By Phil Kerpen
Director of Policy, Americans for Prosperity
The composition of the tax hikes in the 2010 budget is frighteningly similar to the Revenue Act of 1932, the much-maligned Hoover tax hikes that put the “Great” in Great Depression by putting an enormous tax burden on millions of Americans, largely through excise taxes. These taxes, raised even further by FDR, were justified by the promise that the funds would be returned in the form of relief programs, which is to say that some portion of the tax revenue, after administrative costs in Washington, would go back to the states with strings attached, often to further political rather than economic objectives.
As the table below shows, the Obama budget blueprint, like the 1932 act, is split mainly between broad excise taxes and income tax hikes on high income earners. Unfortunately, there were no 10-years projections back then, so I had to use one year numbers, but it’s still an interesting comparison.
The 2010 budget assumes, probably correctly, that the only way to generate a big revenue increase in the face of severe economic weakness is to use a tax mechanism–the excise tax–that is collected in relatively small increments across millions of transactions made by Americans of all income levels. That is a direct lesson of 1932, when the income tax on the rich–then the only people who paid income taxes–was raised to capture as much revenue as possible before high-income earners fled the country or stopped working. Then, as now, that amount was about 0.3 percent of GDP.
Excise taxes did most of the revenue work in the 1932 act, including excises on everything from trucks, tires, jewelry, chewing gum, and soft drinks to gasoline and electricity. Those last two are especially interesting in light of the carbon cap-and-trade proposal in the 2010 budget, which is a DE facto excise tax on those items as well as every other energy technology that relies on the most affordable energy sources: natural gas, oil, and coal.
Despite President Obama’s promise that “If your family earns less than $250,000 a year, you will not see your taxes increase a single dime. I repeat: not one single dime,” his new budget raises 45 percent of its revenue from energy taxes that will be paid by everyone who fills a gas tank, pays an electric bill, or buys anything that was grown, shipped, or manufactured.
While the overall tax hike is smaller than 1932 (0.9 percent of GDP versus 1.6 percent of GDP) and the excise/energy component is only half the size (0.4 percent of GDP versus 0.8 percent of GDP) there is every reason to believe that the bite of the cap-and-trade tax will increase considerably beyond the initial projections, making this plan even more resemble 1932.
The cap-and-trade provisions are designed to get much, much more expensive over time, making the total impact hard to quantify but likely to be as or more expensive than the 1932 Revenue Act. In fact, Obama’s version of cap-and-trade is much more expensive than last year’s already outrageous Lieberman-Warner bill, mandating emissions cuts of 83 percent versus 63 percent in last year’s version.
I didn’t include the death tax in the chart, because there was no revenue estimate for it in 1932, but that’s another eerie parallel. In 1932 the rate was hiked from 20 percent to 45 percent, and in 2010, under Obama’s proposal (which is hidden in a footnote in the budget) it will go from zero under current law to that same 45 percent rate.
If we continue down a path of repeating the policies of the 1930s we risk a repeat of the same results. Let’s hope Congress has the good sense to say no to these Hoover-style tax hikes.
Phil Kerpen is director of policy for Americans for Prosperity.
Complete Discussion Below: marks the location of current message within thread
"Every time Obama opens his mouth, his subjects and verbs are in agreement. If he keeps it up, he is running the risk of sounding like an elitist."
He has already attracted a rebuke from Sarah Palin.
"Talking with complete sentences there and also, too, talking in a way that ordinary Americans like Joe the Plumber can't really do there, I think needing to do that isn't tapping into what Americans are needing, also."
Democracy Obama-style! Great post. Thanks.
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Obama scary
I plan to vote for McCain (even though he was not my first or second choice). The main reason I think Obama is scary is (and I know I'm gonna get a lot of crap about this one) universal health coverage. I've done a lot of research and seen a lot of shows about other countries that have this program and I'm convinced that it's a great idea to have everyone covered under some sort of health insurance, but what people don't realize is that just becasue you have the insurance does not mean you'll get the care you need. Do you really want to wait three weeks to get into a doctor for a sinus infection? Yes, the system we have now is flawed in MANY ways, but I don't think universal health care is the way to go and if you as anyone from Canada, they'll tell you the same thing. The other thing that scares me is his desire to sit down and talk to leaders of countries that want to see the US blown off the map. You can call McCain a warmonger all you want, but he knows that China doesn't want to have a three day picnic and talk about how we can all get along! And just for the record, I think that even though we only have McCain and Obama to choose from, it would be a HUGE mistake not to take part in the voting process. AL Gore didn't really win that election and there are many reasons why - he did win the popluar vote altogether, but he did not win the electorial vote, which is what is takes to be elected. If he had a few more votes in just a few states, that might have swung the electorial vote his way and he would have had a win (shudder). So your vote does count - please go out and make it!
