Leatherneck Blogger

Archive for August 2015

Planned Parenthood and Racism

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“…human weeds,’ ‘reckless breeders,’ ‘spawning… human beings who never should have been born.”

Margaret Sanger, Pivot of Civilization, referring to immigrants, African Americans and poor people. The founder of Planned Parenthood, she was active with the Klu Klux Klan and the eugenics movement in the beginning of the twentieth century.

Written by Leatherneck Blogger

August 31, 2015 at 05:00

Use Tax, Really?

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In order to level the playing field for local businesses, the presiding county commissioner and the Chambers of Commerce declared that Cape Girardeau County must pass a use tax.  The hysteria surrounding this tax was a fabricated “Rahm Emmanuelnesque” crisis.  This is proven by the fact that on August 27th, due to an increase in sales tax collections, the county commissioners reduced property taxes.  The real motive behind the presiding county commissioner’s support of the use tax is to have a new (internet) sales tax put into force without the consent of the voters (RSMo Section: 10.018.(e).1 Voter approval required for taxes … and SB 698 Marketplace Fairness Act of 2015, www.congress.gov/bill/114th-congress/senate-bill/698).

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August 28, 2015 at 13:02

The Educators’ War on the Working Class

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They say that capitalism is the deadliest threat to poor Americans.  But that’s not true — it’s actually Big Education.

We are constantly told that educators are “dedicated” to improving the lives of students and that a good education opens the door to a good career and financial success.   But while this rhetoric may have been true at one time, in the last ten years the economic reality of property taxes and student loan debt are starting to overcome the positives.  Educators may now be the greatest source of financial hardship faced by middle-class and poor working Americans.

The public education system of America is a vast, efficiently organized network reaching from the largest cities to the smallest rural areas.  The bonds that hold this network together include membership in the two largest education unions — the American Federal of Teachers and the National Education association — and the bonds they have to the National Democratic Party.  The bonds to the DNC are made of money.

The size of these unions is impressive: the American Federation of Teachers has 1.5 million members in over 3,000 local affiliates nationwide.  The Center for Responsive Politics records that they give campaign money primarily, and almost exclusively, to Democrats.   They give zero percent to Republicans.  The National Education Association is twice as large and is the number-four all-time contributor to national campaigns.   It gives only four percent of its campaign money to support Republicans.  It has nearly three million members in more than 14,000 school districts nationwide.

So it’s fair to say that American educators overwhelmingly support the Democratic Party.  In return, Democrats in all major states pass extremely lucrative salary and pension plans for educators.

The high salaries, benefits, and pensions going to educators have created two sources of indebtedness to working Americans.  Local K-12 districts are supported primarily through district property taxes, while universities are funded through state taxes and student loan debt.  Sixty percent of students have student loans.  And student loan debt is currently about one trillion dollars.  This amount has quadrupled from what it was in 2003.

The Tax Foundation reports that the average home property tax bill in Cook County, the major source of money for K-12 school districts, was $4,015.  This was up 27% from just five years before.  The Cato Institute reports that up to one-third of the average tax bill goes to pay for K-12 schools.  In where I lived in Cook County, Illinois, half of the property tax bill went to educators.  The three cities that spend the most on students are Los Angeles, New York City, and Chicago, traditional Democratic strongholds.

To see how these two sources of debt impact the average middle-class budget, consider that in 2012, the average student loan was $24,301.  With Stafford loans, a student with $25,000 in loans has a monthly student loan payment of$288; additionally, if he is able to purchase a home, he pays $335 minimum a month in property taxes in Cook County.  If a married couple both went to college, their monthly student loan/tax bill is a total of $911 per month.  The property tax increases were made possible through the inflation of home values in the 2000s.  But while home values have since declined, property tax revenues going to educators have not declined commensurately.

In Chicago, the average retired teacher receives a pension of $3,871.  Their salaries are paid by taxes imposed on all residents of the City of Chicago, whether they own homes or rent.

The U. of Illinois administrators receive the highest pensions in the state, far more than the retired state representatives or state senators.  Of the top 100 publicpensions received by public employees in Illinois, all 100 go to educators.  The top pension is now $512,964 per year, paid to Dr. Winnie, a retired anesthesiology professor.  The average working anesthesiologist is paid $348,000 per year.  There are three other retired educators who are paid $400,000 per year in their pensions.

