Archive for the 'Taxes' Category

Raise Middle Class Taxes Now!

December 26, 2012

by Mario Rizzo

I now favor expiration of the Bush era tax rates for everyone.  Why? Because the only way to curb spending in the long run is to make as large a number of Americans as possible truly feel the consequences of the expenditures they appear to desire.

If Americans saw the cost of the gigantic welfare state in their paychecks, they would, I am confident, radically re-evaluate the expenditure side of the situation we are in. Then when someone comes up with a genius idea for spending, the people would think: Is it worth higher taxes? Might I not spend it better on my family, my church – or even – on… champagne? Read the rest of this entry »

A Cap for Deductions?

November 13, 2012

by Mario Rizzo

The New York Times reports today that the Democrats are searching for a way to get additional tax revenue from “the rich” in a way that might garner Republican support. So they are bringing up an idea suggested by Mitt Romney in the presidential campaign to limit deductions to a specified aggregate amount.

How such a proposal would work out in practice depends on the details. The first point is the status of the charitable contribution deduction. Is that included in the limit or not? If it is, then one should expect charitable contributions, especially the large gifts, to fall. Beyond the political reprecussions, there are substantive issues. In a world so dominated by the “compulsory charity” of the state do we want to reduce private-based alternatives? This is a tough issue.

On the other hand, if we exclude charitable deductions (as some “Democratic centrists” — New York Times‘s label —  want), then we have opened the door to exception-making and special interest pleading. What about the home-mortgage deduction? I can see it now,”At a time when the housing sector is just starting to get on its feet…” And “the state of the housing sector has important macro-economic effects.” And so forth…

Of course, this would be an increase in effective marginal rates since as income rises you must pay the old rate (let us say) on a greater amount of your income.

So this is what the election was all about? I am afraid so.

Fiscal Cliff: Sense and Nonsense

November 9, 2012

by Mario Rizzo

The above table is from the November 8th issue of the Wall Street Journal. The figures for the fiscal cliff consequences are usefully stated for next year and not for the next nine years as those who want to suggest that the numbers are truly impressive (or want to scare children) typically use.

Consider the following facts or likely scenarios: Read the rest of this entry »

Mitt Romney is Not a Tax Idiot

August 6, 2012

by Mario Rizzo

Let us begin with a famous quotation from Judge Learned Hand in a decision affirmed by the Supreme Court:

Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.

Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff’d, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)

Quite simply, I am really tired of hearing about Mitt Romney’s tax returns. Does Team Obama really want us to believe that if Mitt Romney took advantage of every legal option to lower his tax bill that he is somehow bad, out of touch with the majority of Americans, or unpatriotic (whatever that is supposed to mean)? Read the rest of this entry »

Taxpayers’ Future in Wisconsin Vote

April 12, 2012

by Chidem Kurdas

Wisconsin governor Scott Walker is in the extremely unusual position of facing a recall vote less than two years after he was elected in 2010. The recall is orchestrated by unions that have gone all out to reverse his valiant effort to contain the growth in state and local spending. This vote has wide implications beyond the state of Wisconsin, implications for all government budget making and the question of  whether taxpayers can be protected at all against predatory interests.

Mr. Walker’s supposed crime is to be on the taxpayers’ side. Read the rest of this entry »

How’s Your Compulsory Holiday Giving Coming Along?

December 23, 2011

by Mario Rizzo

I wish people would perform the following intellectual experiment. Find out how much in federal taxes you have paid in the past year. Don’t worry about making any distinctions between the various payroll taxes and the income tax. It all goes into the same pot in the final analysis.

Now assume that this amount is in an account and that you are not allowed to spend any of it on yourself or your immediate family. Nevertheless, you are given a choice about how to spend it. What would you spend it on? Now compare that with what the federal government spends on. How do they match up? Read the rest of this entry »

Energy Policy vs. Market

November 14, 2011

by Chidem Kurdas

No matter how thoroughly public policy fails, there is no end to efforts in the same area.  Energy is a case in point. Reviewing the history of US energy policy in his new book, Columbia University legal scholar Michael Graetz writes: “The book  is, then, in one sense a story of failure…”  Read the rest of this entry »

Tax Baseline Key to Debt Fight

July 27, 2011

by Chidem Kurdas

Neither House Republican Speaker John Boehner  nor Senate Democratic Majority Leader Harry Reid propose tax increases in their competing deficit and debt-ceiling plans. Indeed, the Reid plan’s omission of tax hikes is described by Democrats as a major concession to Republicans.

But even if there are no new obligations, taxes are primed to go up. That baseline, biased in favor of a growing tax burden, is key to proposed deals and will no doubt remain the pivotal point in budget negotiations long after the current debt ceiling is broached.

In a recent report on the long-term fiscal outlook, the Congressional Budget Office  estimated that the wide range of tax increases built into current law would generate substantial additional tax revenue and boost the share of taxes to levels not seen in recent decades. That’s the baseline scenario. Read the rest of this entry »

Taxes Are Already Scheduled To Rise

July 20, 2011

by Mario Rizzo

President Obama and his various spokespeople are saying incessantly that deficit reduction as a requirement (thanks to the Republicans) to raise the debt limit must be done in a “balanced” manner. There must be some kind of revenue increases to go along with the spending-growth reductions. There are many ways to talk about “balance.” In this case, however, they are all normative. If you think that taxes are already too high, then higher taxes add to the existing imbalance.

Nevertheless, in all of the discussion, few seem to be reminding us that there are already tax increases built into the current system largely to support the so-called entitlement programs. Read the rest of this entry »

The Current Debt and Budgetary Impasse

July 14, 2011

by Mario Rizzo

One of the most important, but frequently ignored, aspects of the current negotiations about raising the debt ceiling is the lack of credible commitment on each side.

The problem has two aspects. One is clearly analyzed by Michael McConnell in today’s Wall Street Journal.  (Perhaps also here.) What exactly is “on the table”? The president or the GOP says “I propose X in budget cuts.” Are specific reductions being proposed or just general goals to be worked out later? Is the base-line current spending or is it current budgetary authority (that is, the current planned rate of increase)? If the president suggests revenue “enhancements,” how specific are these? Are they increases in marginal rates or elimination of specific “loopholes”? We just don’t know for sure.  

The second aspect is how enforceable would be such agreements under the current gun? Read the rest of this entry »