I saw this article in the LA Times which very clearly displays the hypocrisy and double standards that our government has for its own employees versus all of us people who pay their salaries through confiscatory tax policies that they seemingly can ignore with impudence.
The article states in parts, "Privacy laws prevent release of individual tax delinquents' names. But we do know that as of the end of 2009, 41 people inside Obama's very own White House owe the government they're allegedly running a total of $831,055 in back taxes."
Further, "In the House of Representatives, 421 people owe a total $6,524,892. In the Senate, 217 owe $2,774,836. In the IRS' parent department, Treasury, 1,204 owe $7,670,814. At the Labor Department, where Secretary Hilda Solis' husband had some back-tax problems before her confirmation, 463 owe $7,481,463. Eighty-one workers for the Federal Reserve System's board of governors owe $1,076,733."
Next, "Over at the Justice Department, which is so busy enforcing other laws and suing Arizona, 1,971 employees still owe $14,350,152 in overdue taxes."
And finally regarding Janet Napolitano's Department of Homeland Security, "... there reside 4,856 people who owe the tax agency a whopping total of $37,012,174."
How in the world are we to survive as a nation when laws are only enforced on the people of this country and not on our "leaders"? It is far past time when We The People must hold our elected officials and government employees accountable to the same laws and regulations with which we are held responsible to obey.
Evidently, they feel that they don't have to pay their "fare share" of the burden which they levy upon the rest of us.
Read the story in its entirety at:
http://latimesblogs.latimes.com/washington/2010/09/congress-taxes-irs.html
Hat tip to my old Navy buddy Rex for pointing out this story!
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts
Monday, September 13, 2010
Sunday, September 12, 2010
Governing America based on California/New York or Texas/Utah Models
With the rapidly approaching mid-term elections less than two months away, we have reached a crossroads where there will finally be a referendum in our country on how we the people wish to govern our nation. We can either take the socialistic big-government-is-always-the-solution approach like what has been done in California and New York, or we can take a more limited government, business-friendly approach such has been done in Texas and Utah as our models.
Let's start by looking at California. California has long been governed with an eye towards progressive policies where the state government was the place that most people looked to for answers to all of their problems. The results of this have been utterly devastating. Indeed if California were a country, it would be the equivalent of either Greece or Iceland. It is effectively bankrupt. The state has long been over-governed, over-taxed, over-regulated, and over-unionized, with incredibly excessive spending and entitlement commitments that it will never be able to meet. If current trends continue in California, the rest of the country will have to rescue it from the deep abyss of debt that the unsustainable spending and governing of this state has wrought. Currently and most disturbingly, it would seem that our federal government is using California as its model on how to govern the country.
New York, largely due to the huge population center of New York City, is the east coast sister of California. Seemingly there is no problem that occurs that the people of New York don't look to the government to solve for them. The result of this reliance upon government has created a climate where New York is the 49th worst state for business in the entire country. It is directly preceded by California at the 48th spot.
Chief Executive magazine recently conducted a survey of CEOs who rated California as the worst state in the country for doing business. It was awarded a grade of “F” in the category of “Taxation and Regulation” and was the only state to receive this grade.
New York is seemingly trying to follow suit where the taxation and regulatory burden for businesses has surpassed absurd proportions. In New York City, it is now even against the law for restaurants to sell any food containing trans fats. Yep, big brother is looking out for everyone there!
In contrast, the CEO's in that same survey rated Texas as the number one state in the nation for doing business. Comparatively to California, it is a low tax, low regulation, right-to-work state, where unemployment is is several points below the national average.
So where does Utah fall in this equation? Utah is arguably one of the most conservative states in the union both politically and economically in the way it has been governed historically. It has indeed trended towards more progressive governance in recent years from its past where in 1992 Bill Clinton came in 3rd place behind George H.W. Bush, and Ross Perot in presidential balloting, but overall it still has strong bonafide conservative principles.
That conservative governance has resulted in the 6th best corporate tax index rank in the country, the 2nd best property tax index rank, and the tenth best in overall tax burden for its citizens compared to eleventh place for Texas, and again as opposed to 48th for California and 49th for New York. Furthermore Utah is predicting having a balanced budget in fiscal year 2011, whereas California has a shortfall as a percentage of the state budget of 53% this year and 26% in 2011. New York projects a nearly 39% shortfall this year and a 27% shortfall for 2011.
