Posts tagged with: taxes

Blog author: kschmiesing
posted by on Thursday, November 8, 2007

Sophisticated followers of politics such as the readers of PowerBlog will not be surprised by this story, but I’ll bring it to your attention anyway. The US House recently passed a bill that includes a dramatic tax increase on mining businesses. Supporters argue that the tax helps reign in the environmentally abusive mining industry. Higher taxes. Environmental concern. Senate Democrats would be scrambling to get on that bus, right? One problem: Majority Leader Harry Reid is from Nevada, whose economy depends heavily on the extraction of minerals and metals.

It reminds me of one of Hillary Clinton’s recent controversies, the ethanol flip-flop. Her spokesman explained: “She has always been a supporter of ethanol except for a time when there was evidence that New York would be hurt economically.” No doubt. If only pro-tax, “pro-environment” politicians would be equally sensitive to the economic ramifications of their policies even when they’re not immediately obvious to their own constituents.

Blog author: jarmstrong
posted by on Wednesday, May 23, 2007

Both of our major political parties have missed what seems so obvious. One says that we need more tax cuts to strengthen the economy. This is correct. The problem is that they are not willing to also make serious budget cuts. That party has spent more than any previous administration. The other political party wants to expand federal government by spending more of our money by raising taxes. The first plan helps the economy in the short run but not in the long term. The second is an even worse disaster I think.

Look, budget deficits are not a good thing, at least not in my simplistic understanding of economics. What individual would decrease their revenue, at least for the short term, and then also increase spending, for the long term? I know, cutting tax rates generates more money in the long run and thus the government benefits. I agree with that proven principle. Ronald Reagan advanced it and to the astonishment of all his enemies it worked.

What I do not think is a proven fact is that you can keep raising government spending, so as to increase deficits, and not someday have to "pay the piper." The late Milton Friedman, a hero of mine, continually noted that the burden of government is best measured by the level of our spending, not by the level of our tax rates. John Stossel pointed this out very clearly in his syndicated column that appeared in my paper today.

Here is the bad news. Your FICA and Social Security taxes currently exceed the expenditures of these programs. But by 2017 or 2018 this will all change when the baby boomers start to retire in massive numbers and begin to drain the system. Stossel gives President Bush some credit for the falling deficit because of his tax cuts. This plan has shrunk the deficit, at least to some extent. Cutting taxes and cutting deficits are not opposites. Both can and should be done. There is enough blame to go around in Washington. I want to decrease tax rates even further but I also want to seriously decrease federal spending.

John Stossel notes that the anti-Federalist writer Melancton Smith (1787) wrote: "All governments find a use for as much money as they can raise." That is the real issue and few will admit it, whether Republicans or Democrats. One party generally does a better job with this issue than the other but the difference is more one of degree than of deep and true principle, or so it seems to this amateur. I am open to seeing this differently but I think the obvious is pretty obvious. We need to grow the economy, allow people to keep their own money so they can spend it and create new jobs, and limit the role of government in solving every social ill we face. I believe there are some pressing issues that demand federal solutions. I am not a libertarian Luddite. But I also believe that at some point we had better face this deficit issue and slow spending or we will soon face financial and social chaos like we have never imagined.

John H. Armstrong is founder and director of ACT 3, a ministry aimed at "encouraging the church, through its leadership, to pursue doctrinal and ethical reformation and to foster spiritual awakening."

Blog author: jballor
posted by on Friday, March 9, 2007

Some of Michigan’s economic woes are pretty well outlined in an editorial in today’s OpinionJournal, “MoveOnOutofMichigan.org”.

It begins by noting a symbolically important defection:

Comerica Inc. was founded in 1849 in Detroit and the Detroit Tigers play in Comerica Park, but this week the bank holding company announced it is moving its headquarters to Dallas–where, it said, the bigger growth opportunities are. Consider it one more vote of confidence in the state the national expansion forgot, and especially in Michigan Governor Jennifer Granholm’s economic agenda.

Read the rest here.

Michigan’s unemployment rate was 6.9% in January, the worst in the US, and has been one of the worst in the nation for about the last two years.

As a side note, the actual website MoveOnOutofMichigan.org is “coming soon.”

