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Posts Tagged ‘Tax’

US Tax Code Fosters Inequality and Corruption

Posted by Steve Markowitz on January 3, 2016

As we enter 2106, the major economic problems facing the Country remain as they were last year; excessive debt and increasing income disparity.  Both are fostered by a tax code that is too complex and overly politicized.

The federal government’s excessive debt is simple to understand.  The debt comes from the spending more than incoming revenues over a prolonged period of time.  Deficit spending is a cancer on democracies, allowing politicians to hand out unpaid for benefits to constituents while bypassing the legitimate give-and-take of negotiations that would be required with a balanced budget.

By creating a tax code that is so complex, now including over 8,000 pages, only the very wealthy with access to expensive consultants and lawyers can understand and take advantage of the best loopholes.  In addition this complexity offers opaqueness to regulations making it difficult to determine who truly benefits from them.

It is natural for those with political clout to work to mold the tax code towards their benefit.  This has resulted in some of America’s largest corporations like General Electric paying little or no US income taxes in previous years.  But large corporations are not the only special interests helping control tax policies.  Hedge funds and individual wealthy Americans are heavily involved with the effort, as reported in the New York Times article, For the Wealthiest, a Private Tax System That Saves Them Billions.

Tax ChartWhile special-interest on the political Right has often been called out for efforts to lower taxes and take advantage of loopholes, the greedy Left often gets a pass.  Both political parties receive tens of millions of dollars from special interests.  While Democrats publicly demonize the Koch brothers for supporting Republicans, an issue often reported in the mainstream media, little publicity is given to the ultra-rich liberals, such as George Soros.  Soros has converted his nearly $25 billion hedge fund into a family office to take advantage of tax loopholes.  While Soros contributes to liberal politicians, his hedge fund manager, Stanley Druckenmiller, spends lavishly on the GOP.  Greed has no political affiliation.

The problems of income disparity and tax code manipulation started prior to the election of Barack Obama.  However, it has since worsened.  According to the New York Times, 20 years ago the highest 400 earners in the United States paid approximately 27% of their income to federal income tax.  In 2012, just after Obama’s second election, that figure fell to less than 17%.  In addition, during Obama’s first term the highest-earning 1000th of Americans’, the ultra-wealthiest, tax rates went down from 20.9 to 17.6%.

When the issues of income disparity and the tax code are raised, liberals come up with what sounds like a reasonable and simple solution; raise the tax rate on the wealthy.  That strategy is doomed to fail since it does not address the issues that helped create the disparity; tax code complexity and special interest access to politicians.  As stated by Democrat chief tax console for the Senate Finance Committee, J. Todd Metcalf, “our tax code is like a leaky barrel, unless you plug every hole or get a new barrel, it’s going to leak out.”

There is only one way to address these issues and that is a radically simplified tax code that eliminates all deductions.  It is not surprising that most politicians on both sides of the aisle give at best lip service to this type of solution.  Its implementation would remove the politicians’ power to buy votes through manipulating the tax code jeopardizing their reelection prospects.


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Eric Garner Death Due to Cigarette Tax

Posted by Steve Markowitz on December 7, 2014

There have been two grand jury decisions in recent weeks that have torn at the fabric of American society. While both involve African American males killed by police officers, they involve very different circumstances.

michael brownIn Ferguson, Missouri, Officer Darren Wilson was acquitted by a grand jury of any criminal wrongdoing in the death of Michael Brown. The evidence made public confirms that Brown was involved in a robbery at a convenience store a few minutes before he was shot. It also shows that Brown attacked Wilson while the policeman was in his squad car and attempted to take the officer’s gun. Finally, African-American witnesses testified that Brown charged Wilson as he was being shot.

Given the evidence, the grand jury had no choice but to find Wilson innocent. However, the reaction of many protestors, rioters, and the mainstream media avoids the facts and instead created the inflammatory rally cry; “hands up, don’t shoot,” meant to promote the false narrative that a white cop maliciously shot an unarmed black man that was attempting to give himself up. The results have been tragic with businesses and property in Ferguson being destroyed and race-relations deteriorating to historic lows in the country.

