Tag Archives: Tax

Payroll Tax Cut Details

So, I get the hinge.  The Democrats in the Senate won a vote to extend the payroll tax cut for 2 months.  The House GOP doesn’t like that bill and wants to vote on one of their own.  They want the tax cut to be longer than 2 months, more like a year:

The fourth-ranking House Republican argued Tuesday that a two-month extension of the payroll tax cut “would do more harm than good.”

Now, in so far as we can reduce the tax burden for a s long as we can, I resonate with the good Mr. Hensarling, Rep from Texas.  What I don’t understand however, is why even such a relatively short extension of a year is thought to be THAT much better.  If you’re gonna end the tax, end the tax.  A temporary reduction is just as random and unpredictable if it’s 2 months or 12.

I’m a little disappointed in both parties over this one.

Democrats Discover What A Tax Increase Is

A long time ago President Bush lowered the marginal federal tax rate.  However, he was only able to do it through reconciliation.  This meant, of course, that they were not permanent; they would have to expire.  Since then we’ve been engaged in class warfare as the Left screams to reset the rate for the richest 1%.  As Republicans work to prevent the tax increase, all the rage from the Democrats was that this wasn’t a tax hike, it was simply allowing the tax to go back to where it previously was.

Now, in an admittedly bizarre twist of fate, we have the Democrats bemoaning the fact if the the House doesn’t pass the most recent tax bill, it would be a tax hike on the middle class:

“The bipartisan compromise passed in the Senate yesterday received 89 votes, including 39 Republican votes, and Speaker Boehner himself just yesterday called it a ‘good deal’ and a ‘victory,’ ” the White House communications director, Dan Pfeiffer, said in a statement.

“If House Republicans refuse to pass this bipartisan bill to extend the payroll tax cut,” Mr. Pfeiffer said, “there will be a significant tax increase on 160 million hard-working Americans in 13 days that would damage the economy and job growth.”

As I mentioned, this is bizarro world and I happen to agree with the Democrats.  If the bill fails and the payroll taxes are reset, it would represent a tax hike on America.

I’m just glad that the Democrats finally agree with me.

North Carolina Toll Roads

I’ve seen people drive all over creation to find a gas station that sells gas for $0.02 cheaper than they can get at their local fill-up.  In fact, they’ll spend 15 minutes to obtain cheaper petrol.  I see the same thing with folks wanting to buy a CD, or a book or a video game.

People react to price variance, often outrageously so.

Further, I acknowledge that we need to pay for roads.  Society needs to be burdened to cover the cost of building and maintaining this infrastructure.  Currently we use gas taxes to cover this.  However, with the advent of more fuel efficient cars, and all electric cars as well, that tax may no longer be appropriate.  It is continuing to fall short of requirements, though I suspect this is in large part due to the fact that gas taxes fund other things besides roads and bridges, and so another method is required.

I think that method is tolls.

We have long ago mastered the technology that allows us to gather and collect tolls without having to stop at toll booths thereby slowing traffic.  We can do this automatically and accurately.  Now the only thing preventing us is fear of change.

By tolling a rod we are able to directly collect funds from the vehicles using those roads.  AND we can tax some vehicles more than others.  For example, an 18-wheeler is going to impact our highways much more than a Prius.  We can tax the truck more.  And, from a capacity perspective, we are able to tax our roads in order to increase capacity.

As I mentioned above, people will go to great lengths to avoid even a small increase in price.  It is my expectation that as we increase the cost of driving on a road during peak times, fewer people will drive during those times.  This will spread traffic out  more evenly and allow for much more traffic on our roads than we currently experience.

And I’m glad North Carolina is going to experiment with this use:

Raleigh, N.C. — Growing congestion on Interstate 540 could require an expansion of the state’s first toll road, part of which is set to open to traffic next month, a regional transportation planner said Wednesday.

The Triangle Expressway is an 18-mile stretch of road that includes the western part of 540. Tolling is scheduled to begin in January on a 3.4-mile stretch that runs through Research Triangle Park

The rest of 540 is currently free, but planner Chris Lukasina said that could change in the future.

