his earlier pledge doesn’t mean what it plainly meant — or even pretends that he never made the pledge at all — one suspects that the original promise was really a fib, a falsehood. From the get-go.

In an interview with George Stephanopoulos given last September during the health care debate, Barack Obama tried to escape his no-new-taxes pledge by asserting that the new taxes that would be imposed on Americans declining to buy health insurance under his health care plan would not in fact be taxes. With a straight face, Obama even disputed the dictionary definition of “tax” that Stephanopoulos recited to him.

Now we’re hearing from an administration official that the president never even made the pledge. According to White House Budget Director Peter Orszag, it was merely an expression of a “preference.” We’ll have to wait until a bipartisan commission (on how to tax us more) finishes its work before we learn whether it will be viable for Obama to hew to that “preference.”

Meanwhile, those who prefer truth can view the video proof of an actual pledge on YouTube.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy too much government

Commiserations on Tax Day

It’s April 15, my eldest daughter’s birthday. I used to tell her she wouldn’t have to pay taxes like everyone else, because IRS folks wouldn’t dare make her file on her birthday, would they?

Seriously, when it comes to family and taxes, I’m just glad that my wife does all the work.

My job is getting the birthday cake.

You can understand why I’d shirk the tax work. There are 40,000 sections to the tax code, and no one understands it all.

This complexity has costs. And not just to my sanity. A whole industry has risen to ease the burden of figuring out our taxes. One hates to begrudge anyone an honest living, but really, most of today’s tax accountants would better serve humanity in some other job.

Simplifying taxes should be as important as tax reduction. Instead, because our representatives and our president just cannot stop themselves from spending more and more of our money, they are raising taxes. It’ll be on the proverbial rich, in the immediate future, but they won’t stop there.

They can’t stop there.

Why? Because if you took all the wealth — not just the income, but all the wealth — from every millionaire in the country, you still couldn’t pay all the future obligations of the federal government.

My darling daughter aside, April 15 is no day to celebrate. It’s tax day, and it marks the degradation of our nation at the hands of our politicians.

This is Common Sense. I’m Paul Jacob.

Categories
tax policy

IRS Wants Your Four Cents

On the one hand, we’ve got trillion-dollar federal deficits and no sign of any austerity measure on the congressional horizon. On the other hand, we’ve got dark-suited IRS agents bullying small businessmen for allegedly being four cents behind in taxes.

The letter that the two IRS suits hand-delivered to the owner of Harv’s Metro Car Wash in Sacramento claims that with penalties piling up since 2006, Aaron Zeff now owes over $200. Zeff reports that the agents “were deadly serious, very aggressive, very condescending.”

The incident is bad press for the Internal Revenue Service. But maybe the taxmen relish this kind of bad press once in a while. After all, they need the rest of us to worry what might happen to us if we step out of line even four cents worth, even if it’s only in the fevered imagination of some bored IRS accountant.

Was the hounding of Mr. Zeff a deliberate plan or just zealous overreaching by a couple of goons who forgot to read the manual on being nice to taxpayers? Who knows. Either way, though, do we want the IRS in charge of slapping us with a big tax penalty if we don’t sign up for a government-approved health plan? After all, that’s a big part of the so-called health care “reform” that Congress is in process of imposing on us.

This is Common Sense. I’m Paul Jacob.

Categories
initiative, referendum, and recall tax policy Tenth Amendment federalism

We Told You So

Say it with me: We told you so.

Over the years, I’ve tried to help citizens regain control over their prodigal representatives. Sometimes I got called a radical for these activities. An extremist. But I think of myself as a moderate, as someone promoting moderation.

In government spending, for example.

Among the most moderate of these many statewide initiatives have been what are sometimes called the Taxpayer Bill of Rights, or TABOR, initiatives. These proposals are designed to limit spending increases to a formula of population growth-plus-inflation.

Sometimes we succeeded. Too often we failed.

The consequence of our failures, of each defeat at the hands and promotional budgets of groups that called us, of all people, extremists?

Now, state after state has become what Reason magazine dubs “Failed States.” They did what politicians demanded, spent at rates far greater than moderation would allow. And now that we’ve hit hard times, and state revenues have drastically fallen, how the politicians whine! Indeed, they demand bailouts.

Say it with me, you who’ve voted for TABOR in the past: “We told you so. Lacking our measures, the states have become part of the out-of-control federal deficits and ballooning debt.”

And remember, you who opposed our moderate measures to limit state spending: You are the radicals. You are the ones who helped set our country on its current, self-destructive course.

This is Common Sense. I’m Paul Jacob.