April 15th - Payday?

"According to the IRS, the bottom 50 percent of tax filers pay less than 3 percent of all taxes. That share is decreasing every year, and the trend shows no signs of reversing."

 - The Heritage Foundation

I come from a long (and proud) line of accountants. Accountants know firsthand how people despise the April 15th deadline. But for a growing majority, Tax Day is a godsend. More people are paying no income tax...and still others end up getting the government to pay them! 

Go with me here...some more money/tax jargon to follow...but it's important!  Stay...with...me...

Tax Cut vs. Tax Credit

The so-called "2001 and 2003 tax cuts" benefited all payers. Tax cuts do not eliminate your tax bill entirely, but instead lower it. Heritage says, "Lower tax rates cannot make a tax filer a nonpayer.  Tax filers are falling off the tax rolls at an increased rate because of tax credits."

Tax credit examples are: the home buyer tax credit, the Making Work Pay credit, energy-saving credits etc. A credit directly lowers your tax liability. It comes off the bottom line. Politicians love these because they can target one specific group of people and claim credit for the gain. And tax credits encourage certain behaviors like buying a house, or a Prius, or going green...the government loves this!

But here's the problem...

Tax Credits Create a Downward Spiral

• The government is creating MORE tax credits.
• Tax payers can use multiple credits to literally erase their bill. More tax credits means less people actually pay taxes.
• It is estimated for 2010 more than 50% of taxpayers will be NON-PAYERS. Non-payers get everything back, and some earn everything back plus extra. 
• This is when Tax Day becomes payday. How? --> If a tax credit causes your tax bill to go below zero...and it's called a "refundable" credit, the government will PAY YOU whatever that negative amount is. 

EXAMPLE: If your tax liability is $100 and you're eligible for a $150 refundable tax credit, the government pays you $50.

Are you with me? 

Now...this is where disaster looms.

What happens when you have fewer taxPAYERS?

• When you have a majority of voters NOT paying taxes, theoretically they could vote themselves "an increasing share of government benefits at no cost to themselves."
• Then all hell breaks lose. Why would a politician cut back on government spending when the majority of the voters benefit without any increased burden personally?
• This creates a growing state of dependency. "Growing dependence on the tax code for income will reduce individual initiative to achieve because [people] will be able to sustain a satisfactory standard of living without exerting any additional effort."
• And your top performers will have less incentive to work hard and earn more because "they will need to pay increasingly higher tax rates to fund the growing dependency of those that earn less."
• You have slower economic growth and a lower standard of living.

I'm not saying my family refuses to claim tax credits simply because the ultimate effect could be disastrous. But just like me, everyone takes advantage. The government wants it that way. Heritage sums it up quite nicely:

"[It's] a deadly recipe for never-ending increases in government spending that will inevitably lead to a fiscal implosion when there are no longer enough productive taxpayers to pay the bill for the expanding welfare state."

Source:

Heritage Foundation: Tax Day or Payday

Side Effects Include...

"A lot of the ideas in terms of the exchange...and improving the purchasing power of individuals in the insurance market originated from the Heritage Foundation."

 - President Obama

You better believe The Heritage Foundation feels slandered about this recent comment from our President.  Heritage will refute this from every angle.  

But they are now working on a feature of the Side Effects of Obamacare. After the bill was passed Obama said, "After I signed it, I looked around and no asteroids had hit the planet (chuckling) and no cracks had appeared in the earth."

Again with the arrogance. Of course, people didn't believe literal Armageddon would occur, but the side effects will represent a sure decrease in our liberties and freedoms.  Here are some already highlighted by Heritage:

FIRST - Higher health insurance taxes --> Remember the tax on so-called "Cadillac" health plans? Under the reconciliation bill, a provision was added to index the threshold of what is considered "Cadillac" to the general inflation rate PLUS 1%.  Do you know what that means?  "The high cost plans tax will hit the average family plan five years earlier."  Over time most plans will fall into the "Cadillac" category and be subject to the tax.  See more here.  

SECOND - The young to pay higher premiums --> A new provision in the plan makes it more difficult to charge older people more for their premiums (as is the case today). "So how will insurers make up the difference? It 'will be shouldered by young people in the form of higher premiums.'" Heritage then suggests these young adults will choose to opt out of increased premiums and pay the penalty instead, which will only "fuel a 'death spiral' of out-of-control premium price hikes." See more here.  