The long-term plan for the road, slated for completion around 2035, includes widening it from six lanes to eight, Lukasina said. Two of those lanes could become toll lanes, with varying costs throughout the day depending on traffic.

“At different times of day, or as congestion picks up or slows down, they can change the toll on that particular lane,” Lukasina said.

In other words, drivers will be able to pay their way into a faster lane.

I’ll be fascinated to see how this works.

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Buffet Is A Smart Man

I was looking through articles and news about Warren Buffet, his compensation and his taxes.  He makes a remarkable amount of money.  And I have great admiration for the man.  His simple down to earth nature, his favorite activity is to have a bowl of popcorn and watch the Corn Huskers play football.  I like his common sense approach to business, I think he once mentioned that if he had purchased the Red Sox, he wouldn’t try and manage how Ted Williams approached hitting.

No, tax policy aside, I have great regard for the man.  And even in the tax debate, he showed a glimpse of his genius:

Becky: OK, there were a couple of emails that came in that people that said if you think the government should be able to tax more money, why don’t you just give your money away to the government instead of charity.

Buffett: Well, that’s a choice and it’s an option that… If I had to give it to a single individual, or make some young Buffett a multi-billionaire, or give it to the government, I’d absolutely give it to the government. I think that on balance the Gates Foundation, my daughter’s foundation, my two sons’ foundations, will do a better job with lower administrative costs and better selection of beneficiaries than the government.

Indeed.  I have little doubt that Buffet’s three children would do a better job with that money.

My only question is this:

Why does Buffet reserve the right to keep and spend his money as he sees fit but denies that same right to all other people?

Warren Buffet Wants Tax Rates To Rise

Warren Buffet is now famous for claiming that his secretary pays more in taxes than he does.  Forget for a second that she doesn’t literally pay more.  Also forget for a second that she most certainly doesn’t pay the rate that Buffet claims she does.

Instead, focus on Buffet.  And his salary:

Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc. (BRK/A), was paid a $100,000 salary for a 30th straight year after warning that excessive executive compensation can hurt shareholders.

Buffett, 80, received no bonus in 2010 and he doesn’t get stock options or grants, the Omaha, Nebraska-based firm said today in a filing. Buffett’s personal and home-security services paid for by Berkshire cost $349,946. The company’s compensation committee has determined salaries since 2004. Buffett, Berkshire’s chairman and largest shareholder, formerly recommended his own salary to the board.

It’s reasonable to conclude that Buffet will earn another $100,000 next year.  Plus, of course, the security compensation.  So, if he gets his way and Obama and the Democrats raise the marginal tax rate from the 35% it is now to what ever they wanna move it to, guess what happens to Buffet’s tax burden?

It remains almost exactly the same.

See, Buffet makes his money in other ways than a simple paycheck:

  • Buffett’s adjusted gross income last year was $62,855,038
  • Buffett’s taxable income last year was $39,814,784
  • Buffett paid $15,300 in payroll taxes last year
  • Buffett’s federal tax bill came to $6,923,494, or 17.4% of his taxable income last year
So, if we DOUBLE the current top marginal rate, Buffet is only impacted on the first $100,000 + whatever the security compensation costs him.  The rest, the $39,400,000 or so left over, won’t be impacted.
Don’t be fooled.  Buffet doesn’t wanna pay more taxes.  He wants OTHER people to pay more taxes.

North Carolina’s Toll Road

I’ve long been an opponent of toll based funding of our public roads, highways and bridges.  However, as I’ve been enjoying my Libertarian blossoming, I have come to embrace the idea.  And mainly for two reasons:

  1. The closer we can get to real use based funding, the better our roads will be funded.  Those that use the road more will end up paying for that road.  Big corporation drives trucks over our publicly funded freeways?  Charge those trucks for that privilege.  Don’t drive those roads but DO purchase the goods and services of those corporations?  Pay that toll through pass through costs.
  2. Tolls can easily be adjusted using technology to influence traffic patterns.  Traffic begins to choke things up at 08:00?  Reduce the toll for drivers up until 08:00.  And then increase it slightly through the rush hour until the demand goes back down.  Over time, traffic will normalize.

