The Pronk Pops Show 755, Part 1 of 2, Story 1: President Trump’s Tax Speech — Very Light On Specifics — Let Congress Fill in The Details — Formula For Failure — Tax Rate Cuts Are Not Fundamental Tax Reform — A Broad Based Consumption Tax Such as The FairTax or Fair Tax Less Not Even Mentioned — What Good Is Dreaming It If You don’t actually do it! — Videos — Story 2: Revised Second Estimate of Real GDP Growth in Second Quarter of 2017 Is 3 Percent — Videos

Posted on August 31, 2017. Filed under: Blogroll, Breaking News, Budgetary Policy, Communications, Congress, Constitutional Law, Corruption, Culture, Defense Spending, Donald J. Trump, Donald Trump, Economics, Education, Elections, Empires, Employment, Energy, Federal Government, Fiscal Policy, Free Trade, Freedom of Speech, Government, Government Dependency, Government Spending, History, House of Representatives, Human, Human Behavior, Independence, Labor Economics, Law, Life, Media, Monetary Policy, Natural Gas, Natural Gas, Oil, Oil, People, Philosophy, Photos, Politics, Polls, President Trump, Progressives, Radio, Raymond Thomas Pronk, Regulation, Resources, Rule of Law, Security, Senate, Tax Policy, Taxation, Taxes, Technology, Trade Policy, Unemployment, United States of America, Videos, War, Wealth, Weather, Welfare Spending, Wisdom | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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The Pronk Pops Show Podcasts