The bottom line is quite apparent. When a state government over-extends itself to regulate and govern all aspects of life for its citizens other than just the basic functions that private companies or citizens cannot feasibly do upon their own (utilities oversight, state roads etc) then the burden of having such a hyper-intrusive government becomes so costly that the ultimate destination for these transgressions will necessarily result in insolvency of the state government. Bankruptcy. California is already on the precipice of this problem. New York is not far behind.
In contrast, while Texas and Utah do have their own distinct problems as related to state governance, overall, the more business friendly climate and the overall lower taxation and lesser regulatory burden on the people there have created states where businesses have not fled in droves, thereby keeping unemployment numbers decidedly better than the nation as a whole and far better than California in particular.
So the question now remains, are we as a nation going to continue to vote for politicians and policies to govern our country in the models of New York and California, as we have been doing particularly under the Obama administration, or are we going to reject these obviously failed policies for those that have been fruitful in states such as Texas and Utah?
Early sentiments seem to suggest that a large majority of the population has awoken and realizes that absolutely when it comes to government, less is more. I have to assume that the good people of this country have indeed reached this conclusion, because the California/New York model is unsustainable and the results are apparent for anyone looking to see this fact. It has now become crucial that we adopt the Texas/Utah model if we are to restore our country and undo the massive damage already done by the tax & spend & regulate crowd that is reflected in the California/New York model. We will hear from the people on this matter very soon!
sources: taxfoundation.org and statehealthfacts.org
Monday, August 30, 2010
Four Months to Go Until the Largest Tax Hikes in U.S. History
I saw this excellent posting by Ryan Ellis at Americans for Tax Reform and thought it more than worthy of sharing.
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
(N.B. This version of the document contains even more tax hikes than the original version did)
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
Second Wave: Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The Tanning Tax. This went into effect on July 1st of this year. It imposes a new, 10% excise tax on getting a tan at a tanning salon. There is no exemption for tanners making less than $250,000 per year.
The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Brand Name Drug Tax. Starting next year, there will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers. This tax, like all excise taxes, will raise the price of medicine, hurting everyone.
Economic Substance Doctrine. The IRS is now empowered to disallow perfectly-legal tax deductions and maneuvers merely because it judges that the deduction or action lacks “economic substance.” This is obviously an arbitrary empowerment of IRS agents.
Employer Reporting of Health Insurance Costs on a W-2. This will start for W-2s in the 2011 tax year. While not a tax increase in itself, it makes it very easy for Congress to tax employer-provided healthcare benefits later.
Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. These major items include:
The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
These coming tax hikes are a forgone conclusion. Congress can help by voting to continue the Bush tax cuts, but regardless the effects of the Obamacare taxes will be economically devastating to our economy.
More change you can believe in, I suppose.
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
(N.B. This version of the document contains even more tax hikes than the original version did)
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
Second Wave: Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The Tanning Tax. This went into effect on July 1st of this year. It imposes a new, 10% excise tax on getting a tan at a tanning salon. There is no exemption for tanners making less than $250,000 per year.
The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Brand Name Drug Tax. Starting next year, there will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers. This tax, like all excise taxes, will raise the price of medicine, hurting everyone.
Economic Substance Doctrine. The IRS is now empowered to disallow perfectly-legal tax deductions and maneuvers merely because it judges that the deduction or action lacks “economic substance.” This is obviously an arbitrary empowerment of IRS agents.
Employer Reporting of Health Insurance Costs on a W-2. This will start for W-2s in the 2011 tax year. While not a tax increase in itself, it makes it very easy for Congress to tax employer-provided healthcare benefits later.
Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. These major items include:
The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
These coming tax hikes are a forgone conclusion. Congress can help by voting to continue the Bush tax cuts, but regardless the effects of the Obamacare taxes will be economically devastating to our economy.
More change you can believe in, I suppose.
Monday, August 2, 2010
Arthur Laffer on Cutting Taxes
"Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues."