It is interesting to note that the cutoff for “one-percenters” nationally is an income of $250,000 per year.  There are an additional 25 education pensioners in Illinois who earn $250,000 or more a year, yet no “one-percenter” protesters demonstrate outside the main Administration Building of the U. of Illinois.  Michael Moore is nowhere to be found.  In fact, these retirees receive automatic “cost of living” increases of 2% per year.  This, coupled with other public employee raises at the state universities, forces tuitions up 2% to 3% per year.

Consequently, students must borrow more and work more to maintain the one-percenter lifestyles of both working and retired university administrators.  It may be difficult for those who protested the top one-percenters on Wall Street to justify how middle-class students should pay the cost of living increases for those already making $250,000 per year.  But, following the major media outlets, theysupport government greed and complain only about corporate greed.

So the federal government subsidizes, through the student loan programs, the high university salaries and pensions received by its campaign contributors — a win-win situation for everyone but the working class.  This while public university professors endlessly repeat the Marxist rhetoric that only big corporations exploit the workers.

If oil companies were subsidized by Republicans in this way, liberal media commentators would complain about exploitive quid-pro-quo corruption.  But because Democrats do it, and they portray themselves as helping the working class, few complain.

While teachers constantly remind taxpayers that they deserve their pensions because of their lifetime of dedication, the issue of why students deserve decades of debt to support the luxury-level pensions of teachers needs to be confronted and resolved.  And when everyone in an area has to pay higher property taxes, everyone’s disposable income shrinks.  This shrinks demand for consumer items and puts downward pressure on incomes.  In the long run, this larger macroeconomic effect impacts the best-educated as well.  In fact, we may well be seeing the effects today.

Those who assert that capitalism is at war with the middle class must understand the distinction between purchasing a luxury car and being forced to pay higher property taxes under threat of losing a home.  Property taxes and student loan debt are both created by educators, not corporations.  And citizens have no choice in this debt.  One can choose not to get a student loan, but one is forced by law to pay property taxes.  And since it is very difficult to get a good-paying job without a college education, student loan debt is not entirely a choice.  Theamount of the loan debt, however, is the choice of the one-percenter administrators.

Ever-increasing property tax levels and student loan debt prove that liberal ideas promoted by educators have the effect of making them rich while exploiting working-class Americans.  What adds insult to injury is that educators constantly preach that a college education is the best route working-class students can pursue to lift themselves up and escape the exploitation and oppression created by capitalism.


Written by Leatherneck Blogger

August 28, 2015 at 05:00

Progressives and Their Taxes Kill Cities

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High taxes are bad for cities.  Low taxes encourage growth.  In fact, between 1980 and 2007, compared to the ten most-taxed metropolitan areas, America’s ten least-taxed metropolitan areas experienced three times faster population growth, 2.7 times faster employment growth, and twice as great an increase in personal income.  In the latest Cato Journal, economist Dean Stansel observes:

If high-tax, low-growth metro areas like Detroit, Milwaukee, Buffalo, and Syracuse want to be more like high-growth areas such as Dallas, Tampa, San Antonio, and Austin, they should lower their onerous burden of taxation and bring spending under control.

Yet does any objective observer of today’s ruling-class elitists think that the progressive mayors of humdrum cities would even consider embracing the fiscally conservative strategies of America’s hands-down winners?  Past or present tax-and-spend governors of Michigan, Wisconsin, and New York are not likely to abandon a failed ideology and acknowledge the successes of Texas and Florida.

This is because ideology paralyzes — and so does taxation.

The paralyzing effects of taxation come into focus when comparing highly and poorly performing metro areas.  For instance, at a combined 8-percent state and local tax rate, the Bradenton-Sarasota-Venice, Florida area grew its population, employment, and personal income at rates 466, 6.4, and 4.9 times faster than 12.6-percent-taxed Syracuse, New York.  Admittedly, taking into account a host of contributing factors would yield a more comprehensive assessment of the ways in which cities develop their respective economic conditions.  But dragging in multiple other considerations would also distract from a fundamental truth: libertarian taxation and regulatory structures attract businesses, grow jobs, increase population, and boost individual incomes.

The effects of taxes and regulations can be illustrated by expanding on two of Stansel’s statistics: six of the ten fastest-growing metropolitan areas exist in states which levy no personal income taxes, while all ten of the slowest-growing areas languish in the highly taxed Northeast and Midwest.  The stark distinction is nothing new.  A year ago, I discussed the findings of the Cato Institute’s Dan Mitchell, who analyzed a database that includes government assistance recipients who could not, by any stretch, be classified as “poor.”  I summarized Mitchell’s “Moocher Index” findings:

  1. 6 of the top 10 (in fact, 4 of the top 5) states with the most moochers are in the Northeast.
  2. 11 of the top 30 mooching states are on the East Coast.
  3. Fully half of the top 20 mooching states are on either the East of West Coasts.
  4. Half of the ten states with the lowest percentage of moochers are in the West, but not the West Coast.

