Sunday, May 10, 2009

Obamas New Tax Plan



While my last blog was somewhat supportive of Obama's moderate approach to the national "prayer day", I must quickly go on record to say this does not mean I am a blind supporter of this new President and his current policies. If anything, he is proving to be more progressive and "Leftist" towards BIG Government ideals than I had ever thought he would be. While I admire the man's accomplishments and his charisma, I still find myself on the opposite side of about 70% of his views...so don't count me in as a new "Democrat" just because there are some issues I support him on.

Of course the latest case in point is Obama's new tax reform proposals. His unabashed appeal to go after American corporations and individuals living and/or doing business "offshore" is obviously not in my best interests...nor do I believe it to be in the best interests of our country or accomplishing what he is trying to achieve. Obviously he cannot keep forking out all the money in the tax coffers and nationalizing banks and automotive companies without eventually have a source for those funds. He knows his election was carried by the working class, the poor and the socialistic left in our country, so he can't go to them for more money even though they only pay about 6% of the national tax bill. So, it seems obvious to me he is going to go after funds of those who probably didn't support him to begin with...the wealthy and international corporations...and wealthy estates. He is following the traditional Democrat model of taking from the rich...and after shaking the piggy bank around to support your big government complexes and budgets...getting some small percentages of the take to the real economy.

Somehow in the 20th Century our government succeeded in making its tax codes a patriotic theme. I think that a majority of Americans think it a patriotic duty to pay whatever tax their government demands...and along with that citizens become more and more demanding for government controls and entitlements BECAUSE they pay these taxes. Somehow we have grown to believe that 1)it is the government's legal right to leverage taxes at any time or level, and 2)it's OK for the government to have unbalanced budgets and live off trillions of dollars of international debt because they DO "take care of us". As many wise writers and thinkers of the past 200 years have said, the end of democracy and freedom is when citizens expect their government to cover their every risk and need by entitlement. Our country is living on an upside down "Pyramid" economically and theoretically. Each year a higher percentage of Americans are living off of government programs and entitlements while the producer's numbers continue to shrink and disappear. It is no wonder that Obama wants to go after offshore money, because that's where most of the money is...and based on these actions will probably accelerate in going there. So he is both trying to stop the money from going there, and going after what percentages he can of what is already there.

I think he has a couple core deficiencies in thinking here. Number one is somehow he and most of the G20 nations think that the rest of the world is just going to rollover and accept the "bones" that these countries are offering for access to their financial markets and disallowing competition in taxation between countries. One of the core remaining equalizers in world law are the various laws pertaining to sovereignty of nations...and one of the main reasons so many foreign countries do NOT respect my country, even after millions or billions of dollars of aid to many of them, is the thinking that the USA can control them...from their politics to their economies. I think our days of controlling world conflicts through wars, CIA espionage, intrigue and just by writing big checks to our neighbors are over. The combination of our global empiricism this past 100 years on top of our current economic greed and meltdown has put the USA in a position of having a "loud voice" but less of a big stick to back up our words. The past 8 years of dual conflicts against the "enemies of freedom", and probably more significantly our domestic lack of foundations in work ethic, education, and a dying middle class have weakened our nation like no other time I can think of in this century. This is no joking matter my friends, and what our leaders do now will float or sink the rest of the boat. The end of historic great empires have always fallen at the point where they thought they were invincible. We just don't have that kind of power anymore. Sure, we still have military power...but the coffers and production capacity are declining together to where our superiority is unsustainable.

OK, now that we have reviewed a couple macros of why we are in this mess, lets look at the folly of using tax codes to "right the ship". A government cannot tax itself into financial health. It just doesn't work. And you can't keep spending more while taking less in. No business in the world survives with that approach to accounting, yet somehow our government thinks it can sustain itself by increasing the budget and increasing competitive production in our economy...while sucking the lifeblood out of the hens that are still laying eggs. This program is going the wrong direction in a hurry. Sure, markets for short spurts are going to rejoice when the government floods them with billions of relatively "free" money, but this will be short term when all this freshly printed "money" becomes more and more worthless against more productive and cautious global countries and currencies. Sure, the government is still big enough and has enough of a following to hold on to the "tigers tale" of swinging global economies...but as you run out of money and followers due to failure, there will come a point where you have to let go and dive for protection from the Tiger.