—President John F. Kennedy,
Economic Report of the President,
January 1963
Arthur Laffer, the brilliant economist and creator of the "Laffer Curve", has an excellent editorial in The Wall Street Journal today that defends the philosophy behind President Kennedy's quotation,which worked to improve federal receipts into the national treasury while further improving the national economy. He further explains why it would be extremely detrimental to our economy to allow the Bush tax cuts to expire and then go and raise taxes even higher still on the rich.
Economics and history has proven, particularly throughout the 20th century, that each time significant tax rate reductions were implemented, especially for the rich, the result was a very stimulative effect on the economy that translated into that "rising tide that lifts all boats". Tax receipts to the treasury are actually increased when this is done properly. What was not always done in conjunction was a drastic cut in federal spending. THAT is the key to what is critically important to saving our country from economic collapse today.
Those progressives that find their need to punish the rich do so at the greatest expense to the poor and those struggling to make ends meet in the middle class. Is retribution for perceived greed really something that should trump good economic policy that ultimately improves life for all Americans?
Read Mr. Laffer's article on the subject here.
—President John F. Kennedy,
Economic Report of the President,
January 1963
Arthur Laffer, the brilliant economist and creator of the "Laffer Curve", has an excellent editorial in The Wall Street Journal today that defends the philosophy behind President Kennedy's quotation,which worked to improve federal receipts into the national treasury while further improving the national economy. He further explains why it would be extremely detrimental to our economy to allow the Bush tax cuts to expire and then go and raise taxes even higher still on the rich.
Economics and history has proven, particularly throughout the 20th century, that each time significant tax rate reductions were implemented, especially for the rich, the result was a very stimulative effect on the economy that translated into that "rising tide that lifts all boats". Tax receipts to the treasury are actually increased when this is done properly. What was not always done in conjunction was a drastic cut in federal spending. THAT is the key to what is critically important to saving our country from economic collapse today.
Those progressives that find their need to punish the rich do so at the greatest expense to the poor and those struggling to make ends meet in the middle class. Is retribution for perceived greed really something that should trump good economic policy that ultimately improves life for all Americans?
Read Mr. Laffer's article on the subject here.
Wednesday, January 20, 2010
Obama's Latest Memoranda
I saw on the news this morning that President Obama issued a memo to the various secretaries in his administration that no government contracts are to be awarded to any company that owes federal taxes or has cheated upon them.
Now I absolutely agree with this policy and commend this action; however, doesn't this smell just ripe with hypocrisy, especially when one looks within Obama's own administration?
First and foremost on that list is Obama's treasury secretary, Timothy Geitner. Here is a man that is ultimately in charge of the treasury and the Internal Revenue Service, who had some "tax irregularities" and had failed to pay owed back taxes. Somehow this coming to light did not disqualify him for the job of which he is now incompetently doing. How about revoking the government job of Secretary of the Treasury to this previously independent contractor, President Obama?
The list of tax cheats and avoiders that fill this administration, even in high positions, should be an embarrassment to the President. Apparently tax laws are only meant for the common people though.
Obama said that by doing this he hoped to collect over $5 billion in back taxes from various companies that do business with the U.S. government. Again, while this is a good idea of which I am supportive, that amount of money is less than pennies compared to the trillions Obama and his Democratic henchmen are spending.
If the purpose is to cut the federal deficit, how about spending tax payer's dollars (OUR dollars) on only those things that the Constitution specifically authorizes the government to do, Mr. President? Oh yeah, and clean up your own White House before issuing memorandum aimed at others.
Tuesday, January 5, 2010
Consequences of Your Vote
This story was sent to me by my beloved mother-in-law. While I cannot vouch for the authenticity of the story, the sentiments and the results thereof I can guarantee you are quite authentic! This story makes a point that I have long tried to make myself over the years. Raising taxes on "the evil rich" only affects the myriads of small business owners in the country in that they either go out of business or end up passing those costs on to us consumers. In the end, we the people end up still paying the tax increases placed on "the rich". Far better to cut all unnecessary and un-Constitutional spending...
The Employee Meeting:
I would like to start by thanking you for attending this meeting, though it's not like you had much of a choice. After all, attendance was mandatory. I'm also glad many of you accepted my invitation to your family members to be here as well. I have a few remarks to make to all of you, and then we'll retire to the ballroom for a great lunch and some employee awards.
