Taxes

Kansas Republicans Finally Admit That Their Tax Cuts For The Wealthy Have Failed

We hoped they would just be a magic lantern and everybody would react to it. But, eh, it’s hard to get a company to uproot their business when they’re established and move to another place just because of this difference in tax policy.

(via Kansas Republicans Finally Admit That Their Tax Cuts For The Wealthy Have Failed)

Waiting for people to argue that taxes just were not cut enough.

Tax Burden in U.S. Not as Heavy as It Looks, Report Says

Tax Burden in U.S. Not as Heavy as It Looks, Report Says:

We’ve been told repeatedly that the United States has the highest corporate tax rate in the developed world — 35 percent — which is higher than the nominal tax rates in places like Ireland (12.5 percent), Britain (21 percent) and the Netherlands (25 percent) and the 24.1 percent average rate of all countries that are part of the Organization for Economic Cooperation and Development.

All of that’s true, but Professor Kleinbard contends that most United States multinational companies don’t pay anywhere near 35 percent. Companies paid, on average, 12.6 percent,

Cutting those rates will not get companies to bring more money into the US economy. They would still keep the money were it could be moved more easily. And that is in commonwealth nations that can easily do business with London banks.

How Tea Party tax cuts are turning Kansas into a smoking ruin

How Tea Party tax cuts are turning Kansas into a smoking ruin:

The state’s rainy-day fund is dwindling to zero. Month after month, revenue comes in even lower than fiscal officials’ most dire expectations. In the rest of the country, school budgets are finally beginning to recover from the toll of the last recession; in Kansas, they’re still falling. Healthcare, assistance for the poor, courts, and other state services are being eviscerated.

The cynic in me thinks that’s the result they want. To cut taxes on the wealthy and services for the poor and blame the poor economy on immigrants and Obama.

Charlatans, Cranks and Kansas

Charlatans, Cranks and Kansas:

the Kansas debacle shows that tax cuts don’t have magical powers, but we already knew that. The real lesson from Kansas is the enduring power of bad ideas, as long as those ideas serve the interests of the right people.

People who want those tax cuts the most, care the least that they don’t actually work.

Taxation of carried interest: The loophole for hedge fund managers could end tomorrow.

Taxation of carried interest: The loophole for hedge fund managers could end tomorrow.:

the income of a hedge fund manager is taxed at only 20 percent, which is the highest long-range capital gains rate—even though the hedge fund manager is deriving income that’s as directly earned as the wages of a steelworker.

This loophole will never close. No tax bill that closes it will ever leave the house.

Millionaire tax migration is a myth!

Millionaire tax migration is a myth!:

Those echoing Cuomo’s tax migration myth defend their argument by citing a decline in the number of New York millionaires from 2007 to 2009 after the state passed a tax surcharge. Yet, the real story is what Crain’s Business reports: “New York lost millionaires (between 2007 and 2009) primarily because New Yorkers made less money and saw their property values drop during the recession, not because they moved to other states.”

If you compare median incomes by zip code with property taxes by zip code you’ll see that the wealthy seem to live in places with significantly higher tax burdens. By choice.

Republicans are demanding ever deeper spending cuts, but they won't detail with any meaningful specificity what those cuts should be, and they insist they can solve our revenue problem via eliminating loopholes and deductions, but they won't detail with any meaningful specificity what those should be, either. By contrast, Dems have detailed their demands - they have detailed the tax hikes they want.

Republicans are demanding ever deeper spending cuts, but they won't detail with any meaningful specificity what those cuts should be, and they insist they can solve our revenue problem via eliminating loopholes and deductions, but they won't detail with any meaningful specificity what those should be, either. By contrast, Dems have detailed their demands - they have detailed the tax hikes they want.
The Morning Plum: Dems hold the middle ground. GOP is on fringe.

the deficit-scold movement was never really about the deficit

Recent events have also demonstrated clearly what was already apparent to careful observers: the deficit-scold movement was never really about the deficit. Instead, it was about using deficit fears to shred the social safety net. And letting that happen wouldn't just be bad policy; it would be a betrayal of the Americans who just re-elected a health-reformer president and voted in some of the most progressive senators ever.
—Krugman on the deficit scolds Deficit Hawks and Hypocrites - NYTimes.com

Remember the famous scene from Raiders of the Lost Ark when Indiana Jones faces off against a guy who unsheathes a scimitar and wows the audience with his fancy swordsmanship-only to get shot in the chest by Indy? The swordsman-that's House Speaker John Boehner right now on the Bush tax cuts.

