Sunday, September 18, 2011
Ryan reacts to Obama's "jobs plan"
House Budget Committee Chairman Paul Ryan (R-WI) is making it really, really hard for me to give up on him as a potential 2012 GOP presidential nominee.
Chairman Ryan is always utterly consistent and thoroughly well-informed on fiscal matters, and much of what he said this morning about Obama's "new" job plan was no surprise because Obama has just recycled past policies (e.g., a temporary cut in payroll taxes) that have been repeatedly tried by both Democrats and Republicans, but that have always failed. Ryan's response is a clear, vital statement of specific principles and ideas, and those who've heard Ryan speak in the past will recognize much of what he had to say about those failed policies, and their alternatives, today.
I was struck in particular today, though, by Chairman Ryan's calm, lucid response to one of the most effective parts of Obama's and the Democrats' class-warfare demagoguery, the "Buffett's Secretary" argument:
WALLACE: Let's turn to taxes and there's a lot to talk about. I want to break it down in some bite-size pieces.
First of all, what do you think to all — over the papers today, I guess, the New York Times reported that, first, this idea of a new minimum tax rate for millionaires to insure that they pay at least the same percentage of their money that they get their income as middle income taxpayers?
RYAN: Great. So, I guess what he's saying he's going to raise on capital at ordinary income tax rate, raising capital gains and dividends. Look, if you tax something more, Chris, you get less. If you tax job creators more, you get less job creation. If you tax investment more, you get less investment.
At a time when experts are telling us, including, I said the fiscal commission, we should lower tax rates on investment and job creation by getting rid of all of the loopholes so we can create economic growth. So, we think this is going in the wrong direction. Let's not forget that under the current law that the president has already passed, the top tax rate on individual and small businesses in 2013 goes to about 44.8 percent.
So, we have employers in Wisconsin that pay that tax rate are competing against countries that are taxing their businesses from 16 percent in Canada, almost 21 percent going in England, 25 percent in China. The world taxes their businesses at about 25 percent and he's saying we're going to tax these job creators at above 45 percent with this new tax. What it does is it adds further instability to our system, more uncertainty and it punishes job creation and those people who create jobs.
Class warfare, Chris, may make for really good politics but it makes a rotten economics. We don't need a system that seeks to divide people. We don't need a system that seeks prey on people's fear, envy and anxiety. We need a system that creates job and innovation, and removes these barriers for entrepreneurs to go out and rehire people. I'm afraid these kinds of tax increases don't work.
WALLACE: But, Congressman, this is being called the Buffett rule, because it comes after Warren Buffet, the multibillionaire owner of Berkshire Hathaway said, I end up — because I get so much of my money from capital gains — I end up paying a lower tax rate than my secretary who gets her money in salary. What about the question — what about the question of fairness, sir?
RYAN: So, what he's saying, what he forgets to mention on that, that's a double tax. Capital gains and dividends are taxes on money that has already been taxed once before based on income. So, a person who's paying an income tax is paying the first level of tax on that money and then when you pay capital gains and dividends tax, you are paying that tax again on that money that earns it. What it does — and we've done this before — we have raised capital taxes gains and dividend taxes, we hurt economic growth, we stifle investment in our economy. So, if we tax investment in job creation more, you will get less of it. Like I said, this is — this looks like to me not a very good sign, because it looks like the president wants to move down the class warfare path.
Class warfare will simply divide this country more. It will attack job creators, divide people and it doesn't grow the economy.
Go to budget.house.gov and see a video we put up that shows a common sense idea that has a lot of bipartisan support in Washington these days to lower tax rates on these things by going after the loopholes.
Here's the video he just referenced. I think it's both simple and brilliant. And if the notion of the current tax laws letting General Electric Corp. get away with paying no federal income taxes nearly makes your head explode — a feeling shared by many Democrats, Republicans, and independents — then you should definitely watch this video:
I want this man to be president. This unflappable competency doesn't just appeal to me, it sings to me in ways that, frankly, neither Mitt Romney nor Rick Perry has yet been able to do.
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(1) DWPittelli made the following comment | Sep 20, 2011 10:22:55 AM | Permalink
1) Warren Buffet is a hypocrite and a whore. He's as self-interested as anybody when he advocates higher taxes on the rich, and the left's constant claims to the contrary are B.S. For example, Buffet owns 4 insurance companies. Much of life insurance is insurance in name only, but really a way for rich people to dodge taxes. You want to know how an old man can get a $50 million life insurance policy, even if he's sick? He pays the insurance company about $52 million. They take $2 million plus any interest to pay for lawyers and profits, and when he dies the $50 million is returned to his estate tax-free; because "life insurance" sounds like a good thing to the idiots and corrupt in Washington, they encourage it by not subjecting it to estate taxes. This might be fine as far as non-plutocrats getting policies of maybe up to $2 million so when they die their families don't face poverty, but there are no such limits to this obscene loophole. Insurance companies have similar ways of making money for non-dead people also; (you can "loan" yourself money from your accumulated insurance policy value). Look up "single-payer life insurance" for more info. So Buffet makes a lot of money because estate and income taxes are high, and he stands to lose a lot of money when income taxes are lower and/or simpler, or especially if the estate tax were eliminated.
2) Buffet's secretary may have a higher marginal tax rate than Buffet, but much of her income is not taxed at all (indeed, 47% of the population pays no income taxes) or at much lower rates. Overall her tax rate is a lot lower than the marginal tax rate the left likes to talk about.
3) Buffet's real tax rate is a lot higher than it's generally made out to be, especially because of the double-taxation of the dividends he receives, as Ryan mentioned. Buffet owns shares in corporations, and they pay up to 35% on their earnings in tax before they're passed on to Buffet and taxed again in one form or the other.
4) Our corporate tax rate of 35% is too high. But most firms aren't like GE, which pays nothing because of "green" subsidies and because it's a multinational manufacturing firm. Retailers, for example, even the enormous Wal-Mart which is damned for saving poor people so much money in undercutting other retailers, and which can afford the best lawyers in the world, actually pay the full 35% on their earnings. That's because retailers can't fudge their accounting to instead earn all their "profits" overseas, in nations with lower tax rates. So consumers pay too much for their goods because corporate tax rates are so high. This hurts poor and middle-class people who consume most of their income. At the same time, multinational manufacturers pay much less than 35% on their true profits because their accountants choose to say that all their profit is earned in lower-tax countries (when one corporation is the seller and the buyer of a good it can set the "price" at whatever level minimizes taxes); they would be paying much more in U.S. corporate income taxes if the rate were lower, because then they would have no incentive for this profit-shifting. So a lower corporate income tax rate would be good for people with modest incomes, and would also probably bring in more revenue than the current rate.
(2) Mark L made the following comment | Sep 20, 2011 9:00:22 PM | Permalink
Did you hear Ryan's characterization of Obama's plan on the Laura Ingram show today?
He said, "I think the president has become a pyromaniac in a field of straw men."
I love it.
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