Shortly after the Darren Wilson decision, a gran jury in in New York decided not to indict Officer Daniel Pantaleo in the choking death of Eric Garner. In this incident, Garner was confronted by the police for selling single cigarettes on a New York City street for $1 each. This is a substantial discount from cigarettes purchased within the City that include its huge sin tax. By purchasing cigarettes outside the City, Garner was able to bring a bit of capitalistic spirit to the benefit of himself and purchasers. However, the loser would be the City who stood to loose tax revenues.

While this Blog has difficult finding empathy for those who find wrongdoing in the Michael Brown incident, we are troubled by the events that lead to the death of Eric Garner. Garner was involved with a victimless crime. The police were and are inappropriately tasked with addressing a matter whose only beneficiary is the local and State taxing authorities. Had they not been given this questionable charge, Michael Brown would be alive today.

eric garnerSociety is quick to find racism as the cause when a victim is a person of color. In the Michael Brown incident the facts do not back this narrative and those that promote it either refuse to review the evidence or have more nefarious agendas.

The Eric Garner matter is more complex. Clearly the victim was black and just as clear the police over reacted. However, given that the sergeant in charge at the scene was a black officer, it is hard to make this about race. Still, there is ugliness here that a victimless action that shouldn’t have been a crime was made criminal and that resulted in Garner’s tragic and uncalled for death. Not only should our law enforcement have other priorities, but this tragedy shows the danger of the creping power grab taken at all levels of the government. The Progressives that are so quick to blame the police fear this broader and necessary discussion.

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Al Sharpton Refuses to Pay His Fair Share

Posted by Steve Markowitz on November 23, 2014

Liberals are all for wealth redistribution until the tax man comes for their assets.  Examples include the mega-rich Kennedy clan continuing to live off the riches that patriarch Joseph created before, during and after the Great Depression.  More recently Secretary of State John Kerry, who gained his wealth by marrying into the Heinz catchup family, was caught moving his multimillion dollar yacht to a state with significantly lower taxes than Massachusetts charges.

SharptonThe current outrageous example of tax avoidance by a wealthy liberal is Al Sharpton.  While it is difficult to determine exactly how Sharpton obtained his substantial wealth, he is currently a MSNBC host and often a visitor to the Barack Obama White.  He is a member of the top 10%.  Remarkably, in an article titled “As Sharpton Rose, So Did His Unpaid Taxes”, the New York Times reported that this Progressive owes $4.5 million in unpaid taxes.

When confronted with the unpaid tax issue in a recent interview, Sharpton’s first excuse was that “we’re talking about old taxes”.  Then, he went into the victim mode even inferring racism:

“I think it’s political, he said. A lot of people don’t like the fact that President Obama’s the president.  A lot of people do not like the fact that Bill de Blasio won for mayor.  And they certainly don’t like that I’m still here, and I ain’t going nowhere.”

It is hard to fault Sharpton for not wanting to pay taxes that are often excessive.  However, his unwillingness to do so given his Progressive views is hypocritical.  Those with means who preach and rationalize the societal benefits of the welfare state and wealth redistribution should be first in line pay their fair share.  The fact that so many do not is another indication that their political motives are not so righteous.

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IRS Scandal-II

Posted by Steve Markowitz on April 23, 2014

IRS Scandal-1 involved its employees targeting groups with conservative political leanings for special scrutiny.  While at first the President Obama called this a serious matter, he shortly thereafter began calling it a false scandal, a phrase he uses when his administration is caught with its hands in the cookie jar.

Well, the Internal Revenue Service is at it again, now with IRS scandal-2.  As reported by CNNMoney, an audit by the Treasury Inspector General for Tax Administration found that the IRS gave bonuses of nearly $3 million and thousands of hours of paid time to IRS employees over a two-year period who had recently received discipline for workplace misconduct.  Incredibly, approximately 1,100 employees received $1 million in bonuses even though they were in trouble with the IRS on their own taxes.  You can’t make this stuff up!

This latest IRS scandal is an example of the growing problem of an out-of-control government.  Public-sector employees are no different than employees in the private sector.  They are susceptible to the same human frailties including greed.  In the private sector such greed is often damaging to the employer with the most costly sanction being the death of the company (at least before bailouts).  The public sector’s employer, the government, is not subject to this ultimate sanction.  It is not surprising, therefore, that with the growth of government the scandals are becoming more numerous and more expensive.

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Governments Take Advantage of citizens’ Weaknesses

Posted by Steve Markowitz on November 7, 2013

This week voters in two states made decisions that take advantage and profit from human frailties.