In essence, America’s self-reliant spirit has fled its birthplace.  To catch up with this spirit, one must head west, but certainly not to the Midwest or West Coast.  A Tax Foundation analysis of business climates indicates that four of the five most business-friendly states are located in the mountain-state West.  The East Coast, West Coast, and Midwest contain all ten of the most hostile states.  Furthermore, the Tax Foundation’s 2010 analysis of combined local and state tax burdens showed:

  • seven of the ten worst states are on the East and West Coasts, with
  • eight of the ten best in the South and West.

And on property taxes:

  • eight of the ten highest-taxing states are on the East Coast and Midwest, with
  • seven of the ten lowest-taxing states in the South and West.

In summary, regions scoring poorly both on the Moocher Index and on taxation are heavily “progressive” (Democrat) areas, while regions that fare best lean more libertarian (Republican).  And Stansel’s findings reinforce the probable cause-and-effect relationship between sociopolitical ideology and economic health.  Indeed, high-tax, low-growth, and decidedly liberal Detroit, Milwaukee, Buffalo, and Syracuse lie in the economically lagging East Coast and Midwest areas.  On the other hand, low-tax, high-growth Dallas, Tampa, San Antonio, and Austin are in top-performing southern and western areas.

Yet let’s be crystal clear.  The inverse relationship between prosperity and taxation is not a straightforward geographic phenomenon.  Stansel finds wide variations even within generally low-tax, high-growth states.  Tampa, Florida’s level of employment has grown two times faster than that of 14-percent-higher-taxed Miami.  It’s no surprise that Tampa’s population and personal income have ramped up 50 percent faster than Miami’s.

The Texas towns of Killeen and Beaumont tell a similar story.  Though each city’s population reached about 375,000 in 2007, Killeen attained this level by growing 63 percent from a much smaller 1980 baseline.  Beaumont has been static — a meager growth of 1-percent.  Moreover, employment and personal income grew three and five times faster in Killeen than in Beaumont.  No clear thinker would be shocked at the disparate nature of the two cities’ taxation regimes.  Beaumont’s residents and businesses have been smothering under taxes set 37 percent higher than the levels enjoyed by citizens of Killeen.

High taxation suffocates prosperity.  Progresshttp://www.americanthinker.com/articles/2011/07/progressives_and_their_taxes_kill_cities.htmlives’ religious zeal stifles economic growth.  The progressive worldview darkens the human story.

From the unlikeliest place comes a most fitting condemnation of the progressive worldview.  In Emile, his treatise on education, eighteenth-century Genevan philosopher Jean-Jacques Rousseau — a father of progressivism — declared, “Whatever you do, your actual authority can never extend beyond your own powers”1.  But today’s ideologically fixated progressives refuse to give up the pursuit of superhuman dominance.  Progressive politicians seek control over others using government force.  These hopelessly misguided creatures will always need more and more of other people’s money to fund a quest for relevance in their own lives.

[1] Jean-Jacques Rousseau, translated by Barbara Foxley, Emile, Book Jungle, 2008, p.62.

A writer, physicist, former high tech executive, and Cajun, Chuck Rogér invites you to sign up to receive his “Clear Thinking” blog posts by e-mail athttp://www.chuckroger.com.  Contact Chuck atswampcactus@chuckroger.com


Written by Leatherneck Blogger

August 27, 2015 at 05:00

Why Government Bureaucrats Abuse Taxpayers

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In 2010 the nation learned that the city manager and council members of Bell, CA were abusing their public positions and improperly giving themselves pay increases. The city manager had increased his public salary to nearly $800K a year. The police chief also managed to work himself up to a salary of over $400K a year. When local residents, who pay for these salaries, began to complain, the first response of the government employees was to cut back on town meetings. They refused to meet with townspeople or listen to their valid complaints.

And unlike the heads of huge corporations with outrageous salaries, the city manager has the authority to force local residents to pay his salary through their property taxes. Corporate executives do not have the power to extort salaries through the threat to seize homes. This threat lies behind the ability of local government employees to tax property, which has become the primary source of public sector union wages and pensions. And local taxpayers have virtually no say in either the amount their homes are taxed or the terms of public union contracts. These are all inside deals given to the biggest campaign contributors and the most closely connected politicians and their families.

