Tag: Taxation

Taxes….Taxes….Who Gets The Taxes?

Taxes are always the answer to everything with the Washington elite.

U.S. drivers need to pay more gas taxes and new user fees to fix crumbling roads and bridges and ease congested highways, a transportation commission is set to recommend to Congress later this month.

U.S. gasoline taxes should be raised 10 cents a gallon to help fund improvements, at least until new systems are created to charge drivers for how much they use roads, according to a draft copy of recommendations from the National Surface Transportation Infrastructure Financing Commission.

Which is a good idea, but then in the same breath this idea emerges.

President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts — which would account for about 40% of a stimulus package that could reach $775 billion over two years — is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending.

The Obama tax-cut proposals, if enacted, could pack more punch in two years than either of President George W. Bush’s tax cuts did in their first two years. Mr. Bush’s 10-year, $1.35 trillion tax cut of 2001, considered the largest in history, contained $174 billion of cuts during its first two full years, according to Congress’s Joint Committee on Taxation. The second-largest tax cut — the 10-year, $350 billion package engineered by Mr. Bush in 2003 — contained $231 billion in 2004 and 2005.

None of this will give the middle class the relief and help that they need to survive.  There is only one answer to this dilemna–Land Value Taxation (LVT).  Read more.

Is Raising Taxes Always The Answer?

Oh God, NO, it is not.  But that is all that these socalled capitalist can think of to raise much needed revenues to fund projects.  This is the newest one being proposed or at least considered.

A 50 percent increase in gasoline and diesel fuel taxes is being urged by the commission to finance highway construction and repair until the government devises another way for motorists to pay for using public roads.

The National Commission on Surface Transportation Infrastructure Financing, a 15-member panel created by Congress, is the second group in a year to call for increasing the current 18.4 cents a gallon federal tax on gasoline and the 24.4 cents a gallon tax on diesel. State fuel taxes vary from state to state.

And states like California are coinsidering other moves to help fund programs,

Gov. Arnold Schwarzenegger’s staff Wednesday released his most detailed plan yet to tackle the state’s staggering budget deficit, calling for deep cuts to state services, hefty tax increases and a large new round of borrowing to close a projected $41.6 billion shortfall through mid-2010.

While little of the proposal was new, it included some striking elements, such as cutting billions of dollars from public school funding and slashing the deduction state taxpayers can claim for their dependents. The plan also arrived a day after the state controller warned tax refunds might have to be paid with IOUs in the spring because California is so short of cash.

The above are just examples of what ALL states and communities will be looking at in the coming year or so, if they are to keep their areas functioning as an entity.  All the plans involve a complete screwing of the people.  I want to know why?  There is an easier way.  It is not popular with the big shots that call all the shots in state capitals, but nonetheless, it is easier and does not totally drop the burden on the middle class’ shoulders.

The solution is called Land Value Taxation.  It is explained on my pages here.  Read, understand and  fight for fairness.  You as a taxpayer have the power to make a difference.  Use that power and in turn make this a better country.

copyright:  CHUQ/Info Ink

Ever Hear Of Land Value Taxation?

A New Year and a new beginning—so why not do something new?  Nothing that governments are doing sdeem to help gain the revenue they need for much needed programs.  And at the same time heap a pile of stuff onto the taxpayer.  Why not look for a better answer?

I recently posted this on my Mississippi blog, Gulf South Free Press, as a possible answer to the shortfall in tax revenues.  It would also be something to consider for the nation.  The news in at least 43 states is dire, they are scrambling for funds for projects, to the point of asking the Feds to get involved.  LVT would save the states and their programs.

LVT?  What is that, Professor?  I am glad you asked.

In the strict public policy application, Land Value Taxation (also known as split-rate real property taxation, and two-tiered real property taxation) is a type of real property taxation.  Whereas the typical real property tax taxes both land and the improvements on the land at the same rate, land value taxation taxes land at a higher rate while simultaneously reducing, or even eliminating, the tax on improvements.

The major points of a LVT:

•           A shift to LVT, even when structured in a revenue-neutral manner, usually results in net tax reductions for the vast majority of residents.

•           The problem of inaccurate or radically higher assessments is reduced because of the reduction in reliance on the building portion of the property tax.

•           The damage that taxes like sales and income taxes do to working families and local commerce can be lessened.

•           By reducing or eliminating the tax on improvements, there is a greater incentive to build, to build with higher quality materials, to maintain, to avoid blight, and to redevelop economically depressed areas.

•           Cities are almost always on the “short end of the stick” when economic development dollars are handed out.  This program helps achieve the same goals with no public investment.

•           When cities DO get permission to give out tax abatements, they lead to a revenue loss to the community with no assured payoff later.  LVT is purely revenue neutral to the city.  There is no tax shifting to citizens and property owners who have already done their bit.