Pronk Pops Show 955, August 30, 2017

Pronk Pops Show 954, August 29, 2017

Pronk Pops Show 953, August 28, 2017

Pronk Pops Show 952, August 25, 2017

Pronk Pops Show 951, August 24, 2017

Pronk Pops Show 950, August 23, 2017

Pronk Pops Show 949, August 22, 2017

Pronk Pops Show 948, August 21, 2017

Pronk Pops Show 947, August 16, 2017

Pronk Pops Show 946, August 15, 2017

Pronk Pops Show 945, August 14, 2017

Pronk Pops Show 944, August 10, 2017

Pronk Pops Show 943, August 9, 2017

Pronk Pops Show 942, August 8, 2017

Pronk Pops Show 941, August 7, 2017

Pronk Pops Show 940, August 3, 2017

Pronk Pops Show 939,  August 2, 2017

Pronk Pops Show 938, August 1, 2017

Pronk Pops Show 937, July 31, 2017

Pronk Pops Show 936, July 27, 2017

Pronk Pops Show 935, July 26, 2017

Pronk Pops Show 934, July 25, 2017

Pronk Pops Show 934, July 25, 2017

Pronk Pops Show 933, July 24, 2017

Pronk Pops Show 932, July 20, 2017

Pronk Pops Show 931, July 19, 2017

Pronk Pops Show 930, July 18, 2017

Pronk Pops Show 929, July 17, 2017

Pronk Pops Show 928, July 13, 2017

Pronk Pops Show 927, July 12, 2017

Pronk Pops Show 926, July 11, 2017

Pronk Pops Show 925, July 10, 2017

Pronk Pops Show 924, July 6, 2017

Pronk Pops Show 923, July 5, 2017

Pronk Pops Show 922, July 3, 2017

Pronk Pops Show 921, June 29, 2017

Pronk Pops Show 920, June 28, 2017

Pronk Pops Show 919, June 27, 2017

Pronk Pops Show 918, June 26, 2017

Pronk Pops Show 917, June 22, 2017

Pronk Pops Show 916, June 21, 2017

Pronk Pops Show 915, June 20, 2017

Pronk Pops Show 914, June 19, 2017

Pronk Pops Show 913, June 16, 2017

Pronk Pops Show 912, June 15, 2017

Pronk Pops Show 911, June 14, 2017

Pronk Pops Show 910, June 13, 2017

Pronk Pops Show 909, June 12, 2017

Pronk Pops Show 908, June 9, 2017

Pronk Pops Show 907, June 8, 2017

Pronk Pops Show 906, June 7, 2017

Pronk Pops Show 905, June 6, 2017

Pronk Pops Show 904, June 5, 2017

Pronk Pops Show 903, June 1, 2017

Pronk Pops Show 902, May 31, 2017

Pronk Pops Show 901, May 30, 2017

Pronk Pops Show 900, May 25, 2017

Pronk Pops Show 899, May 24, 2017

Pronk Pops Show 898, May 23, 2017

Pronk Pops Show 897, May 22, 2017

Pronk Pops Show 896, May 18, 2017

Pronk Pops Show 895, May 17, 2017

Pronk Pops Show 894, May 16, 2017

Pronk Pops Show 893, May 15, 2017

Pronk Pops Show 892, May 12, 2017

Pronk Pops Show 891, May 11, 2017

Pronk Pops Show 890, May 10, 2017

Pronk Pops Show 889, May 9, 2017

Pronk Pops Show 888, May 8, 2017

Pronk Pops Show 887, May 5, 2017

Pronk Pops Show 886, May 4, 2017

Pronk Pops Show 885, May 3, 2017

Pronk Pops Show 884, May 1, 2017

Image result for branco cartoons on trump tax reformImage result for fairtax

Image result for branco cartoons on trump tax reform

Image result for branco cartoons on trump tax reform

Image result for branco cartoons on trump tax reform

Image result for branco cartoons on trump tax reform

 

Image result for average quarter to quarter real gdp growth

Image result for average quarter to quarter real gdp growth

Image result for annual real gdp growth 1950-2017

Image result for annual real gdp growth 1950-2017 u.S. economy

Image result for annual real gdp growth 1950-2017 u.S. economy

Image result for annual real gdp growth 1950-2017 u.S. economy

Story 1: President Trump’s Tax Speech — Very Light On Specifics — Let Congress Fill in The Details — Formula For Failure — Tax Rate Cuts Are Not Fundamental Tax Reform — A Broad Based Consumption Tax Such as The FairTax or Fair Tax Less Not Even Mentioned — What Good Is Dreaming It If You don’t actually do it! — Videos —

FULL. President Trump speech on tax reform in Springfield, Missouri. August 30, 2017.

Special Report with Bret Baier 8/30/17 – Special Report Fox News August 30, 2017 TRUMP TAX REFORM

Destroy Trump Media – President Trump Pitches Tax Reform Plan – Kellyanne Conway – Hannity

President Trump’s tax plan

Will US Markets Finally Get Tax Reform – 29 Aug 17 | Gazunda

Keiser Report: The bizarre decade (E1117)

Dan Mitchell on GOP Tax Reform Wrangling, Part I

Dan Mitchell on GOP Tax Reform Wrangling, Part II

Dan Mitchell Discussing the Fate of Tax Cuts and Tax Reform

How Trump’s tax plan impacts average Americans

Trump’s Tax Cut Plan Alienates His Base

Cohn Says White House Is Concerned About U.S. Wages

Gary Cohn on the Trump administration taking on tax loopholes

As White House Cracks Show, Are Rex Tillerson and Gary Cohn Headed Out? | Morning Joe | MSNBC

Gary Cohn’s take on tax reform

Limbaugh Airs Montage Of The ‘3 LIES’ Media Said After Trump’s Tax Speech

Trump’s tax cuts will be done before Thanksgiving: Grover Norquist

Donald Trump Is To Give Speech On Tax Reform But He Has No Tax Reform Plan | The 11th Hour | MSNBC

Freedom from the IRS! – FairTax Explained in Detail

Mark Levin: Donald Trump gave a good speech on tax reform (August 30 2017)

Why U.S. Tax Reform Isn’t Likely in 2017

Milton Friedman – Why Tax Reform Is Impossible

Honda – “Impossible Dream” Power of Dreams Advert Full

 

Trump’s Tax Reform Plan Targets Middle-Class Tax Complexity

Policy director at Competitive Enterprise Institute

President Trump visited Missouri to talk about tax reform, stressing simplicity and middle-class tax relief and “plans to bring back Main Street by reducing the crushing tax burden on our companies and on our workers.”

Noting the elimination of “dozens of loopholes,” special interest carve-outs, and the reduction of brackets and rates that Congress achieved three decades ago, Trump said, “the foundation of our job creation agenda is to fundamentally reform our tax code for the first time in more than 30 years. I want to work with Congress, Republicans and Democrats alike, on a plan that is pro-growth, pro-jobs, pro-worker — and pro-American.”

We’re about to re-enter Obamacare repeal-style complexity and venom, but it’s important, I think, for the public to see the tax reform debate as something other than a campaign to benefit business. The U.S. does have comparatively high corporate tax rates. And the Econ 101 lesson on tax incidence shows that consumers pay much of the corporate tax, not the company.

It’s probable some Democrats would like to reform the tax code, especially come 2016, but the zero-tolerance of Trump, such as that seen at the Commonwealth Club when Sen. Diane Feinstein was barely favorable toward him, prevails.

