Category: tax policy

Categories
judiciary tax policy too much government

Supreme Oxymorons

With the Supreme Court’s decision in National Federation of Independent Business v. Sebelius, the Patient Protection and Affordable Care Act has achieved its first milestone: The repudiation of logic, the Orwellian assertion that A both is and is not A.

The reform package, popularly known as Obamacare, requires that individuals buy medical insurance. If you fail to do so, the law imposes a fine.Justice Roberts

The zillion page legislation refers to this financial penalty 18 times. It never refers to a tax.

Its principal booster, President Obama, repeatedly insisted it wasn’t a tax. And as Justice Antonin Scalia wrote in his dissent, “We have no doubt that Congress knew precisely what it was doing when it rejected an earlier version of this legislation that imposed a tax instead of a requirement-with-penalty.”

But Chief Justice John Roberts, a George W. Bush-​nominee, joined the four liberal justices to declare that what was not a tax, when proposed and passed, now is a tax — so that it could be declared constitutional under Congress’s taxing power. Roberts explains:

Congress did not intend the payment to be treated as a “tax” for purposes of the Anti-​Injunction Act. The Affordable Care Act describes the payment as a “penalty,” not a “tax.” That label cannot control whether the payment is a tax for purposes of the Constitution, but it does determine the application of the Anti-​Injunction Act.

Only were Obamacare not a tax could it be litigated at this time under the Anti-​Injunction Act. Accordingly, the majority says it is not a tax. But it can only be ruled constitutional if it is a tax. So, the High Court calls it a tax and not a tax at the same time.

The dissent called this “remarkable.” Stronger words spring to mind.

This is Common Sense. I’m Paul Jacob.

Categories
initiative, referendum, and recall tax policy

Fighting Taxpayers

Some opponents of citizen initiative and referendum argue that voters will always opt for tax cuts. I only wish.

Yesterday, North Dakotans decided not to eliminate their state’s property tax. Measure 2 wouldn’t have lowered property taxes, it would have abolished them. Even in a land booming with new-​found oil and gas, and a state government surfing in surpluses, a whopping 78 percent of voters weren’t willing to go that far.

Chalk it up to fear — unfounded fear. North Dakota State government is running a surplus bigger than the state’s property tax take.Fighting Sioux

As is too often the case, voters saw a one-​sided campaign, with spending by the forces of big government — public employee unions and those extracting financial gain from the political status quo — completely outmatching the resources taxpayers had to get their message out. On Measure 2, the No side outspent the Yes side by more than 26 to 1.

Empower the Taxpayer, led by Bob Hale and Charlene Nelson, made the argument that property taxes are particularly malicious because people can lose their homes and farms if they can’t afford the taxes. That argument did not win the day.

But there will be other days. I often tell the story of a 2002 Arkansas initiative campaign to “ax the food tax.” The measure to end the sales tax on food and medicine was slaughtered at the ballot box. Still, now a decade later, the tax has been reduced from 6 percent to 1.5 percent.

North Dakotans voted to keep the state university’s Fighting Sioux mascot. The Fighting Taxpayers may be around even longer.

This is Common Sense. I’m Paul Jacob.

Categories
tax policy too much government

A Tale of Two States

Tuesday is Election Day for Wisconsin’s gubernatorial recall, pitting Republican Gov. Scott Walker against Democratic Milwaukee Mayor Tom Barrett in a rematch of their 2010 contest, won by Walker. Polls show Walker leading, and likely to become the first “recalled” governor to ultimately defeat his recall and retain his office.

In fact, after all the massive protests and the recall campaign, Walker’s popularity has increased.Governors Walker and Quinn

Why?

Mr. Walker has done what he said he would. He hasn’t raised taxes. He staked out his position on ending collective bargaining for most public employees as well as requiring them to pay something toward healthcare and pension benefits, and, against a flurry of opposition, stuck to his guns.

Now the Badger State’s unemployment rate is down below the national average and economic prospects are up.

For a very different story, look south, to Illinois.

Gov. Patrick Quinn supports initiative, referendum and recall, but gets demerits for his response to the current economic difficulties. In 2010, Illinois raised the state income tax by 66 percent. But the $7 billion in extra revenue has done little to solve the state’s chief budget woe — Illinois was $8 billion in the hole when the income tax was hiked, and somehow faces that same $8 billion shortfall today.

So, just a week ago, lawmakers slapped a $1‑per-​pack tax on cigarettes.

If a state could tax itself out of trouble, Illinois would be a near paradise today.