•           A tax on land also has the advantage of being a “value capture tax.”  A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up.  Thus, the new public improvements would be paid for by those most benefited by the new public improvements — i.e., those whose land value went up most.

•           A tax on land has been shown to result in better land use patterns and more in-fill development.  This has the benefit of reducing sprawl.

•           Several Nobel Prize winners in economics have stated their approval of government revenue being raised from taxes on land.

•           Support for LVT cuts across political lines.  Free-market economists like how it reduces distortions in economic decision-making.  Environmentalists like how it reduces sprawl and helps fund public transportation.  Developers appreciate how it makes new homes more affordable for their customers.  Citizens like the reduction in taxes.

Ad valorem taxes are increasing nationally.  The assessments were made when the market value of real estate was hugh and now that it has lost almost 40% of its value, people will be paying a higher rate until the next assessment.

These days of uncertain times, it is a new thinking that is needed….and LVT is that new thinking.

I would like to thank Henry George and urbantools.org for the ideas in this post.  For years I have advocated the LVT and now it seems that it is time for action, not begging.

More Bailout News

An extra-legal measure quietly enacted by the Treasury Department in the shadow of the $700 billion Wall Street bailout package will hand the country’s biggest banks another $140 billion windfall, the Washington Post reported this week.

In a five-sentence memo issued on September 30, on the eve of the first House vote on the bailout bill, the Treasury Department unilaterally overturned a two-decade-old tax law passed by Congress. The measure denied profitable companies the ability to shield their profits from taxation by buying up bankrupt firms as shell companies and using their losses as a tax dodge.

The law, section 382 of the tax code, was enacted by Congress in 1986. It was aimed at curtailing what was seen as an egregious corporate scamming of the tax system. The Republican right and corporate lobbyists have been pushing for the measure’s repeal or amendment ever since.

Treasury Department spokesman Andrew DeSouza defended the action, telling the Post that the administration had the power to overturn a law passed by Congress as part of its mandate to interpret the tax code. He further insisted that the action was a necessary means of rescuing the banks from the financial meltdown.

The action by the Treasury Department has been dubbed the “Wells Fargo Ruling,” as it apparently provided direct aid to the successful bid by Wells Fargo to buy up the failing Wachovia bank. According to sources cited by the Post, the tax change will net Wells Fargo $25 billion from the deal.

In other similar takeovers, PNC bank, enjoyed a windfall of $5.1 billion in its takeover of National City as a result of the scrapping of the tax law, while the Spanish Banco Santander gained another $2 billion because of the change when it gobbled up Sovereign Bancorp.

The clear aim of the tax measure was to steer the hundreds of billions of dollars that have been injected into the biggest private banks into the profitable buying up of their weaker competitors, thereby facilitating the concentration of economic power in the hands of a few giant banks, allowing them to exercise monopoly control over the financial system.

A New Alcohol Tax?

A study suggests that raising state taxes on alcohol may be much more effective in lowering the risk of premature death from alcohol-related diseases than anti-alcohol media campaigns.

The study published in the online January edition of the American Journal of Public Health showed that in Alaska, two raises in alcohol taxes reduced the death risk by 29 percent and 11 percent and saved about 40 people a year.

The study was meant to examine the impact of increased taxes on alcoholic beverages on risk of death from alcohol-related diseases.

The researchers analyzed U.S. National Center for Health Statistics data from 1976 through 2004.   Particularly interesting were the data from the state of Alaska which the researchers noticed had raised its tax on beer twice from 46 cents per gallon to 63 cents in 1983 and to $1.20 per gallon in 2002.

Specifically, the researchers found that the tax increase

in 1983 resulted in a reduction of 29 percent drop in mortality every year or about 23 deaths per year after the new tax law was imposed and the tax increase in 2002 led to another 11 percent decrease or another 21 deaths per year.

Alcohol consumption leads to serious injuries and accidents.   But diseases resulting from alcohol consumption alone kill an estimated 85,000 people in the United States each year.

High taxes are not optional if the states intend to reduce risk of premature deaths from alcohol.   Other methods to reduce the death risk are no match for high taxes, according to the authors.

The alcohol industry doesn’t agree.  “A broad tax increase on alcohol would not target the problem drinker, but simply condemn those who drink responsibly and enjoy wine and spirits,” Craig Wolf, CEO and President of Wine and Spirits Wholesale of America was quoted as saying.

Harry Wile, executive director of the American Beverage Licensees was cited by injuryboard.com as saying historical evidence shows that raising the alcohol tax would negatively impact economy and diminish returns for the government.

There is your answer to controlling what people do –raise taxes!

McCain’s Tax Plan And How It Will Work

At least this is how the WSJ sees the plan and its outcome.

