Wintery Knight

…integrating Christian faith and knowledge in the public square

A primer on the fiscal cliff facing us in January 2013: tax hikes and Obamacare

This is a medium-length article from the Tax Foundation. I found it fascinating to read, because I am busy making plans myself to deal with the next four years under Barack Obama.

Excerpt:

On December 31, 2012, a large swath of the federal income tax code is scheduled to expire, an event which has come to be known as the “fiscal cliff.” Among the expiring provisions are the 2001 and 2003 tax cuts enacted under President Bush, a compromise on the estate tax, a “patch” in the Alternative Minimum Tax (AMT) reducing its impact, the temporary 2 percent payroll tax holiday, increased business expensing, and the “extenders” package of miscellaneous tax deductions. On January 1, 2013, five taxes enacted as part of the Patient Protection and Affordable Care Act (PPACA)—popularly referred to as Obamacare—also take effect, along with sequester spending reductions of $109 billion due to the failure of the “Supercommittee” to reach consensus on budget reductions.

In late February, the U.S. government will hit the debt ceiling, exhausting its ability to borrow to finance ongoing spending without an increase by Congress. Finally, the federal government’s continuing resolution appropriating spending expires on March 27, 2013.

Here are some of the things to look out for, which are all described in detail in the article:

  • 2001 and 2003 Tax Cuts Expiration
  • Estate Tax Increase
  • Alternative Minimum Tax
  • Payroll Tax Increase
  • Business Depreciation Expense
  • Taxes in PPACA (Obamacare)
  • Debt Ceiling
  • Sequestration

I am most concerned about income tax increase, the capital gains tax increase, the dividend tax increase and the payroll tax increase. These are all going to clobber me. I will have less money for charity and savings, and will have to retire later – and have less time for my Christian activities as a result of having to work longer. The voters in the last election have decided that I must sacrifice more of my earnings so that Obama can hand it all out to his constituents in exchange for their votes.

It helps to know exactly what will be changing in the future, because I have to know how to respond to this. Some adjustments that I might make cannot be done at the drop of a hat. Some take months to plan and execute. It’s best to think about things in advance. We have two deadlines: December 31st and March 27th. It will be interesting to see  what Washington decides to do.

UPDATE: James Pethokoukis of AEI explains the significance of the tax increases for capital gains and dividends. Other countries have lower rates on these taxes, so expect the capital that funds businesses and creates jobs to leave the country. Obama likes to rail against outsourcing, but he actually causes it – because of his ignorance.

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75% of the costs of Obamacare will be paid by those making $120,000 or less

The video shows the chief economist of the Wall Street Journal, Stephen Moore, making the claim that nearly 75% of Obamacare costs will fall on the backs of those Americans making less than $120,000 a year. (H/T Gateway Pundit)

The Heritage Foundation explains more, using the official numbers from the Congressional Budget Office. (H/T Bad Blue)

Excerpt:

President Obama repeatedly promised not to raise taxes on middle-class families. Yesterday, the Supreme Court ruled that he already has.

Chief Justice John Roberts upheld the President’s health care law on the grounds that the “individual mandate” is a constitutionally permissible tax increase. This violates Obama’s pledge. Middle-class families will pay the vast majority of these new taxes.

Obamacare imposes a penalty—or tax increase—on Americans who do not purchase health insurance. The Congressional Budget Office estimates that most of those paying these taxes are middle-class individuals and families making less than 500 percent of the federal poverty level: $59,000 for an individual and $120,000 for a family of four. Three million lower-income and middle-class Americans will pay an estimated $2 billion in these “mandate taxes.”

The Supreme Court’s interpretation puts the President in a peculiar situation. In 2008, he promised not to raise taxes on the middle class and accused Republican nominee John McCain of wanting to tax health benefits: “And I can make a firm pledge: under my plan, no family making less than $250,000 will see their taxes increase…not any of your taxes. My opponent can’t make that pledge.… [H]e wants to tax your health benefits.” Who could have predicted that Obama would raise taxes on millions of Americans who do not have health insurance?

Obama grossly mischaracterized his health care plan, and now American citizens will pay the price. He has both attacked individual freedom and burdened millions in the middle class.

I thought that Obama said that he would raise taxes on the middle class? For a full list of the taxes in Obamacare, click here.

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In 2013, taxpayers will be paying more of their incomes to government

From CNS News.