The city manager of Bell, CA is not unique. School boards and county tax assessors across the nation gleefully raised property taxes during the housing value boom of 1995-2008. But since 2007 as housing prices have drastically declined, property taxes have not declined but gone up faster than ever. The Tax Foundation reports that from 2005 to 2010 property taxes in the entire U.S. increased an average of 27 percent. And while facing higher property tax bills, middle class Americans lost 39 percent of their wealth from 2007 to 2010.

These tax increases cause great financial stress for homeowners throughout the U.S. In fact, as property taxes increased the income of the average working American fell 8.1% from 2007 to 2012.

Clearly, there is a disconnect between the spending and taxing policies of government officials and the ability of working Americans to pay taxes. The important question is why this insensitivity exists, why government officials abuse taxpayers as their incomes decline. Is this the manifestation of a greedy, megalomaniac personality, or is there something about being in a position of control that creates abusive behavior?

To understand this behavior two researchers, Dr. Phil Zimbardo of Stanford Univ. and Dr. Stanley Milgram of Yale Univ., designed experiments to put some people in control of others. These two experiments have been replicated by other researchers around the world and are well known today.

Milgram’s experiments, performed in the early 1960s, tested the propensity of a person to abuse another with an “authority figure punishment” approach. He set up a situation where “teachers” were given the authority to “instruct” students. The student was part of the experiment, and acted out the role of a suffering victim. The teachers were told if the student could not remember the correct word of a word pair, they would to administer an electric shock. These shocks gradually increased in voltage. And the voltage numbers were accompanied by descriptive words indicating increasing levels of potential danger to the students. The most extreme voltage, 450 volts, was clearly marked that it could cause physical harm.

As the experiment went on and students failed to recall words, voltages were increased.

The experimenter, who was dressed in a lab coat and had the demeanor of a scientist, kept telling the teacher to “proceed with the experiment” in spite of the students’ cries of pain. Nearly two-thirds of the teachers continued the electric shocks. The electric shocks were phony; the student was pretending to be in pain. But the teacher, who was the real subject of the experiment, was not told that the shocks were phony. Milgram found, to his astonishment, that most average everyday people would follow the directions and shock the students up to the maximum, despite audible cries of pain from the students and complaints that they wanted to stop.

Noting the cooperation of the teachers with the experiment, Milgram observed: “ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process.” His comment that can be applied to bureaucrats was “Obedience is the psychological mechanism that links individual action to political purpose.”

Dr. Zimbardo of Stanford devised a different experiment to test if people would engage in abusive behavior when they are given total control over others. His setup involved a mock prison built in the basement of a Stanford campus building. He divided volunteer college students into two groups: prisoners and prison guards. In just the first day the prison guards began to abuse the students. This abusive behavior manifested itself within hours. Dr. Zimbardo was so concerned for the psychological effects on the prisoners he had to discontinue the experiment in just six days. Like Milgram, Zimbardo concluded that when ordinary persons are given complete control over others they lose all sense of empathy for the suffering of others.

What the results of these experiments in situational ethics show, is that when an ordinary person achieves total control over another, they almost instantly become distant and unfeeling toward other people.

It’s not that bad people work to achieve positions of control; being in a position of control makes people bad. Zimbardo called this “The Lucifer Effect.” Decades later Dr. Zimbardo was consulted to explain the behavior of U.S. soldiers in the Abu Ghraib, prison, where Muslim prisoners were abused. He found that the U.S. soldiers were also acting under the same Lucifer effect.

Taxpayers in Cook County, Illinois don’t need to hear about these experiments. They suffer the abuse of powerful bureaucrats every day. The treasurer of Cook County, Illinois, Maria Pappas, had the chutzpah to state that all households in the county “owe” the county $87,720 for the county employees’ pensions and debt. This gives great financial stress to all homeowners and renters in the county, yet Pappas is so insensitive to the moral context of her behavior she has two office employees paid by taxpayers to be her servants: one is her personal chauffeur and the other her cleaning lady. When the Chicago Sun-Times revealed this abuse of taxpayer money she did not apologize, get rid of the servants, or resign. She feels no moral remorse.

The two experiments placed individuals who did not know each other in a situation where one person had total control over the other. They proved that in the absence of racial bias, personal hatred, or a history of conflict; one person could very quickly lose any sense of human respect for another. And when a government comes under the control of one person, and this one person makes all the judgments regarding taxation, spending, and war; terrible abuse has occurred. This is true of all societies throughout world history.

The U.S. Constitution was written with an understanding of this Lucifer effect: that one person should not have all political power.