PotIn Colorado voters approved a measure to place a 25% tax on the sale of recreational marijuana.  In this vote the good citizens of Colorado earmarked the first $40 million of pot revenue for public schools.  How noble!  How ludicrous!  Pot at the least is not a benefit to students or their education.  Recognizing the reality of this lunacy, Colorado’s Democratic Governor John Hickenlooper attempted to defer criticism of the tax saying: “We will do everything in our power to make sure kids don’t smoke pot and that we don’t have people driving who are high.  This ballot measure gives Colorado the ability to regulate marijuana properly.”  Since when has any government been able to regulate the actions of hormone filled teenagers?

New York’s voters legalized casino gambling joining other states who have found the allure of gambling revenues to be too goodCraps to pass up.  The media justifies this affirmative vote in financial terms, indicating it will bring revenues into New York State.  The fact that the money will come from many who cannot afford to lose it is of little consequence to these modern-day Robin Hoods.

With our Libertarian bent, this Blog does not believe morality can be legislated.  We therefore are a proponent of allowing individuals to gamble and get high, as long as their actions do not endanger others.  However, having governments benefit from these human weaknesses puts them in conflict with the interests of the greater society.

For decades governments at various levels spent hundreds of billions of dollars attempting to eliminate gambling and drug use in society.  Many governmental employees and industries earned a living on these massive efforts.  Now their pensions will be paid for by those currently legal practices.  What a clear example of governmental moral corruption.

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Baby Boomers’ Generational Robbery

Posted by Steve Markowitz on October 20, 2013

The Republican attempt to tie an extension of the government’s deficit spending to defunding Obamacare was a doomed strategy from the onset.  While more than 50% of Americans are concerned with aspects of Obamacare, most have no idea of the actual impact it will have on the economy or individuals.  With that they have much in common with the President and Congress.

The Country has been deficit spending for so long that Americans have become immune to claims it will damage the United States in.  Also, too many Americans are dependent on governmental programs and are therefore unwilling to accept cuts to them, which would be required to bring the deficit under control.

Obamacare will fail because it is based on unsound economics.  Republicans therefor wasted precious political capital on an unwinnable battle.  That took this lame effort on an attempt for political gain and lost.

Obamacare is but another Progressive governmental program designed to redistribute assets from some to others.  While camouflaged under the mantle of attempting to control health care costs, that is a red herring.  Obamacare places the government in charge of the medical services industry, which accounts for about 20% of the US economy.  Given the track record of failed and out-of-control government programs, Americans should understand where this one is heading.

Obamacare’s failure started right out of the gate with the sign-up and distribution website not working.  In a world where private industry transacts business on the Internet without a hitch, the government’s failure to set up a working website is a chilling reminder of its incompetence.

While the economic burden Obamacare will likely place on the Country will be problematic, it is not yet occurring or accrued in significant amounts.  Should the program quickly become problematic, as it likely will, it can be undone by legislation only wasting tens of billions of taxpayer funds.  That economic burden is dwarfed by the entitlement obligations already accrued and owed by America, mainly through Social Security and Medicare.

Blog reader Liz sent in an article from the Wall Street Journal titled “Stanley Druckenmiller: How Washington Really Redistributes Income that points to the coming generational battle to occur when those under 40 understand the economics of deficit spending.  While the handouts benefit many including younger Americans, a fact that helps perpetuate the deficit spending, those handouts are small when compared the entitlement programs that benefit the Baby Boomers and will not exist for future generations.

Stan Druckenmiller is a retired hedge fund manager worth just under $3 billion.  In retirement Druckenmiller tours college campuses throughout the United States preaching the reality of the generational robbing that benefits Baby Boomers, mainly through Medicare and Social Security entitlement programs at the expense of younger Americans.  These programs with undefended liabilities of over $60 trillion dwarf the still problematic $17 trillion US debt.