First, he proposes a package of tax incentives that will create jobs and raise earnings by inducing firms to invest more in the U.S. Second, he is strongly committed to blocking any increase in tax rates while doubling the personal exemptions for families with children, which will reduce the tax burden on working Americans. Third, he proposes a new, refundable tax credit that will increase health-care coverage, reduce the cost of health care, and provide more funds for families and individuals to purchase health care.

Here’s how the three components of Sen. McCain’s tax plan will work in practice.

To create jobs, Mr. McCain will reduce the corporate tax rate — now at 35% the second highest among all industrial countries — to one that doesn’t penalize firms for doing business here. To encourage small businesses to expand, he will fight against higher tax rates on their income.

To increase wages, Mr. McCain will provide incentives to raise productivity, which leads to higher wages. To increase productivity, he will provide incentives for developing and applying new technologies by expanding the tax credit for research and development, and by making that credit permanent.

More savings and investment in businesses also raise productivity. Mr. McCain will stimulate saving by keeping tax rates low on the returns to saving in the form of dividends and capital gains. He will also allow faster depreciation of assets, which encourages investment. And he will strengthen the incentive to save by reducing the maximum estate tax rate, with a substantial, untaxed exemption.

This part of the plan is what is most interesting and we will see if he is elected.

Tax revenues will increase robustly over the next few years with Mr. McCain’s overall tax strategy as the economy grows — even with conservative economic growth assumptions. And by maintaining strong control over the growth of government spending, Mr. McCain will bring the budget into balance. His long record of fighting against excessive government spending, his plans to veto earmarks and reverse the spending binge of the past few years, and his strong commitment to balancing the budget can make this goal a reality.

Candidates Tax Plans–Revisited–McCain First

A close look at their proposals shows that the differences fall neatly along the traditional policy gulf that has long divided Republicans and Democrats: liberating the wealthy with tax cuts to stimulate the nation’s prosperity versus raising their rates to redistribute the tax burden and pay for crucial government programs.

Both candidates have promised to balance their tax relief programs with budget cuts designed to trim soaring deficits. But the Tax Policy Center has warned that both plans — coupled with the candidates’ high-cost healthcare proposals — would balloon the $9.6-trillion national debt. The center’s analysis reported that McCain’s tax proposals would add $5 trillion to the debt over the next 10 years, while Obama’s would add $3.6 trillion.

McCain’s plan would cater to wealthy taxpayers and corporations by extending and expanding President Bush’s tax cuts, slashing corporate taxes and weakening the estate tax, but it would also aid taxpayers across the board by making the full Bush cuts permanent.

A deficit hawk and formerly a critic of the massive tax cuts launched in 2001 by the Bush administration, McCain now embraces the tax policies of supply-side economists who contend that lifting the tax yoke on the rich would encourage investment and stimulate the economy. “Wealth creates wealth,” McCain said during a primary debate in Michigan last year.
McCain also has proposed a sharp reduction in corporate taxes. He would pare the two highest corporate tax brackets, 34% and 35%, down to 25%. The top bracket would be immediately eliminated, and the 34% bracket would be phased down to 25% between 2009 and 2014.

He would also maintain the 15% tax rates on dividends and capital gains for the highest-tier taxpayers. And starting in 2010, McCain would substantially reduce the estate tax. He would increase the exemption on inherited funds from $3.5 million to $5 million and sharply lower taxes on remaining wealth from 45% to 15% — moves that would enable affluent families to hold on to more of their wealth.

Democratic-leaning economists say McCain’s plan offers little new aid to squeezed middle-class families. And they question whether corporations and wealthy Americans would convert McCain-era tax savings into new investments that would bolster the economy.

Is Obama’s Tax Plan Welfare?

Barack Obama’s tax plan is the opposite of supply-side economics. He proposes to raise marginal rates for just about every federal tax. He also proposes a raft of tax credits that taxpayers can receive if they engage in various government-specified activities.

Moreover, the tax credits would mostly go to those who pay little or nothing in federal income taxes. His trick is to make the tax credits “refundable.” Thus, if the tax credit is for $1,000, but the taxpayer would otherwise only pay $200 in taxes, the government would write a check to the taxpayer for $800. If the taxpayer pays nothing in federal income taxes, the government would pay him the whole $1,000.

Such credits are not tax cuts. Indeed, they should be called The New Tax Welfare. In effect, Mr. Obama is proposing to create or expand a slew of government spending programs that are disguised as tax credits. The spending on these programs is then subtracted from the total tax burden, in order to make the claim that his tax plan is a net tax cut overall.