THIRD - Medical devices tax will cut jobs --> Obamacare puts a new tax on medical devices to generate $2.2 billion per year in revenue. The industry simply cannot stay afloat with such a tax burden. CFO at Zoll Medical Corp has said, "We could be forced to (move) manufacturing overseas if we can't pass along these costs to our customers." But either way, it's more cost to the consumer and job losses all around.  Read more here. 

FOURTH - Obamacare fatal for your HSA --> If you use a Health Savings or Flex Spending account you should check this out.  Obamacare limits these accounts as follows: (1) restricts what you can use the money for, (2) reduces the election amounts in your FSA, and (3) doubles the tax penalty for using HSA funds for non-medical expenses. "But the worst news for those using HSAs is the provision requiring all policies to cover at least 60 percent of the actuarial value of the benefits offered."  Basically, high-deductible plans which include HSAs may no longer be viable.  Read more here. 

FIFTH - Laws no longer mean what they say --> Did you hear the leaders of the House discovered a major snafu after the bill was signed?  They messed up the provision that children no longer be denied coverage because of a pre-existing condition. Oops.  They've since said it was their "intent to cover these children and the health care industry has kindly opted to go along.  "But is this any way to run a country? To have lawmakers and regulators coerce the private sector into doing what they simply declare to be their "intent," rather than what is actually written in the law?"  I'm pretty sure that's not how a country is supposed to be run. Be prepared for more of this...

Read more here.

If you want to know how Heritage believes the health care crisis should really be handled, read here. And in the meantime, stay informed. Don't let the press demonize you for opposing this hostile takeover of our basic rights and freedoms. Despite what the media reports, I'm not a racist nor a homophobe nor a feminist. I just refuse to tow the progressive line.

Happy Easter, everyone! We are taking a trip to be with some family. There will be no redistribution of easter eggs going on. It's a free for all, and I like it that way!

Surces:

http://www.rushlimbaugh.com/home/daily/site_040110/content/01125112.guest.html
The Heritage Foundation - Side Effects
Side Effects image from The Heritage Foundation

Understanding Unemployment

"To increase job creation, Congress must treat the disease, not manage the symptoms.  Government hiring will not spur private investment -- it will crowd it out.  Congress should instead promote private-sector investment and entrepreneurship -- which promote wealth creation."

 - James Sherk, The Heritage Foundation

Do you remember the State of the Union address?  Do you remember Obama promising to focus his priorities on job creation? Well, here we are two months later and it seems "jobs" is just a four-letter word he's required to say every once in a while, but in actuality, has taken very little focus at all.

The Heritage Foundation has a great article today discussing the basic causes of our high unemployment. Go with me here...this is important. Heritage is comparing data from the downturn in 2001 to our current recession and the results are very interesting. 

Before you read below, remember unemployment is a result of two different things:

(1) Layoffs (businesses letting people go...this is mostly what the media focuses on)

(2) Decreased hiring (businesses not adding to their payroll)

Here are quotes directly from Heritage:

Job losses were worse [in 2001 recession] than now. Net employment has fallen more during the current recession because employers have created 7.3 million fewer new jobs than during the 2001 recession.

Decreased hiring is the most important factor driving unemployment up.

Lay offs have now returned to their pre-recessionary levels. Hiring has not.

The main reason why unemployment rises during economic downturns is that job creation falls while the labor force continues to grow, making new jobs harder to find. Those without work remain unemployed longer, driving up the unemployment rate. 

Low hiring is primarily a symptom of America’s economic weakness, not its cause. Businesses did not suddenly decide to stop hiring. Rather, economic and political conditions changed in ways that discourage investment and entrepreneurship.

The large expansion of government is also contributing to the problem. The resources the government spends do not materialize out of thin air— they come from the economy. When the government increases spending, it crowds out the resources that business owners could have invested in their enterprises. Private investment falls sharply when government spending rises.