During his presentations at the colleges, Druckenmiller points out:

  • Even though worth nearly $3 billion, when Druckenmiller reaches 65 a five years, he will receive a monthly Social Security check of $3,500.  Seeing how ludicrous this is, Druckenmiller believes Social Security should be means tested so that wealthier people that do not require it did not receive the benefit.  The government, however, especially those on the Left, do not want to take this reasonable step since it would put a stake in the heart of the false narrative that Social Security is earned by workers paying into the system, and not the entitlement benefit it really is.
  • Druckenmiller points out that an American who is 65 years old today will receive on average net lifetime benefits of approximately $327,000.  However, an American-born today will suffer a net time loss of approximately $420,000 as they will have to pay the bills older Americans have run up for them.
  • During his college presentations, some older attendees have asked Druckenmiller why the obligations to them should not be fulfilled by raising federal taxes beyond historical norm of approximately 18.5% of GDP.  To that, Druckenmiller correctly responds:  “Oh, so you’ve paid 18.5% for your 40 years and now you want the next generation of workers to pay 30% to finance your largess?” and if 18.5% was “so immoral, why don’t you give back some of your ill-gotten gains of the last 40 years?
  • Similarly, Druckenmiller responds to suggestions concerning increasing payroll taxes saying: “Oh, I see.  So I get to pay a 12% payroll tax now until I’m 65 and then I don’t pay.   But the next generation – instead of me paying 15% or having my benefits slightly reduced – they’re going to pay 17% in 2033.  That’s why we’re waiting – so we can shift even more to the future than to now?

Druckenmiller goes beyond calling out Baby Boomers for self-centered behavior.  He also offers solutions that would benefit younger Americans at the expense of Boomers.  For example, Druckenmiller suggests raising capital gains’ and dividends’ taxes to ordinary income rates.  The logic behind this is that the current preferential treatment on capital gains and dividends disproportionately benefit older Americans, who have accumulated significantly more wealth, correctly stating:  “much wealthier than the working-age population.  So the guy who’s out there working – the plumber, the stockbroker, whatever he is – he’s paying the 40% rate and the coupon clippers who are not working anymore are paying a 20% rate.”

To offset the double taxation on dividends and capital gains after corporate profits, Druckenmiller would eliminate the federal corporate income tax.  This would naturally result in the elimination of the preferential tax code and crony capitalism so many companies take advantage of to the detriment of the greater society.  This reality would make special interests in both the Republican and Democratic parties cringe.  It would also be fought by those in Congress whose careers are aided by doling out tax treats to special interest groups in return for votes and money.

Republicans often preach for fiscal conservatism.  Unfortunately policies promoted by the Party often do not walk the talk.  When George W. Bush was president and Republicans controlled both houses of Congress, they spent like drunken sailors.  Since losing power their attacks on spending have been politically motivated and have not addressed the major spending issues that include entitlement spending.  The Tea Party has been an attempt by some conservative and more libertarian-type Republicans to change the fundamental focus of the Party towards fiscal responsive behavior.  However, the media has painted the Tea Party movement as being radical.  Some mainstream Republicans have helped promote this narrative.  Yes, bringing the country’s out-of-control spending back to economic reality will require radical change.

Barack Obama became a rock star in American politics by creating strong bonds with two key constituents.  One group promotes the redistribution of wealth in the Country, many of which receive benefits from entitlement programs.  It is unlikely that there is anything Republicans can do to break this bond that is dependent on an unholy relationship between benefits receivers and a Party that buys their votes by promising even more benefits.

The second group Obama has bonded well with are younger Americans who see the President as hip and offering supposedly no-cost solutions to America’s growing economic problems.  This group is being had.  The Progressive policies of not only Barack Obama, but also some of his predecessors, has been very damaging to younger Americans.  Those that have recently graduated college are stuck with huge student debt and poor job prospects.  They are also stuck with America’s ever-increasing deficit and undefended entitlement liabilities.  Should Druckenmiller and others be successful in framing the narrative to this reality, the political wins in the Country would shift rapidly.  At the same time it will create significance stress between the generations as each fights for a larger piece of what is a finite pie.

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Cyprus Bailout Taxes Bank Deposits

Posted by Steve Markowitz on March 17, 2013

Cyprus is a miniscule part of the 17 country European Union accounting for only 0.2% of the EU’s total economic output.  Its total economy is valued at only €18 billion.

Cyprus has become the fourth EU country requiring a bailout after Ireland, Portugal and Greece.  Spain has so far avoided an official bailout, but its banks have been given assistance by the European Central Bank.  Other countries are not far behind including Italy with a much larger economy.

