Back to Basics

Clinton is admitting here that the “Buffett Rule” would not solve any of our country’s massive deficit problems — which of course it wouldn’t. But that’s of little consequence anyway because the administration’s motivation behind the Buffett Rule ruse is one of fairness and not deficit reduction.

For a long time the government has been digging a hole we may never get out of, and Clinton is suggesting that part of the solution includes sending them more shovels? Yep:

Bill Clinton said Tuesday that President Barack Obama’s goal of hiking taxes on the rich alone is not enough to solve the country’s fiscal woes and suggested that middle class Americans must also eventually contribute more.

Clinton, who discussed a number of economic and political issues at the Peter G. Peterson Foundation’s third annual Fiscal Summit in Washington, D.C., prefaced his comments with the warning that he was giving his personal view and was “not speaking for the White House.”

“This is just me now, I’m not speaking for the White House — I think you could tax me at a 100 percent and you wouldn’t balance the budget,” said Clinton, who has earned tens of millions of dollars since leaving office. “We are all going to have to contribute to this, and if middle class people’s wages were going up again, and we had some growth to the economy, I don’t think they would object to going back to tax rates [from] when I was president” – before the Bush tax cuts.

Clinton’s idea is to wait for the economy to recover a little more and then crank up taxes across the board to start chipping away at the deficit. Spending cuts instead? He’d probably sooner invite Hillary to go through his text messages.

Trying to resuscitate the economy just so the government can then harvest the money reminds me of that death row inmate who got sick and the concerned warden spent countless hours helping him get better so he was eventually healthy enough to put in the chair.

About $6.8 billion higher to be exact:

California’s budget deficit has swelled to a projected $16 billion — much larger than had been predicted just months ago — and will force severe cuts to schools and public safety if voters fail to approve tax increases in November, Gov. Jerry Brown said Saturday.

The Democratic governor said the shortfall grew from $9.2 billion in January in part because tax collections have not come in as high as expected and the economy isn’t growing as fast as hoped for. The deficit has also risen because lawsuits and federal requirements have blocked billions of dollars in state cuts.

“This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year,” Brown said in an online video. “But we can’t fill this hole with cuts alone without doing severe damage to our schools. That’s why I’m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.”

Brown did not release details of the newly calculated deficit Saturday, but he is expected to lay out a revised spending plan Monday. The new plan for the fiscal year that starts July 1 hinges in large part on voters approving higher taxes.

How about first cutting billions in expenses by putting the “train to nowhere” on the chopping block? Sorry, crazy suggestion.

Part of Brown’s proposal is a tax increase on higher income earners in California — a “Moonbeam Rule” (which is a variation on the “Buffett Rule” except it actually has a chance of being implemented):

Under Brown’s tax plan, California would temporarily raise the state’s sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more. Brown is projecting his tax initiative would raise as much as $9 billion, but a review by the nonpartisan analyst’s office estimates revenue of $6.8 billion in fiscal year 2012-13.

Now if Brown could only convince some of those people in that red sliver on the above chart to donate their money to reduce the state’s deficit instead of giving it to the Obama campaign he might get somewhere:

Look, that’s a lot of money. I don’t really care about this Saverin kid, but clearly his case shows that folks like this aren’t really American, with no national loyalty, despite gaining U.S. citizenship and becoming fabulously wealthy in this country.

And his decision to renounce isn’t going over too well among Facebook fans. See the Los Angeles Times: “Americans feel defriended over perceived Eduardo Saverin tax dodge.” I can see why. See, “Facebook’s Eduardo Saverin gives up citizenship: Shrewd tax move?“:

Here’s a tax tip for Mark Zuckerberg: Give up your U.S. citizenship.

The 27-year-old Facebook Inc. founder could face a tax bill of more than $1 billion after the company’s initial public offering, expected next week.

His former Harvard classmate who is known as “the other Facebook founder” may have found a way to cut the bill. Eduardo Saverin, who now lives in Singapore, has given up his U.S. citizenship. Tax experts say it’s a shrewd move.

