The Wall Street Journal reports on what the Democrats have on their agenda before Congress takes its August vacation this year — and it’s not how they can reduce expenses. Instead, the Democrats have a raft of new and increased taxes for the American public, a few of which threatens to return us to the marginal rates of the Carter administration:
With a new Democratic majority, the agenda on Capitol Hill has shifted abruptly this year, and no more so than on taxes. For a decade the focus in Congress was which taxes to cut. Now everywhere you look someone running the Congress, or running for President, is proposing to raise taxes on some industry or group of Americans. …
It’s all the more remarkable given that federal tax revenues as a share of GDP are currently above their modern historical level. The latest budget estimate is that fiscal 2007 revenues will reach 18.8% of GDP, compared to the 40-year historical average of 18.3%. Tax revenues this year are rising by nearly 8%, following increases of 11.8% in 2006 and 14.6% in 2005. The budget deficit is down to 1.5% of GDP, and falling. But apparently Democrats still think Americans are undertaxed.
It’s quite a list, too. On CQ Radio today, Phil Kerpen deconstructed the capital-gains tax increase for hedge funds and private equity from 15% to 35%, the top marginal rate for personal income tax. Like most other capital gains, this income has already been taxed through the partnerships. However, despite the populist rhetoric coming from the Democrats on this topic, the primary investors that this tax will affect will be the limited partners who will wind up with smaller returns as the general partners absorb more of the revenue to cover the increased taxes. Those limited partners are in large part pension funds for teachers, police, and firefighters, as well as other unions and public employees.
But that’s not where the Democrats stop with new taxes. As the WSJ points out, that’s merely where it starts:
Elections have consequences, and the last one has large consequences for the American economy. Taxing foreign companies at a higher rate will have the effect of discouraging the expansion of foreign investment here in the US. For American workers, that means more outsourcing of jobs and a higher trade imbalance. How does that make America more competitive?
The higher taxation of oil leases seems especially backward at this moment. We’re hearing nothing but “energy independence” from the Democratic presidential candidates. How do they think we’ll accomplish that — by discouraging domestic production? Now the workers who lose jobs when foreign companies pull out of the US can pay higher gas prices, too.
So far, the Democratic Congress has delivered on its promise to return to the economic policies of a previous Democratic administration. They just didn’t mention that they meant the Carter administration.
Well, how about a spiffy tax on US companies who shut their doors and move off-shore (Mexico, anyone). That revenue could be used to subsidize the people who gave years of their lives to the company just be laid off!
You’re darn right that elections have consequences. The conservatives who did not vote Republican in the last election will have no right to complain if this Democrat Congress passes these tax hikes. After all, they helped to elect these Democrats, so this must be what they wanted.
I agree with Lakeside. In fact I remember Peggy Noonan and people like her telling voters to stay home and send a message to the GOP.
I got the message, and my response is Shut Up Peggy.
Moving to MX is strictly a surival plan, foreign competitors with low prices drive that engine. Companies would keep US employees if they could, many problems moving anything south or farther.
Didn’t the dems just learn tax breaks boost the economy…slow learners or just want to control anything that’s left after they ruin it all.
Ever notice how people either complain that all the jobs are going to Mexico or that all the Mexicans are coming here and taking jobs?
Which is it? The truth is that companies will go where the labor is.
The Dems liked to tout that “elections have consequences”. Their tax plans go into effect, they’re going to learn what Bush 41 found out, raising taxes also ‘has consequences’.
Democrats in Congress follow the vote-selling sector of the American market. It’s about the only valuable commodity they understand, or even care about.
Simply ‘Wow’.
Even with the various socialist disasters as examples around the Globe, Democrats still want to push the most unhealthy burdens on the American Public.
Another painful reminder of the differences between the Parties…
Those who sought to teach us, (Republicans-Conservatives-Etc.), a lesson in the last election by not voting, could not have been more misguided.
But they have a chance to correct the concerning problem, with a strong rebuke of the Democrat Party in 2008.
Terrye,
You said:
” I agree with Lakeside. In fact I remember Peggy Noonan and people like her telling voters to stay home and send a message to the GOP.
I got the message, and my response is Shut Up Peggy. ”
What a great post !!! I agree whole-heartedly!
At the same time, I was thinking…so I can run for political office and take the following stances:
1. I’ll raise your taxes by about 15%
2. I’ll increase the taxes on your investments earmarked for retirement by about 13%
3. I’ll support negotiations with terrorists and countries that support terrorism.
4. I’ll do my best to see that we lose every war that the U.S.A. is currently involved in.
I can take those stances and GET ELECTED?!!!??!!