Remember the famous scene from Raiders of the Lost Ark when Indiana Jones faces off against a guy who unsheathes a scimitar and wows the audience with his fancy swordsmanship—only to get shot in the chest by Indy? The swordsman-that's House Speaker John Boehner right now on the Bush tax cuts.
—Boehner Is Bluffing Boehner and the fiscal cliff: The House Speaker is bluffing about the Bush tax cuts. - Slate Magazine

Romney Avoids Taxes via Loophole Cutting Mormon Donations

Romney Avoids Taxes via Loophole Cutting Mormon Donations

In 1997, Congress cracked down on a popular tax shelter that allowed rich people to take advantage of the exempt status of charities without actually giving away much money. Individuals who had already set up these vehicles were allowed to keep them. That included Mitt Romney, then the chief executive officer of Bain Capital, who had just established such an arrangement in June 1996.

Romney's Former Company Under Investigation For Tax Evasion

Romney's Former Company Under Investigation For Tax Evasion

Bain Capital, the private equity firm founded by presidential candidate Mitt Romney, is under investigation for questionable tax practices, according to the New York Times. Since July, New York Attorney General Eric Schneiderman has been issuing subpoenas to private equity firms including Bain, which he believes intentionally changed management fees into capital gains as a way of hanging onto millions of dollars that would have otherwise been taxed at a higher rate.

Mitt Romney Would Pay 0.82 Percent in Taxes Under Paul Ryan's Plan

Mitt Romney Would Pay 0.82 Percent in Taxes Under Paul Ryan's Plan

Romney would have paid an effective tax rate of around 0.82 percent under the Ryan plan, rather than the 13.9 percent he actually did. How would someone with more than $21 million in taxable income pay so little? Well, the vast majority of Romney’s income came from capital gains, interest, and dividends. And Ryan wants to eliminate all taxes on capital gains, interest and dividends. Romney, of course, criticized this idea when Newt Gingrich proposed it back in January by pointing out that zeroing out taxes on savings and investment would mean zeroing out his own taxes.

Basically, the Romney campaign is just the latest Romney tax avoidance scheme.

we have lots of empirical work on the effects of tax changes at the top - and none of it supports the Romney camp's claims. What we've just learned is that they were faking it all along. There is no plan to offset the tax cuts; Romney is just intending to blow up the deficit to lavish favors on the wealthy, then use it as an excuse to savage Social Security and Medicare.

we have lots of empirical work on the effects of tax changes at the top - and none of it supports the Romney camp's claims. What we've just learned is that they were faking it all along. There is no plan to offset the tax cuts; Romney is just intending to blow up the deficit to lavish favors on the wealthy, then use it as an excuse to savage Social Security and Medicare.
Dooh Nibor - NYTimes.com

Ray Dalio calls for more stimulus

Ray Dalio calls for more stimulus

We will also need fiscal stimulation by the government, which of course, is very classic. Governments have to spend more when sales and tax revenue go down and as unemployment and other social benefits kick in and there is a redistribution of wealth. That’s why there is going to be more taxation on the wealthy and more social tension. A deleveraging is not an easy time. But when you are approaching balance again, that’s a good thing.

Dalio leaves Team Friedman and joins Team Keynes.

He raised taxes on the rich - against the wishes of every single Republican in Congress.

Romney and today's GOP often cite the balanced budgets and surpluses that marked the late years of the 1990s, generally crediting them to what was then a Republican-controlled Congress. They'll also give Clinton a measure of credit, if only as a backdoor means of slamming Obama, by citing welfare reform or some other compromise he struck with Republicans. But there's really only one thing that Bill Clinton did to erase the deficit: He raised taxes on the rich - against the wishes of every single Republican in Congress.
When Mitt ridiculed Clinton - War Room - salon.com

Mankiw: Capital Gains vs. Ordinary Income, a little puzzle on policy.

Mankiw: Capital Gains vs. Ordinary Income, a little puzzle on policy.