Saverin, who was immortalized in the film “The Social Network” as Zuckerberg’s contentious former friend and business partner, has a 4% stake in the company, according to the Who Owns Facebook? website. His stake could be worth nearly $4 billion after the IPO.

“It’s definitely savvy tax planning,” said Edward D. Kleinbard, a professor of law at USC who specializes in federal tax policy and international taxation. “He can argue that the value of the Facebook shares in September, when he gave up his citizenship, were significantly less than the value that will be set at the IPO next week.”

“Savvy tax planning.”

Well, no. It’s called tax evasion.

See the Wall Street Journal, “Taxes Got You Down? Renounce!” And at Bloomberg, “Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO.”

And this Savarin kid is a playboy, it turns out. See “The Other Facebook Founder“:

SINGAPORE — Facebook Inc. founder Mark Zuckerberg is one of the world’s most famous chief executives. His former business partner and friend, Eduardo Saverin, is big in Singapore.

The Brazilian-born billionaire’s skirmishes with Mr. Zuckerberg over the future of Facebook were dramatized in the 2010 film “The Social Network,” which portrayed Mr. Saverin as a naive entrepreneur.

Mr. Saverin was squeezed out of Facebook early on, and found his stake in the Internet juggernaut diluted to less than 10% from 34%. Today, after more dilution and sales of some of his shares, his stake is about 2%, according to a person familiar with the matter.

But 2% can go a long way, given that Facebook filed documents Thursday to go public with a valuation of up to $96 billion. It can go especially far in Singapore, a financial center better known for banning the sale of chewing gum than for a thriving technology scene.

Since his arrival in 2009, the 30-year-old Mr. Saverin has attracted intense interest here. Singaporeans avidly track his nocturnal social habits. Many hoped he would fund local tech start-ups, but so far his local investments, which include a cosmetics firm, have been limited.

Mr. Saverin is regularly spotted lounging with models and wealthy friends at local night clubs, racking up tens of thousands of dollars in bar tabs by ordering bottles of Cristal Champagne and Belvedere vodka, according to people present on these occasions.

Most Americans assume that they have a right of privacy guaranteed by the U.S. Constitution and, while several of the Bill of Rights imply this right, it is not specifically expressed.

However, it is understood. In a Supreme Court case, Meyer v Nebraska, 1923, Justice McReynolds perhaps said it best:

“While this court has not attempted to define with exactness the liberty thus guaranteed, the term has received much consideration and some of the included things have been definitely stated. Without doubt, it denotes not merely freedom from bodily restraint but also the right of the individual to contract, to engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up children, to worship God according to the dictates of his own conscience, and generally to enjoy those privileges long recognized at common law as essential to the orderly pursuit of happiness by free men.”

So, yes, a right of privacy does exist, but it may not exist for long.

There have been three attempts by Congress to exercise control over the Internet including the Cyber Intelligence Sharing and Protection Act that would empower the companies we depend upon for access to the Internet to collect information on our activities, share it with the government, while refusing to notify us that our Internet use is being monitored. In basic terms, all our emails, Skype chats, web searches and other activities would be made known to a faceless governmental bureaucracy.

This is being put forward as a means to fight the so-called “war on terror” or to thwart cyber attacks.

Alan Gottlieb, a longtime advocate of the Second Amendment, has just created www.nointernettax.org to alert Americans to yet another threat to our privacy to oppose any kind of an Internet tax.

At the state level, the National Governor’s Association has introduced the Streamlined Sales Tax Project (SSTP) for the purpose of establishing a “national collection center” to monitor and audit your Internet purchases. All your personal information and Internet shopping choices would be administered by “a trusted third party” or government body. An alternative would enable to subscribe to a national “cartel” tax collection system. It is unconstitution.

It is in essence the imposition of a national sales tax to fill the coffers of states that have demonstrated an inability to exercise prudence in the way they spend the taxes they already collect.

At the federal level, Sen. Dick Durbin has introduced S. 1452, the “Main Street Fairness Act” and has sponsored S. 1832, the “Marketplace Fairness Act.” Any time you see or hear the words “fair” or “fairness” it is a subterfuge for the redistribution of your wealth and the right of the government to know every aspect of your life. The Durbin legislation would require online retailers to pay sale tax on their transactions, thus yield million for state government.