I felt that this meeting was important enough to close all 12 of our tire and automotive shops today so that you could be here. To reassure you, everybody is being paid for the day --- except me. Since our stores are closed we're making no money. That economic loss is mine to sustain. Carrington Automotive has 157 full time employees and around 30 additional part-timers. All of you are here. I thank you for that.
When you walked into this auditorium you were handed a rather thick 78-page document. Many of you have already taken a peek. You were probably surprised to see that it's my personal tax return for 2008. Those of you who are adept at reading these tax returns will see that last year my taxable income was $534,000.00. Now I'm sure this seems rather high to many of you. So ... let's talk about this tax return.
Carrington Automotive Enterprises is what we call a Sub-S - a Subchapter S corporation. The name comes from a particular part of our tax code. Sub-S status means that the income from all 12 of our stores is reported on my personal tax return. Businesses that report their income on the owner's personal tax return are referred to as "small businesses." So, you see now that this $534,000 is really the total taxable income - the total combined profit from all 12 of our stores. That works out to an average of a bit over $44,000 per store.
Why did I feel it important for you to see my actual 2008 tax return? Well, there's a lot of rhetoric being thrown around today about taxes, small businesses and rich people. To the people in charge in Washington right now I'm a wealthy American making over a half-million dollars a year. Most Americans would agree: I'm just another rich guy; after all ... I had over a half-million in income last year, right? In this room we know that the reality is that I'm a small business owner who runs 12 retail establishments and employs 187 people. Now here's something that shouldn't surprise you, but it will: Just under 100 percent ... Make that 99.7 percent of all employers in this country are small businesses, just like ours.
Every one of these businesses reports their income on a personal income tax return. You need to understand that small businesses like our s are responsible for about 80 percent of all private sector jobs in this country, and about 70 percent of all jobs that have been created over the past year. You also need to know that when you hear some politician talking about rich people who earn over $200,000 or $500,000 a year, they're talking about the people who create the jobs.
The people who are now running the show in Washington have been talking for months about raising taxes on wealthy Americans. I already know that in two years my federal income taxes are going to go up by about 4.5 percent. That happens when Obama and the Democrats allow the Bush tax cuts to expire. When my taxes climb by 4.5 percent the Democrats will be on television saying that this really isn't a tax increase. They'll explain that the Bush tax cuts have expired .. Nothing more Here at Carrington we'll know that almost 5% has been taken right off of our bottom line. And that means it will be coming off your bottom line.
Numbers are boring, I know ... But let's talk a bit more about that $534,000. That's the money that was left last year from company revenues after I paid all of the salaries and expenses of running this business. Now I could have kept every penny of that for myself, but that would have left us with nothing to grow our business, to attract new customers and to hire new employees. You're aware that we've been talking about opening new stores in Virginia Beach and Newport News . To do that I will have to buy or lease property, construct a building and purchase inventory. I also have to hire additional people to work in those stores. These people wouldn't immediately be earning their pay. So, where do you think the money for all of this comes from? Right out of our profits .. Right out of that $534,000. I need to advertise to bring Customers in, especially in these tough times. Where do you think that money comes from? Oh sure, I can count it as an expense when I file my next income tax return . But for right now that comes from either current revenues or last year's profits. Revenues right now aren't all that hot ... so do the math. A good effective advertising campaign might cost us more than $300,000.
Is this all starting to come together for you now?
Right now the Democrats are pushing a nationalized health care plan that, depending on who's doing the talking, will add anywhere from another two percent to an additional 4.6 percent to my taxes. If I add a few more stores, which I would like to do, and if the economy improves, my taxable income ... our business income ... could go over one million dollars! If that happens the Democrats have yet another tax waiting, another five percent plus! I've really lost track of all of the new government programs the Democrats and President Obama are proposing that they claim they will be able to finance with new taxes on what they call "wealthy Americans.."
And while we're talking about health care, let me explain something else to you. I understand that possibly your biggest complaint with our company is that we don't provide you with health insurance. That is because as your employer I believe that it is my responsibility to provide you with a safe workplace and a fair wage and to do all that I can to preserve and grow this company that provides us all with income. I no more have a responsibility to provide you with health insurance than I do with life, auto or home owner's insurance. As you know, I have periodically invited agents for health insurance companies here to provide you with information on private health insurance plans.