But things can turn on a dime, as the response, likely bipartisan, to Hurricane Harvey may further show. And separately the controversial debt limit needs to be addressed no matter what (hopefully with parallel cuts in regulatory costs), and that debate will influence the trajectory of tax reform.

My broader point here though is is that taxation is just the beginning of the story when it comes to the complexity of regulatory compliance. The economy marinates in compliance burdens to service noble ends, but sometimes serve regulators instead. Trump characterized the Internal Revenue Service’s unfairness to the typical taxpayer like this:

The tax code is now a massive source of complexity and frustration for tens of millions of Americans.

In 1935, the basic 1040 form that most people file had two simple pages of instructions. Today, that basic form has one hundred pages of instructions, and it’s pretty complex stuff. The tax code is so complicated that more than 90 percent of Americans need professional help to do their own taxes.

This enormous complexity is very unfair. It disadvantages ordinary Americans who don’t have an army of accountants while benefiting deep-pocketed special interests. And most importantly, this is wrong.

There’s solid backup for what Trump’s talking about in terms of pubic burdens, even if some are disinclined  to reckon with it, or if their allegiances require professing public disdain for corporations (one of the great democratizing forces in human history, but that’s another story).

The Government Accountability Office (GAO) agrees, I think, that Trump’s example of the IRS is a good one. In the course of a project I have of compiling examples of government proclamationsthat are not laws from Congress, nor even formal regulations from agencies, but instead “memoranda” and “guidance,” the IRS emerged as a leading “offender.”

A September 2016 GAO report called  “Regulatory Guidance Processes: Treasury and OMB Need to Reevaluate Long-standing Exemptions of Tax Regulations and Guidance,” looked at the Internal Revenue Service’s hierarchy of law, regulations, guidance, and explanatory material with respect to communicating interpretation of tax laws to the public.

It’s an eye-opener.

A pyramid diagram presented by GAO was topped by the Internal Revenue Code, as passed by Congress. Beneath that, in widening stages, one finds “Treasury Regulations,” “Internal Revenue Bulletins,” (IRB), “Written Determinations,” and “Other IRS Publications and Information.” The IRS regards the bulletins as generally authoritative, while determinations tend to apply to individual taxpayers.

That’s a lot of public guidance, difficult to absorb.

As the GAO explains:

Treasury and IRS are among the largest generators of federal agency regulations and they issue thousands of other forms of taxpayer guidance. IRS publishes tax regulations and other guidance in the weekly IRB. Each annual volume of the IRB contains about 2,000 pages of regulations and other guidance documents.

From 2013 to 2015, each annual Internal Revenue Bulletin edition contained some 300 guidance documents; back in 2002-2008, about 500.

When one sees such document proliferation from the IRS, an impartial observer might surmise the time for tax reform and simplification has arrived.

Likewise, when regulatory guidance multiplies that applies to various sectors—like finance, Internet, health care—one might similarly conclude the time has come for Congress to enact regulatory liberalization. Trump mentioned cutting the overall federal regulatory burden in the Missouri speech, too.

We knew it all along, but paying taxes also requires paying a lot of attention to regulations. In more ways than one, tax reform and regulatory reform go hand in hand.

https://www.forbes.com/sites/waynecrews/2017/08/30/trumps-tax-reform-plan-targets-middle-class-tax-complexity/#31fda3736ef8

Ann Coulter goes off on Trump over taxes, saying he delivered his ‘worst, most tone-deaf speech’

Conservative author Ann Coulter rebuked President Donald Trump over his speech on Wednesday in which he rolled out the broad outline of his tax reform plan.

In a slew of tweets on Wednesday, the firebrand conservative pundit said the president’s focus on simplifying the tax code and lowering business taxes to 15% was missing an opportunity to prioritize some of his more incendiary, but unique, policy objectives, including building a southern border wall and deporting immigrants living in the US without permission.

This isn’t a “once in a lifetime” shot at tax cuts! EVERY GOP cuts taxes! This is “once in a lifetime” shot to save US: Wall & deportations!

Bush cut taxes! Did it create millions of jobs? Nope. The rich pocketed their tax cut & sent jobs abroad, hired guest workers. F– them.

It’s so obvious Trump’s only getting polite applause for tax cuts. Want to get the crowd hollering, @realDonaldTrump? Talk about THE WALL!

It’s like Night of the Living Dead watching our beloved @realDonaldTrump go to DC & start babbling the same old GOP nonsense on tax cuts.

