Business & Economy
Tax increases, President Obama PDF Print E-mail
News Releases - Business & Economy
Written by Grassley Press   
Wednesday, 11 July 2012 11:53

Tuesday, July 10, 2012

For four years now, we have heard President Obama talk about the need to raise taxes on those earning more than $250,000.  We heard this from him again just yesterday when he spoke in support of increasing taxes on the so-called wealthy.

In his speech yesterday, he made the following points:

·         That those making under $250,000 deserve certainty now.

·         That it’s ok to increase taxes on small business owners making more than $250,000 because those tax increases would affect less than 3 percent of small business owners.

·         That those making more than $250,000 aren’t paying their fair share.

·         That we can’t afford to extend the 2001-2003 bipartisan tax relief measures to these households because of the impact to the deficit.

·         That, if Congress sent him a bill to extend the 2001 bipartisan tax relief just for those making under $250,000, he would sign the bill into law right away.

Well, I rise today to highlight what the President is not telling taxpayers.

First, on the issue of certainty, the President fails to mention what his plans are for the dozens of tax provisions that expired at the end of last year and the dozens more that are expiring at the end of this year. These provisions affect everyone from teachers who dip into their own pockets to purchase school supplies to families and students struggling to pay for higher education.  They also include key incentives for businesses to invest in new equipment and engage in the research needed to produce the products of tomorrow.

He also fails to mention what he would do about the Alternative Minimum Tax that threatens an ever-increasing number of middle class Americans each year.  Over the past several years, legislation was enacted to avert this crisis through a series of “patches” to increase the exemption amount.

Unless an additional patch is signed into law, the AMT will trap 30 million taxpayers this year, or roughly one-fifth of all taxpayers, compared to about 4 million taxpayers last year.

The President also fails to mention whether he continues to support the middle-class tax increases he included in his budget proposal. These include the reinstatement of the Personal Exemption Phase-out and the Pease limitation on itemized deductions.  Additionally, he would impose a new 28 percent limitation on itemized deductions.  Each of these provisions comes with their own income thresholds and phase-out rules that increase complexity and increase taxpayer burden.

Finally, the President fails to mention the tax increases he supported to pay for his health care reform legislation.

These provisions include a bigger haircut on deductions for medical expenses, lower contribution amounts for Flexible Savings Accounts, and taxes on artificial knees and hips that medical device manufacturers will pass on to patients.

Given all of the looming tax increases the President failed to mention in his speech yesterday, it’s difficult to see how extending just the 2001-2003 bipartisan tax relief provides certainty to taxpayers, including small businesses.

The President agrees that they are the job creators and engines of our economy. Unfortunately, he defends his tax increases on small businesses by claiming that the impact will be minimal since only 2 percent to 3 percent of small business would be subject to his tax increase.  What the president fails to mention is that this 2 percent to 3 percent account for a large amount of economic activity and jobs.

According to the non-partisan Joint Committee on Taxation, 53 percent of flow through business income would be subject to the President’s proposed tax increases.  This 2 percent to 3 percent also accounts for about 25 percent of the employment.

The President claims that he wants give the 97 percent of small businesses “a sense of permanence”.  Yet, the tax relief for those in this group is only for another year.

The President continues to claim that we cannot afford to extend tax relief for those earning above $250,000 because of our current deficit situation.  But, he fails to mention any ideas for reducing the deficit by controlling spending or by enacting tax reform, which is the only real way to provide a sense of permanence.

At the start of his Administration, the President established the Simpson-Bowles commission to come up with a framework to address our current out of control spending, as well as reform our tax code.

The Commission issued a report over a year ago that included substantive proposals on how to reform the tax code.  There are some things in the Simpsons-Bowles plan I like and some that I don’t.  I like that it would streamline the tax code, reduce tax rates across the board, broaden the base, and enhance economic opportunity.  At the same time, it violates one of my core tenants for tax reform: that it not increase taxes overall. But, it is at least a serious proposal.