Written by Leatherneck Blogger

August 26, 2015 at 14:00

The New Landed Gentry

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The United States was formed to establish the individual’s right to own property and to have a vote in the establishment of laws through the election of representatives. These rights were to be protected through the Bill of Rights in the Constitution. Yet within the past sixty years the Democratic Party has worked to slowly undo these rights and establish themselves as what can only be called a contemporary version of the old British landed gentry: those who earn a living from owning property and renting it to taxpayers.

This article is not intended to examine a theory of how a landed gentry can be established in contemporary American politics. Unfortunately, the seizure and rental of property by government is an established fact.This paper will primarily focus on Illinois and the methods its government has used to establish its landed gentry.  Illinois is the best example since it is the most thoroughly dominated by the Democratic Party, and has experienced the most thorough control of its finances and property through Democrats.

Local governments obtain their authority to levy property taxes through the exercise of what is known as police powers: the duty of the government to maintain services for the health and safety of the community. But in Chicago the pensions paid to public sector union retirees have become so great that in effect all of the property tax revenues are used for public pensions and bond debt only. The services provided by the city such as police and fire protection are now funded solely through fees collected by the city for such things as cable TV, motor fuel and liquor taxes, and so on. Recently the city has started floating the idea that it will begin to bill residents for street lights and other services they claim are paid for through property taxes.

While retired teachers take up most of the pension dollars raised by the city and state, the number of pensioners in Illinois is so great that now there are 80,385 people who get a pension of more than $60,000 a year and of these there are 13,240 who earn $100,000 or more. An additional 20,004 make a pension between $60K and $80K a year. The total for the past year was $12.7 billion dollars.

These are the landed gentry. And while pensioners assert that the Illinois state constitution forbids reducing public pensions, the state constitution also mandates the state budget be balanced, and Democrats ignore that.  Currently there is a six billion dollar deficit in the Democrats’ state budget.

No wonder Chicago’s municipal bonds now have a junk bond rating, and Illinois has the highest unfunded pension debt — $205 billion according to Moody’s — of any state in the U.S.

How this debt came about and how Democrats gamed the Constitution to make it happen are closely related. The voting public is supposed to have some input into property tax increases. Illinois has a state law that requires that any property tax hike of five percent or more be put before a public hearing. However, to get around this, municipalities have raised taxes 4.99% a year so the public doesn’t have to know what’s going on. And contracts made with public unions are negotiated behind closed doors. The only thing the public is allowed to know is how much their new property tax bill will go up. In Chicago, now each household “owes” the city and state $88,000 for their pensions. In effect the charming Democrats used the homes of innocent taxpayers as collateral to create the bond debt they want to fund their pensions.

These tactics have been carefully hidden for decades. Only with the retirement of Mayor Daley II has the city been “allowed” to reveal its pensions debts. After Daley retired, the Treasurer started to list the unfunded debts of all the major pension funds on property tax bills. This verifies that the property taxes only go to fund the luxurious retirements of public union members. And only through careful investigations by the Chicago Tribune newspaper, the IL Better Government Association, and the Illinois Policy Institute have other details been revealed.

The Tribune reported that when it asked to see the records of how the $9.8 billion of bond debt money was spent, records showed that millions were spent on such things as flower boxes for street decoration, plastic doggie bags, and real estate deals for the politically connected.

So the Democratic Party is stonewalling investigations into how they spend money; refuse to allow citizens to attend meetings where their taxes are raised, and secretly creating more debt through muni bond issuances and layers of derivatives.

Anyone who appeals their property tax bill does not have the right to be heard by a jury. A tax appeal board, not a jury, decides the issue. Taxpayers have no say in the amount of the taxes or whether or not they are lawful.

Some may say that blaming Democrats for this is an exercise of partisan politics. But the Center for Responsive Politics reports that the landed gentry, the two national teacher unions, AFSCME and the SEIU, gave 99% of their campaign money to Democrats. Of the six biggest national campaign contributors, four are public sector unions.  Big oil, big steel, and automakers haven’t been the biggest campaign contributors for decades.

In Illinois the public sector unions have not seized ownership of the land. They shrewdly allow the owners of the land to keep their names on the deeds but raise rent — taxes paid to fund their pensions — constantly and without any input from the property owners. The unions protect their pensions through a clause of the Illinois constitution that states public union pension contracts may not be impaired or reduced. However, this clause may violate the equal protection clause of the 14th Amendment since it sets up separate treatment under state law for those who are in public sector unions. Similarly, the extortion of residential property taxes under threat of tax sale for unpaid taxes without market value compensation violates the 5th Amendment: “nor shall private property be taken for public use, without just compensation.” Market value compensation is never paid to homeowners who lose homes to tax sales, as it is when property is taken through eminent domain.

It is not just the Constitution that is being violated but state and Federal laws. For example, private businesses that do work for the state of Illinois are not allowed to make campaign contributions, but public unions are. It is a policy of Federal law that government money cannot be used to influence elections, yet teachers in Illinois are the biggest campaign contributors, kicking back their property tax-funded salaries to the lawmakers who vote for their contracts and protect them with the Illinois constitution.

Public sector unions and their legislative enablers have shrewdly planned to violate the Constitution and pursue a strategy to make themselves a permanent landed gentry class throughout the U.S. Public sector unions are not legally based on the Constitution and someone must challenge these violations of the Constitution before the Supreme Court.


Written by Leatherneck Blogger

August 25, 2015 at 05:00

The successful Clinton economy was based on tax cuts. No, really…

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At the end of this year, America will be looking down both barrels of one of the biggest tax increases in history: the expiration of the 2001 and 2003 rate reductions on income and dividends/capital gains. It’s seldom a good time to raise taxes, but the imposition of the old rates during a recession may guarantee a Hooverian result. The country needs further tax reductions and an even larger reduction in spending to stimulate recovery.
Though there is some disagreement about where the Laffer Curve bends, most agree that higher rates can and do reduce tax revenue and that the Curve allows for a point at which further tax rate reductions won’t stimulate economic activity and create a corresponding increase in Treasury receipts. The United States hasn’t found the latter point yet. Unfortunately, Democrats controlling Washington are unwilling to seek it.
Reasonable people of all political persuasions will acknowledge that tax cuts worked for Democratic President John Kennedy and Republican President Ronald Reagan. Presidents Kennedy and Reagan oversaw significant reductions of confiscatory tax rates on high earners and taxpayers generally. In both cases, records show that Treasury revenues increased with the rate of investment of the freed assets.
Often overlooked in the debate over tax policy is the success of the Clinton-era tax reductions — reductions that, though fairly recent, are unknown to most Americans. That may be no accident.
The Clinton years provide lessons on the effects of tax increases and decreases. The American left attributes the successful economy of the Clinton years to the former and ignores the impact of the latter in order to justify their appetite for the increases they would have us believe will provide additional tax revenues today.
The effects of increasing taxes on Treasury receipts can be seen in the Clinton and Democrat-controlled congressional tax increase of 1993, one of the largest in history. Despite a more robust job market following a recession, the 1993 tax increase didn’t accomplish what Democrats expected. The tax increases added very little to treasury receipts despite their magnitude. Reports from the Congressional Budget Office, the Office of Management and Budget, and the Internal Revenue Service all agree.
In fact, the balanced budgets of the Clinton years didn’t occur until after a Republican Congress passed and the president reluctantly signed a 1997 tax billthat lowered the capital gains rate from 28% to 20%, added a child tax credit, and established higher limits on tax exclusion for IRAs and estates. 
The Clinton tax policies of the early ’90s were based on rate increases and luck — the luck provided by a normal growth cycle that began in 1992 as America emerged from a mild recession and a communications revolution. It was tax relief that improved receipts following the disappointing outcome of the 1993 tax hikes and made the Clinton economy successful. The 1997 rate reduction on capital gains unleashed the economy, causing capital investment to more than triple by 1998 and double again in 1999. Treasury receipts for this category of tax obligation increased dramatically. Without tax relief and the internet/communications revolution, the second Clinton term would likely have seen tax revenues decline in a lagging economy.
There is no reason to believe that tax increases will perform any differently this time under a different aggregation of hopeful Democrats.

To find a pure, easily illustrated example of tax decreases boosting the economyand Treasury receipts, one need only look at the current rates on capital gains and dividends. When Congress passed the 15-percent tax rate on capital gains in 2003, and again following the 2006 extension, Democrats protested that large deficits would result.

The new leadership in Washington and those who support them would allow this tax cut to expire to “generate revenue” for the federal government. Based on data from Congress’s own budgetary agency, they should consider whether expiration will have the effect they desire.

For anyone willing to read it, the January 2007 Congressional Budget Office annual report settles any debate. Citing the original CBO forecasts of capital gains tax revenue of $42 billion in 2003, $46 billion in 2004, $52 billion in 2005, and $57 billion in 2006, Democrats who opposed the rate reduction in 2003 claimed that the capital gains tax cut would “cost” the federal treasury $5.4 billion in fiscal years 2003-2006.

