How Big Will the Democratic Tax Increase Be?

USA Today does the math, and concludes that Barack and Hillary are promising an awful lot of new spending -- given the level of the federal deficit:

As detailed below, both candidates have major new health care initiatives and other spending proposals; Obama tacks on a major tax cut for working Americans to offset Social Security tax payments...

A rollback of Bush's tax cuts for the wealthiest Americans could generate perhaps $75 billion next year. The Iraq war savings are much harder to figure. The war has been costing about $100 billion per year. But a Democratic president, once in office, might decide that national security demands a gradual withdrawal, or a redeployment to Afghanistan. Health care for Iraq war veterans will run into the billions for decades. It's unlikely that winding down the war will produce a large, quick peace dividend capable of supporting a host of new programs...

None of this seems to trouble the candidates. Clinton — who also promises to bring back the fiscal responsibility of her husband's administration, when the budget moved into surplus — and Obama present their ideas with a mix of inspirational rhetoric and populist anger.

As Allah would say, Exit Question: how much longer can the Democrats' complain about the increased deficit under President Bush, while simultaneously promising huge spending increases of their own? And can Democrats win an election in which John McCain points out that simple math dictates their tax increases must be much higher than they are willing to admit?

Update: Ed Morrissey has a post worth reading as well.

Time to Triple the Gas Tax?

Read it at the Standard.

A Funny Idea of 'Consumer Protection'

The State of Maine -- and a number of others -- have decided that there's one class of private property that reverts to the state if it is not used within two years. If the class of property were a car, or a home, or a piece of real estate, we would never stand for it. Elected officials would get tossed out of office if they tried to confiscate those. But apparently the states feel that there's at least one sort of property that's different: gift cards.

Maine officials say the issue is consumer rights and some of the billions of dollars in unused gift-card value whose ownership cannot be determined should revert to the public instead of retailers.

“There is a windfall of sizable proportions here that Maine law wants to return to the consumers, and that the national retailers want to hold on to,” said Lemoine, who has sought — without success so far — to get large chains to pay up.

The retail industry says the Maine law is simply a money grab.

“States have no legitimate claim to that money whatsoever,” said Craig Shearman of the National Retail Federation. “This is really a situation where states are seeing revenue shortfalls, and they’re looking for ways to put their hands in somebody else’s pocket to cover their tax situations...”

Nationally, unused value is expected to drop to $7.8 billion this year from $8 billion last year. Most gift cards issued by retailers have no expiration date, and Maine is among the states that prohibits expiration dates on the cards.

Note the attempt at misdirection by the way: if you fail to use a gift card for 2 years, the state considers it a card 'whose ownership cannot be determined.' That's silly of course. The ownership of the balance is no less certain than a card that's been outstanding for a week. In either case, all that anyone can determine with certainty is that it hasn't been used. There's no way to tell who has the card, of course.

It's also ironic that the state of Maine makes it illegal for retailers to put expiration dates on the cards -- since the state is effectively doing exactly that. After two years, the card expires (for the consumer) and the balance is transferred to the state.

Why stop here? Why not seize bank accounts with no activity for two years? Or real estate? Why not set up a program for consumers to give unwanted Christmas gifts to the state? What exactly is the difference?

At what point does the state magically assume some right to step in between gift giver and recipient, and decide that the recipient no longer wants the gift?

I prefer honest taxes.

One more question: how is it that this does not constitute interference with interstate commerce -- a power reserved in the Constitution to the federal government?

Hope You're Not Counting on That Tax Refund

Read it at the Standard.

Democrats 130% Tax Increase in Doubt

Read it at the Standard.

An Idea to Use With Your Credit Card Company

How many times can you spend $6 billion you don't have? Congressional Democrats have done it four times (and counting):

In four separate pieces of legislation -- two energy bills, the farm bill and a bill that would fund rural schools and libraries -- lawmakers in the House of Representatives make use of $6 billion in payments from oil companies.