However, the President failed to embrace the Simpson-Bowles plan and offered a token “framework” for corporate tax reform. While the President agrees that our current corporate rate is too high, his framework is overly vague and provides little in the way of simplification.   Instead, as one commentator put it, his proposal simply “rearranges the deck chairs on the Titanic”.

That being said, at least the President took a position on lowering the corporate tax rate to 28 percent.  This is in stark contrast to his ideas for individual tax reform.

Even thinner on details, his overarching principle for individual tax reform seems to be the wealthy should pay their fair share.  Yet, he never defines what rate or amount of tax constitutes fair share for individuals.  Adopting this rhetoric seems to indicate support for using the tax code to reduce income disparity between the highest and lowest taxpayers.

However, data from the non-partisan Congressional Budget Office shows the so-called wealthy already pay the bulk of the taxes and that our tax code is highly progressive.

This chart shows that, if all federal taxes are considered, the top 5 percent of households pay an average effective tax rate of about 28 percent and account for nearly 45 percent of all federal receipts.  In contrast, the bottom 20 percent of households pay an average effective tax rate of about 4 percent and account for less than 1 percent of federal receipts. All federal taxes include individual income, corporate, excise and payroll taxes.

The disparity is even greater when we only consider individual income taxes.  This is actually a better measure since the President proposes to increase just income taxes on the so-called wealthy. If you look at this chart, you will see that the bottom 40 percent of households have an average effective tax rate below zero.  In contrast, the top 5 percent have an average effective tax rate of nearly 18 percent and account for 61 percent of income tax receipts.

I’ve highlighted the top 5 percent on these charts because these are the households generally earning more than $250,000.  In other words, these are the wealthy households according the President.

Looking at these numbers, it’s fair to ask the President to define what he means by “fair share.”  How high is he willing to raise taxes to meet his objective?

I have always stated that taxpayers should pay what they owe – not a penny more, not a penny less.  Anyone who looks at my record will see that I have fought long and hard to shut down loopholes and ensure taxpayers of all incomes pay what they legally owe.  However, I hold a fundamentally different view from the President on how the economy works and what government’s role should be.

I believe that the money a taxpayer earns belongs to that taxpayer, not a pittance the taxpayer may keep based on the good graces of the government. I generally believe individuals have the right to enjoy the fruits of their success.  I believe that the best way to increase the wealth and livelihood of all Americans is through pro-growth policies that increase the size of the economic pie, not by redistributing the pie based on some unspecified definition of “fairness.”

I believe that 18 percent of the gross domestic product of this country is good enough for the government to collect and spend.

This benchmark of 18 percent is what the government has collected consistently regardless of that the statutory tax rate has been.  In other words, just because you raise tax rates on so-called wealthy people does not necessarily mean we will get the influx of revenue some believe we will.

Higher income individuals generally have a greater ability to choose the form of income they will receive.  They also have a greater ability to decide when the will recognize this income, such as through the sale of stock, in a way to limit their taxable income in a given year.  They also have accountants and attorneys to help them legally shield income from the view of the IRS.  As tax rates go up, so does the incentive to reduce income through legal and non-legal means.

I have a chart here that shows annual revenues as a percent of GDP in relation to our top marginal tax rate.  This shows that our annual revenue has remained relatively constant over the years even as the top marginal rate on high-income individuals has fluctuated.

Since post World War II, revenue as a percentage of GDP has averaged right around 18 percent.  This has remained true whether we have had a top marginal rate of 93 percent, 70 percent, 50 percent, 28 percent, or now a 35 percent marginal rate.

What this means is we are not going to be able to tax our way to surpluses.  We are going to have to make substantial adjustments on the spending side to bring it in line with revenues.

History also shows that tax increases just lead to spending increases.  Professor Vedder of Ohio State University has studied tax increases and spending for more than two decades.

His most recent work on this topic, with Stephen Moore of the Wall Street Journal, found that:  “Over the entire post World War II era through 2009, each dollar of new tax revenue has been associated with $1.17 in new spending”.