Excerpt:

The tax increases scheduled to take effect in January 2013 – dubbed Taxmageddon – could have the American people spending more days than ever working to pay for federal and state government, areport from the Tax Foundation shows.

A host of tax rates are scheduled to rise in January 2013 – when George W. Bush-era tax rates and the annual patch for the Alternative Minimum Tax expire – leading to a tax increase of approximately $500 billion in 2013, according to the conservative Heritage Foundation.

The Congressional Budget Office reported in January that taxes would increase by $4.6 trillion over ten years, if Congress allows the rates to rise as scheduled at the end of this year.

Tax Foundation economist William McBride estimated that this historic tax increase would push Tax Freedom Day to its latest point ever.

Tax Freedom Day is the day when – theoretically – Americans begin working for themselves and can stop paying for government. It assumes that 100 percent of a person’s wages go to paying for federal and state tax burdens. The day when government operations are fully paid for is Tax Freedom Day.

In 2012, Tax Freedom Day was April 17. However, Taxmageddon may push it until the end of April or beyond, McBride reported in a blog post on the foundation’s website. At the federal level, the 2012 tax increases would add 11 days to the Tax Freedom Day calculation, pushing it to April 28.

Adding in rising state and local tax revenues could push Tax Freedom Day beyond its May 1 record.

The Taxmageddon provisions adding to the cost of government – measured in the days that Americans will spend paying for it – are as follows:

  • Bush tax rates – 2.6 days
  • Alternative Minimum Tax – 2.2 days
  • Small business tax cuts – 0.4 days
  • Corporate income tax – 3.4 days
  • Payroll tax cut – 2.5 days
  • Estate tax – 0.2 days

One of the problems with all of this voting for bigger government is that there is less money for people to make their marriages and families work. The more we vote for bigger government, the less we haves as individuals for our own plans, including our marriage and family plans.

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John Boehner says no to Obama’s plan to raise taxes by 2 trillion

Republican Speaker John Boehner

Republican House Speaker John Boehner

From the leftist Washington Post.

Excerpt:

Senate Democrats have drafted a sweeping debt-reduction plan that would slice $4 trillion from projected borrowing over the next decade without touching the expensive health and retirement programs targeted by President Obama.

Instead, Senate Democrats are proposing to stabilize borrowing through sharp cuts at the Pentagon and other government agencies, as well as $2 trillion in new taxes…

[...]Republicans dismissed the Democratic blueprint, saying higher taxes would be devastating to an economy already weighed down by a 9.2 percent unemployment rate. In their spending plan, House Republicans proposed to save $4 trillion entirely through spending cuts; they would also eliminate Medicare as an open-ended entitlement after 2021.

“If they’re calling for $2 trillion in tax hikes in the middle of a jobs crisis, it’s little wonder that it’s been 800 days since Senate Democrats passed a budget,” said McConnell spokesman Don Stewart.

Since early this year, Senate Democrats have struggled to draft a spending plan. Moderates refused to endorse any blueprint that included big annual budget deficits or big tax hikes. Liberals, meanwhile, opposed sharp cuts to social programs. Sen. Jeff Sessions (R-Ala.), the senior Budget Committee Republican, has relentlessly hammered Democrats for their failure to adopt a budget.

Although the new document is unlikely to be officially adopted, it was embraced by a majority of Senate Democrats when Conrad presented it at a closed-door luncheon earlier this week, aides said.

Under the blueprint, the top income tax rate would rise to 39.6 percent for individuals earning more than $500,000 a year and families earning more than $1 million. That group, which constitutes the nation’s richest 1 percent of households, would also pay a 20 percent rate on capital gains and dividends, rather than the 15 percent rate now in effect.

John Boehner says no way.

Excerpt:

Speaker John A. Boehner told President Obama on Saturday night he will not agree to the president’s most ambitious plan for deficit reduction, citing the administration’s pursuit of tax increases as one of the main hurdles.

The Democrats want to tax investors and job creators. Is it any wonder that this administration has been unable to create jobs? They keep taxing and regulating the small businesses and investors who enable the creation of the majority of new private sector jobs, then are shocked to find that no new jobs are being created. When will they learn that “taxing the rich” just means “taxing the job creators”?

Why are companies not hiring?

Companies are not hiring because the Democrats spent too much, and now they want to raise taxes. Higher taxes makes companies not hire workers.