Those forecasts were embarrassingly wrong. The 2007 CBO report revealed that capital gains and dividends tax collections were actually $51 billion in 2003, $72 billion in 2004, $97 billion in 2005, and $110 billion in 2006, the last two years nearly doubling initial forecasts.

In other words, forecasts in earlier CBO reports were low by a total of $133 billion for the four-year period. This tax rate reduction stimulated enough additional economic activity to more than offset forecasted losses.

Reductions in tax rates for capital gains were arguably the most successful fiscal initiatives of the past thirty years.

How could the CBO and Democrats have gotten it so wrong?
It’s very simple. Forecasts are guesses. When rates change in either direction, the CBO does linear forecasts on tax revenues, never estimating the stimulation or retardation of economic activity resulting from the changes. It is all policy permits them to do. Accordingly, CBO forecasts for rate changes are alwayswrong. CBO results, on the other hand, are facts — the same facts that appear in reports from the OMB and the IRS. Four years of factual history on the 2003 tax rate reduction on capital gains and dividends in the CBO’s own report showed that contrary to their expectation of revenue declines, the Treasury actually received record revenues from this class of tax obligation. For that matter, including the 2001 rate reductions on income, Treasury revenues set records through 2007, at that point exceeding original forecasts by roughly twice the cost of the two wars in which America was engaged. The CBO was wrong about that as well.
Politicians and their enablers who embrace old, wrong guesses and ignore newer facts are either a little stupid, or they think we are.
All of America’s current deficits are the result of spending by both parties above the baseline, including spending on the costs of war, homeland security, and natural disaster. Despite those circumstances, at the rates of economic growth through 2007 and with simple spending restraint, the Bush-era 2001 and 2003 tax rate reductions should have yielded a surplus by 2009 with no increase in taxes.
Unfortunately, federal expenditures have been setting records, too, and are increasing drastically. A typical Congress has a spending problem, not a revenue problem. This Congress is no exception, except that its members are spending at exceptional rates and have no will to stop.
Millions of Americans fell off the tax rolls following the 2001 rate reductions on income. Today, the top 1% of earners pays more taxes than the bottom 95%. Who really believes that taxing this top group even more is going to pay everyone’s tab for the ambitious and irresponsible spending objectives of the Democrats in Washington?
Unless clearer heads prevail, we will all pay. Hope for the best, but prepare for the worst.
Jerry Shenk is co-editor of the Rebuilding America, Federalist Papers 2 website©: www.frankryan.org. E-mail: jshenk2010@gmail.com

Written by Leatherneck Blogger

August 24, 2015 at 05:00

Hillary Clinton’s tax returns: the most hilarious chart

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There was a good reason why Hillary Clinton chose a Friday afternoon document-dump time slot to release her and Bill’s joint 2007-2014 tax returns.  The income total of $139 million over eight years is awfully one-perecenter-ish ($17.4 million a year on average), of course.  But dig a little into the deductions, and you strike comedy pay dirt.

Paul Caron of Taxprofblog checked out the charitable deductions claimed by the prosperous couple.  It turns out they are tithing!  A total of $15 million, or 10.8% of their adjusted gross income, went to helping others.  Wow, that’s pretty good, and the tax savings are nothing to sneeze at.

But go one level farther, and you discover that 99% of their charitable giving went to Clinton family charities.  The ones that pay for travel expenses for the Clintons and hire their old friends to work for future political campaigns, along with doing the storied “good work” we always hear about (holding glitzy conferences for wealthy donors, for example).

Doug Ross of Director Blue put out a pie chart that says it all:


Written by Leatherneck Blogger

August 21, 2015 at 05:00

Valerie Jarrett profited from tax loophole She and Obama rail against

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For Valerie Jarrett, following President Obama’s lead as “point man” for repealing the carried interest loophole (which allows certain non-cap gain income to be taxed at capital gains rates), made good politics. But her personal wealth, it was good thing that the effort didn’t succeed.  The venerable Better Government Association of Chicago exposes the rank hypocrisy, if not worse, of Jarrett’s double approach to issue.  Chuck Neubauer and Sandy Bergo write:

The loophole was applied to Jarrett’s earnings from a 2013 Chicago real estate deal involving a $160 million luxury apartment high-rise – earnings that topped $1 million and came while she was working for the White House as a senior advisor to the president, according to records and interviews.

The term “carried interest” refers to money paid to wealthy investment managers that is taxed at the capital gains rate of 20 percent, about half the 39.6 percent maximum rate applied to salaried income. Since his first presidential campaign, Obama has proposed taxing carried interest income at the higher rates.

