Don't Quit Your Day Job…

As you may recall, the United States implemented a huge package of stimulus – about $787 billion worth – in 2008, President Obama’s first year in office. Included in that package was a fair amount of temporary tax cut measures, increased funding for programs like unemployment and food stamps, and a large list of spending on various projects identified as “Good Investments”. This is relevant for two reasons. First, President Obama proposed in a recent speech $447 billion in new spending along similar lines to the original stimulus (do the math, that will be $1.2 trillion in ‘stimulus’, not including the plethora of other stimulus programs like Cash for Clunkers) . Second, it is relevant because the Congressional Budget Office recently declared the original stimulus a success based upon the models which were used to propose the stimulus.

Fresh off of Secretary of State Hillary Clinton’s classic quote to the Brookings Institute, “The rich are not paying their fair share”, it’s nice to see a few publications with proof that thought may be a little wacky. The Congressional Budget Office released a timely report they named “Average Federal Taxes by Income Group”. What does that report show? Strangely, that the share of the burden of taxation for the rich in this country has actually been increasing. Shocking, I know, with all of the quotes you can find to the contrary. Let’s take a look…

Thanks to the Committee for a Responsible Public Budget, you too can play Dictator/a for a day! It’s no surprise that the United States has a high national debt. The United States has around $13 trillion in public debts. The United States is also the largest economic engine in the world, with a GDP of $14.2 trillion in 2009. How would you balance the expenditures of the government?

What would you say if someone offered you money to report your tax-evading friends? If you are staring at the screen incredulously, allow me to introduce you to Uncle Sam, who wants to make it worth your while to report on your loose-moraled tax cheat friends (and acquaintances!). If you know someone who is particularly dastardly, you could even make bank- the IRS will reward you 15% of the underpaid amount, up to a whopping $10 million!

The Congressional Budget Office recently released their scoring of the Senate Health Care Bill. Reading some of the headlines in major newspapers, one would be forgiven to think that the health care plan being debated in the Senate is a deficit reducing panacea for all of the United States’ health problems… “No Big Cost Rise in U.S. Premiums Is Seen In Study” touts the New York Times, for example. The health care bill is supposed to ‘bend the health care cost curve’ and extend coverage to the unfortunate people who don’t currently have insurance. Sadly, it completely misses the mark.

Since yesterday I compared the health plan taxes in Congress to the Alternative Minimum Tax, I suppose it’s only right if today I discuss that tax itself. The infamous tax was enacted to target upper class taxpayers who paid less than ‘their fair share’ of taxes. It went into effect in 1970.

No matter what the final estimate for Health Care reform is, it will cost a lot more.

The bills being written already carry price tags so high it’s mind boggling… $1 trillion over ten years, even $1.6 trillion over ten years. A large number like that seems to convey honesty and straight-talk, yet probably only scratches the surface of what will be a much higher bill. Recall: Social Security was sold to the American public as a 1% tax on the employee and employer, scaling up to 3% on each in 1948. How close are the rates to 3% now? Well, employers and employees both pay 6.2% in tax and Social Security is now the largest expenditure in the federal budget.