Another study, this one by the National Bureau of Economic Research, states that when it comes to fiscal adjustments, “those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over Gross Domestic Product ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions.”

So we know that increasing taxes, including on targeted groups, is not going to reduce the deficit.

American workers and businesses deserve tax reform and tax certainty.  There is bipartisan agreement that we need comprehensive tax reform.  What we need is real leadership to get this done.

To be sure, lack of leadership is not because of a lack of interest.  The Senate Finance Committee, of which I am a member, has held more than a dozen tax reform hearings during this Congress alone.  The Senate Budget Committee has also held tax reform hearings.

What has been lacking is presidential leadership.  The President’s speech yesterday was just that – a speech.  As I outlined, he spoke only about extending certain tax relief measures for those earning under $250,000.

However, he failed to address other looming tax increases and failed to discuss how his other tax increase proposals provide the certainty he claims he wants to provide.

It’s easy for the President to engage in election year antics and goad Congress to send him a bill.  Unfortunately, that’s not leadership and such speeches do nothing to help individuals and small businesses.

If the President really was concerned about preventing tax increases on the middle class and small businesses, he would at least be working with leaders in his own party to make sure they all agreed on who the wealthy really are. Democratic leaders in the House and the Senate have signaled that they support extension of the lower income tax rates for those making up to a million dollars. In fact, a year ago this week, here in the Senate, we were debating the majority party’s “Millionaire Tax Resolution.”

So, if the President really wanted Congress to send him a bill that provided certainty to taxpayers, he would make it a priority to get it done.   Unfortunately, he’s too busy traipsing around the country raising money for his reelection.  That is not leadership and certainly is not going to provide timely tax relief to the millions of taxpayers who need it.

Mr. President, I yield the floor.

 
Americans for Prosperity - Iowa Responds to Obama on Taxes PDF Print E-mail
News Releases - Business & Economy
Written by Mark Lucas   
Wednesday, 11 July 2012 11:39

Cedar Rapids, IA - Americans for Prosperity - Iowa issued the following statement in response to President Obama's speech today on taxes:

“The White House continues to play politics instead of trying to fix the economy. It's ironic that the same President who has repeatedly blamed his economic failures on his predecessor and bashed the "Bush tax cuts" now wants to extend those same tax cuts for some Americans. Of course, the greater irony is that he is hiking taxes for millions of middle class Americans with the new health care law.

Obama's strategy of one foot on the gas, one foot on the brake, will never get our economy moving. We need real, permanent tax relief for all Iowans.”

Americans for Prosperity (AFP) is a nationwide organization of citizen-leaders committed to advancing every individual’s right to economic freedom and opportunity. AFP believes reducing the size and intrusiveness of government is the best way to promote individual productivity and prosperity for all Americans. Americans for Prosperity does not support or oppose candidates for public office. For more information, visit www.americansforprosperity.org

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Illinois Revenue & Jobs Alliance letter to Gov. Quinn PDF Print E-mail
News Releases - Business & Economy
Written by Illinois Revenue and Jobs Alliance   
Tuesday, 10 July 2012 11:17

 
PFGBest Questions PDF Print E-mail
News Releases - Business & Economy
Written by Grassley Press   
Tuesday, 10 July 2012 11:16
Tuesday, July 10, 2012

Senator Chuck Grassley made the comment below after customer accounts at PFGBest, a futures broker, were frozen yesterday due to possible accounting irregularities.

Last year, Senator Grassley participated in oversight hearings of the Senate Agriculture Committee seeking information and accountability for the loss of up to $1.2 billion in MF Global customer funds, including money from Iowa farmers, grain coops and brokers.

Grassley comment:

“Whether there is an issue with segregated customer accounts, or it’s something else, PFGBest served a lot of Iowa customers who are going to have questions about how this is going to affect their accounts.

“From a systemic standpoint, the question is whether there is effective oversight in our commodity trading system.  People need to have confidence in our commodity trading system in order for it to work for farmers and investors the way it’s intended.  I want to know if the existing set up with the National Futures Association and the Commodity Futures Trade Association is working to safeguard this marketplace.  Regulators need to be on the ground working diligently to sort out what's going on, and I would expect the Senate Agriculture Committee to look into this matter in the same way it continues looking into MF Global.”