The Democrats are proposing to levy yet another tax against Carrington in the amount of 8 percent of my payroll as a penalty for not providing you with health insurance. You should know that if they do this I will be reducing every person's salary or hourly wage by that same 8 percent. This will not be done to put any more money in my pocket. It will be done to make sure that I don't suffer financially from the Democrat's efforts to place our healthcare under the control of the federal government. It is your health, not mine. It is your healthcare, not mine. These are your expenses, not mine. If you think I'm wrong about all this, I would sure love to hear your reasoning
Try to understand what I'm telling you here. Those people that Obama and the Democrats call "wealthy Americans" are, in very large part, America 's small business owners. I'm one of them. You have the evidence, and surely you don't think that the owner of a bunch of tire stores is anything special. That $534,000 figure on my income tax return puts me squarely in Democrat cross hairs when it comes to tax increases. Let's be clear about this ... crystal clear. Any federal tax increase on me is going to cost you money, not me. Any new taxes on Carrington Automotive will be new taxes that you, or the people I don't hire to staff the new stores I won't be building, will be paying. Do you understand what I'm telling you? You've heard about things rolling downhill, right? Fine .. then you need to know that taxes, like that other stuff, roll downhill. Now you and I may understand that you are not among those that the Democrats call "wealthy Americans," but when this "tax the rich" thing comes down you are going to be standing at the bottom of the mud slide, if you get my drift. That's life in the big city, my friends ... where elections have consequences.
You know our economy is very weak right now. I've pledged to get us through this without layoffs or cuts in your wages and benefits. It's too bad the politicians can't get us through this without attacking our profits. To insure our survival I have to take a substantial portion of that $534,000 and set it aside for unexpected expenses and a worsening economy. Trouble is, the government is eyeing that money too ... and they have the guns. If they want it, they can take it.
I don't want to make this too long. There's a great lunch waiting for us all. But you need to understand what's happening here. I've worked hard for 23 years to create this business. There were many years where I couldn't take a penny in income because every dollar was being dedicated to expanding the business. There were tough times when it took every dollar of revenues to replenish our inventory and cover your paychecks. During those times I earned nothing. If you want to see those tax returns, just let me know.
OK ... I know I'm repeating myself here. I don't hire stupid people, and you are probably getting it now. So let me just ramble for a few more minutes. Most Americans don't realize that when the Democrats talk about raising taxes on people making more than $250 thousand a year, they're talking about raising taxes on small businesses. The U.S. Treasury Department says that six out of every ten individuals in this country with incomes of more than $280,000 are actually small business owners. About one-half of the income in this country that would be subject to these increased taxes is from small businesses like ours. Depending on how many of these wonderful new taxes the Democrats manage to pass, this company could see its tax burden increase by as much as $60,000. Perhaps more.
I know a lot of you voted for President Obama. A lot of you voted for Democrats across the board. Whether you voted out of support for some specific policies, or because you liked his slogans, you need to learn one very valuable lesson from this election. Elections have consequences. You might have thought it would be cool to have a president who looks like you; or a president who is young, has a buff body, and speaks eloquently when there's a teleprompter in the neighborhood. Maybe you liked his promises to tax the rich. Maybe you believed his promise not to raise taxes on people earning less than a certain amount. Maybe you actually bought into his promise to cut taxes on millions of Americans who actually don't pay income taxes in the first place. Whatever the reason .. your vote had consequences; and here they are.
Bottom line? I'm not taking this hit alone. As soon as the Democrats manage to get their tax increases on the books, I'm going to take steps to make sure that my family isn't affected. When you own the business, that is what you're allowed to do. I built this business over a period of 23 years, and I'm not going to see my family suffer because we have a president and a congress who think that wealth is distributed rather than earned. Any additional taxes, of whatever description, that President Obama and the Democrats inflict on this business will come straight out of any funds I have set aside for expansion or pay and benefit increases. Any plans I might have had to hire additional employees for new stores will be put aside. Any plans for raises for the people I now have working for me will be shelved. Year-end bonuses might well be eliminated. That may sound rough, but that's the reality.