Putting aside the allegories, let's cut to the heart of the matter. Nationalization and killing of free markets or tax competitions is not going solve the USA dilemma. Now more than ever, the USA needs successful global companies to do business within our borders and successfully sell our products and ingenuity outside the USA. We need more wealth to come to the USA, bringing jobs and productivity to meet the growing global competition and demands of better products and services. If our government continues to fleece its domestic companies and entrepreneurs doing business globally and if they continue to out tax a majority of other countries on the profits that are made...no matter what laws or tax codes are passed, the USA will hear a big "WHOOSHING" sound of capital and companies leaving the USA so that they don't go down with the ship. I see very few incentivizing ideas coming out of our current government. Instead, they want to castigate and villainize the few remaining profitable productive companies and patriots. They want independents and producers to feel guilty about their gains, and push forward as "patriotism" a more altruistic attitude towards the country and government. From what I am seeing where I sit, they are just putting up more walls and defenses on the part of the companies and people outside the USA who they need to produce right now. Talk about doing the opposite of what you SHOULD be doing...

Obama obviously has a flood of support and political clout right now and will probably succeed in getting most of his taxes and initiatives passed by Congress. What will be interesting to see is how the international business community and foreign countries respond to an increasingly desperate and controlling USA government who like France and even Venezuela are speeding towards total socialism and elimination of incentive for private investment. The wealthy, industrious people of the world will continue to be pressure to escape these tyrannies in small paradises throughout the world...while the huge irrational government systems will continue to implode the once free and productive society some of us remember growing up in.

I am going to read more in coming days about competitive tax structures, and try to come up with some constructive suggestions for a sane and just tax system that would be preferable for the USA. I'm sure Obama and company are just dying to hear my ideas:)...

Here are links to some of the alarming news articles that caused this diatribe.

Business Groups Gear Up To Fight Tax Plan

Corporations Assail Latest Obama Tax Plan

Obama and the Tax Dodger

6 comments:

Timothy said...

I don't think Obama's tax plan is really that extreme. Most of the "increase" (from my understanding) is coming from a repeal of some of Bush's tax cuts. As we both know, it was these tax cuts and increased military spending that caused the ballooning deficit. I think it's only fair for Obama to want the amount of revenue that Government used to receive, because the only other alternative is cutting services (or military spending, but that'll never happen). Also remember that some of America's marginal tax rates are quite low compared to other western-style countries, so it isn't like you're being taxed into oblivion (i.e. the hysteria of the tea parties).

I just don't see what is so socialist about Obama, and this is coming from a socialist. There is a consensus in both the democrat/republican leadership to put public money into the banks that were about to collapse (Government intervention can save free markets from collapsing into themselves, can ensure competition remains in an industry where the tendency might be towards natural monopolies, and also force companies to internalise certain negative externalities that they are causing to society (i.e. dumping waste into an ocean). His modest tax increases don't have anything to do with the principles of socialism, and furthermore he is fully committed to the war in Afghanistan and only slowly withdrawing from Iraq. He also maintained those incursions into pakistani airspace. He appears to me like a centrist, as much as i'd like to pretend that he's a socialist/idealist.

Bibiana said...

Bueno, el senor esta tratando de hacer, lo que el piensa es conveniente, para tratar de solucionar los problemas economicos que dejo la anterior administracion.
Socialista, democrata, comunista, que mas da, cada uno tira para su lado.
Al final veremos, pero como siempre dije, Obama, no me daba mucha tranquilidad para el futuro de los Estados Unidos.
BB

edward said...

Tim...thanks for your participation in this conversation. If you are talking comparatively with first world countries...yes, US tax rates are not the highest. But...I am strongly suggesting that is the very reason the USA economy grew so much ans so fast for many decades and DID support so much of the world for so long...we had a much fairer and simpler tax structure which allowed more individual and corporate freedom to profit and reinvest in new technologies etc. Unfortunately we are now seeing and being pressured into accepting the worlds failed model of heavy government and high taxation. This system is killing the goose that lays the eggs. Meanwhile, other emerging economies are growing wealthy and rising to prominence because they DONT have that heavy burden of entitlements and socialistic systems that are failing.