And so North Carolina begins its foray into toll based funding:

MORRISVILLE, N.C. — North Carolina’s first toll road is almost ready for drivers…

….

When Phase I of the toll road – a stretch of 3.4 miles between Interstate 40 at N.C. Highway 147 in Durham County south to Interstate 540 in Wake County – opens in December, it and the existing portion of N.C. Highway 540 between N.C. Highways 54 and 55 will be the Tar Heel state’s first toll road.

Drivers will have one month’s grace, and tolls will begin in January 2012.

I’m excited to see how the toll goes.  I’m hopeful that we’ll be able to recover enough money to fund these “infrastructure jobs” that the Obama administration continues to talk about.  The direct tax from tolls should be able to be easily tracked to highway funding.  This should be a no brainer.

However, I also fear that the money we normally collect for our roads will simply be diverted to other uses and that, in net, our roads will continue to be underfunded.

Sigh.

A Him

Let’s get one thing clear.

  1. I care for the people less fortunate.
  2. The government has no role in that caring.

Okay, that’s two, but the second is important.  The government has a role.  And that role is to act as the referee in disputes.  It is to make sure that we all face the same rules and laws.  Sure, there is a cost in maintaining a government, so we tax to pay for it.  But that role of government is not meant to take money from those who have it and just flat out GIVE it to those who don’t.

When that role is given to the government, bad things happen.  Really bad things.

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Who Can Vote

Ya know, there’s been a lot of back and forth among folks on either side of the aisle concerning Voter ID laws making their way into state houses around the country.  With the massive Republican win in 2010, control of state government swung hard right.  And using those majorities and governorships, the GOP is passing laws that would restrict voting.  Now, the restrictions are common sense and are reasonable.  Basically, you have to be a citizen.  Crazy talk I know, but nothing will get a bunch of statists up in arms like a good government regulation!

Wait.

But serious.  Think about voter id laws and the reaction to ’em.  It goes back to the days when polling places, cities, counties and even entire states tried to prevent black people from voting.  For no other reason than they were black.  We’re stuck there.  We can’t escape from there.  Talk about requiring some burden of proof and the immediate reaction is the usual “Tea Party is racist!” meme.

Nonsense.

But here is something that will REALLY get the Left up in arms.  If we’re gonna restrict voting, restrict it on the basis of your Federal Tax burden.

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The Debt Ceiling, The Budget and The Deficit

In April I spoke about taxing the rich.  Basically, you can’t tax ’em enough.

But for fun, let’s try; the highlights:

  • The deficit is $1.5 trillion.
  • People making more than $200,000 a year paid $5.3 billion.
  • Back out those taxes and the deficit is about $2 trillion.
  • People making more than $200,000 a year made, in total, $2.4 trillion.

If you tax the people making more than $200,000 a year at a rate of 100%, you cover the deficit and have $400 billion left over.

You would have to tax every single dime those people made.

At what point would taxing the rich reach the point at which the Leftist would be willing to cut Social Security?  Medicaid?  Medicare?  Unemployment?

If it were me, I’d compromise.  I’d offer $1 in tax raises for each $10 in spending cuts.

“Raise taxes on airplanes?”  Fair enough, cut spending 10 times that much.

Actions Have Consequences

I really enjoy chess.  Well, actually, I wish I really enjoyed chess.  In reality, I’m a horrible chess player; and I know why.

I think the reason I’m such a poor player is that I’m a “selfish” or “arrogant” player.  That is, I assume my opponent will play as I would.  Therefore, when I create my strategy and begin to implement it, I fail to take into account that as the board changes, my opponent is going to react and change his behavior.

I’ve never overcome this failing of mine.  So I lose.

And because I lose, I rarely play.

I can take heart that others face the same challenges.  However, that comfort can also cause great concern.

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