You're going to continue to hear a lot of anti-wealth rhetoric out there from the media and from the left. You can chose to believe what you wish .. .but when it comes to Carrington Automotive you will know the truth. The books are open to any of you at any time. I have nothing to hide. I would hope that other small business owners out there would hold meetings like this one, but I know it won't happen that often. One of the lessons to be learned here is that taxes ... all taxes ... and all regulatory costs that are placed on businesses anywhere in this country, will eventually be passed right on down to individuals; individuals such as yourself. This hasn't been about admonishing anyone and it hasn't been about issuing threats. This is part of the education you should have received in the government schools, but didn't. Class is now dismissed.
The Employee Meeting:
I would like to start by thanking you for attending this meeting, though it's not like you had much of a choice. After all, attendance was mandatory. I'm also glad many of you accepted my invitation to your family members to be here as well. I have a few remarks to make to all of you, and then we'll retire to the ballroom for a great lunch and some employee awards.
I felt that this meeting was important enough to close all 12 of our tire and automotive shops today so that you could be here. To reassure you, everybody is being paid for the day --- except me. Since our stores are closed we're making no money. That economic loss is mine to sustain. Carrington Automotive has 157 full time employees and around 30 additional part-timers. All of you are here. I thank you for that.
When you walked into this auditorium you were handed a rather thick 78-page document. Many of you have already taken a peek. You were probably surprised to see that it's my personal tax return for 2008. Those of you who are adept at reading these tax returns will see that last year my taxable income was $534,000.00. Now I'm sure this seems rather high to many of you. So ... let's talk about this tax return.
Carrington Automotive Enterprises is what we call a Sub-S - a Subchapter S corporation. The name comes from a particular part of our tax code. Sub-S status means that the income from all 12 of our stores is reported on my personal tax return. Businesses that report their income on the owner's personal tax return are referred to as "small businesses." So, you see now that this $534,000 is really the total taxable income - the total combined profit from all 12 of our stores. That works out to an average of a bit over $44,000 per store.
Why did I feel it important for you to see my actual 2008 tax return? Well, there's a lot of rhetoric being thrown around today about taxes, small businesses and rich people. To the people in charge in Washington right now I'm a wealthy American making over a half-million dollars a year. Most Americans would agree: I'm just another rich guy; after all ... I had over a half-million in income last year, right? In this room we know that the reality is that I'm a small business owner who runs 12 retail establishments and employs 187 people. Now here's something that shouldn't surprise you, but it will: Just under 100 percent ... Make that 99.7 percent of all employers in this country are small businesses, just like ours.
Every one of these businesses reports their income on a personal income tax return. You need to understand that small businesses like our s are responsible for about 80 percent of all private sector jobs in this country, and about 70 percent of all jobs that have been created over the past year. You also need to know that when you hear some politician talking about rich people who earn over $200,000 or $500,000 a year, they're talking about the people who create the jobs.
The people who are now running the show in Washington have been talking for months about raising taxes on wealthy Americans. I already know that in two years my federal income taxes are going to go up by about 4.5 percent. That happens when Obama and the Democrats allow the Bush tax cuts to expire. When my taxes climb by 4.5 percent the Democrats will be on television saying that this really isn't a tax increase. They'll explain that the Bush tax cuts have expired .. Nothing more Here at Carrington we'll know that almost 5% has been taken right off of our bottom line. And that means it will be coming off your bottom line.
Numbers are boring, I know ... But let's talk a bit more about that $534,000. That's the money that was left last year from company revenues after I paid all of the salaries and expenses of running this business. Now I could have kept every penny of that for myself, but that would have left us with nothing to grow our business, to attract new customers and to hire new employees. You're aware that we've been talking about opening new stores in Virginia Beach and Newport News . To do that I will have to buy or lease property, construct a building and purchase inventory. I also have to hire additional people to work in those stores. These people wouldn't immediately be earning their pay. So, where do you think the money for all of this comes from? Right out of our profits .. Right out of that $534,000. I need to advertise to bring Customers in, especially in these tough times. Where do you think that money comes from? Oh sure, I can count it as an expense when I file my next income tax return . But for right now that comes from either current revenues or last year's profits. Revenues right now aren't all that hot ... so do the math. A good effective advertising campaign might cost us more than $300,000.
