Democrats want tax hikes to be the first item negotiated in “super committee” deficit-reduction talks, trying to force Republicans to confront an issue at the heart of this year’s budget fights, sources told Reuters.

The tough stance by Democratic members of the powerful 12-member congressional panel reflects the party’s wariness that Republicans might try to sideline the issue of revenue increases in the negotiations.

“They’ve raised the idea of doing taxes first,” a Republican aide involved in the discussions said on Friday on condition of anonymity.

Heh, when I first read this on Saturday afternoon, I couldn’t help but laugh… Democrats are as predictable as sunrise, they’ve spent the last several years demonizing “the rich” and trying to divide us along racial, cultural, socioeconomic lines. The numbers however tell a different story:

In 2007, 390,000 tax filers reported adjusted gross income of $1 million or more and paid $309 billion in taxes. In 2009, there were only 237,000 such filers, a decline of 39%. Almost four of 10 millionaires vanished in two years, and the total taxes they paid in 2009 declined to $178 billion, a drop of 42%.

Those with $10 million or more in reported income fell to 8,274 from 18,394 in 2007, a 55% drop. As a result, their tax payments tanked by 51%. These disappearing millionaires go a long way toward explaining why federal tax revenues have sunk to 15% of GDP in recent years. The loss of millionaires accounts for at least $130 billion of the higher federal budget deficit in 2009. If Warren Buffett wants to reduce the deficit, he should encourage policies to create more millionaires, not campaign to tax them more.

The millionaires who are left still pay a mountain of tax. Those who make $1 million accounted for about 0.2% of all tax returns but paid 20.4% of income taxes in 2009. Those with adjusted gross income above $200,000 a year were just under 3% of tax filers but paid 50.1% of the $866 billion in total personal income taxes. This means the top 3% paid more than the bottom 97%. Yet the 3% are the people that President Obama claims don’t pay their fair share. Before the recession, the $200,000 income group paid 54.5% of the income tax.

The “rich” as defined by President Obama and Democrats in congress are a very small majority of tax filers who already pay a disproportionate share of the total federal income tax bill. The notion that we solve our budget problems by raising taxes on that small majority is nuts.

I’m not saying we shouldn’t look at the revenue side, what I am saying have to do it in a comprehensive way that a) broadens the tax base and b) flattens tax rates… There just aren’t a enough “rich” people that can be taxed at a high enough rate to make a significant difference on difference on the revenue side.

The government has to cut spending and make comprehensive reforms to the tax… in short we need more people paying taxes, simply shifting more and more of the burden onto a small minority of taxpayers isn’t going to solve our budget problems.

Related

• Recession Is the Outlook, Despite Manufacturing Report – Larry Kudlow, The New York Sun

Connecticut’s new governor, Dannel Malloy, gets no honeymoon as voters disapprove 40 – 35 percent of the job he is doing, with 25 percent undecided, according to a Quinnipiac University poll released today.

Voters are optimistic, 55 – 39 percent, about the next four years under Gov. Malloy, the independent Quinnipiac (KWIN-uh-pe-ack) University poll finds. And they say 89 – 7 percent that Malloy’s town hall meetings to discuss the budget and the economy are a good idea.

But they disapprove 51 – 32 percent of the way he is handling the budget and turn thumbs down on his budget plan:

• 66 percent say the plan increases taxes too much, as 3 percent say too little and 19 percent say the tax level is about right;
• 39 percent say it cuts spending too little, with 17 percent saying too much and 29 percent say about right;
• 16 percent say it increases taxes on the wealthy too much, as 48 percent say too little and 24 percent say about right;
• 68 percent say it raises taxes on the middle class too much, with 1 percent saying too little and 21 percent saying about right.

Malloy’s budget proposals are unfair to “people like you,” voters say 56 – 31 percent. Democrats say “unfair” 45 – 41 percent and Republicans agree 65 – 25 percent and independent voters agree 59 – 28 percent.

Ouch. Frankly, I’m not really surprised by these poll results. Gov. Malloy has $3.4 billion budge gap to close and has proposed the largest tax increase in state history.