Wow.
This all reminds me of the Clinton $1,000,000 salary tax.
Of course, there was an exclusion for sports and entertainment celebs. I remember it being said that when Baba S. sung at the MGM Grand in Las Vegas for $2 or $3 million a night, that she didn’t get taxed, but the head of MGM did.
Wonder if that tax surcharge” of 4.3% for income over $500,000 has the same exclusion ?
What was it that flaming liberal Milton Friedman said … oh yeah, “The decision to spend is the decision to tax.” It sure must be nice to live in a world in which the government can go crazy spending money and cut taxes also. It must also be nice to live in a world where Santa Claus brings you big free presents every year.
Do the people here know how big the public debt is now, or how much money we owe to China, Japan and people in other countries who have been financing our government’s voracious borrowing these past 7 year? It has always been a danger in a democracy that a party will go for power by promising the voters both all the spending they want and low taxes. It’s funny, but I always thought it would be the Democrats who would go the way of throwing financial responsibility out the window in return for buying votes with money the government does not have. Oh well, live and learn.
As the saying goes, counterfactual, “a mind is a terrible thing to waste” and you have done it. Perhaps its because like most libs you think if you lie long and loud enough the lie will become truth. All you have to do is pick up any rag you like, ie- NYT, WaPo, and you can see over the last several years that the revenue to the Federal gov’t has been going up due to the tax breaks of Bush 43. Owell, doens’t fit with YOUR reality so lets pretend it isnt there.
As for our foreign debt being skyrocketing, back when I was in grad school for my MBA (7 years? more like 25) it was England and Japan (does England still own the most American debt? I havent known that answer in years). If I remember correctly (and I do) it was a huge topic of disaster at one time when the Japanese bought Rockefeller Center. Guess what? Americans own it again. But 7 years is just when GWB took over. Gotta keep in your meme, forget the truth.
The definition of insanity is doing the same things over and over and expecting different results. Raising taxes has hurt the US economy many times. You say you live in the Reality based Community; most people with more than half a brain call it an Asylum.
Nothing will clobber the stock markets, at least in the short term, like the anticipation that Congress will kick the cap-gains rates back up for Joe Average investors.
You’ll see people selling like mad to take their gains at 15% before trying to find more tax-advantaged places to put the money back.
Are we seeing the leading edge of this now? Looks to me like the Democrats have the ability to put this country into a recession as soon as they think it’s politically advantageous to do so.
The top Federal income tax rate when Ronald Reagan came into office was 70%. He lowered it; but it took some time. (It did not go down to 28% until the 1986 tax reform package). So the comment that the 39.3% rate is the lowest since the Carter administration is slightly misleading.
It could be said that these kind of rates have not been seen since Ronald Reagan dealt with the confiscatory rates of the New Deal, Fair Deal & Great Society eras.
For years I have heard liberals complain that President Bush is ruining America by cutting taxes. Now the Democrats seem determined to hasten that ruin by increasing them.
I wish that politicians would let me have access to their bank account for just a few hours, then they can would understand how I feel every time taxes are increased.
Lakeside said “The conservatives who did not vote Republican in the last election will have no right to complain if this Democrat Congress passes these tax hikes. After all, they helped to elect these Democrats, so this must be what they wanted.”
Couldn’t agree more. I would only add conservatives who did not vote Republican “or at all” …
The angry holdouts in the last election reminded me of the angry Sunni’s in Iraq who also didn’t vote. I’m an idiot, and even I knew this was idiotic logic.
i was going to say, we’ve been in debt with foreign nations for decades. the selection of the number “7 years” seems… convenient.
Capitalism – The unequal distribution of wealth
Socialism – The equal distribution of misery
As I wrote in a post about the tax system, it ISN’T about a rational, logical scheme to keep economic activity, productivity, tax revenue, and wages high: it’s about rewards and punishments handed out by the elite. Libs are big into this because it dovetails nicely with their totalitarian bent. Further, the lackwits who make up the dem base operate on emotion rather than intellect, and the prime emotion for them is hatred. In this case, it’s hatred of “the rich”, who DESERVE to be taxed to take them down a notch (“Make those bastards pay their fair share!”). Libs don’t think about lifting people up; they think about dragging everybody down to the same level of misery.
Clobbering the US economy also has political advantages for them. Keep in mind that the New Deal, which spawned so many social programs that the dems flog for votes every election cycle, was born in the midst of poverty, unemployment, and hopelessness. The dems’ longterm electoral strategy is to get as many Americans on the government dole as possible; “Vote for me and I’ll keep the checks coming”. Imagine how many votes they could buy if 10, 15, or 20% of the US workforce was on the dole! It’s cynical, but it works.