Unfortunately, the same $6 billion gets spent in each bill.

What's more, because of a recent federal court ruling, it's unclear whether that money will ever be collected.

It's an extreme example of the contortions Congress has been going through to comply with pay-as-you-go rules put in place by the Democratic majority, requiring that any spending increases or tax reductions be offset with spending cuts or tax increases.

Don't worry. If the money fails to materialize, it simply gets tacked onto the federal deficit. Then... oh yeah. YOU pay for it.

Democrats' 130% Tax Increase Hits Ethics, Political Problems

Read it at the Standard.

House Democrats Push Higher Taxes on Housing Sector

Read it at the Standard.

Are Taxes Still a Cutting Political Issue

Some have noted that voters don't seem to be as concerned about taxes as they have been in recent years. A look at a recent district-wide mailer from Representative Kirsten Gillibrand (D-NY) suggest that she at least, thinks they remain an important voter concern.

She's using taxpayer dollars to make sure constituents see lots of fake headlines about tax cuts, in an attempt to convince voters that Democrats aren't really planning dramatic tax hikes.

Will Congressional Democrats Hike Taxes... By Procrastinating?

Read it at the Standard.

The Logic of S-CHIP

This video captures extremely well what Congressional Democrats claim to be doing on S-CHIP:



The thing is, it's not actually true.

In funding S-CHIP, Democrats project that 22 million people will take up smoking and pay the taxes needed to fund the expansion. In reality though, they know that won't happen. It's just a paperwork gimmick to make it look like the program is paid for, so they can pass the measure under Congress' pay-go rules. Instead, the additional cost will simply be tacked on to the national debt -- to be paid for down the road by higher income taxes on all Americans.

Now do you feel better?

Update: Rob points out:

Good point, but don't forget it was Heritage that did the research about the 22 million.

True. Point taken.

Why I Don't Like Mike Huckabee

How did Mike Huckabee emerge to draw such attention on this blog?

Oh well -- the reason why is over here.

Rangel's Tax Bill: Rob from the Rich, Give to the Less Rich

Read it at the Standard.

Reich's Hypocritical Argument on Inequality

Listening to Reich on income inequality is like asking the arsonist for advice on how to put out a fire. Jump to the bottom of the post if you want to see why.

I note that McQ has a great post over at QandO on Robert Reich's misleading piece in support of soaking the rich to pay for costly new government programs. McQ says:

This is easy stuff, folks. Note the premise. The bill, its size or what is on it is not open for discussion. All that is open for discussion is who gets stuck with it. And that is how the Democrats and Reich frame the argument. Imagine going into a restaurant, having a meal delivered to your table which you didn't order and because you look fairly prosperous, finding the bills of 4 other tables added to yours because they're not. Outraged? You bet you would be outraged.

But we hear basically the same argument here and most of us accept the premise because it probably won't be us footing the bill (just like those 4 tables of diners probably were fine with you picking up their tab).

Reich's entire premise for new taxes on the rich is that the current system is unfair. But federal tax data continue to confirm the progressivity of the current system. As Bob Bartlett points out:

Fleischer's main point is that a growing percentage of the population is paying no federal income taxes. He said the figure is 40 percent, based on a recent study by the Congressional Budget Office showing that the bottom two income quintiles (20 percent of households) paid no federal income taxes in the aggregate in 2004. This is because the Earned Income Tax Credit offsets all of the tax liability for those who had incomes below $29,400.

Fleischer was quickly taken to task by liberals like Jared Bernstein of the Economic Policy Institute and Jonathan Chait of The New Republic for ignoring the burden of payroll taxes on those with low incomes. The same CBO data cited by Fleischer show that those in the bottom quintile paid 8.2 percent of their income in payroll taxes and the second quintile paid 9.1 percent.

This is the standard liberal response to data showing that the wealthy are shouldering a greater and greater share of the income tax burden. According to the CBO, those in the top quintile paid 85.3 percent of all such taxes in 2004. In 1979, the first year of the CBO study, this group paid only 64.9 percent.