Tax cuts are a 2d term issue. 1st term: BUILD THE WALL, End DACA, Deport Illegals, No Refugees, No Muslims, Immigrn Moratorium. SAVE USA!

Cutting taxes doesn’t do a damn thing for wages if you allow businesses to keep bringing in cheap foreign labor!

To create jobs for AMERICANS, no more cheap foreign workers, CUT REGULATIONS & cut corporate taxes. (NOT income taxes.)

Coulter particularly singled out the similarities between Trump’s plan and a hypothetical plan that other Republicans like former Florida Gov. Jeb Bush would’ve put forward.

This speech could have been given by Jeb! — except even he wouldn’t have talked about the govt helping yuppie women with child care costs.

Oh stop pretending this is about letting “families” keep more of their money. HALF OF AMERICANS DON’T PAY TAXES! This is for Wall Street.

Indeed, beyond the prominent former Wall Street figures playing key roles in overhauling the tax code, Trump’s administration has absorbed some financial figures from Bush’s policy world.

Notably, Bush’s former senior policy director Justin Muzinich joined the Treasury Department in March to work closely with Treasury Secretary Steve Mnuchin on “major policy initiatives” and on tax reform.

Over the past several months, Coulter has increasingly criticized Trump and mocked him on social media and in interviews, saying that he has not fulfilled his anti-immigration campaign promises.

“The millions of people who haven’t voted for 30 years and came out to vote for Trump, thinking, ‘Finally, here’s somebody who cares about us’ — Nope!” Coulter told The Daily Beast after former chief strategist Steve Bannon left the White House earlier this month. “Republicans, Democrats — doesn’t matter. Jeb exclamation point, Donald Trump, Hillary Clinton — doesn’t matter. Goldman Sachs is running the country.”

http://www.businessinsider.com/ann-coulter-trump-taxes-speech-2017-8

 

Who Pays Income Taxes?

The charts below illustrate the share of taxes paid by income percentiles for Tax Year 2014, the most recent set of data available from the IRS. NTUF has broken down the federal share of income taxes by gross income to show how much each bracket contributes yearly.

For more information:

 

https://e.infogr.am/38b876d9-6c59-4a84-8b02-1ed223f6a454?src=embed

https://www.ntu.org/foundation/page/who-pays-income-taxes

Trump Hits The Road To Promote Tax Cuts (Details To Come)

President Trump participates in a tax overhaul kickoff event at the Loren Cook Company in Springfield, Mo., on Wednesday.

Jim Watson/AFP/Getty Images

Updated at 5:25 p.m. ET

President Trump called for a major rewrite of the U.S. tax code during a visit to Springfield, Mo., on Wednesday afternoon. The speech came a day after Trump’s trip to Harvey-hit Texas and is the first in what is expected to be a series of traveling sales pitches on taxes from the president.

But the White House is not ready to spell out what the rewrite will look like or what kind of price tag it will carry. Trump spoke in broad terms about creating a tax system that favors middle-class Americans and keeps business in the U.S.

“First and foremost our tax system should benefit loyal, hardworking Americans and their families. That is why tax reform must dramatically simplify the tax code, eliminate special-interest loopholes,” he said.

Trump called on Congress to join him and “unite in the name of common sense and the name of common good” to create jobs and improve America’s “competitive advantage.”

“I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress,” he said.

Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn have been meeting regularly with Republican congressional leaders to discuss tax policy. Thus far, though, they’ve committed only to a vague statement of principles that calls for lower tax rates on both individuals and businesses. Cohn said it will be up to lawmakers to fill in the details.

“We’ve got a great, I would say, skeleton,” Cohn told reporters earlier this month. “We need the Ways and Means Committee to put some muscle and skin on the skeleton and drive tax reform forward. And it’s our objective to do that between now and the end of the year.”

With Republicans in control of the House, Senate and the presidency, supporters have described this as a once-in-a-generation opportunity to overhaul the tax code in accordance with GOP principles. But after Trump’s insistence on swift, ultimately unsuccessful bids to repeal the Affordable Care Act, some observers are skeptical that Trump has the patience or discipline to see a tax overhaul through to completion.

Mnuchin insists tax cuts are now Trump’s No. 1 priority.

“He’s going to go on the road,” Mnuchin said. “The president is 100 percent supportive of us passing legislation this year.”

The White House has been promising such a sales campaign for weeks, only to see much of August consumed with controversy over the president’s Charlottesville, Va., remarks and his intraparty carping with fellow Republicans, including Senate Majority Leader Mitch McConnell, R-Ky.