Kingronjo – A comment if I may.
– “you can see over the last several years that the revenue to the Federal gov’t has been going up due to the tax breaks of Bush 43. Owell, doens’t fit with YOUR reality so lets pretend it isnt there.”
Certainly the revenue has risen the last couple of years as the economy has done well. The revenue always rises when the economy does well. This is what happened in the 1990’s also. Your statement only makes sense if you think it is only because of tax cuts the economy does well. Perhaps you do think that, but the experience of the 90’s goes straight against that, so I wonder who is fighting against reality now?
– And to both Kingronjo and Justin,
I fully agree that people can get too excited over foreign (or domestic debt). Some can be lived with. However do you believe that because some foreign debt is not too bad, that the government can just open the spigots and borrow huge amounts and that won’t be a problem either? You might as well say that since some credit card debt is not too bad, there is no reason not to just run up a huge bill. There is a difference between the foreign debt that arises from the normal ebbs and flows of the economy and the amount that floods in when the government launches a program of huge spending increases along with large tax cuts and borrows the difference.
And why did I mention the last 7 years, specifically? Because it is in the last 7 years that, after we actually had achieved a surplus, the deficit came back in a big way again. My point was not that we did not have foreign debt until 7 years ago. My point is that large government borrowing contributing to a massive increase only occured in the last 7 years.
Look, everyone here knows the Bush Administration has spent a huge amount more money than it has taken in by taxes. Where do you think this money has come from? And doesn’t this worry you at all? China can wreck our economy whenever it wants to now by demanding payment of what we owe it. Do I think they will? No. But that doesn’t mean I have no problem with it. And I certainly don’t want them having that power the next time a disagreement over Taiwan comes up.
Lamp posts are the only places for these…people. It’s amazing that anyone votes for people who promise to take your money and spend it on what they see fit, especially when you look at their track record. We struggle to take home a buck, and they scheme to take it away from you and spend it on whatever silly idea they feel like subsidizing. Democrats are still worst, but the crop of Republicans whose behaviour led to the last elections aren’t much better. Cut the (&(*& taxes AND cut the &#*&%) spending!
Big tax cuts for the rich, the top 1% of the rich control more of the nations wealth than at any time since the 1920’s. The rich send their factories overseas and people lose jobs here. The rightwing noisemachine spews out propaganda that all un-intelligent conservatives accept as gospel. Bush spends 10 BILLION DOLLARS A MONTH IN IRAQ, borrowing that money from China! And you neo-nuts think Democrats are bad for the country? Luckily even the noise machine can’t stop the American people from seeing the trainwreck that Bush and the neo-cons and corporate robbers have created. Think the 2006 midterms were an anomoly? The gop will get a well deserved ass-kicking in 08, count on it pilgrim.
this is all blather for the dems base. none of these taxes will be passed while bush is president.
the real problems start if hillary becomes president. as an avowed socialist, some might say communist, the entire government will be changed if she has a democratic house and senate. i don’t think it would be a stretch to say the country will be changed by a degree not seen since FDR.
Yet another example of the Majority Party ‘ s cowardice , of their manipulation of the Middle Class , of their self – delusional disregard for the malign effect of higher taxes on the Economy : Democrats have the votes with which to eliminate , once and for all , one of the most idiotic of shakedown schemes ,
the ALTERNATIVE MINIMUM TAX .
I have yet to hear the new Democratic Majority
address the issue , while twenty million
taxpayers sweat the indifference of Congress .
It is the arbitrary nature of progressive taxes :
intended to soak the rich , they put the hurt to the middle Class instead .
The party that implemented ‘ compensatory
spending ‘ ( during F . D . R . ‘ s first term ) and has been grandstanding the issue of
‘ fiscal responsibility ‘ these past seven years
( read the crassly dishonest PAUL KRUGMAN sometime ! ) has chutzpah galore . Find me the Democrat who proposes comprehensive reform of MEDICARE and SOCIAL SECURITY , both
looming long – term fiscal disasters .
COUNTERFACTUAL , besides paying lip service to the notion that the Clinton Administration taxed its way to prosperity , disregards the fact that President Clinton
approved the reduction in the Capital Gains tax , with favorable results . Moreover , the budget surpluses of his second term occured with – – for the first time in FORTY
( 4 0 ) years – – a REPUBLICAN MAJORITY
in the House Of Representatives .
