For last night’s State of the Union Address, President Obama invited Warren Buffet’s secretary, Debbie Bosanek, to sit in the First Lady’s box during the speech and specifically promised in that speech to support tax changes in order to mend the injustice Buffet claims occurs allowing him to pay the lowest tax rate of anyone in his office, including his secretary. This line of attack is doubtless partly designed to pave the way millionaire Barrack Obama to make populist attacks on multi-millionaire Mitt Romney during the upcoming presidential campaign. Romney is, after all, very, very rich, and his income comes primarily from investments.
David Leonhardt at the NY Times asks both right-leaning economist Greg Mankiw and the left leaning Center on Budget and Policy Priorities to comment on this alleged tax injustice. Mankiw makes a fairly reasonable case that the reason capital gains are lower is that investment income is based on corporate profits and corporate profits have already been taxed. Companies would have more profits to pass on to investors (either as dividends or in the form of being worth more) if they didn’t pay corporate taxes, and so the tax on investment income is set lower to avoid this “double taxation”. Chuck Marr of the Center on Budget and Policy Priorities must know the facts aren’t on his side, because instead of answering the question he provides a canned response about income inequality and how tax rates are lower than in the ’70s. The column is worth a read.
However, there’s another issue here which I think is worth pointing out. Progressives writing on this issue usually act as if billionaire investors such as Warren Buffet are all paying right around 15% (the capital gains rate) in taxes — Buffet claims that he pays 17.4% — and that “middle class Americans” are paying the top marginal income tax rate of 35%. Continue reading
In the 2012 election, Ohio will once again be a key battleground state at the presidential level. This will be a new experience for me, now an Ohio resident, as I’ve spent my voting live up until now in California and Texas — two states so solidly in their opposite party’s columns that one at times wondered if it was worth the time to stand in line and vote.
The Ohio vote froom yesterday getting national and international headlines was the rejection of Issue 2, repealing a law which limitted collective bargaining for state employees including teachers, police and firemen. State employee unions poured huge amounts of money into the “No on 2″ campaign and focused heavily on scare tactics. The most frequent claim was that if unions could not negotiate over staffing levels, that police or paramedics would not arrive when you needed them. “Vote no on Issue 2. It could save your life.”
The victory in the No on 2 campaign is being taken as a positive sign by Democrats nationally, but it is likely to be a bad sign for the actual state workers who campaigned so hard for their unions. In the same election, voters rejected a number of local tax levies (both new and renewals) which in combination with the striking down of Senate Bill 5 (via the No on 2 campaign) means that local government will be stuck with old, more expensive contracts and also come up far short on revenues. This means that voters are still very much in a low tax, low budget mood (probably a positive for Republicans come next year) and that unions just spent an unprecedented amount of money in order to get more of their members laid off. Oops.
In yet another state-wide referendum, voters, by a 2-to-1 margin, voted to ammend the state constitution to ban any form of health insurance mandate in Ohio. Given that state constitutions cannot override federal laws, this is mostly a symbolic gesture, however with the ammendment getting a majority in every single county, it underscores how unpopular some of the key ideas of ObamaCare remain with voters.
It remains to be seen which of the two statewide issue votes prove to be the more suggestive of how Ohio voters will lean in the 2012 election.
There have been worries expressed on both sides of the political spectrum about the use of drone killings against Al Qaeda, and more especially so as it’s come out that the Obama Administration has a secret “kill list” which even includes American citizens who are working with Al Qaeda overseas (as was the recently killed Anwar al-Awlaki).
It seems to be that there is a legitimate worry here. In a sense, drones are the modern American equivalent of pillars of the Victorian British Empire such as Charles “Chinese” Gordon — gallivanting about the world to put down disturbances wherever they occur. However, they’re also relative unobtrusive and cheap. Thus, I would imagine that there is more danger of them being used to embroil us in conflicts that we really don’t want to be in. (Which, come to that, is more or less what Gordon managed to do for the British Empire on an occasion or two.) While I think that US hegemonic power, like that of others such as the British and Romans in the past, is generally a positive force in the world, power is often a temptation to over reaching. Putting international intervention only a joystick away, without any need for congressional approval or oversight, seems to put just a bit too much power in the hands of an already imperial presidency.
A Pew/WaPo poll over the weekend asked people to give the one word they believed best described the then-still-ongoing debate in congress over the debt ceiling and budget cutting issue. The results are:
The disgust was shared by Democrats, Republicans and Independents, and people reported that their impressions of both Obama and the Republican congressional leadership had worsened (from their already low levels.)
That no one is impressed with the specter of a bunch grown men and women squabbling endlessly is probably unsurprising — if we saw what congress was up to more often we’d probably have this reaction frequently. However, it seems to me that there are two things which make this go-round particularly bad.
I wish I had a dollar for every time a wealthy liberal has declared he thinks he should pay more taxes. That list includes Warren Buffett, George Soros, Bill Gates Sr., Mark Zuckerberg and even Barack Obama, who now says that not only should rich people like him pay more taxes, they want to pay more. “I believe that most wealthy Americans would agree with me,” he said of his tax-hike plan. “They want to give back to the country that’s done so much for them.”
So why don’t they? There is a special fund at the Treasury Department for taxpayers who want to make “gift contributions to reduce debt held by the public.” But very few do. Last year that fund and others like it raised a grand total of $300 million. That’s a decimal place on Mr. Zuckerberg’s net worth and pays for less than two hours worth of federal borrowing.
I understand the basic satisfaction of saying, “Look, mister, if you really want to pay more taxes, no one is stopping you,” but I don’t think that it’s actually a very good argument. The reason why people like Bill Gates and Warren Buffet advocate for higher taxes but don’t voluntarily pay higher taxes than the law requires is pretty obvious: Continue reading
Reading a rather cursory opinion piece this morning (calling for federal spending to be decreased) it occurred to me that there’s an interesting symmetry to what the more aggressive advocates of tax increases and spending cuts suggest:
The most passionate tax increase advocates frame their calls for tax increases in terms of some prior level of taxation: “We should roll back all the Bush tax cuts and return to the tax rates people payed under Clinton. We all remember the ’90′s; the world didn’t end when the top marginal tax rate was 39.6%” or “By golly, we should go back to the tax tables that were in force under that ‘socialist’ Eisenhower. 91% top marginal rate. That’ll teach those corporate fat cats to vote themselves bonuses.”
Similarly, when passionate spending cutters explain their plans, they tend to phrase it in terms of rolling back to a previous level of spending: “These ‘draconian’ cuts in fact only represent a return to 2006 spending levels. Did we starve in the streets then? Did the world end?” Continue reading