I'm afraid what you are asking for my friend is to feed the masses with "5 loaves and 2 fish". Jesus is the only one in history I know who succeeded in that.

Timothy said...

Hey Ed,

Yeah I understand your argument. But I read somewhere (correct me if i'm wrong) that even if Obama was able to pass all of his tax increases that he has proposed, the marginal tax rate would increase only to where it was when Reagan was president. And if it didn't choke business and consumers then, why would it now?

These emerging economies aren't growing wealthy because they don' have socialism, it's becuase they (China and India) have such a massive population and they are only now starting to organise themselves and become a productive economy. With a population like China's, assuming at least a half-competent Government (Which the chinese didn't get until they reformed the communist party) it is only inevitable that they'll become a superpower.

edward said...

Wow...this blog is getting me quite a few emails and comments.

Tim, the superpowers you mention such as China and India cannot be compared to the USA system nor politically. China is still for all intents and purposes a Communist run regime which has woken up to the reality that a CERTAIN AMOUNT of free enterprise is their only hope to feed their zillions and compete trade and militarily with the rest of the world. This regime survives and thrives off the back of its massive poor and almost slave labor. How can that system be just in the eyes of anyone? There is no freedom or democracy there...unless you create and produce and share...and tow the line of the ruling party.

Also, Obama's tax plan isn't the only problem. If it was, it might be considered less threatening. But in addition he is nationalizing banks and big auto companies which way oversteps his constitutional rights per position, giving control of Chrysler to the unions over the rights of the stockholders, emptying the citizens tax coffers just to sustain the unsustainable. He seems to think the government can do miracles with upside down budgets and creating money out of thin air that just goes against cause and affect or even laws of nature if you will. He is NOT God...but trying to be. This will affect our GLOBAL economy for decades to come...and not in a GOOD way.

There in inherent evil in much of what is being done which I may go into on another blog one day soon. I really am not out to burst your socialist bubble my friend, but this pony doesn't ride from how I have experienced life and read history. Maybe you have to be from America to understand what a LEFT turn this is for our system overall.

Meanwhile, follows is a comment just received from another friend that couldn't seem to post it here. I will do so for him and it somewhat responds to what you are saying as well...

edward said...

This just in from my friend Bill.A who hasn't been able to get on this comment trail...

"As I have tried to tell many people, including yourself, this man is the most dangerous man of power to ever be engaged in American politics, legislation and Presidential orders / reversals.

I am besides myself that the mainstream media holds this pup it socialist up and does not question his ever damaging policies. He is on an onslaught to reverse just about every policy to protect corporations and anyone who has accumulated money. He just gave Chrysler control over to the United Auto Workers (55%) over the holders of actual investment of the company. That is reversing the rule of law in bankrupt proceedings.

He is vicariously spending money that this nation does not have even a fifth of. His disdain for our homeland security from Islamic terrorists is now slowly becoming visible to many. He just canceled the Mexican fence security along with canceling programs to keep tabs on illegal aliens. He wants to bring these terrorists into the U.S. for a fiasco of legal proceedings. Hello, the countries he tried to pawn them off on do not want these dangerous criminals.

From new information, he is considering asking Israel to dismantle it's nuclear arsenal and giving up the West Bank.....That would be the end of that nation. Yep, his Muslim heritage is bleeding through.

Now he about to break the bank with Health reform....ala God help the elderly when medical help will be rationed out or they are left to die as in some other socialized medicine countries.

And there is Cap and Trade. Probably the worst scam in history, yea, I know you don't agree but wait for the bombastic cost to citizens and corporations. Yet he has stymied oil and gas exploration with newly enacted orders.

You were right.....the sucking sound of corporations leaving this country will be loud and vigorous as he tries to control or tax their actions.

Hello America......you got the "CHANGE" you voted for. God help this country.

Since I cannot access your blog due to technical reasons, you are welcome to place my comments in it......."