Me too! I think Obama is the scary one (sm)
I'm no huge fan of McCain, but at least his choice of running mate is a real Republican and she seems to have a good head on her shoulders. If Obama wins I believe within a year we will be a third-world country. He wants tax payers to pay for welfare for the whole world. His goal seems to be to be President of the UN. He is ultra-left wing and his interests are not the interests of your average American IMO.
McCain is scary. Obama is the US's best hope for Many scary questions remain about Obama. If you
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I think that was Hoover.....(sm)
A chicken in every pot and a car in every garage.
I agree that the trickle down thing hasn't worked. What that did was put more money in the hands of the people who already had money. Instead of creating jobs with that money, they invested or spent it, thereby staying in the top 2% with no benefit for the average American at all.
Obama's plan at least puts that money in the hands of the people who need it. No, it may not be that much, particularly at first. It may just cover that chicken in the pot, but that chicken is more than you started out with.
So, I think the real question is -- are pubs willing to just keep giving that money to the top 2% -- that would include those CEOs everyone's been talking about like dogs -- or would they rather have that money in hand. I don't see why anyone would want to fight this given the fact that Reaganomics has obviously failed so miserably.
during an economic recession and that lead to The Great Depression. Obama is the one wanting to raise taxes here. He wants to raise taxes on companies who are already hurting right now because of the financial crisis. This will lead to less jobs and more companies closing and going out of the country. FDR introduced several new deals which were government assistant programs that were supposed to help people during the great depression and those new deals have actually been proven to lengthen the duration of the great depression.....not help it. Obama wants to introduce new government assisted programs. To me....Obama will be the absolutely worst thing for this economy.
As for Sarah Palin....at least she has run something which is more than I can say for Obama. He may have been a community organizer but the buildings in his region that were for low-income families, like the ones owned by Rezko, were often without heat and were horrible living conditions. Sarah Palin has run a state where she is very popular. She has cut spending in her state. She has no problem standing up to her own party. These are very admirable things. Yes, Obama has been on the senate but he hasn't been on there very long. His experience of running things and making executive decisions is seriously lacking. Instead of cutting back government spending, he wants to raise our taxes. Gee....that sounds like change, huh. A man looking out for us little people.....whatever. Obama has never once stood up against his own party. His own running mate said he didn't have the experience. The amount of pork Obama has spent government money on is just outrageous. The key to this whole thing is to get government under control and stop the spending.....not let government get bigger and control more of OUR money.
All jokes on the liberal board must be approved by the CONS, and everyone's sense of humor MUST mirror their own. Any deviation from this will result in deletion of the jokes (and any accompanying posts).
It's the epitome of true freedom of speech -- Bush style!
BANGKOK (AFP) - Parliamentary candidates in Thailand's upcoming election are trying to buy the votes of elderly men by passing out free Viagra, a local government official said Friday.
Thais head to the polls on December 23 for the first time since the military toppled the elected prime minister Thaksin Shinawatra in a bloodless coup last year.
Residents in Prathumthani, on the northern outskirts of Bangkok, reported some of the candidates were passing out doses of the anti-impotence drug in exchange for promised votes, said Sayan Nopkham, a local government official.
"The villagers told me they have been given one or two pills of Viagra by candidates. Then they come to me to ask for more pills, or sometimes coffee, in exchange for voting for my brother, who is also running for a seat," he told AFP.
Thailand has a long history of vote-buying, but laws banning it have recently been toughened.
Anyone found guilty of buying votes could face up to 10 years in prison while voters who accept money face up to five years in jail.
Charungwit Phumma, an investigator with the Election Commission, said he had received no formal complaints about a Viagra-for-votes scheme.
"It's a funny claim," he said.
Charungwit said the most common complaints filed with his office were voters being paid to join a political party or being promised cash for going to the ballot box.
Sens. Barack Obama & D*ick Durbin Rep. Jesse Jackson Jr. Gov. Rod Blogojevich House leader Mike Madigan Atty. Gen. Lisa Madigan (daughter of Mike) Mayor Richard M. Daley (son of former Mayor Richard J. Daley).....
Chicago is a combat zone. Of course they're all blaming each other.
Can't blame Republicans; there aren't any!
(Look them up if you want).
State pension fund $44 Billion in debt, worst in country.
Cook Co unty ( Chicago ) sales tax 10.25% highest in country.
Chicago school system, one of the worst in country.
This is the political culture that Obama comes from in Illinois .
It really adds nothing when you insult other posters like this. Why can't you accept an opinion, when everyone here who knows politics, is very aware of things that have happened over the past few months? Just because someone doesn't feel like typing out what has been discussed and debated here for the last few months does not make them less intellectual than you.
I rather admire them for refusing to be baited by your antagonistic style of posting.
1. Individual income tax 45% of tax revenues.Included in individual income tax category are capital gains taxes, which make up between 4% and 7% of individual income tax revenues and between 2% and 3% of total tax revenues within this category.
2. Payroll taxes 35% of tax revenues.Social insurance (Social Security). Funds used to pay for Federal old age, survivors, disability insurance, unemployment insurance, temporary assistance to needed families, Medicare/Medicaid, State Children's Health Insurance Program (SCHIP) and Supplemental Security Income (SSI).Employee's share of this is 17.5%.
3. Corporate Income Tax 15% of total tax revenues.
4. Excise Tax 3% of total tax revenues. Essentially a consumer tax on alcohol, cigarettes and gas.
5. "Other" 2%
So, individuals' share of total tax revenues amounts to approximately 65.5%, employers 17.5% and corporations 15% plus the mysterious "other" of 2%. If you go to the above link and scroll down about halfway, you will find a nifty little chart that shows how much the share corporations paid into total tax revenues has diminshed since 1950. For example, an early 50s spike on the graph show corporations' share to be approximately 30+%...TWICE AS MUCH AS IT IS NOW.
"…tax compliance costs employers with less than 20 employees a total of $1304 per employee as compared to employers with 500 or more employees which incur $780 per employee to comply with Federal taxes.Small entities pay 40% more for tax compliance than employers with 500 or more employees.
Center on Budget and Policy Priorities – How Robust was 2001-2007 Economic Expansion? Figures 1 and 2 will indicate the following information: Based on the 7 economic indicators, Bush years turned in below average growth percentages in every single indicator except for one….CORPORATE PROFITS. The biggest losers….employment (JOBS) and wages and salaries (PAYCHECKS). To make this dry economic data a little bit spicier, 2 comparisons have been shown…Bush years against Post WWII averages and Bush years as compared to the 90s decade. I have run averages on the trough and peak growth comparison data depicted in Figure 2 to come up with the following overall percentages. Pay special attention to the last 3 items.
1. Gross Domestic Product (GDP) down 31% from Post WWII average and down 12.85% from the 90s
2. Consumption down 23.45% from Post WWII average and down 6.25% from the 90s
3. Non-residential fixed investment down 40% from Post WWII average and down 58% from the 90s
4. Net worth down 16.25% from Post WWII average and down 20.1% from the 90s
5. Wages and salaries (PAYCHECKS) down a whopping 55.6% from Post WWII average and down an impressive 40.55% from the 90s
6. Employment (JOBS) down an amazing 68.65% from Post WWII average and down an impressive 46.65% from the 90s
7. Corporate profits up 200% above post WWII average and up 126% from the 90s.
From where I sit, there is clearly something wrong with this picture. I will be voting for the candidate who shares this view and plans to restore a more balanced, equitable and FAIR distribution of wealth. This is not about shifting bucks from one person to another. This is about corporations whose butts are being bailed out right and left by us Joe Shmoes shouldering more fiscal responsibility toward their shareholders AND toward John Q. Public.
I wonder if the Catholic *terror group* was being spied on before or after this became public. You know how truth and light are with the Bush crowd: If you expose the truth about their actions, you WILL Plamegated, Swiftboated or just generally trampled on.
This just further proves that if you're not evangelical and born again, you may as well hang it up because you simply don't count as an American any more. You don't belong either here on earth or in heaven as far as they're concerned.
They act more like the antichrist than people who follow the teachings of someone who was LOVING and TOLERANT, like Jesus.
Yes, very scary. sm
But, for now I'm still in denial, but then so were the Jews until they were being rounded up by Hitler.
That is just too scary
I heard that and thought letting them steal our money from us and feel good about it? (well I actually don't make that much, but for the people who have earned it with blood sweat and tears, and lots of hard work, since when is it right to do that to them). Since when did patriotism fall into the same category as robbery. BTW...this $250K thing? Just a short while ago it was $200K (guess they were losing too many votes so they upped the figure), but what's going to happen when they say, oh we're not getting enough money, we're going to have to steal from the people who make $150K, then $100K, etc, etc. Anyone see a pattern here? Oh and on top of that we're supposed to feel patriotic about that. Sure I'll sing the national anthem everytime I get my paycheck to find they stolen from me. That's not patriotism, that's socialism at its finest. I have been saying all along the democratic party is now the socialist party and it's coming right back to bite them. - Another little tidbit of info...Joe Biden plagerized something a socialist said word for word. I'd have to do some research on what exactly it was but I heard that on TV and also DH told me that tonight. I'm voting for McCain/Palin so I can keep as much as I can. Things are tough enough without the government stealing more from me. The democrats need to learn to stop spending!!!!! I can't wait for Sarah Palin to take the office of VP. If anyone caught part I of her interview with Sean Hannity you will understand why. She's one smart cookie when it come to economics and how to get America back on track and prosper.
She's scary. You are very scary if you believe that. Oh my...sm
Is that what we are reduced to in this country? Doesn't a leader of the modern world need to have an education and an understanding of what it takes to guide the US in the right direction in this most difficult time. I am a hockey mom too, have a masters degree in political science and a law degree from Rutgers University. I have been very involved over the years in setting the record straight for both parties. I feel like I have contributed to cracking that ceiling for women but I am ashamed that the republican party is using Sarah Palin for their own disgusting purposes. She is neither qualified to be VP or president, and neither am I.
Scary
Have you checked out your McSaint as thoroughly? What about his hair-trigger temper for example? Have you watched the video of his exchange with the mother of the Vet still MIA in the congressional hearing? Not exactly a kindly man. What about the Palin investigation that the results of that investigation won't be released until after the election?
Could it be that if the majority of the people intend to vote for Obama (or against McCain) that the majority agree that McCain does not need to be in the White House?
I personally find McCain just as scary, if not more so, than Obama.
Want to see something REALLY scary?
Go rent the DVD "Jesus Camp." It's like watching an hour and a half of nanny-cam filled child abuse, & so creepy I had to calm myself down with some Pat Condell & Julian Jaynes.
Bush has done a LOT of work on this during his administration (which isn't over yet) when he could have been doing things like securing our borders. This is one of the reasons people are frightened of him and don't trust him.
I'm glad this is coming to the surface now so that Obama doesn't get blamed for all this later -- if there IS a "later."
I am for 'live and let live!' and freedom of speech!
REALLY SCARY! -was trying to say.
nm
Scary logic
So you would base qualification solely on his horrific experience in the POW camp? Seriously?
McCain is truly to be admired - no doubt - and ANYone who actually said "lying in a POW camp for 5 years does not make you qualified to run a counry" is despicable.
But enduring torture (at the hands of people whose country we invaded by the way, sound familiar?)
does not and SHOULD NOT automatically grant *any*one a pass to the most powerful position on the planet. If that's as far as your thinking goes, it's just scary...
PATRIOTISM, my friend, means standing up against your government on behalf of your COUNTRY! not JUST being willing to participate in any war, any where.
And being commander in chief means to ME that the person in that position would NEVER send men/women into another Vietnam OR IRAQ - and John McCain CLEARLY would like to continue the battle in many more places - but NOT in the one place where the attackers from 9/11 originated: Saudi Arabia. THAT my friend is shameful.
I will not vote republican for multiple reasons going back to the Reagun administration and I think Palin is a joke. It's like Dubya trying to put Harriett Myers on the supreme court - WHAT!!!!! Lies? Lets talk about lies. Like being led into a war with no end in sight due to LIES. Our children being slaughtered in that country for nothing - except maybe oil. Tax cuts? I don't know about you, but I'm not in the upper 10% tax bracket, so I didn't reap any benefits from the so-called "tax breaks." Lets not forget the worst deficit this country has ever seen all due to Dubya's reckless spending. And never, never, never forget Katrina. That was genocide. Let's toss in Bill Clinton's "sexual misconduct." Hmmm.....I don't want anyone in my bedroom. That was Hillary's problem - not the country's. But we have Foley playing footsie with the congressional pages, whatshisname and his wide stance in airport bathrooms and don't forget that religious nut who was good buddies with Dubya and visited the white house on occasion that was snorting meth and having sex with a male prostitute. How's that for family values????? No child left behind? What a crock. We have been manipulated over and over by the current administration as well as by the media. They swallowed the Kool-Aid, too; until Katrina. It took that disaster to open their eyes, but they seem to have closed again. We have the patriot act, no habeas corpus and if the republicans get in again, they will line up the supreme court with their right-wing fanatics who think that everyone should abide by their MORAL rules. You cannot legislate morality. And anyone with half a brain would realize that abstinence does not WORK. Palin's daughter for example. Take away birth control, take away abortion - who's going to pay for all of these kids? The republicans aren't going to fund any programs to help them. Lets just step back 50 years and start all over again. My God! Wake up! You'll find more babies in dumpsters and illegal abortions will wend their way back into society creating more misery and death. I value my rights. I value the right to decide what is best for me. I don't think it is the right of our government to determine the outcome of my life. I guess it does take 8 years to ruin a country. Look how divisive everyone is. Voting republican is voting against your own best interests. The trickle down theory DOES NOT WORK. You will not benefit from any of these proposals - they are proposed to keep big corporations and greed on the upswing. My parents retired with good pensions - will you? My parents had great insurance that paid the WHOLE bill - do you? My mother made more money when she retired (20 years ago) than I do currently. Wages have not gone up. Gas has gone up. Groceries have gone up. The cost of living has gone up as well as insurance policies, medications. Corporate America treats its employees like slaves. There is no compassion - just greed. Vote republican and you will fall on your own sword. Bill Maher said it best "Americans are stupid and are getting stupider; they deserve the leader they elect." I am praying Obama who graduated from Harvard due to his own sweat and hard work gets elected. He wasn't born with a silver spoon in his mouth and he knows what it is like to be on the ugly end of the stick.
If making health care affordable and/or available to people who are literally DYING because they can't afford it makes one a 'socialist' well BRAND me now!
I think youu missed the point: PEOPLE (in both parties)are easily manipulated into voting for a candidated for all the WRONG reasons.
and for the record MCBush is using 'CHANGE WE CAN TRUST...
and he will likely snag just as many nonthinkers with this slogan as Obama.
anybody who falls for EITHER lie is a schmuck. Nothing substantive is going to change in the US for a while... it takes a bit of time to stop imperialism.
And I am sure Obama can emphathize with the statement "clumsy word choices" this morning.
lol.....and yet, very, very scary at the same time....lol....nm Truly scary stuff
http://www.youtube.com/watch?v=G8fSe27iloU
What's so scary about it? The man was just praying
for her. That is way too scary and not comforting at all
I've listened to her talk. And she can't talk. Talk about stutter, jerking movements, and what she says never has any substance. I agree Palin did a heck of a lot better in her interviews than Pelosi has ever done (and Pelosi is suppose to have some expereince in talking to the public). Keen observation about keeping the Pres & VP separated. Pelosi knows exactly what power she has and the things she can do (probably why she has that idiotic grin on her face all the time. Obama probably sees that and says, no way will Hillary be my VP. Can you imagine Hillary & Pelosi as Pres & VP - Quick where's my passport.
there is nothing scary about encouraging
I'm curous about HOW you encourage them. Do you share with them "The sleeping giant is stirring and a youthful new leader has emerged to restore us to the greatest nation in history?"
What is scary is someone willing to vote for someone....
who talks a good fight, went to a racist church for 20 years, has a far left socialist agenda, wants to fundamentally change this country to a socialist state followed closely with changing "the world."
THAT is scarier than Sarah Palin ever thought about being.
Too bad you can't get a master's degree in common sense.
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