H.R. 1981 is yet another similar piece of legislation. Under the guise of protecting children from pornography, it would require online service provides to, as Gottlieb points out, “spy on your online activities and provide that information to the government. H.R.

Why now?

That’s the one question about the present push for the “Buffett Rule” that President Obama can’t answer – at least not without exposing his own proposal as the shabbiest, sleaziest sort of partisan posing.

If the president cared sincerely about “tax fairness,” or the importance of millionaires paying a “proper” percentage of their income to the government, then why did he do nothing to address these issues during his first three years in the White House? This challenge applies with special force to the two years 2009 and 2010, when Barack Obama enjoyed overwhelming Democratic majorities in both House and Senate. Had he suggested the Buffett Rule in, say, April of 2010, the Hope-and-Change intoxicated Congress of Nancy Pelosi and Harry Reid would have passed it without delay, claiming at least partial progress in fulfilling Obama’s often-repeated campaign promise to raise taxes on the rich.

But the president never fought for anything like the Buffett Rule when he easily could have prevailed in the battle, so what changed in the intervening months to make a tax adjustment they never even debated two years ago seem suddenly urgent and important?

Of course the Republicans won sweeping victories in November 2010, and that dramatically altered the political climate in the Capitol. But since Big Bad Boehner rode to power, his GOP Wild Bunch failed to make any major changes in the tax code, and enacted no new breaks or giveaways for millionaires. The same favorable treatment of investment income, the same exemptions and deductions and tax dodges that so offend the president in 2012 existed in all their glory when he first came to office in January 2009. The president can blame the new Republican majority for blocking many of his more ambitious spending initiatives but he can hardly blame them for the sorry state of a disastrously dysfunctional tax code that’s remained largely unaltered in the Obama era.

If anything, the tax system looks less favorably on the rich than it did when this president took power; he’s not only introduced new levies on the prosperous as part of Obamacare, but proudly passed a two year payroll tax reduction that saves 2 percent on all income below $108,000. The Democrats can hardly explain their new-found enthusiasm for a minimum tax rate on high earners by claiming that the administration they ardently admired presided over a shift in a less progressive direction.

Nor can they claim that this minor but mercilessly-hyped alteration makes a serious dent in the deficit. The administration’s own figures show that even in a best case scenario the Buffett Rule would generate less than $5 billion a year– amounting to less than 0.5 percent of the current $1.2 trillion deficit, and less than 0.1 percent of the $45.4 trillion the federal government will spend.

If the deficit crisis counts as such a dire emergency that even a reduction of one-half of one percent merits this ferocious tax fight, then why did the president ignore a similarly desperate situation in 2009, 2010 and 2011? Of course, he would say that he addressed the problem previously by calling for an end to Bush era “tax cuts for the rich” but those changes – which Mr.

When I heard the Senate was taking up the “Buffett Rule” today, I originally prepared two headlines to cover each possible outcome: 1) “Senate rejects Buffett Rule; Deficit to remain insurmountably high,” or 2) “Senate passes Buffett Rule: Deficit to remain insurmountably high.”

From Josh Barro at Forbes:

Just moments ago, the so-called Buffett Rule (imposing a minimum 30 percent federal income tax rate on those making at least $2 million per year) came up for a vote in the Senate and was defeated. There were 51 votes in favor and 45 opposed, but 60 votes were required for cloture and so the proposal could not proceed.

The vote was nearly along party lines, with Susan Collins (Maine) the only Republican to vote yes and Mark Pryor (Arkansas) the only Democrat to vote no. Joe Lieberman, an independent who caucuses with Democrats, also broke with his party and opposed the proposal, though he wasn’t in Washington D.C. today and so didn’t actually cast a vote. Lieberman said “I am opposed to the Buffett Rule because it would double to 30 percent the capital gains tax on one group of investors”—a statement that reflects the fact that the Buffett Rule debate is fundamentally a debate about whether we should have a preferential tax rate for capital gains.

Worry not, Patriotic Millionaires, you still have time to fill out form 1040-B to pay your “fair share” and hit the pillow tonight with a clear conscience.