Blog author: jballor
posted by on Wednesday, December 27, 2006

Our series on the year in review continues with the second quarter:

April

“Surprise! Evangelical Politics Isn’t Univocal,” Jordan J. Ballor

So from issues like immigration to global warming, the press is eager to find the fault lines of evangelical politics. And moving beyond the typical Jim Wallis-Jerry Falwell dichotomy, there are real and honest disagreements among evangelicals on any number of political issues….

May

“How Do You Spell Relief?” Jordan J. Ballor

If Congress really wants to address the rising price of oil over the long-term, the only thing it can really do is act on what it directly controls. Congress doesn’t control supply and demand, but it does control how much it adds in taxes to the price per gallon. Why not cut or suspend the federal gas tax indefinitely?…

June

“There are more environmentalist misanthropes than you think,” Jay Richards

But anyone who reads widely in the environmental literature knows that suggestions such as Pianka’s are not uncommon. In fact, the desire for mass human death follows logically from the anti-human beliefs of some radical environmentalists. Some are more consistent in their beliefs than others. But Pianka is by no means the only person to express such opinions….

Blog author: jballor
posted by on Thursday, December 21, 2006

Filing your taxes just got a little more complicated. The IRS recently announced new guidelines for charitable deductions to be introduced for the 2007 tax year. Beginning next tax season, “taxpayers must provide bank records or other information when claiming deductions for charitable donations of money.”

These records can include credit card statements and canceled checks. And in addition, taxpayers “may also submit a written communication from the charity with the organization’s name, the date of the transaction and the amount of the contribution.” A number of charities that I contribute to already provide me with year-end statements, so just be ready to pass that paperwork along with your return.

HT: Zondervan>To The Point

Blog author: jballor
posted by on Wednesday, September 20, 2006

NBC Nightly News has long had a special feature titled, “The Fleecing of America,” which investigates various instances wasteful spending by government officials.

To get a visual clue about the massive size and diversity of the federal budget, check out “Death and Taxes”, the 2007 edition, “a representational graph of the federal discretionary budget. The amount of money that is spent at the discretion of your elected representatives in Congress. Basically, your federal income taxes.”

The website also notes, “Don’t forget about the national debt! It’s the circle so big it doesn’t even fit in the box.”

I recommend printing out the graph in landscape orientation on ledger-sized paper and posting it somewhere near your desk. You’ll get plenty of questions from curious passers-by.

(HT: Mises Economics Blog)



Update: In response to the limitations of the graph noted by Tim in the comments section below, it should be noted that this graph does only refer to discretionary spending. This does not include either the mandatory spending that falls under the federal budget each year or the various entitlement programs, such as Social Security, which are “off budget.” With this in mind, of course, the pork in the graph above is the good news, relatively speaking.

With regard to speculation as to why the makers of the budget graph chose only to look at discretionary spending, I quote this Reason article: “Because discretionary spending can theoretically be zeroed out each year, it is generally regarded as the clearest indicator of whether a president and Congress are serious about reducing government spending.”

Blog author: jballor
posted by on Thursday, August 3, 2006

This story makes me think of an old joke. Stafford, TX has a population of 19,227 people and 51 churches. The city council is making noise about preventing any more churches from opening up because, as tax-exempt organizations, they are threatening the viability of the local government.

My initial reaction: In one sense this is nothing new. Ever since the days of the Holy Roman Empire, church estates have been free from the taxes of civil government, and as monastic and ecclesiastical property holdings grew larger, the civil magistrate grew more and more covetous…after all, there is no tax exemption from the tithe.

I do, by the way, support the idea that the church should be free from paying taxes to the civil government, and not simply because the government deems churches to be of positive social value. The Church and the State are different institutions with different orders of authority. You might say that the State has no authority or right to tax the Church.

And this might even true even if churches want to make political statements (although I have my own view about the prudence of doing so). In this sense, churches perhaps aren’t like other nonprofits, and so perhaps these IRS warnings are based on a misplaced view of the authority civil government.

But I digress. Living in West Michigan, which I believe has to have one of the largest proportions of church space per capita in the country, this hits home. You’ve probably all heard it in some form or another:

A man was shipwrecked and he was able to find his way to an island. He lived there alone for 10 years.