This weekend the European Union announced a bailout of Cyprus that includes an unusual requirement.  In return for €10 billion, CNN reported that all depositor accounts in Cyprus’s banks will be taxed a one-time fee on Tuesday.  Those with less than €100,000 in deposits will pay a tax of 6.75% and those with over €100,000 will pay 9.9%.

Not surprisingly citizens of Cyprus have responded with panic, mobbing ATM machines in attempts to withdraw deposits.  However, the banks placed a limit on withdrawals of only €400 and it is reported that there is a shortage of cash.

After making the announcement, Cyprus’s President Nicos Anastasiades justified the action Sunday saying, “A disorderly bankruptcy would have forced us to leave the euro and forced a devaluation”.  In other words, Anastasiades offered the same Progressive doubletalk that the steps were required to protect the people.  However, this justification will be more difficult to accept given the tax levied on depositors.

The reality of the Cypriot bailout is similar to bailouts that have occurred for banks and sovereign debt throughout the world in recent five years.  These actions were taken to protect the banks and their investors, both private and sovereign investors. These flawed policies have also resulted in economies worldwide jumping from one crisis to crisis in a downward spiral.

Attempting to pay for bailouts by taxing bank depositors is a ratcheting up of wealth redistribution towards the financial sector, protecting large banks and fiat currencies.  While the policies may have some success in the first two goals, this move in Cyprus will increase the pressure on fiat currencies.  It is only a matter of time until fear contagion spreads.  If the Cyprus can take money from bank depositors to pay for the irresponsible behavior of others, it is only a matter of time until other countries take similar steps.

In justifying bailouts and irresponsible government spending, those supporting these actions often refer to the learned economist John Maynard Keynes who was a proponent of government spending to offset slowdowns in the private sector.  However, such rainy day Keynesians ignore the second half of Keynes’ theory that requires governments to save for a rainy day during more vibrant economic times.  This part of the equation has not been met in decades.

Economist Keynes was well aware of the dangers of inflation and the related issue of governments debasing a fiat currency.  Keynes’ written below in a 1919 essay says it all.

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some…. Those to whom the system brings windfalls… become “profiteers” who are the object of the hatred…. the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right.  There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.  The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Posted in Bailouts, European Union | Tagged: , , , , , , | 2 Comments »

Evan Bayh Offers Straight Talk on Obamacare

Posted by Steve Markowitz on October 2, 2012

Evan Bayh is becoming an endangered species in the Democratic Party.  Bayh is a Democrat in the tradition of Truman, Kennedy and Humphrey.  30 years ago this reality, Bayh’s intelligence and his good looks, would have made him a leader in the Party.  While once a rising star and US Senator from Indiana, Bayh has left politics frustrated at where the Country and his Party are heading.

While Bayh is no longer on the national political scene, he continues to share concerns about the Country’s direction.  This past weekend Bayh published an op-ed in the Wall Street Journal with a concern about one of the provisions in Obamacare.  Bayh contends that the Affordable Care Act, often referred to as Obamacare, will seriously impact a critical industry in the United States, medical devices.  Bayh makes the following conclusions:

  • One Obamacare provision is a 2.3% tax charged to manufacturers on the sale of medical devices such as defibrillators, pacemakers, artificial joints, stents and other devices.  This will lead to an additional 15% tax on these companies’ profits and when added to the federal and state corporate tax rates, will mean an overall tax rate in excess of 50%.
  • The medical devices industry directly employs over 400,000 in United States, with another 2 million jobs dependent on this industry.  The average compensation in the industry for directly employees is over $58,000, almost $17,000 more than the national average for the United States.  In addition, the industry has an annual net positive exports in excess of $5 billion.
  • This new tax on producers of medical devices will negatively impact these companies global competitiveness and result in American job losses.  As example, stethoscope manufacturer Welch Allyn announced a 10% reduction in its global workforce, with all of these cuts occurring in the United States.  Bayh offers other examples.

The economic impact on the medical devices industry is an unintended consequence of Obamacare.  Any time the government intervenes in a market it does so with the naïve belief that it can control a significant number of complex variables.  Time and time again this has proven to be fallacious.  But that does not stop the government from ever more frequent interventions.

The economic impact on  the medical devices is but one of the problems in this area.  As these manufacturers profits decrease, so too will their spending on research and development.  This will negatively impact future advances in this important area of medicine hurting patients well-being.