Is this all starting to come together for you now?
Right now the Democrats are pushing a nationalized health care plan that, depending on who's doing the talking, will add anywhere from another two percent to an additional 4.6 percent to my taxes. If I add a few more stores, which I would like to do, and if the economy improves, my taxable income ... our business income ... could go over one million dollars! If that happens the Democrats have yet another tax waiting, another five percent plus! I've really lost track of all of the new government programs the Democrats and President Obama are proposing that they claim they will be able to finance with new taxes on what they call "wealthy Americans.."
And while we're talking about health care, let me explain something else to you. I understand that possibly your biggest complaint with our company is that we don't provide you with health insurance. That is because as your employer I believe that it is my responsibility to provide you with a safe workplace and a fair wage and to do all that I can to preserve and grow this company that provides us all with income. I no more have a responsibility to provide you with health insurance than I do with life, auto or home owner's insurance. As you know, I have periodically invited agents for health insurance companies here to provide you with information on private health insurance plans.
The Democrats are proposing to levy yet another tax against Carrington in the amount of 8 percent of my payroll as a penalty for not providing you with health insurance. You should know that if they do this I will be reducing every person's salary or hourly wage by that same 8 percent. This will not be done to put any more money in my pocket. It will be done to make sure that I don't suffer financially from the Democrat's efforts to place our healthcare under the control of the federal government. It is your health, not mine. It is your healthcare, not mine. These are your expenses, not mine. If you think I'm wrong about all this, I would sure love to hear your reasoning
Try to understand what I'm telling you here. Those people that Obama and the Democrats call "wealthy Americans" are, in very large part, America 's small business owners. I'm one of them. You have the evidence, and surely you don't think that the owner of a bunch of tire stores is anything special. That $534,000 figure on my income tax return puts me squarely in Democrat cross hairs when it comes to tax increases. Let's be clear about this ... crystal clear. Any federal tax increase on me is going to cost you money, not me. Any new taxes on Carrington Automotive will be new taxes that you, or the people I don't hire to staff the new stores I won't be building, will be paying. Do you understand what I'm telling you? You've heard about things rolling downhill, right? Fine .. then you need to know that taxes, like that other stuff, roll downhill. Now you and I may understand that you are not among those that the Democrats call "wealthy Americans," but when this "tax the rich" thing comes down you are going to be standing at the bottom of the mud slide, if you get my drift. That's life in the big city, my friends ... where elections have consequences.
You know our economy is very weak right now. I've pledged to get us through this without layoffs or cuts in your wages and benefits. It's too bad the politicians can't get us through this without attacking our profits. To insure our survival I have to take a substantial portion of that $534,000 and set it aside for unexpected expenses and a worsening economy. Trouble is, the government is eyeing that money too ... and they have the guns. If they want it, they can take it.
I don't want to make this too long. There's a great lunch waiting for us all. But you need to understand what's happening here. I've worked hard for 23 years to create this business. There were many years where I couldn't take a penny in income because every dollar was being dedicated to expanding the business. There were tough times when it took every dollar of revenues to replenish our inventory and cover your paychecks. During those times I earned nothing. If you want to see those tax returns, just let me know.
OK ... I know I'm repeating myself here. I don't hire stupid people, and you are probably getting it now. So let me just ramble for a few more minutes. Most Americans don't realize that when the Democrats talk about raising taxes on people making more than $250 thousand a year, they're talking about raising taxes on small businesses. The U.S. Treasury Department says that six out of every ten individuals in this country with incomes of more than $280,000 are actually small business owners. About one-half of the income in this country that would be subject to these increased taxes is from small businesses like ours. Depending on how many of these wonderful new taxes the Democrats manage to pass, this company could see its tax burden increase by as much as $60,000. Perhaps more.
I know a lot of you voted for President Obama. A lot of you voted for Democrats across the board. Whether you voted out of support for some specific policies, or because you liked his slogans, you need to learn one very valuable lesson from this election. Elections have consequences. You might have thought it would be cool to have a president who looks like you; or a president who is young, has a buff body, and speaks eloquently when there's a teleprompter in the neighborhood. Maybe you liked his promises to tax the rich. Maybe you believed his promise not to raise taxes on people earning less than a certain amount. Maybe you actually bought into his promise to cut taxes on millions of Americans who actually don't pay income taxes in the first place. Whatever the reason .. your vote had consequences; and here they are.
