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Sunday, December 02, 2012

Bush Tax Cut Chart Disproves Obama's Lies

By Susan Duclos

Spending is considered "outlays" and revenue is considered "federal receipts."

Via Reason we see a chart of the federal receipts and the outlays from the last two years of the Clinton Administration, the two George W. Bush terms and Barack Obama’s first term. The source for the chart is White House OMB.

A few notes: George W. Bush and supporters of the tax cut said federal revenue would go up after passing the cuts and it appears it did. In fact, federal receipts reached Clinton-era levels without Clinton-era tax rates in 2006, not long after all the cuts went into effect (passed in 2001 and 2003, they were tweaked with in 2005). Bush passed a tax cut as stimulus in 2008 and Barack Obama’s trillion dollar stimulus package in 2009 included some type of tax cuts as well, but does that chart look like a revenue problem or a spending problem?

 Despite Obama's babbling across the country to push for hiking taxes and his fiscal cliff proposal which includes another $255 billion in stimulus spending aka outlays, the bottom line is that to generate more sustainable revenue we need more taxpayers, more people working so they are paying taxes into the system.

Taxpayers Needed, Not New Taxes

In 2011, Marco Rubio said something that received some attention but then, as happens in politics, was overwhelmed by other arguments in Washington, but his words are more relevant today than they were then.

Here is part of that speech: (The entire speech can be found here)

“We don't need new taxes. We need new taxpayers, people that are gainfully employed, making money and paying into the tax system. And then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again. And that's what we should be focused on, and that's what we're not focused on.

“So you look at all these taxes that are being proposed, and here's what I say. I say we should analyze every single one of them through the lens of job creation, issue number one in America. I want to know which one of these taxes that they're proposing will create jobs. I want to know how many jobs are going to be created by the plane tax? How many jobs are going to be created by the oil company tax that I heard so much about? How many jobs are created by going after the millionaires and billionaires the president talks about? I want to know: How many jobs do they create?

Going back to a couple links I put into a piece on November 30, 2012,  showing Barack obama deliberately misleading the American people on who exactly gets caught up in his "tax the rich" death trap.

Obama continues to say his plan to tax the rich would only affect 3 percent of small business owners. What Obama does not mention is he is counting businesses which include marginal and part-time firms with no workers.

Via Washington Post in July 2012, using Department of Treasury data, the percentage of small companies that actually employ workers that would be caught in  Obama's tax the rich death trap, is 24 percent.

That 24 percent of business that would be affected, according to the latest research using data from the Federal Reserve Survey of Consumer Finances (SCF), employ 93 percent of the people working in small businesses.

Using Wisconsin business owners as just an example because that is the most recent  State survey conducted, we can see the estimated numbers of what is rolling across America's small businesses.

June's 62 percent that were planning to increase their workforce is now down to 24 percent, a whopping 38 percent decrease. The two percent that were planning to decrease their workforce is now up to 20 percent, an 18 percent increase.

The economy, regulation, healthcare and taxes, are among the concerns and the reasons cited for the change.

Gallup's nationwide survey, released November 30, 2012, confirms that the findings by Wisconsin to be accurate and widespread:

One in five small-business owners (21%) expect the number of jobs at their company to decrease over the next 12 months, the highest percentage Gallup has measured to date.

 Drew Greenblatt, president of Marlin Steel, addresses the issue:

“We’ve got to increase job creation, fast,” he told FOX Business. “This recession has gone on too long, and now is the time for us to turn it around by creating certainty.”

As for those looming tax increases for those making above $250,000 annually, Greenblatt said he was going to deliver a message that the move would stunt economic growth and hiring. American factories, he said, are one example of a small business that pays taxes on a personal level of income. Increasing their tax rate will deter potential for economic gains.

“It makes us less competitive against our economic adversaries like Canada and Germany,” Greenblatt said. “Right now, American factories are paying much more in taxes than our German and Canadian rivals. We have to be more competitive—if we are more competitive, we will win more jobs… we will hire more locals.”

And if government spending continues on its current path, he said, it is a road to doom.

Spending is America's problem. Raising taxes on 24 percent of employers that are responsible for employing 93 percent of those working in small businesses, will lead to less people employed according to those small business owners, which means  less "federal receipts" by way of tax revenue.

According to a study done by  Ernst & Young, in an effort to predict the long-term economic impact of letting the top rates increase at year’s end, determined the plan would actually subject 2.1 million business owners to higher rates; specifically, those who pay pass-through taxes, like most partnerships, LLCs and S-Corporations. The result, less capital in the hands of business owners and diminished labor supply, would cost the United States an estimated $200 billion in economic output and 710,000 jobs. (Source- Washington Post)

Tax Rates for 2012:

  • 10% on taxable income from $0 to $8,700, plus
  • 15% on taxable income over $8,700 to $35,350, plus
  • 25% on taxable income over $35,350 to $85,650, plus
  • 28% on taxable income over $85,650 to $178,650, plus
  • 33% on taxable income over $178,650 to $388,350, plus
  • 35% on taxable income over $388,350.

That would be a loss of 710,000 taxpayers paying revenue into the system,  less capital for business owners, less spending into the economy by both those owners and the newly unemployed, plus the unemployment benefits the government would be spending on those new unemployed workers via unemployment checks, medicaid, food stamps etc... all caused by adding a 3-5 percent bump in taxes for the so-called rich. (35 percent paid now, Obama wants 39.6 percent)

You do the math.

[Update] Quote of the day goes to The Lonely Conservative: "You just can’t make this stuff up. President Obama  wants more stimulus spending to offset the expected drag on the economy that his proposed tax hikes would cause. Good grief."