Imagine : Democrats called the shots in the lower chamber , uninterrupted , over some
four decades . The National Debt reached its first TRILLION dollars at the end of JIMMY
CARTER ‘ s presidency ; why weren ‘ t Democrats more conspicuously bent out of shape over our expenditures back then ?
The hysteria over ‘ out – sourcing ‘ ? The unemployment rate is all of 4 . 5 % . Contributing to the near – full employment are foreign firms who manufacture goods in the United States , hiring AMERICAN workers .
If You drive a Toyota , a Nissan , a B M W
or a Mercedes , it is very possible Your car was built at an American plant by one of Your fellow citizens . Out – sourcing works BOTH ways , is mutually beneficial .
The top ONE PER CENT of Americans as
determined by income – – they that receive
$ 3 0 0 , 0 0 0 or more annually – – pay
THIRTY – SEVEN PER CENT of the taxes .
If this isn ‘ t ‘ progressive ‘ enough for You ,
‘ Joe ‘ , what exactly have You in mind ?
Even SWEDEN has repudiated Socialism .
Why are Democrats so slow to catch on ?
Two of our largest creditors , SOUTH KOREA and JAPAN , quite simply owe their National Security and their prosperity to The United States Army , Navy , Air Force and Marine Corps ; Japan ‘ s infrastructure was rebuilt following World War Two with American Capital . The United States provides both Japan and South Korea with export markets .
It is short – sighted and foolish for Mrs . Senator CLINTON , already proposing to raise taxes should she succeed President Bush , to disregard her hubster ‘ s lead and embrace the contemporary Democratic hostility to Free Trade . Four Free Trade agreements ( PERU , PANAMA , COLUMBIA and SOUTH KOREA ) are likely to be scuttled by the Majority Party . This is bad faith as well as bad policy , a SMOOT – HAWLEY for the new Century – – as if the old one wasn ‘ t catastrophic enough .
In retrospect , we can say of President Carter that he did the American Republic the great courtesy of making RONALD REAGAN ‘ s Presidency possible . Another Clinton Presidency could well do likewise , although it is still a grievously ugly notion to have MRS . Clinton as Commander – In – Chief for even one DAY , let alone one term !
Gee, I wonder if the $500,000 bar for the increased tax rate is for gross or net income? If it were for gross (before any deductions), I’d be all for it, since that means that all the tax dodges the rich have available which we in the middle class don’t are for naught.
Given that most of the Senators and Senatrices and quite a few Congresspeople are in that category, I’d love to see them put their pocketbooks where their votes are.
Are capital gains paid on IRAs? If so, the baby boomers must be feeling cranky by this.
How about a half-century moratorium on ANY new taxes? I can see nothing but good results from such a policy, whereas all the grand benefits promised by the taxers never seem to materialize–at least for those doing the paying.
Joe, you’re falling into your own rhetorical trap: there is no such thing as *the nation’s wealth.* There is the wealth of the citizens within a nation. Your little slight of hand convinces you that those who did not produce the wealth have some sort of property right to that produced by others, a right created by nothing more than having the largest gang of voters on your side.
That’s wrong, my friend, no matter how popular the view.
Once again you Repub apologists tire me….whining that we conservatives are to blame for the Dhimmicrats threatening to raising taxes….when all the while, it’s your Big Spending Republicans themselves (and their enablers—YOU!) who are responsible for the Dhimmis taking over.
The Repubs held down taxes…for the time being…but they didn’t even try to curb spending. But I should have voted for them even though they spent more than Clinton and previous Dhimmicrats?
Maybe it’s better to have the Dhimmis in the WH too…if we’re going to have spending like Dhimmicrats might just as well have their taxes to go along with it….even a simpleton could make the case that the Dhimmicrats are more HONORABLE on this issue than are the Repubs…they say they’ll spend (and tax) the Repubs lie through their teeth about it…or treat us like idiots. It really is sickening.
I fear for those of us who know what “Liberty” really is…when the “opposition” party to the Dhimmicrats is less honorable? How could this be made possible?
While I agree with your position on taxes, one of your “facts” is simply wrong. You write “Like most other capital gains, this income has already been taxed through the partnerships.” That is simply not true. There is no “partnership” tax. The income is reported on a partnership tax return, however, the individual partner is responsible for reporting his share of partnership gains and/or losses on his personal return.
When you are referring to the OPINION pages of a newspaper, shouldn’t you begin your blog entry with “The WSJ REPORTS”, but rather with “So-and-so EDITORIALIZES on The WSJ Opinion page”???
To quote a famous philosopher: “Elections do have consequences”… and Democrats are allowed to “Spend their political capital” just like Republicans do when they win elections.