The simple truth is you can’t tax your way to prosperity, if Gov. Malloy and the state legislature are serious about closing the budget deficit they’ll scale back the proposed tax increases and make real meaningful cuts — some of them draconian in the budget. It’s the only way to ensure the states long term prosperity.

Click image for full size.

Bottom line; we’re not under taxed… The government spends to much!

H/T: James Pethokoukis.

A new value-added tax (VAT) is “on the table” to help the U.S. address its fiscal liabilities, House Speaker Nancy Pelosi (D-Calif.) said Monday night.

Pelosi, appearing on PBS’s “The Charlie Rose Show” asserted that “it’s fair to look at” the VAT as part of an overhaul of the nation’s tax code.

“I would say, Put everything on the table and subject it to the scrutiny that it deserves,” Pelosi told Rose when asked if the VAT has any appeal to her.

The VAT is a tax on manufacturers at each stage of production on the amount of value an additional producer adds to a product.

Pelosi argued that the VAT would level the playing field between U.S. and foreign manufacturers, the latter of which do not have pension and healthcare costs included in the price of their goods because their governments provide those services, financed by similar taxes.

The sad reality is the Federal Government now borrows roughly 50 cents of every dollar it spends, that’s simply unsustainable over the long term… The Obama Administration and Democrats in Congress are either going to have to radically scale back their agenda (something they won’t do) or raise taxes on broad swath of Americans… Something they’re only too happy to do while saying with a straight face “the deficit made us do it.”

Make no mistake a Value Added Tax added on top of our current income tax system will be an economy killer that hits those who can least afford it the the hardest.

STEPHANOPOULOS: You were against the individual mandate…

OBAMA: Yes.

STEPHANOPOULOS: …during the campaign. Under this mandate, the government is forcing people to spend money, fining you if you don’t

How is that not a tax?

OBAMA: Well, hold on a second, George. Here — here’s what’s happening. You and I are both paying $900, on average — our families — in higher premiums because of uncompensated care. Now what I’ve said is that if you can’t afford health insurance, you certainly shouldn’t be punished for that. That’s just piling on.

If, on the other hand, we’re giving tax credits, we’ve set up an exchange, you are now part of a big pool, we’ve driven down the costs, we’ve done everything we can and you actually can afford health insurance, but you’ve just decided, you know what, I want to take my chances. And then you get hit by a bus and you and I have to pay for the emergency room care, that’s…

STEPHANOPOULOS: That may be, but it’s still a tax increase.

OBAMA: No. That’s not true, George. The — for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase. What it’s saying is, is that we’re not going to have other people carrying your burdens for you anymore than the fact that right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase.

People say to themselves, that is a fair way to make sure that if you hit my car, that I’m not covering all the costs.

STEPHANOPOULOS: But it may be fair, it may be good public policy…

OBAMA: No, but — but, George, you — you can’t just make up that language and decide that that’s called a tax increase. Any…

STEPHANOPOULOS: Here’s the…

OBAMA: What — what — if I — if I say that right now your premiums are going to be going up by 5 or 8 or 10 percent next year and you say well, that’s not a tax increase; but, on the other hand, if I say that I don’t want to have to pay for you not carrying coverage even after I give you tax credits that make it affordable, then…

STEPHANOPOULOS: I — I don’t think I’m making it up. Merriam Webster’s Dictionary: Tax — “a charge, usually of money, imposed by authority on persons or property for public purposes.”

OBAMA: George, the fact that you looked up Merriam’s Dictionary, the definition of tax increase, indicates to me that you’re stretching a little bit right now. Otherwise, you wouldn’t have gone to the dictionary to check on the definition. I mean what…

STEPHANOPOULOS: Well, no, but…

OBAMA: …what you’re saying is…

STEPHANOPOULOS: I wanted to check for myself. But your critics say it is a tax increase.

OBAMA: My critics say everything is a tax increase. My critics say that I’m taking over every sector of the economy. You know that.

Look, we can have a legitimate debate about whether or not we’re going to have an individual mandate or not, but…

STEPHANOPOULOS: But you reject that it’s a tax increase?

