Taxes and Small Business Job Creation: How to get it done

From Chris Edwards at the Cato Institute:

A little background first, Taxes and Small Business Job Creation to get you started.

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  The chart shows that the average top OECD rate fell from 46.7% in 2000 to 41.5% in 2009. If we let the Bush tax cuts expire, we won’t be simply going back to our situation in 2000—the world has changed since then as other countries have adopted more competitive tax rates.

• President Bush cut the top federal tax rate by 5 percentage points, but the average top rate in the 30 OECD nations has also fallen by 5 percentage points since 2000.
• Unless policymakers extend current tax relief, the combined U.S. federal-state top rate will increase from 41.9% to about 46.5%, based on OECD data. That will give us about the tenth highest rate among the 30 OECD nations.
• President Obama’s proposed top federal rate of 39.6 percent is 41-percent higher than the 28-percent top income rate achieved in the late 1980s after the bipartisan Tax Reform Act of 1986.

Chris has many bulletpoints on the case for extending the Bush tax cuts.  Be sure to read them all. In other news, forty-seven Democrats have publicly demanded that Pelosi acquiesce to an across-the-board extension of existing tax rates on capital gains and dividends:

The debate over what to do about the expiring Bush-era tax cuts has focused mainly on income tax rates and the fight between Democrats and Republicans over maintaining the tax breaks for the wealthiest Americans. But in a letter to the House speaker, Nancy Pelosi, 47 rank-and-file Democrats urged Congressional leaders to maintain lower tax rates on dividends and capital gains that are also due to expire on Dec. 31.
“Our fiscal policy should be one that maximizes economic growth and private sector job creation,” the lawmakers, led by Representative John Adler, Democrat of New Jersey, wrote.
“By keeping dividends and capital gains tax rates linked and low for everyone, we can help the private sector create jobs and allow seniors and middle class households to save and invest more,” the Democrats added in the letter.

Note the phrase for everyone.  A hike in capital gains tax rates will discourage both initial investments and turnover in capital, both of which are necessary to expand the economy.  It has to apply to those with the most capital on hand in order to have the maximum effect.  It doesn’t do a lot of good to penalize those with the most potential to expand the economy through new ventures and significant expansion of existing projects and companies. This also extends to income taxes as well, since many business owners file their business income as individual income  (pushing them over the $250,000 limit).  Taking more money from this class of entrepreneur means less capital for hiring and keeping employees, capital investment, and so on.  The exact same arguments apply to income tax rates, perhaps even more so since the very wealthy can usually structure their cash flow as income, dividends, or capital gains depending on which method provides the least amount of loss.

Troubleshooting issues, but I'm BACK!

Site had some techincal issues to resolve, but i've fixed the issues.  26 posts should be up as a result since July 27th and through September 26th.  You can now follow me on Google Reader and keep up with the information.  I'm still heavily involved in discussions on liberal sites like Global Grind (their news channel) and the Huffington Post sites, so look for my tag: Cmyst82 if you want to get in the discussions.  I have a Youtube channel so videos may be up from time to time (as I try to figure out how to edit and post them).  I'll see how I can work that with this site.
As always, it's about educating people on what's going on.  I'll do my best to continue on that path.

Paul Ryan's attempt for an Adult Conversation on Debt & Entitlement Reform

Ryan tries to explain that his plan for reform focuses on any person younger than age 55. That group would have 3% of their Social Security savings (at the current withdrawal level) put aside into their own private account (not pooled) which is monitored and maintained by the Federal Government and not by Wall Street. The best part about it.....it's optional, thus giving Americans the choice to stick with the current system, or have the additional option of guaranteeing 3% of their Social Security investment.

Watch who's trying to scare the 55 and up retirement group.

We're now 4th in Competitiveness Against Other Nations

"We're no longer "exceptional" Joe..."