If you have a job, the money you are paid for your work is ordinary income. If you buy an asset at one time and sell it later for a higher price, the profit you made from holding it is a capital gain. But is it really that easy? Consider five examples, and see if you can identify what is ordinary income and what is a capital gain.

Really great explanation. A must read.

At 102%, His Tax Rate Takes the Cake

At 102%, His Tax Rate Takes the Cake

That doesn't mean Mr. Ross pays more in taxes than he earns. His total tax as a percentage of his adjusted gross income was 20 percent, which is much lower than mine. That's because Mr. Ross has so many itemized deductions. Since taxable income is what's left after itemized deductions like mortgage interest, charitable contributions, and state and local taxes are subtracted, it will nearly always be smaller than adjusted gross income and demonstrates how someone can pay more than 100 percent of taxable income in tax.

His tax rate is 102% His total tax on his adjusted gross income was at 20% So…does it make sense to cut his taxes when he rate he actually pays is only 20%?

The absurdity of this claim is clearly revealed if one considers capital gains that accrue to short sellers, who pay rather than receive dividends while their positions are open. Following the logic of the argument, one would be forced to conclude that short sellers are taxed at an effective rate of negative 20%, thereby receiving a significant subsidy due to the existence of the corporate tax. The flaw in this reasoning is apparent when one recognizes that asset prices are lower (relative to the zero corporate tax benchmark) not only when a short position is covered, but also when it is entered

The absurdity of this claim is clearly revealed if one considers capital gains that accrue to short sellers, who pay rather than receive dividends while their positions are open. Following the logic of the argument, one would be forced to conclude that short sellers are taxed at an effective rate of negative 20%, thereby receiving a significant subsidy due to the existence of the corporate tax. The flaw in this reasoning is apparent when one recognizes that asset prices are lower (relative to the zero corporate tax benchmark) not only when a short position is covered, but also when it is entered

Economist’s View: Is Romney Double Taxed?

Rajiv Sethi looks at the numbers and concludes that Romney isn’t being double taxed and doesn’t have an effective rate of 45% to 50%.

Leaving the payroll tax intact and reducing Social Security benefits for higher-income seniors is, in effect, an increase in marginal tax rates but it was clear from the discussion at this morning's GOP Presidential debate that few Republicans see it this way. Still, it's true. The way Social Security works is that you pay taxes when you're working and you collect benefits when you retire, with the benefits proportional to what you paid.

Leaving the payroll tax intact and reducing Social Security benefits for higher-income seniors is, in effect, an increase in marginal tax rates but it was clear from the discussion at this morning’s GOP Presidential debate that few Republicans see it this way. Still, it’s true. The way Social Security works is that you pay taxes when you’re working and you collect benefits when you retire, with the benefits proportional to what you paid.
Means Testing Social Security Is A Kind of Tax Increase

The appetite of red states for federal subsidies mocks the tirades of their politicians against the federal government. In March 2008, on the verge of the Great Recession, 22 Republican states were net recipients of federal subsidies, while only 10 Democratic-leaning states were. Sixteen blue states were net payers of federal taxes, compared to only one red state, Texas (thanks to the oil and gas industry).

The appetite of red states for federal subsidies mocks the tirades of their politicians against the federal government. In March 2008, on the verge of the Great Recession, 22 Republican states were net recipients of federal subsidies, while only 10 Democratic-leaning states were. Sixteen blue states were net payers of federal taxes, compared to only one red state, Texas (thanks to the oil and gas industry).
The red state model is (also) broken - salon.com

the only difference between debt-financed spending and tax-financed spending is that debt-financed spending needs to be paid back with interest. So by preferring $1.2 trillion in cuts to $2 trillion in cuts and $1 trillion in spending hikes, the GOP position is pushing both long-run spending and long-run taxes much higher than it would be under the Democratic plan.

the only difference between debt-financed spending and tax-financed spending is that debt-financed spending needs to be paid back with interest. So by preferring $1.2 trillion in cuts to $2 trillion in cuts and $1 trillion in spending hikes, the GOP position is pushing both long-run spending and long-run taxes much higher than it would be under the Democratic plan.

Conservative Orthodoxy Makes Spending Higher | ThinkProgress

And somehow we are to believe that the GOP cares about the debt? Or that their interest in cutting spending is about concern about the debt and not policy preference to push desired economic outcomes?