The BGA estimates the loophole saved Jarrett $200,00 or more. As far as anyone knows, she has voluntarily paid the higher income tax rate on the gain, so as to make her actions follow the course of action she claimed was fair.

But, there is something even worse, the small mater of conflict-of-interest laws.

Federal law prohibits executive branch employees from playing a substantial role in official matters that would have a direct impact on their financial interests. Employees are required to remedy conflicts of interest by asking to be recused, requesting a waiver or selling assets.

Other federal appointees have been forced to divest themselves of assets that could cause a conflict. White House lawyers who reviewed Jarrett’s finances allowed her to keep her interest in the development project that brought her the tax perk, according to records and interviews. There is no record of a White House waiver allowing Jarrett to work on the issue.

Starting in 2010, Jarrett, as the president’s liaison to the business community, was called on to discuss the Administration’s proposal to eliminate the carried interest loophole at three meetings held by the Real Estate Roundtable, a group of top industry executives. She listened to complaints that the changes Obama wants would hurt the real estate industry, according to the Real Estate Roundtable newsletter.

Jarrett also met separately with angry hedge fund executives, according to a March 2012 article in the New Republic.

She also went on the talk show circuit promoting the cause, appearing on MSNBC, Bloomberg TV and NPR in 2011 and 2012.

“This is about fairness. It’s about equity,” Jarrett told Michel Martin of NPR. “Things have gotten out of kilter.”

So Jarrett worked on a matter in which she had a strong personal financial stake, which seems to violate federal law. It was in her interest that the effort to close the loophole fail And – surprise! – it did fail.

Does anyone expect the Justice Department to investigate? That sort of scrutiny is only for the president’s enemies.

Written by Leatherneck Blogger

August 20, 2015 at 05:00

Netherlands abandoning multiculturalism

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Famously progressive and permissive Holland has tried multiculturalism and decided that it just doesn’t work.  In a historic reversal, the Dutch are abandoning government policies in support of multiculturalism and demanding intregration and acceptance of Dutch values from immigrants, mostly Muslims, who now constitute 6 percent of their population.

The Gatestone Institute reports:

A new integration bill (covering letter and 15-page action plan), which Dutch Interior Minister Piet Hein Donner presented to parliament on June 16, reads: “The government shares the social dissatisfaction over the multicultural society model and plans to shift priority to the values of the Dutch people. In the new integration system, the values of the Dutch society play a central role. With this change, the government steps away from the model of a multicultural society.”

The letter continues: “A more obligatory integration is justified because the government also demands that from its own citizens. It is necessary because otherwise the society gradually grows apart and eventually no one feels at home anymore in the Netherlands. The integration will not be tailored to different groups.”

Immigrants will be required to learn the Dutch language and no exceptions to obedience to Dutch law will be allowed for followers of sharia.  In addition, the government will stop subsidizing Muslims and making special criteria for their employment…and will ban the burqa:

The government will also stop offering special subsidies for Muslim immigrants because, according to Donner, “it is not the government’s job to integrate immigrants.” The government will introduce new legislation that outlaws forced marriages and will also impose tougher measures against Muslim immigrants who lower their chances of employment by the way they dress. More specifically, the government will impose a ban on face-covering Islamic burqas as of January 1, 2013.

If necessary, the government will introduce extra measures to allow the removal of residence permits from immigrants who fail their integration course.

The Dutch have tasted the fruits of importing Islamic culture and have decided they don’t want any more.  Western Europeans are experiencing similar second thoughts in many countries, including France, Sweden, and Denmark, but so far they have not elected governments willing to take this sort of action.  But it is likely that once Holland acts, others will follow.

Now if only the United States gets the guts to insist that those who come here adapt to our ways, instead of vice versa.

Update: The Dutch government has enacted a partial Islamic veil and Burqa ban.AFP reports:

The Dutch cabinet on Friday approved a partial ban on wearing the face-covering Islamic veil, including in schools, hospitals and on public transport.
“Face-covering clothing will in future not be accepted in education and healthcare institutions, government buildings and on public transport,” the government said in a statement after the cabinet backed interior minister Ronald Plasterk’s bill.
The ban does not apply to wearing the burqa on the street, but only “in specific situations where it is essential for people to be seen” or for security reasons Mark Rutte, the prime minister, told journalists after the cabinet meeting.

Hat tip: Clarice Feldman

Written by Leatherneck Blogger

August 19, 2015 at 05:00

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