OBAMA: I absolutely reject that notion.

With all due respect Mr. President you’re wrong… It is a tax… I says so right on page 29 of the Baucus bill itself:

Excise Tax. The consequence for not maintaining insurance would be an excise tax. If a taxpayer‘s MAGI is between 100-300 percent of FPL, the excise tax for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or an individual claimed as a dependent) is $750 per year. However, the maximum penalty for the taxpayer unit is $1,500. If a taxpayer‘s MAGI is above 300 percent of FPL the penalty for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or as an individual claimed as a dependent) is $950 year. However, the maximum penalty amount a family above 300 percent of FPL would pay is $3,800.

The Presidents contention is so ridiculous that even the AP is calling him out on it:

Memo to President Barack Obama: It’s a tax. Obama insisted this weekend on national television that requiring people to carry health insurance — and fining them if they don’t — isn’t the same thing as a tax increase. But the language of Democratic bills to revamp the nation’s health care system doesn’t quibble. Both the House bill and the Senate Finance Committee proposal clearly state that the fines would be a tax.

There’s no way around it, the individual mandate is a tax… and as David Rivkin Jr. and Lee Casey explain in a Wall Street Journal op-ed it’s an unconstitutional one.

• Individual Mandate Tax.  If you don’t sign up for health insurance, you will have to pay a tax in the following range:
• Various industry tax grabs based on market share. $2.3 billion PhRMA; $6 billion health insurance providers; $750 million clinical labs; $4 billion medical device manufacturers:
  

  	Single	Family
  100-300% FPL	$750	$1500
  300% FPL <	$900	$3800

• Employer Mandate Tax.  $400 per employee if health coverage is not offered.  Note: this is a huge incentive to drop coverage, as $400 is much less than the average plan cost of $11,000 for families or $5000 for singles (Source: AHIP)
• Corporate 1099-MISC Information Reporting. Currently, only non-corporations providing property or services for a business must be issued at 1099-MISC.  This would expand the requirement to corporations doing business with other businesses.  The amount of reporting needed for an average business would be huge.  Paves the way for full information reporting to the IRS.
• Increase Non-Qualified HSA Distribution Penalty from 10% to 20%.  This makes HSAs less attractive, and paves the way for HSA pre-verification

• Backdoor Death of HSAs.  By requiring that all plans (besides the few that are grandfathered) provided first-dollar coverage for most services, there would be no HSA-qualifying plans available from the Massachusetts-like exchanges

• Excise Tax on High-Cost Health Plans. New 35% excise tax on health insurance plans to the extent they exceed $21000 in cost ($8000 single)

• Report Employer Health Spending on W-2. This is clearly a setup for the easy individual taxation of employer-provided health insurance down the road.

• Cap Flex-Spending Account (FSA) Contributions at $2000. Currently unlimited.

• Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D

• Medicine Cabinet Tax.  Americans would no longer be able to purchase over-the-counter medicines with their FSA, HSA, or HRA

Ouch, kiss your health savings account goodbye.

Related

• Jay Rockefeller rips Max Baucus bill – Politico
• Snowe bails on “compromise” ObamaCare bill – Hot Air

Connecticut grabs $7,007 in state and local taxes per man, woman and child resident, according to the Tax Foundation, more per capita than every state but New York and New Jersey. That’s hardly the company any state would want to keep these days, but the politicians in Hartford seem intent on following Trenton and Albany off the tax-and-spend cliff.

This week Republican Governor Jodi Rell proposed a $1-billion-plus income tax hike, raising the top tax rate to 6.5% from 5% on individuals with incomes above $500,000 and couples with earnings above $1 million to close an expected two-year $8.5 billion budget deficit. The tax hike would be retroactive to January 1, meaning the government would snatch money that residents have already earned. Perhaps she aspires to the nether-world approval ratings of New Jersey Governor Jon Corzine.