Flat Tax

Two thoughts on flat taxes

  • There is no reason why you need to have a flat tax before you cut any loop-holes. Cutting loop holes and simplifying the tax code can be done without making the tax rates flat or even flatter.
  • If you think the hardest of doing your taxes is the part where you take your adjusted taxable income and look up what your taxes due are on that little chart, then clearly you’ve never done your own taxes or have only taken the standard deductions.

Look at the IRS data on returns for the 400 highest incomes in America (pdf) - specifically, Table 43. If you look at the numbers since 2004, you'll see that in a typical year between 30 and 40 percent of those super-high-income players paid an average tax rate of less than 15 percent; most of them paid less than 20 percent. Bear in mind that for the very wealthy the payroll tax - the main burden on working-class Americans - is trivial, because of the cap on Social Security and the fact that it only applies to earned income. And what becomes clear is that the Obama/Buffet claim is absolutely, totally true.

Look at the IRS data on returns for the 400 highest incomes in America (pdf) - specifically, Table 43. If you look at the numbers since 2004, you'll see that in a typical year between 30 and 40 percent of those super-high-income players paid an average tax rate of less than 15 percent; most of them paid less than 20 percent. Bear in mind that for the very wealthy the payroll tax - the main burden on working-class Americans - is trivial, because of the cap on Social Security and the fact that it only applies to earned income. And what becomes clear is that the Obama/Buffet claim is absolutely, totally true.
Billionaires and Secretaries - NYTimes.com

The Buffett Rule

President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials. … Mr. Obama, in a bit of political salesmanship, will call his proposal the "Buffett Rule," in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.

From NYT I’m looking forward to the explanation on why the GOP is for increasing taxes on the middle class but not for millionaires.

The point is that the supply-siders were absolutely sure that his policies would produce disaster

It should go without saying that the supply-side idea—which is that tax cuts have such a positive effect on the economy that one need not worry about paying for them with spending cuts—does not persist because of any actual evidence in its favor. If you want, any nonpartisan economist can explain to you at length what really happened during the Reagan years, and why you can’t seriously claim his record as an advertisement for supply-side policies. But surely it is enough to look at the extraordinary recent record of the supply-siders as economic forecasters. In 1993, after the Clinton administration had pushed through an increase in taxes on upper-income families, the very same people who have persuaded Dole to run on a tax-cut platform were very sure about what would happen. Newt Gingrich confidently predicted a severe recession. Articles in Forbes magazine urged readers to get out of the stock market to avoid the inevitable crash. The Wall Street Journal editorial page had no doubts that the tax increase would sharply increase the deficit instead of reducing it. Well here we are, three years later: The economy has created 10 million new jobs, the market is up by 1500 points, and the deficit has been cut in half. I’m not saying that Clinton’s policies led to that result—they account for only part of the good news about the deficit, and hardly any of the rest. But the point is that the supply-siders were absolutely sure that his policies would produce disaster—and indeed, if their doctrine had any truth to it, they would have.

Supply-Side Virus Strikes Again - By Paul Krugman - Slate Magazine

15 Years later and the debate still rages on, facts be damned.

Even with several decades of median wage stagnation, the fact of the matter is that the median American household has quite a lot of money compared to the median household of almost every other country. And yet, I think there are a lot of other respects in which quality of life in the United States falls short. We spend a lot of time in traffic jams. We have both a frighteningly high murder rate and a frighteningly high level of incarceration. Our health care system is very inefficient. Americans work very long hours and have unusually little vacation time. It's not clear to me that any of these issues can be usefully tackled primarily by focusing on higher taxation of the very wealthy.

Even with several decades of median wage stagnation, the fact of the matter is that the median American household has quite a lot of money compared to the median household of almost every other country. And yet, I think there are a lot of other respects in which quality of life in the United States falls short. We spend a lot of time in traffic jams. We have both a frighteningly high murder rate and a frighteningly high level of incarceration. Our health care system is very inefficient. Americans work very long hours and have unusually little vacation time. It's not clear to me that any of these issues can be usefully tackled primarily by focusing on higher taxation of the very wealthy.

Beyond The Top One Percent | ThinkProgress

This is why there is more to policy than taxes.