Bottom line? I'm not taking this hit alone. As soon as the Democrats manage to get their tax increases on the books, I'm going to take steps to make sure that my family isn't affected. When you own the business, that is what you're allowed to do. I built this business over a period of 23 years, and I'm not going to see my family suffer because we have a president and a congress who think that wealth is distributed rather than earned. Any additional taxes, of whatever description, that President Obama and the Democrats inflict on this business will come straight out of any funds I have set aside for expansion or pay and benefit increases. Any plans I might have had to hire additional employees for new stores will be put aside. Any plans for raises for the people I now have working for me will be shelved. Year-end bonuses might well be eliminated. That may sound rough, but that's the reality.
You're going to continue to hear a lot of anti-wealth rhetoric out there from the media and from the left. You can chose to believe what you wish .. .but when it comes to Carrington Automotive you will know the truth. The books are open to any of you at any time. I have nothing to hide. I would hope that other small business owners out there would hold meetings like this one, but I know it won't happen that often. One of the lessons to be learned here is that taxes ... all taxes ... and all regulatory costs that are placed on businesses anywhere in this country, will eventually be passed right on down to individuals; individuals such as yourself. This hasn't been about admonishing anyone and it hasn't been about issuing threats. This is part of the education you should have received in the government schools, but didn't. Class is now dismissed.
Monday, September 28, 2009
The Rich ARE Paying Their Share, and So Am I!
I heard some moon bat on the radio the other morning on my way into work, and he was complaining about how "the rich" aren't paying their fair share of the tax burden and how he was happy that Lord Obama was going to redistribute the wealth so that he could finally catch a break. (I really should just listen to our new Catholic radio station in the morning so I don't get my blood pressure up before I even arrive at work.)
Anyway, I am of the opinion that taxes are too danged high for everybody, but particularly so for the rich. Now before you left-wingers go off on a rant, let me say that I am NOT rich; however, I aspire to be so someday, God willing. I am solidly middle class and I have to watch my money just like most everyone else does. That being said, I don't hate the rich nor do I despise the poor.
I do, however, have serious issues with a federal government that is out of control with its spending on unconstitutional expenditures and then feels the need to raise my taxes in order to attain some "common good Marxist utopia" that is nothing more than an illusion and an attempt only to solidify power in the executive and legislative branches of our nation.
A balanced budget amendment to the Constitution should be enacted and ratified, if that were ever possible, and then a requirement made for all congressional appropriation committees to explain in detail how each bill they propose to collect and spend WE THE PEOPLE's money on is authorized in our U.S. Constitution. This should be a part of the summary of the bill itself, and if the authors of the legislation cannot cite SPECIFICALLY where the U.S. Constitution gives them authorization to enact such legislation, it should not be able to pass out of committee.
This would eliminate congress from passing legislation to protect us from ourselves such as providing funding for green cars to dictating how much water our toilets use per flush. Congress has no authority to do these things Constitutionally and frankly should have more important matters in which they should be attending. Think this has a Conservative's chance in New York City of passing? I don't either...
I decided to go to an old standby resource of mine to see what was going on with taxes on the federal levels these days, although I already had an excellent idea of what I would find. Sure enough, at the non-partisan, non-profit http://www.taxfoundation.org/ I found the data that enumerated in black and white what I already knew.
The rich in this country ARE paying far more than their share and then some. As of the latest IRS data available (2007) the top 1% of this nations wage earners pay 40.42% of all federal income taxes. The top 25% of all wage earners pay 86.59% of the federal tax burden. The top 50% of all wage earners in this country pay 97.11% of all federal taxes. This means the bottom 50% of all wage earners in the United States pays only 2.89% of the federal tax burden for our nation. This is not slanted data to make a point. These are actually numbers from the IRS, and yes I think they do make a point... quite strongly!
So the next time you hear some ignorant person buy into the Democrats' class warfare garbage and starts to say how the rich are not paying their fair share, set him straight and help him to be not so ignorant anymore. Maybe we all will be a little richer for it in the long run and I won't be all upset by some fool on the radio on my commute into work each day.
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