On the tax side of the ledger, the details released by his campaign last week confirm what a President Obama has in mind for our most productive citizens. The top individual income tax rate, for example, would be increased by 13%, to 39.6%; the next-highest rate would be raised to 36%. The top rates on capital gains and dividends would rise by a third, to 20%

The Social Security payroll tax would be raised between 16% to 32% for families making over $250,000 a year. This means that the real returns these people get from their lifetime payments into the retirement program will be driven below 0%, according to my own previous research, which was published by the Cato Institute and elsewhere.

Mr. Obama also wants a permanent federal estate tax, with a top rate of 45%; his health-insurance plan includes a new payroll tax on employers; and he also contemplates several increases in the corporate income tax, including a new so-called windfall profits tax on oil companies.

I understand why people would say that it is welfare, but if we are to have all these new programs it will take cash and without new taxes, where will that cash come from?

Obama’s Tax Plan

With John McCain attacking him as a tax raiser, Sen. Barack Obama tied off the loose ends of his tax policies today, saying he would set the tax rates paid on most dividends and capital gains at 20 percent, substantially below where they stood during most of President Clinton’s presidency and lower than most Republicans expected.

He also clarified that that a proposal to impose Social Security taxes on incomes over $250,000 would not start until at least a decade from now.

The new details of the Obama tax plan are not new policies but are clarifications on vague statements from the senator from Illinois in the past. Obama has said for some time that he would raise dividends and capital gains tax rates from the 15-percent level reached in President Bush’s 2003 tax cuts, but he put the range somewhere between 20 percent and 28 percent. In an opinion piece in the Wall Street Journal today, Obama aides and advisers picked the lowest point in that range — a decision made as McCain pummels Obama as a tax hiker with a barrage of ads running during the Olympics.

By choosing a 20 percent tax, Obama is bringing tax rates on investments up to a mid-way point for families earning more than $250,000. Families below that level would continue paying the existing 15 percent rate. Obama economic aides Jason Furman and Austan Goolsbee noted that a 20 percent capital gains rate is well below the level set by Ronald Reagan in 1986. And Bush didn’t even think to lower the rate on dividends in his first round of tax cuts.

How About A Carbon Tax

One of the most pressing issues facing the candidates is global warming or climate change, whichever you prefer.  I want to talk about ways to stop or at least slow down the effects of said issue, at least from the Dem perspective.  I have listened to the candidates and their positions on helping the planet.  So far I am not too impressed with many of their views.  To me they are given too much time for the elimination of the harmful emissions.  IMO, the popular cap and trade that is being proposed by most candidates will not do the trick.

The leading candidates have the same plan, only with slightly different end goals.  That is a cap and trade system.  That is efforts to curtail emissions through fuel economy standards, biofuel mandates, or appliance standards may be well-meaning, but in my opinion, this is not the answer.  Clinton wants to cut oil consumption in half by 2025; Obama wants to a two-thirds reduction by 2050 and then there is Edwards who wants an 80% reduction of greenhouse gases by 2050.  All these are cap and trade approaches.

The program that I feel would be better in the control of the situation is an emissions tax.  But it is a TAX!  Yes it is and taxation seems to be an ugly word these days, but if taxation discourages consumption; for example, taxing carbon emissions discourages carbon consumption, why would this be a bad idea?  The less carbon emissions released into the atmosphere the better and more healthy the planet will be. 

There are five reasons why the emissions fee or carbon tax is better than the popular cap and trade.  These are the reasons put foward by carbontax.org

    * Carbon taxes will lend predictability to energy prices, whereas cap-and-trade systems will do little to mitigate the price volatility that historically has discouraged investments in less carbon-intensive electricity generation, carbon-reducing energy efficiency and carbon-replacing renewable energy.

    * Carbon taxes can be implemented much sooner than complex cap-and-trade systems. Because of the urgency of the climate crisis, we do not have the luxury of waiting while the myriad details of a cap-and-trade system are resolved through lengthy negotiations.

    * Carbon taxes are transparent and easily understandable, making them more likely to elicit the necessary public support than an opaque and difficult to understand cap-and-trade system.

    * Carbon taxes can be implemented with far less opportunity for manipulation by special interests, while a cap-and-trade system’s complexity opens it to exploitation by special interests and perverse incentives that can undermine public confidence and undercut its effectiveness.

    * Carbon tax revenues can be rebated to the public through dividends or tax-shifting, while the costs of cap-and-trade systems are likely to become a hidden tax as dollars flow to market participants, lawyers and consultants.

The costs passed on to each consumer might be noticeable, but need not excessive. An emission fee of $15/ton or a permit price of $15/ton would increase gasoline prices about 15 cents per gallon and residential electricity prices about ¾ of a cent per kilowatt-hour, according to Joe Aldy of the Progressive Policy Institute.   

The proposals of the “Big 3” take too long to achieve the goal of cutting emissions and saving the planet for future generations.  Personally, since we all are contributors to the problem then we all should be part of the solution and the best solution is the emissions fee.