Look at this diagram:

Republican control of House = low unemployment

Compare the unemployment rates when Republican Newt Gingrich was in charge of the House, to when Nancy Pelosi was in charge:

Gingrich versus Pelosi unemployment graph

Unemployment: Gingrich ('95-'99) vs Pelosi ('07-'10)

Nancy Pelosi added 5.34 trillion to the national debt in 4 years! If you are running a business, then you STOP hiring when you see that the government is spending so much that new taxes are inevitable. You cannot argue with these facts – more spending means higher unemployment, BECAUSE more spending raises fears of higher taxes on job creators. And that’s exactly what Obama is now threatening, and why the unemployment rate is going UP not DOWN. Newt Gingrich added only ONE TRILLION to the national debt between 1994 and 1999. ONE TRILLION. That’s bad, but it’s not FIVE TRILLION as under Pelosi.

Prior to January 2007, George W. Bush’s unemployment rate was down below 5%. Job creators knew that he wasn’t going to come after them with tax hikes and burdensome regulations. You can’t create jobs by punishing job creators. The trade-off of low tax rates for the wealthy is a low unemployment rate. Those are the facts, and we have to live with reality as it is.

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Government report: US has world’s largest supply of oil, natural gas and coal

Here’s the press release. (H/T Canada Free Press)

Abstract:

Sen. James M. Inhofe (R-Okla.), Ranking Member of the Senate Committee on Environment and Public Works, and Sen. Lisa Murkowski (R-Alaska), Ranking Member of the Senate Energy and Natural Resources Committee, today released an updated government report from the Congressional Research Service (CRS) showing America’s combined recoverable oil, natural gas, and coal endowment is the largest on Earth. America’s recoverable resources are far larger than those of Saudi Arabia (3rd), China (4th), and Canada (6th) combined.  And that’s not including America’s immense oil shale and methane hydrates deposits.

Details:

Oil

CRS offers a more accurate reflection of America’s substantial oil resources.  While America is often depicted as possessing just 2 or 3 percent of the world’s oil – a figure which narrowly relies on America’s proven reserves of just 28 billion barrels – CRS has compiled US government estimates which show that America, the world’s third-largest oil producer, is endowed with 163 billion barrels of recoverable oil. That’s enough oil to maintain America’s current rates of production and replace imports from the Persian Gulf for more than 50 years.

Natural Gas

Further, CRS notes the 2009 assessment from the Potential Gas Committee, which estimates America’s future supply of natural gas is 2,047 trillion cubic feet (TCF) – an increase of more than 25 percent just since the Committee’s 2006 estimate.  At today’s rate of use, this is enough natural gas to meet American demand for 90 years.

Coal

The report also shows that America is number one in coal resources, accounting for more than 28 percent of the world’s coal. Russia, China, and India are in a distant 2nd, 3rd, and 5th, respectively. In fact, CRS cites America’s recoverable coal reserves to be 262 billion short tons. For perspective, the US consumes just 1.2 billion short tons of coal per year.  And though portions of this resource may not be accessible or economically recoverable today, these estimates could ultimately prove to be conservative.  As CRS states: “…U.S. coal resource estimates do not include some potentially massive deposits of coal that exist in northwestern Alaska.  These currently inaccessible coal deposits have been estimated to be more than 3,200 billion short tons of coal.”

Oil Shale

While several pilot projects are underway to prove oil shale’s future commercial viability, the Green River Formation located within Colorado, Wyoming, and Utah contains the equivalent of 6 trillion barrels of oil.  The Department of Energy estimates that, of this 6 trillion, approximately 1.38 trillion barrels are potentially recoverable.  That’s equivalent to more than five times the conventional oil reserves of Saudi Arabia.

Methane Hydrates

Although not yet commercially feasible, methane hydrates, according to the Department of Energy, possess energy content that is “immense … possibly exceeding the combined energy content of all other known fossil fuels.” While estimates vary significantly, the United States Geological Survey (USGS) recently testified that: “the mean in-place gas hydrate resource for the entire United States is estimated to be 320,000 TCF of gas.” For perspective, if just 3% of this resource can be commercialized in the years ahead, at current rates of consumption, that level of supply would be enough to provide America’s natural gas for more than 400 years.

The press release has lots of informative graphs.

The PDF of the full report is here.

Obama keeps blocking energy production at home, and sending taxpayer money (and jobs) to countries in the Middle East, some of who don’t like us very much. What would possess a president to undermine the national security and economy of his own country that way? Why does he want to raise the cost of living for his fellow citizens and send jobs overseas to the Middle East?

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