Investors Business Daily places the blame on the Obama Administration, but this is the result of years of federal intrusion into the private sector in the lase few Administrations.  The current Administration's only sped up the process.  The World Economic Forum notes:

The United States now ranks fourth among all nations in competitiveness, down from first just two years ago. Not surprisingly, it’s government — not business — that’s to blame. …

Why did we lose our spot at the top? Broadly speaking, the Geneva-based forum report cites “a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets.”
The group stressed that the U.S. remains innovative with a flexible labor market and outstanding higher education. But its soaring deficits, burgeoning debts and declining public confidence in the nation’s leaders and businesses are dragging it down. Finding a way to end the massive federal stimulus of the last two years will help boost U.S. competitiveness, the WEF also said.
The report doesn’t come right out and say it, but it might as well: Not only is Obamanomics not working, it’s doing material damage to America’s economic well-being.

It certainly hasn’t helped that under Obama and Democrats, government has grown more confiscatory and intruded farther into private markets. Healthcare Refrom is the best example, but the proposed cap-and-trade system would have been worse, impacting every single home and industry directly with higher costs that eventually transfer massive amounts of capital back to Washington. Congress would have put itself into the task of picking winners and losers in energy markets instead of allowing the markets to work that out for themselves — in other words, using the competitive pressures of markets determine outcomes rather than political cronyism. That goes to the heart of competitiveness, and shows why we’re declining.
 
But that is really a symptom of a deeper ill, as Business Insider noted earlier in the week:
 
Take property rights. They’re at the essence of US capitalism. Last year, according to the WEF’s survey of executives, the US was the 30th best country. This year we’ve fallen to 40th.

And you’ll be stunned at the countries that our better than the US.

If you aren’t stunned by the nations listed, then be stunned by the length of the list, at least. No one will be terribly put out to see Canada (10), Austria (9), or Switzerland (1) ahead of the US. But what about Saudi Arabia (28)? China (38)? Jordan (30)? The US got edged out by Gambia, which relies on foreign aid to deal with high unemployment and underemployment, according to the CIA factbook.
 
If we want to improve our economy, we need to improve our competitiveness. If we want to improve competitiveness, we need to protect property rights and get the federal government out of the redistribution business. Property rights are the first rights mentioned in the Constitution (Article I, Section 8) for a reason. It’s the basis of prosperity and opportunity, and also the basis of a free, self-governing people.  China's doing better in property rights than we are.  That should be an emarassment.

Another "Surprise": The cost curve bends UPWARDS due to Healthcare Reform

Recall the time when President Obama and many Democrats promised that Healthcare Reform would "bend the cost curve downward" and cease the rapid increases in costs?  The Wall Street Journal has an advance look at a report from the federal government that shows no slowing in costs to the government as a result of the Healthcare Reform bill. In fact, the analysis will show that the bill’s passage actually results in an increase in future costs over what had been projected for the next decade:

The health-care overhaul enacted last spring won’t significantly change national health spending over the next decade compared with projections before the law was passed, according to government figures set to be released Thursday.

The report by federal number-crunchers casts fresh doubt on Democrats’ argument that the health-care law would curb the sharp increase in costs over the long term, the second setback this week for one of the party’s biggest legislative achievements. …
Regardless of the health law, national health spending has been rising in recent years and economists expect that to continue. In February, the federal Centers for Medicare and Medicaid Services projected that overall national health spending would increase an average of 6.1% a year over the next decade.
The center’s economists recalculated the numbers in light of the health bill and now project that the increase will average 6.3% a year, according to a report in the journal Health Affairs. Total U.S. health spending will reach $4.6 trillion by 2019, accounting for nearly one of every five U.S. dollars spent, the report says.
“The overall net impact is moderate,” said lead author Andrea Sisko, an economist at the Medicare agency. “The underlying impacts on coverage and financing are more pronounced.”

I present to you a chart directly from the Centers for Medicare &Medicaid Services; Health Affairs:
 

 
Earlier in the week, the Journal reported that insurers have already begun raising premiums in response to the front-loading of Healthcare Reform benefit mandates by the White House. That report sent Democrats into fits of anger, threatening to “ratchet up pressure” on insurers. Rep. Pete Stark (D-CA) blamed “greed” for price increases instead of the higher costs imposed by the mandates — all of which was the predicted consequence of adding more mandates and bureaucracy to insurance coverage.
 