Given the size of its deficit, it’s hard to believe that for 200 years Connecticut balanced its budget without any income tax and became the richest state in the bargain. That changed in 1991 when then-Governor Lowell Weicker pushed the state’s first-ever personal income tax with a promise that the rate would remain flat at 4.5%. But the next time the state couldn’t pay its bills, in 2001, the legislature raised Mr. Weicker’s tax to 5%. In 2007, Ms. Rell wanted more money for the schools, so she proposed raising the income tax again. That plan failed, but now comes her “millionaire surcharge,” which Democrats have eagerly endorsed.

The most surprising and frightening statistic from the Journal’s editorial is this one:

Since the income tax became law, Connecticut has experienced a long, slow exodus of jobs and people. The Yankee Institute notes the astounding fact that since 1992, the year the income tax went into effect, businesses in Connecticut have hired a grand total of zero net new workers.

Gov. Rell and the state legislature would do well to remember that and the state’s declining population, Connecticut’s population  has declined in every year but one over the last decade, while looking for solutions to our current fiscal crisis. Raising taxes and continuing to spend money we don’t have is not the answer.

Few of President Obama’s 2008 campaign pledges were more definitive than his vow that anyone making less than $250,000 a year “will not see their taxes increase by a single dime” if he was elected. And he was right, very strictly speaking: It’s going to be many, many, many billions of dimes.

Asked about raising taxes on the middle class on Sunday on CBS’s “Face the Nation,” White House economist Larry Summers wouldn’t repeat Mr. Obama’s pre-election promise. “It is never a good idea to absolutely rule things out no matter what,” Mr. Summers said—except, apparently, when his boss is running for office. Meanwhile, on ABC’s “This Week,” Treasury Secretary Timothy Geithner also slid around Mr. Obama’s vow and said, “We have to bring these deficits down very dramatically. And that’s going to require some very hard choices.”

These aren’t even nondenial denials. The Obama advisers are laying the groundwork for taxing the middle class while claiming the deficit made them do it.

The liberal establishment is even further along in finally admitting that Mr. Obama wasn’t, er, telling the truth. A piece in the New York Times over the weekend declared in a headline that “the Rich Can’t Pay for Everything, Analysts Say.” And it quoted Leonard Burman, a veteran of the Clinton Treasury who now runs the Brookings Tax Policy Center, as saying that “This idea that everything new that government provides ought to be paid for by the top 5%, that’s a basically unstable way of governing.” They’re right, but where were they during the campaign?

The Federal Government now borrows nearly 50 cents of every dollar it spends, that’s just not sustainable… The Obama Administration is going to have to radically scale back it’s agenda or raise taxes on broad swath of American tax payers. They’ve already floated the idea of a European style Value Added Tax and now they’re setting the table for a “the deficit made it necessary” defense of a middle class tax hike.

After all as the as Wall Street Journal concludes:

The undeniable reality is that you can’t run a European-style welfare-entitlement state without European-style levels of taxation on the middle class (and eventually without low European-style growth and high jobless rates). It’s looking more and more like Mr. Obama’s no-middle-class-tax pledge was one of the greatest confidence tricks in American political history.

Related

• Obama’s Pledge to Tax Only the Rich Can’t Pay for Everything, Analysts Say – New York Times
• You can bet on it: Obama will raise your taxes – Washington Examiner
• 5 reasons why Obama will hike middle-class taxes – James Pethokoukis
• Video: Former CBO director says ObamaCare numbers don’t add up – Hot Air
• Income Tax Surtax Should Not Fund Government Health Care Expansion – Heritage Foundation
• Who Pays Income Taxes? See Who Pays What – National Tax Payers Union

House Majority Leader Steny Hoyer (D-Md.) said that job growth and economic recovery would not be harmed by a Democratic plan to increase income taxes by $540 billion to pay for their health-care reform proposal because the tax hikes would not affect small businesses.

Hoyer also said he could not think of any small business owners who make enough money to qualify for the higher taxes.

Speaking at his weekly press briefing on Tuesday, Hoyer said that the proposed tax was merely a surcharge on wealthy individuals, explaining that the tax increases were graduated.

“This is a surcharge,” Hoyer said, “on people making over $280,000 as an individual, $350,000 [per year] as a couple and it’s graduated, it goes up as you reach $1 million in income.”

