Tax Update Blog: Brutal Assault on Reason Watch Archives

At least it ends today

November 04, 2008

The quadrennial Brutal Assault on Reason is about done. Russ Fox has an insightful look at how the tax scene is likely to play out over the next four years.

If you can stand more information at this point, TaxVox and the Tax Policy Blog have good coverage of the candidates tax positions. If you want a reason to stay in bed, the estimable Gordon Tullock explains why you don't have to feel guilty.

I incline to this view.

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So that's where the free money comes from?

October 16, 2008

Politicians like to promise to spend money as if they can pull it out of a stash of free cash that doesn't actually come out of someone's pockets. Senator Obama seems to think corporations can fill the role of cash pinata for politicians:

Because after eight years of failed policies, he and I both agree that what we're going to have to do is to re-prioritize, make sure that we're investing in the American people, give tax cuts not to the wealthiest corporations, but give them to small businesses and give them to individuals who are struggling right now...

The Tax Policy Blog has nonpartisan coverage of the candidate's tax whoppers. They rightfully note the folly of the assertion that "big corporations can afford to pay more taxes":

What Sen. Obama doesn't understand or doesn't want to tell the American public is that when Exxon Mobil writes that check to Uncle Sam, some PERSON is paying the price for that. In the short-run, that person could be a shareholder, a worker, or a consumer. But the fact that Exxon Mobil has a lower after-tax profit means that some PERSON is worse off. For example, Exxon Mobil would likely reduce its dividend payment, or its share price could fall, and that hurts every PERSON who was invested in Exxon Mobil at the time the tax was enacted.

Only two sets of people can pay corporation taxes: the owners and the employees. When you beat on corporations, you either beat on their employees or you beat on the 401(k) plans that invest in them. I don't think there are many people whose 401(k) accounts need more beating right now.

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District 60 offers two more reasons to flee Iowa

October 03, 2008

If you have any hope that Iowa will someday foresake absurd targeted tax breaks to pursue a business-friendly low-rate, low-loophole system, it doesn't come from the Tax Update's home district for the Iowa House, based on this piece in the Des Moines Register.

The Democrat in the race, Alan Koslow, has an ingenious plan to keep young folks in the state -- indentured servitude:

Koslow's plan is to offer forgivable loans to college students if they stay in Iowa for 10 years after they graduate. He also proposed a three-year income tax holiday for people younger than 25.

Apparently Iowa has this big pile of cash to lend that has escaped our notice. The Republican, Peter Cownie, offers no hope either:

Cownie, 28, said Koslow's plan would be expensive. Instead, he wants to bring high-tech and better-paying jobs to Iowa by continuing to offer companies financial incentives to build here. Microsoft announced in August that it will build a $500 million data center in West Des Moines after state lawmakers approved about $3 million in tax exemptions for the Redmond, Wash., software giant.
"Does Microsoft need those tax credits? No," Cownie said. "But it was needed to get those jobs for Iowa."

Corporate welfare. How innovative. Repeat after me: you can't grow your economy by taxing your existing businesses to lure and subsidize their competitors. At $500,000 per job, we'll all be bankrupt by the time we achieve full employment. Or does this corporate welfare come out of the same pile of free money that Mr. Koslow wants to use to hold the youngsters hostage?

Will we ever have somebody who will campaign on raising Iowa's business tax climate ranking from 45th out of 50 states?

By the way, Roth & Company has created 35 jobs, with exactly $0 state subsidies; we're still waiting for our $28 million.

If you want tax silliness on a national scale, the TaxProf has the scoop for you.

UPDATE: I goofed. I actually miss being in District 60 by a few blocks. I regret the error, if not the district boundaries.

Tags: corporate welfare.iowa tax policy.

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MRS. O'LEARY FOR FIRE MARSHAL

September 22, 2008

Senator McCain last week said he would fire SEC Commissioner Christopher Cox. Over the weekend he said he might replace him with Andrew Coumo. This Andrew Coumo:

Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans.

Sigh...

Via Instapundit.

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BIDEN ATTACKS PATRIOTISM OF NON-WEALTHY

September 19, 2008

Joe Biden says the wealthiest 1% of the taxpayers are the most patriotic Americans. Really:

Biden was asked by ABC News' Kate Snow in an interview aired Thursday morning on "Good Morning America" if people earning more than $250,000 a year would have to pay more taxes under an Obama-Biden administration.

"You got it," Biden replied. "It's time to be patriotic, Kate. Time to jump in, time to be part of the deal, time to help America out of the rut, and the way to do that is they're still gonna pay less taxes than they did under Reagan."

If paying taxes is patriotic, those earning more than $250,000 are the most patriotic:

... both the tax share and AGI share of the top 1 percent reached all-time highs in 2005. In 2005, the top 1 percent of tax returns earned 21.2 percent of adjusted gross income and paid 39.4 percent of the nation's federal individual income taxes. This indicates that the federal individual income tax is highly progressive as under a purely proportional system, the two shares would be identical.
Furthermore, in 2005, the top 1 percent of tax returns paid nearly the same amount in federal individual income taxes as the bottom 95 percent of tax returns, a group which was responsible for 40.4 percent of the federal individual income taxes paid.

So by linking paying taxes to patriotism, Senator Biden is impugning the patriotism of everybody who makes less than $153,542 - the bottom 95% of taxpayers. Is that a wise electoral strategy?

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NEW FEATURE: BRUTAL ASSAULT ON REASON WATCH

September 19, 2008

This week's headlines have provided constant reminders of Arnold Kling's cri de coeur:

To me, political campaigns are not sacred events, to be eagerly anticipated and avidly followed. They are brutal assaults on reason. I look forward to election season about as much as a gulf coast resident looks forward to hurricane season.

Today we launch "Brutal Assault on Reason Watch," where we will highlight statements by politicians that in a just world would require them to be bound, gagged and banished to a remedial economics course for the rest of their natural lives. So we begin.

First, John McCain:

But first McCain went after SEC Chairman Christopher Cox, a former Republican congressman. McCain said the SEC under Cox was "asleep at the switch" and "kept in place trading rules that let speculators and hedge funds turn our markets into a casino."

"The chairman of the SEC serves at the appointment of the president and in my view has betrayed the public's trust. If I were president today, I would fire him," McCain added, prompting loud cheers.

So it's Christopher Cox's fault that he couldn't prevent Fannie and Freddie - two agencies that he doesn't regulate - from bankrupting themselves? It's his fault that the SEC - which doesn't regulate the insurance industry - couldn't prevent AIG from writing bad credit default insurance? And he was supposed to stop this... how?

Now to the other side:

This crisis serves as a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary. It’s a philosophy that lets Washington lobbyists shred consumer protections and distort our economy so it works for the special interests instead of working people; a philosophy that says we should give more and more to those with the most and hope that prosperity trickles down to the rest.

That's rich - McCain opposes regulation? Virginia Postrel has a more accurate description: