My friend Dubbs Galt warned me that if I didnt shape up, then President Obama was going to nationalize my blog and fire me from it.
Also, I received a message on Facebook yesterday from someone named Jory Lyons who said in regards to yesterdays post about how each American’s individual share of the bailouts and stimulus is $42,105: “Can we write this expense off on our taxes?”
Funny stuff.
Americanly Yours,
Phred Barnet
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If you are a regular reader, you will remember that I wrote earlier that the total amount committed to the bailouts by the government equaled $8,800,000,000,000 [$8.8 trillion].
Thats a ton of money–to put it lightly. But, unfortunately for your wallet, it didnt end there.
Bloomberg recently reported that “[t]he U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion” over the past 20 months. “The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.”
This means that in the past 20 months, the government has committed about 90% of our country’s GDP to bailouts and “stimulus.” [emphasis added by me] Roughly 1/3 of this money has already been spent, while the remaining 2/3 has been committed but not yet spent.
The article breaks the spending by category. This is pretty scary stuff. Please pass this along to your friends and family. Also, get involved. There are Tea Parties coming up across the country on April 15th. The Facebook group representing the Tea Parties has over 24,000 members. We are expecting between 5,000 and 10,000 protesters in Atlanta for next weeks event. These protests are being held in cities, both large and small all across the country. Here is a map listing the locations of many of them. Join the struggle before they spend another $42,105 of your money!
Americanly Yours,
Phred Barnet
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If you arent a smoker, you might not have heard about the huge increase in cigarette taxes which took effect on April 1st. On the first of this month, Federal excise taxes on cigarettes went up from 39 cents a pack to $1.01 per pack–an increase of 62 cents a pack. This is an increase in the tax by about 159%.
It is not fair to target one group of people–a group who are disproportionately from the lower class and who are addicted to a a product–and tax them for the benefit of others.
From the article I linked to above:
“The rate of adult smoking in the United States is, in fact, directly related to household income, dropping in linear fashion as income rises. Overall, 21% of American adults smoke… A different way to look at this smoking-by-income data is that slightly more than half of today’s smokers (53%) earn less than $36,000 per year — making cigarette taxes highly regressive.”
Here is a chart from the CBO on what percentage of taxes are paid by what range of wage earners. I found this about a year ago when I was looking for evidence that President Bush’s tax cuts benefited the rich way more than the poor. It turns out that I was wrong about that, but more on that in another post.
I want you to look closely at this chart. It will make the next couple of paragraphs make a lot more sense. The lowest 20% of wage earners pays .8% of all federal taxes, the second 20% pays 4.1% of all taxes, the third 20% pays 9.3% of all federal taxes, the fourth 20% pays 16.9% of all federal taxes, and the top 20% pays 68.7% of all federal taxes.
This includes all income taxes, social insurance taxes, and excise taxes.
I like this chart because it allows you to look at excise taxes by themselves. Scroll down to the bottom of the chart and they have the numbers for who pays the excise taxes in this country. In this case, the bottom 20% pays 11.1% of excise taxes, the second 20% pays 14.4% of excise taxes, the third 20% pays 18.1% of excise taxes, the fourth 20% pays 21.9% of excise taxes, and the top 20% pays 34.1% of all excise taxes.
You can easily see that excise taxes fall much more heavily on the poor than do the average federal taxes. In fact, you can see from the chart that the bottom 40% actually pay no income taxes and even received money back from the government, while the third 20% pays only 4.4%. Combined, the bottom 60% of wage earners pay only .6% of federal income taxes, but pay 43.6% of all excise taxes.
The point here is that excise taxes excessively burden the poor when compared to other taxes. As the numbers from Gallup above showed, smokers are disproportionately poor. It sounds simple, but increasing taxes on a product used primarily by the poor amounts to an increase in the taxation of the poor.
This brings me to my next point. Here is an article from the AP criticizing Mr. Obama for raising cigarette taxes and calling it a violation of campaign promises.
A couple of key quotes from the article:
“”I can make a firm pledge,” he [President Obama] said in Dover, N.H., on Sept. 12. “Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes. [emphasis added by me]””
“No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised,” Joe Biden said, “whether it’s their capital gains tax, their income tax, investment tax, any tax. [emphasis added by me]”
To me, the word “any” means “any.” I dont have ANY idea why it wouldnt.