I would like to hear the same Democrats attempt to explain once again how the higher costs in Healthcare Reform meets their promise of bending the cost curve downward. In addtion to this bit of news, it also consistently pushes the curve upwards for private insurance, and especially Medicaid. It only bends downward for Medicare and slightly downward for out-of-pocket costs for consumers. (Figures are on WSJ link above)
 
Medicare does look slightly better under Healthcare Reform due to the lower reimbursement rates for Medicare services, which means it comes out of the pockets of doctors. The predictable result will be fewer participating providers in Medicare, which will mean longer wait times, more difficulty in getting treatments, and most likely higher out-of-pocket payments as those consumers pay retail for their medical care more often.

DOGGIN' OBAMA???!

I've been a little busy lately (if you haven't noticed). I'm leaving a little bit from Zo. He keeps it pretty mild in this video, but hits the good points. Some of the subjects that he brings up will be expanded upon in the near future (tax incentive versus tax cuts, etc.). Going to change the direction of this site a bit to focus strictly on economics.

Black Conservatives Blast Al Sharpton Protesters in DC 8/28

DUDE!!!

The Runaway Slave movie crews were at Glenn Beck’s “Restoring Honor Rally” and at Al Sharpton’s “Reclaiming the Dream March” on Aug 28th. As the two ideologies clashed in DC, our movie crews were on the scene. In this raw footage, shot near the future MLK memorial site, Black Conservatives leaving the “Restoring Honor” rally encounter Sharpton’s protestors who were holding signs claiming “Tea Party Racism.” This is just one of the exchanges that was captured after the rally had ended.

The best line:

"“In 1960 over 80% of black babies were born in two-parent households. After welfare, I work in the inner city, I work with kids that look like me. After LBJ’s welfare policies in the 60′s in the inner city over 90% of kids are born without fathers. Because the liberal establishment wants to break apart the nuclear family. Because they want kids controlled by the state. That’s what Karl Marx said. So let’s talk about that!”

Keynesian Economics haven't worked. Good news though, the White House has found Fiscal Conservatism

The left will forgive him if it helps to preserve the congressional majority in the Senate, and since the majority in the House is a lost cause, he’d probably be pushed by the GOP into doing something like this next year anyway. Might as well do it now and take as much of the credit as he can:

With the recovery faltering less than two months before the November congressional elections, President Obama’s economic team is considering another big dose of stimulus in the form of tax breaks for businesses – potentially worth hundreds of billions of dollars, according to two people familiar with the talks.

Among the options are a temporary payroll tax holiday and a permanent extension of the research and development tax credit, say people familiar with the talks who spoke on the condition of anonymity in order to describe private deliberations.
Permanently extending the research credit would cost roughly $100 billion over the next decade, tax experts said. And depending on its form and duration, a payroll tax holiday could let businesses keep more than $300 billion they would otherwise owe the Treasury.

Add that since some liberals like to remind us of how well Social Security is doing financially, there should be minimal screeching about a temporary revenue shortfall due to a payroll tax cut, no? But wait — what's this?
 
Worried about the fragile economy and their own upcoming elections, a growing number of Democrats are joining the rock-solid Republican opposition to President Barack Obama’s plans to let some of the Bush administration’s tax cuts expire…

“In my view this is no time to do anything that could be jarring to a fragile recovery,” said Rep. Gerry Connolly of Virginia, a first-term Democrat…
Another freshman Democrat, Rep. Bobby Bright of Alabama, said he would like to see all the tax cuts extended for two or three years, if lawmakers cannot agree on a more permanent plan…
Several Democratic candidates for Senate have also come out in favor of extending them all, including Robin Carnahan in Missouri and Jack Conway in Kentucky.

If Congress moves to extend the Bush tax cuts even for the rich, will Obama dare veto the bill at this point? Or will he break liberal hearts by going back on another oft-repeated campaign promise? We know that every campaign promise, thus far, has had an expiration date.  For the sake of saving the party this year, I don't see why he would stick to his promises now.
 
Two videos ephasizing that the economic team, up to this point, had NO IDEA what they were doing from day one.  Watch in the next few months as the spin on the Stimulus will be: we shouldn’t have sold the job-creation program known as the stimulus as … a job-creation program.  You can't make this up.
 
From last year; Christina Romer (now resigned from the Economic team) explaining how they had no clue how to handle the economy:


Anita Dunn making her case recently: