–Winston Churchill.
“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”
–Vladimir Lenin.
–Milton Friedman.
“The power to tax is the power to destroy.”
–John Marshall.
Tax day having come and gone last week, I thought it timely to revisit some myths about taxes in the United States. Because as sure as the Sun rises in the East, if Democrats regain power in Washington, our lives are going to become much more expensive.
MYTH NO. 1: THE RICH DO NOT PAY THEIR FAIR SHARE OF TAXES.
This is the most repeated claim in American tax politics and one of the least supported by actual data. The top 1 percent of earners take in 22 percent of total income and pay 40 percent of all federal income taxes. The top 10 percent earn about half the nation’s income and pay 72 percent of its taxes. The bottom half of earners, collectively, pay roughly 3 percent of the tax revenue. The United States, in fact, has the most progressive income-tax system in the developed world.
MYTH NO. 2: WE’LL FIX THE BUDGET DEFICIT BY TAXING THE RICH.
We simply cannot. The collective net worth of every American billionaire is estimated at somewhere around $8 trillion. The projected federal deficit over the next decade alone approaches $25 trillion. Even a one-time total confiscation of every billionaire’s wealth wouldn’t come close, and you only get to do it once.
The real driver of America’s fiscal crisis isn’t a shortage of tax revenue from the wealthy. It’s the structural growth of Social Security and Medicare. The Congressional Budget Office projects that such mandatory spending and interest payments will permanently exceed all federal revenue starting next year. No amount you could tax the rich will correct an imbalance like this.
MYTH NO. 3: IF YOU CAN’T TAX THE RICH, TAX THE CORPORATIONS.
Corporations are the next most likely target for those who want large government without the middle class paying for it. The problem is that corporations don’t actually pay taxes. Once you understand why, this starts to look like one of the worst ideas in America’s tax code.
Corporations write checks to the IRS, but they don’t bear the tax burden. Every dollar collected for corporate tax comes from a human: the worker who’s paid a lower wage, the shareholder who earns less and the consumer who pays higher prices at checkout. Research shows that workers bear somewhere between one-third and two-thirds of the corporate tax burden through lower wages. If you have a 401(k), you’re paying it too, quietly, through lower returns on every stock in the fund.
Further, corporate profits are returns on investment. Tax them and you get less investment. Less investment means lower productivity, which leads to lower wages over time. Decades ago, economists Robert Hall and Alvin Rabushka showed a better way: Replace the corporate income tax with a consumption-based system under which businesses deduct all wages and capital investment immediately. No double taxation, no penalty on investment, and revenue without unintended economic damage.
The corporate tax survives because voters mistakenly believe someone else pays it. This belief is expensive.
MYTH NO. 4: CAPITAL GAINS SHOULD BE TAXED AS ORDINARY INCOME.
This proposal sounds like common sense, but it’s bad economics. When a company earns a dollar of profit, it pays roughly 26 cents in combined federal and state corporate taxes before distributing the rest to its shareholders. When it’s all said and done, the government has taken close to half of every dollar the company earned. That’s not a tax on the rich — it’s two taxes on the same income.
Those who want to raise capital-gains rates assume the U.S. is a low-tax haven for investors. It’s not. America’s combined federal, state and net investment income tax rate on capital gains already sits at 29.2 percent, well above the average of 19.1 percent in fellow OECD democracies. We’re already an outlier, and not in a good direction.
HERE IS THE PROBLEM WITH THE FEDERAL BUDGET. There is too much spending. More than 2/3 of all federal spending is unconstitutional. Congress does not have the authority to, for example, involve itself in healthcare, whether by regulating it or subsidizing it. Same with housing, pensions, food, and electric vehicles. Don’t believe me? Read the Constitution, Article I, Section 8. That sets out what Congress is permitted to do. BUT THE COURTS! The Courts have upheld some of these programs (for example, Obamacare). SO WHAT? Newsflash: The Constitution is the supreme law of the land. Supreme Court opinions are not the supreme law of the land. If the Supreme Court rules contrary to the Constitution, it is void ab initio.
The United States has too many people riding in the wagon, and not enough people pulling the wagon. When a population figures out a way to force other people to pay for their livelihoods, that society eventually collapses. Slowly, then all at once. This is where the United States is at this point.
Spending must be cut. Incentives for people to look to others for their support must end. We must tax the poor; not because we hate the poor. But all Americans should have some skin in the game. Otherwise the takers will always support politicians who promise to give to them the spoils taken from the producers.
Please consider this carefully. And vote accordingly.
U.S. Transportation Secretary warned New York State months ago that if it did not revise its rules about issuing Commercial Drivers Licenses, his Department would withhold federal funding. More than 1/2 of New York’s CDLs were issued to illegal aliens. Well, the verdict is in; New York refused to revise its rules, and now federal funding is being withheld.
“This is dead on arrival in the Senate. Temporary Protected Status is just that: temporary. Beyond that, 91% of all Haitian TPS holders entered the country illegally. In the last election, the American people rejected mass migration policies that effectively grant amnesty to illegal aliens. It’s past time to put our own citizens FIRST.”
–Senator Katie Britt (R. Al.).
Last year, Representative Ilhan Omar (D. Mn.) filed Congressional financial disclosures that estimated her net worth at around $30 million. That was a surprise. This year, Representative Omar filed Congressional financial disclosures that estimated her net worth at $95 thousand. That is a bigger surprise. Hmmmm.
So what is Senator Ruben Gallego (D. Az.) hiding about his knowledge of former Representative Eric Swalwell’s egregious sexual behavior, as well as his own bad behavior? Hmmmm.
Politico was working on a story exposing former Representative Eric Swalwell’s egregious sexual behavior in 2019, while he was running for President. But then Politico killed the story when Mr. Swalwell dropped his presidential campaign. Why?
Virginia taxpayers are now stuck paying state income taxes on tips, overtime, car loan interest deductions, and certain business expensing provisions that their federal returns may now deduct or otherwise treat more favorably. Governor Abigail Spanberger (D.) deliberately chose not to pass along the full Trump tax breaks to Virginia’s citizens. These changes are the functional equivalent of a targeted tax increase on the very people Democrats claim to champion: the service-industry workers who rely on tips to make ends meet.
What does Spanberger’s action mean for service workers in real terms? At the federal level, the Big Beautiful Bill now allows waiters, bartenders, delivery drivers, hairstylists, hotel housekeepers, and other service workers to deduct up to $25,000.00 in qualified tips on their federal returns, subject to eligibility rules and phaseouts. Virginia, however, will still tax those same tips at the state level. A waitress earning $500.00 a week in tips now watches the state take its 2%–5.75% cut anyway, and that adds up to hundreds or even thousands of dollars a year that could have gone toward rent, groceries, gas, childcare, or car repairs.
Most tipped employees earn less than $50,000.00 a year total. They are often young adults, single parents, immigrants, veterans, or retirees working extra shifts just to get by. These families often live paycheck to paycheck, so every extra dollar taken in state taxes makes it tougher to cover bills, handle emergencies, or give their kids a better shot at life. It is the exact opposite of helping working families. It turns out that Governor Spanberger is more interested in filling the state’s coffers than the pockets of average Americans. Affordability.
California Governor Gavin Newsom (D.) wrote a memoir, as a run up to his expected presidential campaign. He calls it “best selling”, because 97,000 copies of his book have been purchased. Governor Hair Gel’s own political action committee purchased 67,000 copies. Ouch! Some best seller.
It will be a sad celebration of Independence Day for Southern California residents. Traditionally, the City of Long Beach puts on a spectacular fireworks show over the harbor. People come from all over to view the fireworks. But this year, on the occasion of our country’s 250th birthday, there will be no fireworks show. The California Coastal Commission cancelled it. Because . . . who knows?
Boston, Massachusetts Mayor Michelle Wu (D.) authorized the expenditure of taxpayer funds to provide LGBTQ++ illegal aliens with “wellness” benefits, including yoga lessons, meditation, and gym memberships. When confronted with public outrage, Mayor Wu denied the expenditure, because she claims to have “paused” the transfer of funds. Liar.
“How dare you tell me, as mayor, how to tax you?”
–Philadelphia, Pennsylvania Mayor Cherelle Parker, responding to citizens’ criticism of her proposal to add surcharges to all Uber and Lyft rides.
Wisconsin Secretary of State Sarah Godlewski found hailstones in her front yard following a thunderstorm. She is raising the alarm; apparently, according to Mrs. Godlewski, hail is a sign of global warming. We are all going to die!
Seattle, Washington is overrun with homeless people, most all of whom are drug addicts. These people have overrun downtown, public parks, and are now spilling into residential neighborhoods. So what is Seattle’s city government doing about this problem? The city is providing the homeless drug addicts with spoons, foil, pipes, lighters–all sorts of drug paraphernalia–along with condoms. The city is concerned with keeping the drug addicts safe. The law-abiding citizens can just fend for themselves.
“We’ve got a feeble-minded, trigger-happy president who plunged us into a war where no threat was present, with no clear objectives and no exit plan. We need to call that what it is. That’s fascism. There are more good people that care about equality, that understand it’s not America First. It’s humanity first.”
–Tampon Tim (D. Mn.), speaking at a “Global Progressive Mobilization” event in Barcelona, Spain.
This corrupt, communist loving twit was speaking to a group of commies in Spain, a socialist country, hostile to the United States. He was undermining America’s war effort, while American troops are actively deployed to combat (a service he worked hard to avoid). A disgusting display by a man who sought to be Vice-President.
Hennepin County, Minnesota [Minneapolis] District Attorney Mary Moriarity (D.) charged an ICE agent with 2 felonies for pointing a firearm at an illegal alien during the discharge of his official duties. Ridiculous! This will not end well . . . for Mary Moriarity.
Luzvin Garcia is an illegal alien from Guatemala. He has been terrorizing Northern Virginia, being convicted 25 times for crimes in Arlington and Fairfax Counties. Yet despite his status as an illegal alien, and a violent criminal, governing authorities keep releasing Mr. Garcia into the community, refusing to turn him over to ICE. Now Mr. Garcia is back in custody, having been arrested for the attempted rape of a woman in Arlington. NOW can we turn Luzvin Garcia into ICE, and deport his criminal a$$ back to Guatemala? Please?
Safeway now offers only paper bags for its customers, due to California’s insane environmental regulations. And now Safeway has shifted to only paper bags without handles. Customers are outraged, as the flimsy bags are difficult to carry, and often break.
Well, The San Francisco Chronicle’s annual list of San Francisco’s 100 best restaurants is out, and it is a disappointment. There is 1 steak house listed (the House of Prime Rib, #88), and 1 traditional seafood restaurant (Scoma’s, #78). Everything else is Oriental (Thai, Vietnamese, Japanese, Chinese), or vegetarian, or something I do not recognize on a plate. There is 1 Mexican restaurant, and 1 pizza restaurant. Sigh. I don’t know who compiles this list, but no doubt he is a hipster doofus who is gluten free, drinks fizzy water, and refrains from drinking alcohol. He is appalled by real food. And it shows.
Former Archbishop of Canterbury Rowan Williams said that “there is something demonic” about the United States’ “political culture”. With all due respect, have you paid any attention to what is going on in Great Britain lately?
Iran claimed that the Strait of Hormuz is open, and shall remain so through the duration of the Israeli/Lebanese ceasefire. We shall see. Iran is still playing games.
Meanwhile, the United States’ blockade of the Strait of Hormuz continues. No ships leaving Iranian ports are allowed to depart the Persian Gulf.
No wait! Iran reversed itself, claiming that the Strait of Hormuz is closed again. We shall see. Iran is still playing games.
British Prime Minister Starmer and French President Macron are leading a European effort to fashion a plan to reopen the Strait of Hormuz. Talk about being late to the party. President Trump responded appropriately–“No thanks”.
Bob Hall, the only man to compete in the Boston Marathon in a wheelchair, and who is considered the “father of wheelchair racing, has died at age 74. R. I. P.
Country music songwriter Don Shlitz has died at age 73. R. I. P.
Former MLB All Star and Los Angeles Angel Garret Anderson has died at age 53. R. I. P.
GFK
Observations From The Fifth Estate 