And of course, this tax was enacted in the name of the “public good.” The money will go to fund S-Chip–a program which gives medical care to children of the poor. I find this ironic for two reasons. The first is that the government is essentially taxing the poor to provide their children with a service. The second is that the government is also claiming that an increase in the tax on cigarettes will lead to a decrease in the number of smokers. Im sure that this is a correct assumption, but the government is missing (or masking) the point here.
From the Danville Register and Bee:
“The twisted logic of this tax increase as a way to modify behavior shouldn’t go unnoticed. If higher cigarette taxes convince more people to quit smoking, won’t the S-CHIP program need a new source of federal dollars in the future? Won’t that lead to different taxes being raised to continue to cover the same number of children?”
The cigarette companies themselves realized that an increase in federal cigarette taxes would decrease the number of consumers using their products. Can you guess how they responded? Altria, the maker of Marlboro, increased their prices by 71 cents per pack for Marlboros, but 81 cents per pack for their menthol cigarettes (which tend to be smoked more often by the poor than other cigarettes) to cover the anticipated losses in smokers due to the new tax. This means that those who dont quit are being forced to spend at least an additional $1.33 per pack of cigarettes.
I have a friend who supports the cigarette tax increase–he said “its about damn time smokers pay their share.” But he is missing the point too. Smokers pay their share–they have the same income tax rates as everyone else in the country. They are being taxed to pay for a program that they may not use.
Our system of government is supposed to protect citizens against tyranny of the majority, and so I must reiterate my point from above: It is not fair to target one group of people and tax them for the benefit of others. It sets a bad precedent and only sounds good until the government decides that it wants to tax a product that you enjoy.
Americanly Yours,
Phred Barnet
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Check out this chart from Coyote Blog before reading on:
http://www.coyoteblog.com/coyote_blog/2009/02/voting-with-their-feet.html
I find this to be very interesting. With the exception of Louisiana, every one of the States listed in the bottom 10 is a State that is heavily unionized, has more social programs, and higher corporate taxes (and even Louisiana has high corporate tax rates).
The States with the highest positive net migration, however, are all “business friendly” states. In these States, unionization is minimal, corporate taxes are generally low, and social programs are not as abundant.
You might think that people would want to live in places where corporations are taxes at a higher rate (so that they pay their “fair share). You might think that people want to live in a place where there are more social programs to help those who are less fortunate.
The numbers, however, tell a different story. While sticking a faceless corporation with a higher tax bill sounds great, higher taxes mean more expensive goods and either fewer jobs, or jobs that pay less (or give fewer benefits). Social programs might help people temporarily, but they are no substitute for jobs. The States above that taxed their corporations at higher rates and spent more of their budgets on social programs saw people leave. Those people came to States like Georgia, Texas, and Tennessee. States with low (or no) corporate income taxes and little if any union control over jobs.
While automakers in Detroit are moving out and leaving the country, foreign automakers from Toyota, to Kia, to Honda have built plants in the South where labor unions do not have an iron grip and corporations are not taxed for the “social good.”
There was an interesting article in the Wall Street Journal back in September comparing the economic policies of Michigan with those of then-Senator Obama. Here is an interesting excerpt from that article: “While the population of the three highest-performing states grew twice as fast as the national average, per-capita real income still grew by $6,563 or 21.4% in Texas, Florida and Arizona. That’s a $26,252 increase for a typical family of four.”
Policies of higher corporate taxation, heavy union control, and costly government programs impede economic growth. Would you rather have a government run safety net, or an extra $6,563 for each person in your family each year?
And more importantly, will people begin to leave this country if we pursue these policies on a national level? They just might. I just might too…
Americanly Yours,
Phred Barnet
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The poll that I put up on the right side wasnt working, so I had to take it down. Ill most likely be writing about the tobacco tax increases on Friday.
Here are a few articles for yall to read this morning while I think about what to write on later:
A Larry Kudlow article on government intervention.
An interesting article on “freeing the job creators.”
Also, if you havent already done so, please become a fan of my site on Facebook.
Americanly Yours,
Phred Barnet
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