Many items on the congressional agenda—the gargantuan health care legislation...cap-and-trade regulations of CO2 emissions, and abolishing private ballots for union organizing—would significantly raise taxes and business costs. In addition, enormous increases in federal spending raise the prospects of yet higher taxes and rapidly rising inflation.

These combined factors have particularly affected small businesses...[who] have less room to absorb the cost of additional regulations or taxes. Unsurprisingly, then, small business hiring has dropped much more sharply than in the past. Small businesses now account for 35.8 percent of job losses in this downturn—triple the 2001 amount.

Heritage has a couple great charts within the article.  I've cut and pasted this one because it shows MORE losses in 2001, but also MORE gains compared with today, thus a shorter and less devastating downturn.  The political climate in '01 was such that the private sector was still adding jobs! 

Heritage outlines a slew of options and suggestions to promote job creation, so check it out. But just remember...the government cannot SPEND it's way out of a recession. The private sector needs to start investing, spending and hiring, otherwise 10% unemployment is going to become the norm around here.  

Source:

The Cause of Unemployment: Still Due to Dwindling Job Creation  

Professor Obama...He's in charge...and don't you forget.

The Summit's over...phew!  Now we can go back to where we were before this thing started.  It's fair to assume both sides want reform (I agree), but while the GOP wants smaller steps ensuring success along the way the Dems are prepared to dive in head first. The two sides are so polarized at the gate it's impossible to seek middle ground on specific provisions when you can't even compromise on strategy.  

Here are some quotes and thoughts... 

Harry Reid speaking of Obama said this today: "He sat through that and listened to everything and was so patient and responsive.  It was an issue-oriented meeting.  The president let everybody talk and talk and talk."  

And by "everybody" I'm assuming Reid is talking about his fellow democrats and the president himself considering the time breakdown looked like this:

 - President Obama = 117 minutes

 - Democrat lawmakers = 114 minutes

 - Republican lawmakers = 110 minutes

And what I love is this little bit of arrogance from our President (referring to the Republicans lack of speaking opportunity:

"You're right, there was an imbalance on the opening statements because I'm the president. I didn't count my time in terms of dividing it evenly."

So, yes, he's king...he's exempt from the rules. Or should I say, Professor/King.  The summit basically turned into an Obama lecture, but the embarrassing fact was Obama wasn't even too familiar with the material.  

See for yourself:

Exhibit A: When Sen. Lamar Alexander (R-Tenn) referred to the estimate from the Congressional Budget Office stating individual policy premiums would be 10-16% higher than premiums under current policy, Obama claimed this was "not factually accurate," when it's actually right in the bill. 

Obama later clarified the rise in premiums would be for "better coverage" than the "bad insurance" people currently have.  Yeah, all that insurance we currently have is "bad" alright.  If it doesn't have Obama's name on it, it must be "bad".  

And is that justification for lying to the American people?  Promising costs will go down, when actually they'll go up?  The Dems defense is yes, costs will go up but there will be subsidies to help defray these costs. But no matter how you slice it, the subsidies must come from somewhere...taxes...and it's still an increase.  

Exhibit B:  I don't know much about Sen Tom Coburn (R-OK), but from his talking points at the summit I think he and I might get along.  Here are a few great quotes:

Talking about fraud in Medicare/Aid, which is $1 out of every $3...can you say wow!?  Coburn said:

"I don't know many people that will disagree that one in three dollars doesn't help somebody get well...we ought to be going for that one in three dollars.  And we ought to do it NOT by creating a whole bunch of new government programs but by creating an incentive to reward people."  

Did you know Coburn is a physician?  I would suggest he has relevant and noteworthy background experience.  I am a big supporter of public incentives to encourage responsible management of one's health care.  As I mentioned in my last post, we pay a lot for our coverage but we are also much more cognizant of our health costs (we have a high-ish deductible).  It works people.  I am a living testament.  

Also, Coburn talked about doctors and how their fears of malpractice suits was "akin to extortion" that drives doctors to order tests for their own protection rather than for patients.  

It's no secret the people of this country are sue-happy...medical malpractice regulations could go a long way in cutting medical expenses and the cost of care.  