Finally a ship came to his rescue. His rescuers saw three huts that he had constructed and they were puzzled by that. They asked him if he were alone on the island and he answered that he was.

Then, “What was this hut used for?” they asked.

“I live there.” he replied.

“What was the second hut used for?” they asked.

“Oh, that’s where I go to church.” was his answer.

“And the third?” they queried.

“Hmmph! That’s where I used to go to church.”

HT: WorldMagBlog

Blog author: jballor
posted by on Tuesday, May 9, 2006

You may have seen an op-ed in the NYT last week by Tom Friedman, who noted that when oil and gas prices go up, bad things happen in oil producing nations abroad. The tendency is for the oppressive regimes in oil producing nations to consolidate their power and be less responsive to the demands of their citizens when they have the added buffer of huge profits from the sale of oil.

And domestically many have made the claim that rising oil and gas prices are a bad thing. Many people’s pocketbooks have been hit hard, when they stop to fill up at the pump and over the course of the long winter. So many people are against high gas prices that politicians at almost every level have felt the need to respond and make some sort of gesture, token or substantive, to address the issue.

There’s no doubt that the poor, as in most cases, are disproportionately affected by high energy prices. People on fixed incomes often have trouble paying their utility bills when prices spike. Others who must commute to their jobs have trouble filling up the gas tank. Attention needs to be fixed on the people in these sorts of situations, and help should be there when they need it. It must be noted, too, that increased taxes have the same drawback as increased prices from market-pressures: they are regressive.

But for the vast majority of Americans, if addressed honestly, the rising cost of oil is more of an inconvenience than anything else. If people can afford to buy expensive new SUVs and large trucks, they can afford the pinch on their disposable income that higher gas prices mean.

Even so, the inconvenience does have the ability to change people’s behavior, and this is why I’m making the argument that high gas prices have the potential to be a good, albeit a costly one (so to speak). People might drive less, carpool more, walk to the corner store instead of driving, and so on.

But an even bigger point is this: as gas prices rise the cost relative to other forms of energy is bound to decrease. This is why so many environmental advocates have long been arguing in favor of some sort of hefty additional petroleum products tax, which would make other sources of energy more competitive.

But what so many fail to see is that the market can accomplish by itself what such artificial and authoritarian measures are intended to do. Clearly the price we pay at the gas pump includes a huge amount by way of taxes to the various levels of government. But when gas prices rise without an increase in the amount of government taxation, the market itself is making other cleaner and renewable sources of energy more competitive.

As the Cornwall Declaration observes, “A clean environment is a costly good.” This has never been more true than in the case of rising gas prices. The wealth created by market economies allows the creation of new, better, and more efficient technologies. And the market itself gives strong economic incentive to the pursuit of such endeavors, especially when oil prices are on the rise.

It’s high time that environmentalists stopped being so wishy-washy about the market. As Paul Jacobs points out, they like the market when the prices are high but hate it when they are low. On this inconsistency, Jacobs is right. But where he’s wrong, I think, is that arguing for the positive effects of the market in this case automatically means that you must otherwise be for increased taxation to accomplish the same goals.

Related Items:

“Bodies for Barrels,” The McLaughlin Group, May 5, 2006 (archived text of issue available here; search for ” Issue Two: Bodies for Barrels.”) Key quote from Tony Blankley: “I’m in favor of free markets. The people will go to smaller cars if they want them. And trying to force people to buy cars they don’t want is foolish. And anybody who wants to protect their family, particularly if you have children, you want them in a lot of steel around them. And that to me is the better call to protect your children – driving around in Suburbans and large vehicles.”

Tom Daschle and Vinod Khosla, “Miles Per Cob,” The New York Times, May 8, 2006. Another installment of the “governments create markets” fallacy.

Jordan J. Ballor, “Humanity’s creativity helps environment,” Detroit News, April 22, 2006.

Jordan J. Ballor, “Cashing in on Carbon Credits,” Acton Commentary, April 19, 2006.