 
In Case You Missed It: June Young Adult Unemployment at 12.8 Percent, Signaling More Delayed Dreams and Stalled Careers for Millennials PDF Print E-mail
News Releases - Business & Economy
Written by David Pasch   
Tuesday, 10 July 2012 11:05

Generation Opportunity encourages young Americans to call White House and demand an end to policies that stifle job creation, hiring, and opportunity

Washington, DC – (7/10/12) – Generation Opportunity, one of the largest grassroots organizations connecting with young Americans through advanced social media outreach and traditional, boots-on-the-ground organizing, is releasing today the non-seasonally adjusted (NSA) 18-29 unemployment rate data for June:
  • The youth unemployment rate for 18-29 year olds specifically (NSA) for June 2012 is 12.8 percent.
  • The declining labor participation rate has created an additional 1.735 million young adults that are not counted as “unemployed” by BLS because they are not in the labor force, meaning that those young people have given up looking for work due to the lack of jobs.
  • If the labor force participation rate were factored into the overall 18-29 youth unemployment calculation, the actual 18-29-unemployment rate would rise to 16.8 percent (NSA).

Generation Opportunity President Paul T. Conway, former Chief of Staff for the United States Department of Labor and the United States Office of Personnel Management (OPM), responds to the June 2012 jobs numbers:

“For young Americans, through no fault of their own, their story is one of few opportunities, delayed dreams, and stalled careers. Today's unemployment numbers tell the story of millions of young Americans who are paying the price for the failed policies coming out of Washington that have inhibited economic opportunity and job creation.

“Despite the challenges they face, this generation is not asking what their country can do for them. Instead, they stand ready to do more for their country, to continue their service beyond the contributions they have already made as brave defenders of freedom across the globe, as selfless rebuilders of disaster-torn communities here at home, and as confident advocates for greater opportunity for all Americans.

“While leaders in Washington travel to communities to make campaign promises and seek to place blame for the results of their failed policies, young Americans are looking for more than rhetoric.

“In 2012, their message to candidates is clear – we want to build our careers, get on with our lives, and fulfill our dreams. If the only solutions you offer mean fewer jobs and more debt for the country, the stakes are too high to risk our vote on a bad bet.”

Generation Opportunity is encouraging its Facebook fans, as well as its thousands of grassroots supporters across the nation, to call the White House today at (202) 456-1414 and demand that the policies of the last three and a half years, which have stifled job creation, be reversed in favor of policies that free up Americans to create jobs, to hire, and to restore the American tradition of access to opportunity for all.

To see our Facebook call to action, go to: https://www.facebook.com/BeingAmericanByGO

ABOUT GENERATION OPPORTUNITY

Generation Opportunity is a non-profit, non-partisan 501 (c)(4) organization that seeks to engage everyone from young adults, to early career professionals, college students, young mothers and fathers, construction workers, current service men and women, veterans, entrepreneurs, and all Americans who find themselves dissatisfied with the status quo and willing to create a better tomorrow.

Generation Opportunity operates on a strategy that combines advanced social media tactics with proven field tactics to reach Americans 18-29. The organization’s social media platforms – “Being American by GO,” “The Constitution by GO,” “Gas Prices Are Too Damn High,” and “Keep Texas Awesome” on Facebook – have amassed a total fan base of more than 3.4 million. All four pages post links to relevant articles and reports from sources ranging from the federal Government Accountability Office (GAO), to The New York Times, The Washington Post, The Brookings Institution, The Wall Street Journal, The Huffington Post, and The Heritage Foundation.

Read about Generation Opportunity here; visit “Being American by GO” on Facebook here, “The Constitution by GO” on Facebook here“Gas Prices Are Too Damn High” on Facebook here, and “Keep Texas Awesome” on Facebook here.

For our Spanish-language page – Generación Oportunidad – click here.

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