Exhibit C: Bob Moffit's analysis, as quoted by The Heritage Foundation, notes a scary provision in the government plan, which Obama continues to deny as a government takeover of the health care system:

"Since the inception of the debate, it should be noted that the President insisted that his health policy agenda did NOT constitute a federal takeover of the health care system.  In fact, it is very much a federal takeover...In the outline of his proposal...the President would add to the federal powers embodied in the Senate bill.  The most important would be a new Federal Health Insurance Rate Authority, which would provide federal "assistance and oversight" to the states conducting reviews of "unreasonable rate increases" and "unfair practices" of health insurance plans.  This, of course, establishes for the first time a legislative basis for the imposition of price controls on health insurance.  If government can control both health benefits and health care pricing, that's the proverbial ball game.  Private health care would be "private" in name only.  

Now, if that doesn't scare you, you must be so dang progressive you can't see the forest for the trees.  It's alarming.  Now THAT would keep me awake at night.  

And do you want to know what made me smile?  Seeing Obama distracted and lose focus so easily.  I felt he often pulled off topic and simply said, "That's just a talking point, we're not going there"....or to McCain, "We're not campaigning anymore" or my favorite?...

When Obama lays into Rep Eric Cantor (R-Va) about Cantor bringing copies of the health care bills calling it "stagecraft" and a "political stunt".  

Wait a minute...you mean, Cantor brought the background material that was the basis for the summit and Obama thinks this is a political stunt?   That's laughable!!  This WAS a discussion about the health care bills right? 

It's been suggested the entire summit was a political stunt for Obama and the Dems to put a face to the gridlock.  Well, it's done and I actually think the GOP had a decent showing.  Of course there was no compromise...of course the House and Senate will now work towards reconciliation...and, of course, our President and his congressional minions will forge ahead and rule against the will of the people.    

Sources:

http://www.foxnews.com/politics/2010/02/26/obama-shows-testy-health-care-summit/

http://www.politico.com/politico44/perm/0210/obama_time_split_fair_10521388-b47d-4a4d-aeec-44e1ede585eb.html

http://www.foxnews.com/politics/2010/02/26/obama-shows-testy-health-care-summit/

http://newsok.com/coburn-takes-center-stage-at-summit-on-health-care/article/3442300

http://www.rushlimbaugh.com/home/daily/site_022510/content/01125106.guest.html

http://blog.heritage.org/2010/02/25/health-care-summit-wrap-up/

Free Speech to ALL

Those who criticize this decision have lost sight of a basic truth: the answer to speech they disagree with is not to restrict that speech, but to answer it with more speech.

 - Hans Von Spakovsky, The Heritage Foundation

This past Thursday the Supreme Court reversed two prior court decisions related to corporations' ability to contribute on a political campaign.  The Heritage Foundation has a great article conveying how the reversal is a restoration of our basic right to free speech granted in the Constitution.

Heritage says, prior to the ruling on Thursday, "Corporate associations were prohibited under penalty of criminal and civil sanctions from expressing the views of their members in the political arena over which particular candidates should be elected to uphold the positions on important issues of public policy that their members believe in unless they complied with certain very restrictive, complex provisions."

Summary: in most instances corporations couldn't contribute on a political candidate's campaign.

Here are some great quotes supporting and defending the Supreme Court's decision:

The Court also found that free speech rights under the First Amendment do not depend on a speaker’s financial ability to engage in public discussion – the fact that some speakers may have more wealth than others does not diminish their First Amendment rights.

Speech is an essential mechanism of democracy and the means to hold officials accountable to the people. As such, political speech must prevail against laws that would suppress it.

The following quote is directly from Justice Scalia:  "The Amendment is written in terms of “speech,” not speakers. Its text offers no foothold for excluding any category of speakers…Indeed, to exclude or impede corporate speech is to muzzle the principal agents of the modern free economy. We should celebrate rather than condemn the addition of this speech to the public debate.

Now, yes, some "shady" companies will take advantage of the court's ruling to finance misleading advertising, but the argument is still irrelevant.  What matters is whether the voting body chooses to be educated on the issues enough to make an informed vote.  Give the responsibility to the voter...which is where it should be in the first place.

Chalk up a win for our Constitution.  I wish I could high-five our founding fathers.

Source: http://blog.heritage.org/2010/01/21/citizens-united-v-fec-a-landmark-decision-in-favor-of-free-speech/