Walker took on the government employee unions; Quinn took on the taxpayers. That’s why Wisconsin — including their embattled governor — is on the upswing and Illinois is not.

This is Common Sense. I’m Paul Jacob.

Categories
tax policy

Regressive Europe

Some folks love to compare the U.S. to Europe unfavorably.

Not me.

Though I’m fine with learning from European states and cultures (hey: I like Switzerland!), I shudder when I hear someone suggest that America should be “more like Europe.”

Obviously, I’m not with our current president on this. He says we should tax the rich more, make them pay “their fair share.” And his left-​leaning admirers append the phrase, almost under their breath, “like in Europe.”

Ugh.

But reserve some of that “ugh” not at the proposal, but at the assumption that European states tax the rich with higher “progressivity.” Veronique de Rugy, reporting on a new book by Bruce Bartlett, says that view is off base. European states tend to rely on the VAT, which is heavily regressive. Additionally, Europe’s high income tax rates kick in at lower incomes, so that Europeans lower down on the middle class ladder feel the bite of high taxes.

De Rugy concludes that America is a lot like Europe, on the whole, but that America’s “tax framework may be worse.… It disproportionately relies on the top earners to raise revenue, it exempts a large class of taxpayers from paying any income taxes, and it conceals spending in the form of tax breaks.”

This is all very interesting. But my take-​away is not to emulate Europe, but — instead — the distinctively American policies we’ve let slip away. Our limited government principles don’t require us to endlessly chase new revenue streams.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets ideological culture tax policy

Unfuzzying Up the Past

We hear a lot of talk about the disappearing middle class. Sometimes this jabber goes so far as to posit that normal folks — say, the “99 percent” — haven’t really experienced any progress since the ’60 or ’70s.

So blame the rich. And their government.

It’s not an implausible case. Wealthy interests do rent politicians at extravagant rates, changing policy in their favor.

But as economist Russ Roberts and Cornell University’s Richard Burkhauser discussed recently, sloppy statistics feed the hand-​wringing over middle-​class decline. Considering government transfer payments from rich to poor and plotting income by household rather than individually, the basic “stagnation” thesis doesn’t pass the “smell test.”

For the real stink, however, consult the Internet memes, particularly this goofy contention:

In the 1950s and 1960s when the top tax rate was 70 – 92%, we laid the interstate system, built the Internet, put a man on the moon, defeated Communism, our education system was the envy of the world, our middle class thriving, our economy unparalleled. You want that back? Raise taxes on the rich.

Forget the obvious nonsense (ARPANET was the Internet only in ovo; Communism collapsed in the ’80s), and concentrate on the main points, as Tom Woods has done: tax evasion was rampant back in the alleged “good ol’ days”; public schools have doubled in per capita spending since then, and not improved; and the stagflationary ’70s followed the booming ’60s, almost certainly as a consequence of the policies being touted, here.

Selective memories help in constructing just-​so policy “proofs.” The middle class has received some big hits, I grant you. Still, we’ve seen progress, too.

This is Common Sense. I’m Paul Jacob.

 

Categories
tax policy

Expiration Date

Lots of talk and worry has been expended over an unfortunate aspect of the ancient Mayan calendar: it was calculated to run through 2012 but no further.

Some folks, placing inordinate weight on pre-​Aztec American time-​keeping, think that spells the end of the world.

As preposterous as the movie about this was, there are a few things to be expected at the end of this year that have a touch of the hand of Doom.

Bush-​era tax rates expire, for instance.

Isn’t it strange how a lowered tax rate must expire, but higher rates don’t get a similar sunset treatment?

Anyway, on December 31, 2012, tax rates go up. The Washington Post relates that some folks are calling this “Taxmageddon,” and it could be a disaster for our faltering recovery:

Overnight, the marriage penalty for joint filers will spring back to life, the value of the child credit will drop from $1,000 to $500, and the rate everyone pays on the first $8,700 of wages will jump from 10 percent to 15 percent.

The just-​agreed-​to payroll tax reprieve also has a built-​in expiration date, so FICA withholding will go up 2 percent as well.

Though folks are running scared about this, politicians are girding their loins for a big fight. Or “negotiation.” Or something.

Meanwhile, no real cuts in spending can be expected, especially if President Obama wins in November, as seems increasingly likely.

And the U.S. government continues to borrow an additional six billion dollars every business day. I fear more than one thing is set to expire.

This is Common Sense. I’m Paul Jacob.