President Obama will keep hammering on the Buffett Rule. This is one reason, and this is another.

Facts are stubborn things. So too apparently are the minds of certain individuals. These individuals usually, but not always, tend to lean to the left. This is so because in order to be an individual who believes in the power and glory of Big Government as one’s savior, it requires a mind so obstinate that facts simply cannot penetrate it. When facts attempt to enter a liberal’s mind it is the proverbial unmovable object (the liberal mind) meeting the equally proverbial unstoppable force (the facts).

I really do detest repeating myself. But stubborn sorts require that such things be done from time to time. Especially when those stubborn sorts are egged on by someone like President Obama. The President is possibly the biggest, most stubborn mule of all on the left at this given moment. He has to be. It is the only way he can keep promoting the failed ideology of liberalism. If he were not so stubborn, the President would admit he is wrong and adopt the truth as his guide and we would be happy and prosperous as a nation. Yeah, and if you think for a minute that the President will ever let the truth reign and ditch the failed policies of liberalism, then I have a bridge to sell you.

When the President is not out and about telling everyone who will still listen to him that taxing the rich and taking their money to pay for benefits for others is not redistribution of the wealth, he is still harping on the myth that the rich pay less of an income tax rate than the middle class and the poor. He is still out there pretending that the rich are scamming the system so as to not pay their “fair share” which President Obama needs to fund all his glorious dreams for a dependent America.

The whole scam the President is perpetrating is so heinous that it is nothing short of slander. While it is true that many rich people pay 15% on Long Term Capital Gains on the profits from their investments, the dirty little secret is that it is the same rate everyone pays on such things [2]. You, me, Mitt Romney, Warren Buffett, even President Obama himself all pay the rate. Now, if you do not have investments and have to live off of income earned at a job while people like Mitt Romney do not, it still does not mean that they are paying a lower rate than you on the same type of income. My suggestion is that if you want to pay Romney’s tax rate then invest your money and live off of it. What? You cannot do that? Hey not my problem. And it is not Mitt Romney’s problem either.

See, I am not so fortunate as to be able to put my money into investments and live off the proceeds. But do you hear me bitching about the rich paying 15% because they able to? Nope. See, I do not bitch about it because I strive to be at that level someday. I have goals beyond living hand to mouth and off biweekly paychecks or government handouts. And I work towards those goals.

My father was a Certified Public Accountant and dinner time throughout my youth was filled with horror stories about the Internal Revenue Service (IRS) as he struggled to keep up with a tax code that just kept growing.

According to Nina Olsen, the National Taxpayer Advocate for the IRS who heads a staff of 2,000, the American tax system is “a huge convoluted mess.” Despite efforts to determine its length, it is variously estimated to be between 65,000 and 70,000 pages. “We looked at how many changes in the tax law (that) had occurred in the last year alone,” said Olsen, “it was something like 579 changes.” No one can keep up with that volume of changes, not even Ms. Olsen’s office.

As this is being written, President Obama is dominating the news cycle with his message of tax “fairness”, attacking men like Mitt Romney, the presumptive Republican candidate, for being wealthy and citing men like Warren Buffett and other millionaires and multi-millionaires who say they should pay more. It is a longtime populist, progressive message and it is a false message.

Chris Edwards who studies tax policy at the Cato Institute, a libertarian think tank, says, “What happens when you raise taxes for higher-income people; they reduce their productive activities—like working and investing and starting businesses—and they increase their unproductive activities—like tax avoidance and tax evasion. So governments really shoot themselves in the food if they raise rates too much.”

If it were not for “taxation without representation” Americans might still be “subjects” of the British Empire because, as any school child can tell you, the Revolution was fought over this issue and was kicked off in earnest by the Boston Tea Party when a tax on tea enraged the citizens of that time. There were, in fact, some ten other tea parties in the colonies.

The United States has the dubious honor of having the highest tax rate on corporations in the world. And some people still cannot understand why U.S. corporations are shipping jobs overseas and foreign corporations are reluctant to set up U.S. headquarters here.