It's hard to see that too much democracy was the problem.

Whenever I read pieces like David Brooks's column this morning - pieces that attribute our budget deficits to the public's irresponsibility and lack of realism - I find myself wondering how so much recent history went down the memory hole.

Remember, we had a budget surplus in 2000. Where did it go? The two biggest policy changes responsible for the swing into deficit were the big tax cuts of 2001 and 2003, and the war of choice in Iraq.

And neither of these policy changes was in any sense a response to public demand. Americans weren't clamoring for a tax cut in 2000; Bush pushed his tax cuts to please his donors and his base. And the decision to invade Iraq not only wasn't a response to public demand, Bush and co. had to spend months selling the idea to the public.

In fact, the only budget-busting measure undertaken in recent memory that was driven by popular demand as opposed to the agenda of a small number of powerful people was Medicare Part D. And even there, the plan was needlessly expensive, not because that's the way the public wanted it - it could easily have been simply an addition to traditional Medicare - but to please the drug lobby and the anti-government ideologues.


From Krugman: It's hard to see that too much democracy was the problem.


Correcting the record.

30 percent of households making 250k+ think "upper-income" people pay too little?

Gallup poll that found only 6 percent of households making over $250,000 think their taxes are too low but 30 percent of that same group thinks “upper-income” people pay too little in taxes. She blames “this disconnect on the fact that upper-income people don't realize they're upper income.”

From Andrew Sullivan - The Daily Beast

Maybe everyone knows people wealthier than them?

A very large share of the public has no income that hasn't already been reported to the IRS by the payer and doesn't itemize deductions. Under the circumstances, the sensible thing would be for the IRS to send everyone a sheet of paper that says "based on the income that's been reported to us and your family status from last year, your taxes owed (or refund owed to you) is $X with standard deductions. If something's changed, or if that income number is wrong, or if you want to itemize deductions, you should fill out forms blah blah blah. Otherwise, just send a check." A lot of us would still need to wrestle with the forms and nobody likes to give up money, but this would be much more convenient for millions of people. We don't do it because H&R Block and TurboTax don't want to lose customers and, crucially, because the conservative movement wants taxes for ordinary people to be as annoying as possible. Rich people don't care about this kind of simplification because they itemize their deductions and hire accountants. But they benefit from middle class people resenting the tax process because it helps them build the case for low tax rates.

A very large share of the public has no income that hasn't already been reported to the IRS by the payer and doesn't itemize deductions. Under the circumstances, the sensible thing would be for the IRS to send everyone a sheet of paper that says "based on the income that's been reported to us and your family status from last year, your taxes owed (or refund owed to you) is $X with standard deductions. If something's changed, or if that income number is wrong, or if you want to itemize deductions, you should fill out forms blah blah blah. Otherwise, just send a check." A lot of us would still need to wrestle with the forms and nobody likes to give up money, but this would be much more convenient for millions of people. We don't do it because H&R Block and TurboTax don't want to lose customers and, crucially, because the conservative movement wants taxes for ordinary people to be as annoying as possible. Rich people don't care about this kind of simplification because they itemize their deductions and hire accountants. But they benefit from middle class people resenting the tax process because it helps them build the case for low tax rates.
Yglesias >> Why Taxes Are Annoying

The liberal backlash that isn't

with the release of a new Washington Post/ABC News poll — conducted late last week and over the weekend, as the supposed liberal backlash against the deal was at its peak — that shows Obama’s approval rating with liberal Democrats sitting at 87 percent. That’s essentially where it’s been all year; it represents a statistically microscopic decline from where he stood with liberal Democrats in the last WaPo/ABC survey, taken about six weeks ago. Among all Democrats, Obama’s approval rating in the new survey sits at 79 percent — again, pretty much exactly where it’s been all year. As has been the case throughout his presidency, Obama’s problem among Democrats — to the extent he has one at all — is with self-described moderates and conservatives in the party.


From The liberal backlash that isn’t - War Room - salon.com


There is a major disconnect between people claiming to be the liberal base, and actual liberals.