Inclusion of payroll taxes in the calculation doesn't change the picture that much because the top quintile of households paid 44.2 percent of all payroll taxes in 2004. Overall, this group paid 67.1 percent of all federal taxes -- well above their share of reported income, which was 53.5 percent.

Of course, we have a progressive tax system, and the wealthy are expected to pay more than their proportional share of taxes. The CBO data confirm that our federal tax system is indeed very progressive. Looking at all federal taxes, including payroll taxes, those in the lowest quintile paid 4.5 percent of their income to the federal government in 2004, the second quintile paid 10 percent, the third paid 13.9 percent, the fourth paid 17.2 percent, and the top quintile paid 25.1 percent.

Bartlett is going easy on the critics, too. Liberals have generally been very wary to change the current payroll tax structure. This is because it is easier to argue that Social Security is a pension plan when all contribute equally to their benefits. If you exempt those at the bottom -- or merely give them a lower rate -- you change the program from a pension plan to a welfare plan, and make it easier to cut benefits. For that reason Democrats have generally opposed plans that change the payroll taxes paid by earners at the low end.

And with regard to income inequality overall, is it going up under Bush -- as Reich claims? Not according to the Census Bureau and Congress' Joint Economic Committee:

According to a key Census Bureau measure, income inequality was essentially unchanged between 2001 and 2006. In response to a request by the Republican staff of the Joint Economic Committee, a statistical test performed by the Census Bureau earlier this week confirms that no statistically significant change in the inequality measure occurred between 2001 and 2006...

“Despite all the discussion about income inequality, the fact is that it hasn’t changed in recent years, according to the Census Bureau measure,” ranking Joint Economic Committee member Congressman Jim Saxton said today. “Congress should consider this fact before acting on the assumption that income inequality is surging.

How does Bush's record compare with the record under the Clinton administration -- when Robert Reich served as Labor Secretary?

However, the rise of the income share of the top 1 percent of tax filers ranked by income during the 1990s is very pronounced. For example, between 1992 and 2000, this share jumped from 14.23 percent to 20.81 percent, a huge increase of nearly 7 percentage points. Meanwhile, the income share of the bottom half of tax filers fell from 14.92 percent in 1992 to 12.99 percent in 2000.

Reich in his piece asserts:

The wealthiest 1 percent of Americans earn more than 21 percent of all income. That's a postwar record.

So under the Clinton administration the share earned by the top 1 percent climbed 6.78%, while under President Bush it has climbed less than 0.4%.

Reich's argument is as full of holes as his credibility on the issue.

Update: I note good arguments on this over at Wake Up America, Sister Toldjah and Protein Wisdom as well.

Rangel Proposes Largest Tax Increase in American History

Read it at the Standard.

Senate Democrats Block Vote on Permanent Internet Tax Ban

Read it at the Standard.

The Fruits of Protectionism

As a pro-free-trade Republican, I will frequently disagree with 'fair traders' -- both Republican and Democrat. Therefore it's no surprise that I disagree with representatives English (R-PA), Altmire (D-PA), Visclosky (D-IN), and Hayes (R-NC) on the use of Chinese steel in the border fence:

House members allied with the domestic steel industry blasted the Department of Homeland Security (DHS) on Thursday for building a fence on the Mexican border with steel products from China.

“By allowing the use of Chinese pipe, DHS is allowing the U.S. taxpayer to subsidize Chinese production at the expense of the American workers,” Rep. Phil English (R-Pa.) said at a press conference. “This is completely unacceptable.”

“This is outrageous, it’s offensive and it’s unacceptable,” charged Rep. Jason Altmire (D-Pa.).

“It is beyond outrageous that we’re using Chinese steel to build a border fence to protect us against illegal immigration,” said Rep. Robin Hayes (R-N.C.), who also joined the press conference...