Blog author: jballor
posted by on Wednesday, May 3, 2006

This section from Reinhold Niebuhr’s Moral Man and Immoral Society: A Study in Ethics and Politics strikes me as quite true:

The coercive factors, in distinction to the more purely moral and rational factors, in political relations can never be sharply differentiated and defined. It is not possible to estimate exactly how much a party to a social conflict is influenced by a rational argument or by the threat of force. It is impossible, for instance, to know what proportion of a privileged class accepts higher inheritance taxes because it believes that such taxes are good social policy and what proportion submits merely because the power of the state supports the taxation policy. Since political conflict, at least in times when controversies have not reached the point of crisis, is carried on by the threat, rather than the actual use, of force, it is always easy for the casual or superficial observer to overestimate the moral and rational factors, and to remain oblivious to the covert types of coercion and force which are used in the conflict.

This obfuscation of motives is part of what differentiates charity from taxation. True charity cannot be coerced.

See also: Reinhold Niebuhr Today, ed. Richard John Neuhaus (Grand Rapids: Eerdmans, 1989).

Blog author: jballor
posted by on Monday, May 1, 2006

You may have heard about the debate in Washington that erupted late last week, as Senate Democrats and Republicans sought ways to respond to rising gas prices. According to Marketplace’s Hillary Wikai, the majority Republicans settled on “a $100 gas-tax rebate to be paid for by drilling in Alaska’s Wildlife Refuge.”

Michigan Democrat Debbie Stabenow proposed “a $500 rebate but pay for it by cutting the tax breaks for oil companies.” She said, “We should instead put that money back in the pockets of the people paying the high gas prices.” But one other Democratic plan was to stop taking that money from the people in the first place, at least temporarily.

The NYT reports that “Democrats were pushing for a 60-day suspension of the federal gas tax of 18.4 cents a gallon, and the Senate Republican leadership settled on the rebate.” The short-term nature of the proposed solutions lead many to suspect that any of the proposed moves are simply pandering to the voters in an important election year.

Indeed, Congress has good reason to distract us from the reality of the situation. As Benjamin Zycher comments (text here), “Oil industry earnings per gallon were about 19 cents in 2005, and have increased to about 23 cents more recently. Federal and state taxes per gallon of gasoline average 46 cents. And so by all means, yes: Let’s have a debate about who is profiteering from the gasoline market.”

Of the two options, clearly suspension of the tax is preferable to filtering money through the government bureaucracy and letting it trickle back to taxpayers. But why make it temporary? If Congress really wants to address the rising price of oil over the long-term, the only thing it can really do is act on what it directly controls. Congress doesn’t control supply and demand, but it does control how much it adds in taxes to the price per gallon. Why not cut or suspend the federal gas tax indefinitely? States could do the same, by the way.

Here are some of the reasons that even the 60-day relief plan was tanked, given by Congressional staffers:

Those leaders and Finance Committee aides said many Republicans opposed the Democratic plan because they feared that oil companies, which pay the gas tax, would not pass savings on to the public, or that the laws of supply and demand would push the price up again.

There was also the probable opposition of House Republicans, who have been reluctant to jeopardize the flow of the gas tax revenue to the highway trust fund that underwrites road and bridge projects.

“Our folks thought it might amount to nothing for consumers,” said one aide who was granted anonymity to discuss internal leadership deliberations.

The first excuse is really just quite lame. If increasing demand raises the prices further, they would still be lower than they would be if the 18.4 cent tax were still in place. The second paragraph really tells the tale. If Americans are addicted to oil, maybe politicians are addicted to taxes.

Instead of being worried that the move might “amount to nothing for consumers,” the politicians are clearly more worried that any move to cut taxes would “amount to nothing” in terms of spendable tax revenue.

Placing limits on the levels of government taxation of gasoline would be a much more substantial and effective move than attempts to set price controls, as advocated in an online petition introduced by Michigan Governor Jennifer Granholm.

According to MichiganGasPrices.com, Michigan gets nearly 20 cents (19.875) in tax revenue per gallon of gasoline sold, and this figure does not include the additional 6% sales tax that is tacked on.

Government leaders should never forget that they are entirely dependent on the productivity and labor of the nation’s citizens for their budgets. Their task is to responsibly and faithfully administer those funds, acting as stewards on behalf of the tax-payers. Attempts to point the blame for rising gas prices solely on oil companies, without acknowledging the basic role of rising demand and high levels of government taxation, is irresponsible and disingenuous.