Bayh points out that Congress attempted to correct this part of Obamacare, voting 253, including 37 Democrat legislators to  repeal the tax.  However, not one Democrat in the Senate supports it killing the effort.

Obamacare is just beginning to be implemented and the negative impacts are already significant.  This is but the beginning of what will likely go down in history as one of the largest governmental boondoggles of all time.  Curiously, President Obama touts it as the greatest achievement of his first term in office.  Sort of matches the decision for the President to receive the Noble Price for Peace within weeks of his inauguration.

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Supreme Court Finds Obamacare is a Tax

Posted by Steve Markowitz on June 29, 2012

Yesterday’s Supreme Court ruling left President Obama’s health care overhaul intact.  That decision created quite a stir with the hard Left expressing the glee of a child left alone with a cookie jar and the hard Right screaming as if the world was coming to an end.  Neither response reflects the reality of this decision.

In a surprising twist, Chief Justice John Roberts joined four liberal members of the Court in the 5 to 4 vote.  In the decision, Roberts explained that he interpreted the individual mandate penalty as a tax stating: “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax,” Chief Justice Roberts wrote in the majority opinionBecause the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”  While this Blog disagrees with the Court’s decision, Robert’s logic unfortunately has merit.

When the Affordable Health Care Act was signed, made by the President promised it would enable 30 million uninsured Americans to obtain insurance.  While the President attempted to hide from the American people the cost for this massive governmental program, it should have been clear to all that it would be very expensive.  Camouflaged in the massive program were the penalties included with the individual mandates, as well as specific taxes.

While President Obama campaigned for bill he went out of his way to assure the American people that the individual mandate was not a tax, as shown in the video below of an interview in September 2009 with George Stephanopoulos.  His claim was disingenuous.  In addition, the Administration’s main argument for the Act being Constitutional was under Congress’s power to regulate interstate commerce.  The Court flatly rejected this argument.  Finally, the Court rejected the Administration’s expansion of Medicaid through the use of coercing and threats on states

In another unexpected twist of the decision, Justice Anthony Kennedy sided with three conservative members of the Court who issued a strong dissent indicating a belief that the entire law should have been thrown out as Unconstitutional.

While The Affordable Care Act is bad policy that will be anything but affordable, it is unfortunately not the mainstay of America’s real problems; the debt.  America’s debt is already in excess of $16 trillion, not including the over $50 trillion of off-balance-sheet debt.  It has accumulated because of a government that uses handouts to maintain the power of political elites and a people who have become dependent on an entitlement mentality.  Obamacare will add weight to this problem and bring the Country closer to the economic realities currently facing Europe.


Posted in Uncategorized | Tagged: , , , , , | 2 Comments »

Krauthammer Attacks Obama’s ‘Buffett Rule’

Posted by Steve Markowitz on April 23, 2012

One of the brightest and most articulate voices on the Right is that of Charles Krauthammer, commentator and columnist.  Krauthammer has called Pres. Obama on many of his flawed policies.  This weekend he went ballistic on Obama’s “Buffett Rule” with the following statements:

  • “A shiny object.”
  • “It’s almost an embarrassment, it’s so shameless.  If you were to collect the Buffett tax for the next 250 years – that’s longer than the life of this republic – you will not have covered the deficit, Obama’s deficit for 2011.  You collect it for another 250 years, so we’re now in the year 2612, and you’ve covered 2011 and 2012 and you need to cover only 498 other years of deficits.”
  • “This is a preposterous statement and he know it is,” Krauthammer continued. “On growth, it’s equally deceptive.  What the tax is, it’s a doubling of the capital gains tax.  It’s disguised, but that’s the reason why the Buffett rates are lower, it‘s the capital gains rate and it’s lower than the rate for normal income.  So he doubles it.  Now the reason that’s not a good idea is because when you double the rate, you actually decrease the amount that the Treasury receives.  And you decrease the growth because you are shrinking the pool of capital that’s out there that people can invest and hire other people.”

As Krauthammer points out, the Buffett Rule will result in a doubling of the capital gains tax.  History is proven how disastrous such actions have been to the overall economy.  However, that is of little concern to Barack Obama who has stated that raising this tax rate has been a priority of his “for purposes of fairness”.

It is remarkable how Progressives cannot grasp the concept of the overall good.  As Winston Churchill once so famously said: “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”  Obama’s is doing his best to prove Churchill correct.

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