In a recent opinion in The Wall Street Journal, Amity Shales, a former WSJ reporter and now the director of a George W. Bush Institute project on national economic growth, wrote that “The trouble is that lawmakers (especially at the federal level) insist on discussing fax reform in terms of fairness. Tax competition earns a mention from time to time, but only a mention.” She pointed out, as have others, that “states with no income tax grow faster than those with high income taxes.”

By framing the tax debate in terms of fairness and attacking Mitt Romney’s wealth, President Obama is pandering to his greatest constituency—the stupid among us. He was elected on the basis of a lot of gauzy, vague promises of hope and change, and with the adoring support of the mainstream media.

Obama’s problem is not about fairness or taxes. His problem is 13.9 million unemployed Americans, not counting those who are not looking for work or those working part-time jobs just to make ends meet.

According to the Obama administration’s official position this week, the Buffett Rule isn’t about chipping away at the deficit, but rather putting fairness in the tax code:

Introducing a minimum 30 percent income tax on millionaires “was never our plan to bring the deficit down and get the debt under control,” Jason Furman, the principal deputy director of the White House National Economic Council, told reporters on a conference call Monday afternoon. “This is not the president’s entire tax plan. We’re not trying to say this solves all our economic problems, all our budget problems.”
[...]
Obama will be in Boca Raton, Fla., on Tuesday afternoon as part of the administration’s renewed push. Vice President Joe Biden also has a speech about tax fairness scheduled for Thursday in New Hampshire.

Biden’s speech will be entitled “Raising the level of patriotism in America.”

Where would anybody have gotten the silly notion that the Buffett Rule would help reduce the deficit? Well, President Obama’s State of the Union address in January for starters:

Tax reform should follow the Buffett Rule. If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. (Applause.) You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.

Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get a tax break I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference — like a senior on a fixed income, or a student trying to get through school, or a family trying to make ends meet. That’s not right. Americans know that’s not right. They know that this generation’s success is only possible because past generations felt a responsibility to each other, and to the future of their country, and they know our way of life will only endure if we feel that same sense of shared responsibility. That’s how we’ll reduce our deficit. That’s an America built to last. (Applause.)

As for the recent administration claims that implementing the Buffett Rule wouldn’t make a big dent in the deficit, I believe it:

*****

Update: More of the Obama administration playing “Point/Counterpoint” amongst themselves:

“[N]o one ever suggested that implementing the Buffett Rule would contribute in large measure to reducing the deficit,” said press secretary Jay Carney.

However, Obama’s own campaign team is touting the Buffett Rule as a way to pay down … the federal deficit.

The six states with the biggest increases in taxes in 2009 were Delaware, California, Illinois, New York, Rhode Island, and West Virginia.  From Fox Business:

In 2010, California, Illinois, New York and Rhode Island, all of which increased revenue from taxes by over 9%, had among the highest deficits, exceeding 30% of general funds. California faced a gap of more than 50%, second only to Arizona. Despite cutting spending and increasing tax revenue, many of these states have continued to experience major shortfalls. Projected budget deficits for California, New York and Illinois remain among the highest in the country. . . . .

California for 2012

The State ended last fiscal year with a cash deficit of $8.2 billion. The combined current-year cash deficit stands at $21.6 billion.  Those deficits are being covered with $15.2 billion of internal borrowing (temporary loans from special funds) and $6.4 billion of external borrowing.

Illinois for 2012

The Institute for Illinois’ Fiscal Sustainability at the Civic Federation released its analysis of the enacted FY2012 State budget today. The report found that the spending plan will increase Illinois’ total general operating deficit to $5.0 billion by June 2012. . . .

New York was expected to still have a large deficit, but it had to raise yet more taxes.

The budget closes what was once a $3.5 billion deficit, a process made easier when lawmakers in December approved a Cuomo- backed tax increase on joint earners making at least $2 million annually. That lowered the gap to $2 billion. The remaining savings were reached mostly by consolidating agencies. . . .

Rhode Island

Although Rhode Island’s economy is beginning to recover after multiple years of economic distress the House Fiscal Staff estimate a FY 2012 budget shortfall of roughly $300 million, which is projected to grow to approximately $375 million by FY 2016. . . .