The liberal backlash that isn't

with the release of a new Washington Post/ABC News poll — conducted late last week and over the weekend, as the supposed liberal backlash against the deal was at its peak — that shows Obama’s approval rating with liberal Democrats sitting at 87 percent. That’s essentially where it’s been all year; it represents a statistically microscopic decline from where he stood with liberal Democrats in the last WaPo/ABC survey, taken about six weeks ago. Among all Democrats, Obama’s approval rating in the new survey sits at 79 percent — again, pretty much exactly where it’s been all year. As has been the case throughout his presidency, Obama’s problem among Democrats — to the extent he has one at all — is with self-described moderates and conservatives in the party.


From The liberal backlash that isn’t - War Room - salon.com


There is a major disconnect between people claiming to be the liberal base, and actual liberals.

10 Epic Failures of the Bush Tax Cuts

In a rare moment of candor last week, the third-ranking Republican in the House admitted the failure of the Bush tax cuts. “You know, I think it’s fair to say, if the current tax rates were enough to create jobs and generate economic growth we’d have a growing economy,” Mike Pence acknowledged, adding, “It’s not working now.” Given that the Bush years produced the worst economic growth in the past 50 years, Pence is sadly correct. But sadder still is the dismal performance of the Bush economy across almost every indicator that counts. From moribund job creation and sinking household incomes to skyrocketing deficits and record income inequality, Republican economic stewardship over the past decade has been a disaster.

From 10 Epic Failures of the Bush Tax Cuts | Crooks and Liars

So the argument becomes “They haven’t done what we claimed they would do, but that’s no reason to undo the policy. “

The Politics of Erskine-Bowles

I think that this is a blueprint that conservatives should regard favorably, all things considered. But let's be clear: The cuts it proposes don't even remotely "slash the size of government"; they merely slow its future growth. By my back-of-the-envelope calculations, federal revenue has hovered around 18.3 percent of G.D.P. since 1980, breaking 20 percent only during the halcyon days of the dot-com boom. Under Simpson-Bowles, it would stick at 21 percent, a solid 10-15 percent boost over how the American government taxed its citizens in the Reagan and Clinton eras.

From The Politics of Erskine-Bowles - NYTimes.com

I finally found someone else sort-of-happy with the Erskine-Bowels report.

The sad fact is that for all the high-minded blathering about the size of government and its overreach, the right has demonstrated that people want big government most when they can effectively get other people to pay for it.

Frankly, you are not going to cut spending without raising taxes. Unless there is some connection between the cost of government and the services it provides, you are not going to have any consensus to decrease the demand for government services. This is just basic behavioral economics.

Things We Already Knew - Ross Douthat

It isn t really surprising that if you take the marginal tax rate on labor from 29 percent to 38 percent, raise the tax burden dramatically for the middle and working classes, permanently slash physician reimbursements for Medicare and curb domestic discretionary spending growth as successfully as the Clinton-Gingrich deadlock did in the 1990s, you can dig your way out of the fiscal hole. But the whole reason our fiscal picture seems so grim is that it s hard to imagine lawmakers being willing to let those kind of changes take effect, or to imagine that voters would put up with them.

From Things We Already Knew - Ross Douthat Blog - NYTimes.com

I agree with some of that Mr. Douthat is saying, but I don’t think that tax increases and spending cuts won’t happen because of voter revolt. I don’t see any reason why voters would be against raising other people’s taxes or repealing other people subsidies. If anything, it will be easier to sell to voters than it will be to force these past the special interests groups that will object to any tax increase or any spending cut.

Tie CO2 Tax to Temperature

John Tierney relays today what seems like a very sensible idea from economist Ross McKitrick, tie a carbon tax to the temperature. If the temperature rises the tax goes up, if the temperature does not rise (as McKitrick, a climate change skeptic thinks) the tax will stay at a low level. Temperature of the troposphere would be measured by satellite at the equator and averaged over a period of time…In theory, both climate change proponents and skeptics ought to agree to this proposal, but I predict the proponents will object.
From Tie CO2 Tax to Temperature

Brilliant.