DHS’s Office of Congressional Affairs indicated to English’s office that it had waived so-called Buy American rules, which normally require the use of U.S. steel in such projects, in order to use the Chinese pipe and tube, English said.

This is the funniest part of the piece:

Rep. Pete Visclosky (D-Ind.) said he was concerned about the safety of Chinese steel. However, when pressed, he and other lawmakers could not cite any specific safety problems that might result from the use of foreign pipe in a fence. Visclosky did note other safety issues that have recently come up with toys from China, while English said the use of Chinese inputs in U.S. infrastructure prompts broader concerns.

The safety of the steel? Can someone describe the potential safety concerns with a steel fencepost? Are they afraid it might explode? Or is the concern that it will collapse without warning -- potentially... bruising the head of the illegal immigrant attempting to bring down that section of fence?

Does the American steel industry need the help? It's enjoyed an unprecedented run of success since 2004 -- partly because the federal government helped bail the industry out of its overly generous pensions. US steel companies enjoyed record revenues and profits in 2006. Why aren't we treating steel like oil -- and imposing windfall profit taxes on the industry, to punish it for taking advantage of a highly-regulated market to gouge domestic consumers? After all, high steel prices damage the competitiveness of American industries that depend on steel -- such as autos. Aren't we trying to help the American auto industry?

More importantly, isn't there a strong public interest in ensuring that American taxpayers get the most 'bang for the buck' when it comes to spending their hard-earned tax dollars? Don't we want to buy the most border fence we can with limited revenues? Democrats are livid about deficit spending to fund the war in Iraq; why do they want us to add to the federal deficit to purchase more expensive steel from producers enjoying record profits?

I better not see any of these Members of Congress issuing press releases complaining that federal agencies are wasting taxpayer dollars, given that they favor wasting it here.

Tax Fix Tests Democratic Campaign Promises

Read it at the Standard.

Democrats Quietly Looking for Support for War Tax

Just proof that as far as House Democrats go, a good idea never goes away:

Rep. John Murtha (Pa.) opposed House Speaker Nancy Pelosi (Calif.) on two major issues this week, repeating a pattern of alternating agreement and disagreement between the two influential Democrats.

Murtha renewed his call for a surtax to fund the Iraq war, an idea Pelosi has shot down, and he cautioned against bringing up legislation to condemn the Armenian genocide, a measure Pelosi supports...

Despite being rebuffed by Pelosi on the war surtax earlier, Murtha and Reps. Dave Obey (Wis.) and Jim McGovern (Mass.) wrote their colleagues Tuesday to gather support for the idea.

Meanwhile, Charlie Rangel is planning to propose a tax increase of about a trillion dollars. And at the same time, the Congressional Budget Office estimates that the budget will be balanced by 2012 -- if Democrats don't bust the budget with new spending.

So why do we need another new tax, exactly?

SCHIP Polling Should Worry Democrats

Go read the story over at Rob Bluey's site:

• 52% agree with Bush that most benefits should go to children in families earning less than 200% of the federal poverty level — about $41,000 for a family of four. Only 40% say benefits should go to such families earning up to $62,000, as the bill written by Democrats and some Republicans would allow.

• 55% are very or somewhat concerned that the program would create an incentive for families to drop private insurance. Bush and Republican opponents have called that a step toward government-run health care.

As the House and Senate prepare to vote on a veto override -- one that's certain to fail -- it's worth noting that Americans are closer to the president's position on this. It's enough to make you wish he was not so weak as a spokesman; he might otherwise be able to challenge the expansion more effectively.

More broadly, the lack of support for an expansion of health care that would help needy children -- the Democratic line -- should worry the Democrats. The Democratic campaigns are operating that the era when big government was over has concluded. They saw themselves as free to advocate bigger spending and higher taxes. But if even this program can't get a majority in support -- before the question of how to pay for it is even broached -- what does that suggest about the proposals of Democratic candidates for president? Maybe America isn't ready for a return to the Carter era.