Asked by CNSNews.com whether such a tax increase would affect small businesses and job creation during a recession, Hoyer said: “I don’t know many small business men or women who are making, themselves $280,000 [per year], so I’m not sure that very many small businesses are going to be affected by this.”

With all due respect Congressman you’re wrong. I’d suggest you take a look at the Small Business Administration’s Size Standards which defines small business as follows:

A small business is an concern that is organized for profit, with a place of business in the United States, and which operates primarily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.  Further, the concern cannot be dominant in its field, on a national basis.  Finally, the concern must meet the numerical small business size standard for its industry.  SBA has established a size standard for most industries in the U.S. economy.  The most common size standards are as follow:

• 500 employees for most manufacturing and mining industries
• 100 employees for all wholesale trade industries
• $6.5 million for most retail and service industries
• $31 million for most general & heavy construction industries
• $13 million for all special trade contractors
• $0.75 million for most agricultural industries

About one-fourth of industries have a size standard that is different from these levels.  They vary from $0.75 million to $32.5 million for size standards based on average annual revenues and from 100 to 1500 employees for size standards based on number of employees.  Several SBA programs have either alternative or unique size standards, such as the Small Business Investment Company Program.

In other words Congressman small businesses aren’t all mom and pop operations. many of them employ hundreds of people and earn significantly more $280.000 in income. The bottom line congressman is that many of these, not so, small businesses file their taxes as subchapter-S corporations or ‘sole proprietors’ and the $540 billion in new taxes you and your colleagues are proposing will ultimately result in slower economic growth and a loss of jobs.

Related

• Health reform would tax the rich, near-rich – Washington Times
• Health Reform Requires Lawsuit Reform – Wall Street Journal
• PROMISES, PROMISES: Indian health care’s victims – Associated Press
• VA admits its failure to give female veterans proper care – McClatchy
• Small Business Faces Big Bite – Wall Street Journal
• 9 reasons Pelosi’s healthcare surtax is disastrous – James Pethokoukis
• Obama will Repeal Medicare – Dick Morris

WASHINGTON — Landmark legislation to curb U.S. greenhouse-gas emissions was approved by the House of Representatives in a close vote late Friday, securing an initial victory for a cornerstone of President Barack Obama’s agenda.

The 1,200 page bill — formally known as the “American Clean Energy and Security Act” — will reach into almost every corner of the U.S. economy. By putting a price on emissions of greenhouse gases, such as carbon dioxide, the bill would affect the way electricity is generated, how homes and offices are designed, how foreign trade is conducted and how much Americans pay to drive cars or to heat their homes.

The House climate bill, approved by a 219-212 vote Friday evening, would mandate that 15% of the nation’s electricity come from renewable sources such as wind and solar power by 2020, potentially expanding the market and profit potential for companies in those sectors. Towards that goal, it seeks to boost nascent industries such as wind-generated electricity and solar power.

It’s not clear whether the bill will pass the Senate though. Call your Senators at (202) 224-3121 and urge them to vote no this economy killer… According to an analysis conducted by The Heritage Foundation, the bill would raise energy costs for a household of four, by $436 in 2102, when it’s provisions go into effect, and by an average or $1,241 in 2035. That same families electricity costs would rise up to 90 percent by 2035, gasoline by 58 percent, and natural gas by 55 percent by 2035.

The Eight House Republicans who voted for the Cap and Tax bill are:

Mary Bono Mack (CA) (202) 225-5330
Mike Castle (DE) (202) 225-4165
Mark Kirk (IL) (202) 225-4385
Leonard Lance (NJ) (202) 225-5361
Frank LoBiondo (NJ) (202) 225-6572
John McHugh (NY) (202) 225-4611
Dave Reichert (WA) (202) 225-7761
Chris Smith (NJ) (202) 225-3765

Special thanks to Michelle Malkin for the names and phone numbers.

Related

• The Cap and Tax Fiction – Wall Street Journal
• The Climate Change Climate Change – Wall Street Journal
• The Economic Impact of the Waxman-Markey Cap-and-Trade Bill – Heritage Foundation