Taxes vs Voucher Socialism

Instead of being paid to deliver planes, missiles and tanks, defense contractors would receive “weapon supply tax credits” (WSTC). The defense contractors would be able to reduce the taxes they owed the federal government by the prices of the weapons they delivered. Because the tax credit would be refundable, if the prices exceeded a firm’s annual tax liability, the IRS would send a check to the firm in the amount of the difference. In this way, the federal government could finance a massive military buildup — and because tax credits aren’t counted as part of the federal budget, for official purposes the cost of the buildup would be zero!
I had you going there for a minute, didn’t I? The “weapons supply tax credit” is a joke. It was proposed some years ago by the late David Bradford, a Princeton economist who worked in the Ford and George H.W. Bush administrations. Bradford’s purpose was to ridicule the growing reliance of Congresses and presidents on tax credits and other so-called tax expenditures as an alternative to ordinary spending programs funded by ordinary taxes.
From Taxes - salon.com

Excellent article on the misuse of Tax Credits as a substitution for taxes as a way to fund public goods.

Twitters From Texas

Have you ever noticed that the states where anti-tax sentiment is strongest are frequently the same states that get way more back from the federal government than they send in? Alaska gets $1.84 for every tax dollar it sends to Washington, which is a rate of return even Bernard Madoff never pretended to achieve. Yet there they were in Ketchikan waving "Taxed Enough Already!" signs and demanding an end to federal spending.
From Op-Ed Columnist - Twitters From Texas - NYTimes.com

Irony too good not to share.

A Short Citizen's Guide to Kooks, Demagogues, and Right-Wingers On Tax Day

No one likes to pay taxes, so tax day typically attracts a range of right-wing Republicans, kooks, and demagogues, all of whom tell us how awful we have it. Herewith a short citizen’s guide (that is, a citizen’s guide that’s short rather than a guide for short citizens) responding to the predictable charges:
From A Short Citizen’s Guide to Kooks, Demagogues, and Right-Wingers On Tax Day | Robert Reich’s Blog

Well written fact check from Robert Reich. I cringe whenever I hear people conflate taxes, income taxes and payroll taxes. When I look at images of the tinfoil hat conservatism on display at the Tea bagging, I doubt many of those people could explain the Obama tax increase in any coherent way.

The tax cut ratchet

notice that everything that happens is good for tax cuts.
If the economy is growing, and tax receipts are rising, then it shows that past tax cuts achieved wonders, plus the Laffer curve is right so let’ s cut taxes some more!
If the economy is shrinking, well, it needs a boost and what better boost than another round of tax cuts!
See, cutting taxes is always good. It makes you wonder why we ever had taxes in the first place.
From The tax cut ratchet - Paul Krugman - Op-Ed Columnist - New York Times Blog

Krugman does a bang up job exposing the tax-cut ratchet. Or tax cut racket if you prefer.

Gain in Income Is Offset by Rise in Property Tax

Nationwide, property taxes grew 28 percent from 2000 to 2004, though income went up only 16 percent.
From New York Times

Anyone still willing to argue that under the Bush administration, the middle class is paying less in taxes? I for one would not be willing to defend that proposition. Likewise, anyone really willing to argue that the Bush tax cuts have stimulated the economy; now that it is clear that median wages haven’t kept up with inflation, the median household savings is negative and local taxes have grown faster than household income? And would anyone willing to defend the current state of the economy still be willing to do so if Gore or Kerry were in office?

rewards or punishments

Democrats — and I fear many Republicans — think we cut taxes to reward the rich. Democrats would raise taxes to punish the rich and to increase tax revenue for their favorite projects. Perhaps they could find some other way to punish the rich. Their demagoguery impedes economic growth and — as their phrase has it — “revenue enhancement.”
From CNN.com - Tyrrell: The supply-side miracle continues

Mr. Tyrrell has advocated spending cuts in the past. I wonder if he would object to having this categorized as wanting to punish the poor by taking away services they pay taxes for?

The fallacy in play here is called The False Dilemma. Since some people think that the Bush Tax Cuts are designed that reward certain groups, those who oppose those cuts must be looking to punish. This is of course wrong. There are any number of reason why one would object to tax cuts that have nothing at all to do with rewards or punishment.

Tell us again about red-state self-reliance

In a study released today, the nonpartisan Tax Foundation reveals that — to a much greater degree than their azure kin — red states continue to rely on the largess of the federal government.
From Salon.com

Between 04 and 06; the amount of money New York State gets back went up $0.02 per dollar. I feel so blessed. The amount I am subsidizing the red-state-socialist economies went down.