Mnuchin conceded that rewriting the tax code is a taller order than he initially imagined.

“Earlier in the year I said I thought we’d get it done by August, and I was wrong,” the Treasury secretary said. “I am now going to say that I’m very hopeful, and I think we can get this done by the end of the year, but we will continue to revisit it.”

“The president’s leadership on this is critical,” said a senior White House official who briefed reporters on the Springfield trip. “Everybody involved understands that and believes that. And he is ready to really take this conversation where it belongs and that’s the heartland of America.”

The official spoke on condition of anonymity.

“The president now feels that it’s the right time to begin engaging directly with the American people on tax reform,” he said.

The administration argues the current tax code is too complicated and rates are too high to encourage investment in the U.S.

“We are not competitive with the rest of the world on the business tax and on the personal income tax,” Cohn said.

Neither the White House nor congressional leaders have spelled out how much lower tax rates should go, nor have they specified how the government would make up the lost revenue. They’re counting on faster economic growth to help close the gap. They’ve also promised to eliminate unspecified tax “loopholes,” which Trump called out multiple times in his speech on Wednesday.

Back in April, the White House proposed lowering the corporate tax rate from 35 percent to 15 percent while reducing the top individual tax rate from 39.6 percent to 35 percent. That’s broadly similar to a proposal Trump put forward during the presidential campaign. The nonpartisan Tax Policy Center said at the time 78 percent of the tax savings in Trump’s campaign plan would go to people on the top 20 percent of the income ladder. (Nearly a quarter would go to the top one-tenth of 1 percent.)

The campaign plan was also forecast to reduce government revenue by more than $6 trillion over a decade — a gap that would be difficult to erase through growth and loophole closings.

The White House has said it wants to preserve deductions for charitable contributions, retirement savings and mortgage interest.

One popular tax break that could be on the chopping block is the deduction for state and local taxes. That’s one of the biggest loopholes in the tax code. Eliminating it would boost federal revenues by an estimated $1.3 trillion over a decade. The tax break is particularly popular with residents in the Northeast and West Coast, typically blue states with relatively high tax rates.

House Speaker Paul Ryan, R-Wis., favored a so-called border adjustment tax on imports as another way to raise revenue and offset the cost of income tax cuts. But lawmakers ultimately scrapped that idea after consultation with the administration.

Senate Republicans plan to use a procedural tactic to prevent Democrats from blocking the tax overhaul with a filibuster. Under Senate rules, though, any measure passed with that tactic must not add to the federal deficit for more than 10 years.

This presents a choice for Republicans: Go with a more modest tax cut that can be offset by growth and closing loopholes, or opt for a more ambitious cut but allow it to sunset after a decade.

For all the challenges, GOP lawmakers are under political pressure to pass something they can brand as “tax reform.” Otherwise, they’ll have to face voters in 2018 with little to show for two years of single-party rule.

http://www.npr.org/2017/08/30/547114024/trump-hits-the-road-to-promote-tax-cuts-details-to-come

 

Trump’s Fill-in-the-Blanks Tax Reform Plan

The president is leaving the details to Republicans in Congress. Only they haven’t figured them out yet, either.

Alex Brandon / AP

notable

On Wednesday, President Trump traveled to Missouri to expand on the need for tax reform, to lay the groundwork for a major legislative push in Congress this fall. But more than anything else, what Trump’s speech revealed was that despite months of behind-the-scenes negotiations, Republicans aren’t much closer to enacting the most significant overhaul of the tax code in 30 years than they were back in April.

Trump was pitching a plan that doesn’t exist and demanding votes for a bill that hasn’t been written. If anything, the address the president delivered was even less detailed than the skimpy blueprint the White House issued in the spring. The most specific item Trump mentioned—a 15 percent corporate tax rate, down from the current 35 percent—is something that Republican tax-writers on Capitol Hill believe is impossible to achieve under the parameters with which they must work. He talked in broad terms about simplifying the code so that it’s easier for people to file their taxes, removing unspecified special interest loopholes, and encouraging businesses to bring back profits they’ve parked overseas—all policies that have been central to GOP proposals for years and offer little indication of the particular direction the party plans to go.

This was a bully pulpit speech. Having laid down his principles, Trump is once again leaving the dirty work to Congress, a strategy that even he seemed to acknowledge was as risky as it is politically necessary. “I don’t want to be disappointed by Congress, do you understand me? Do you understand?” he warned at one point, a none-too-subtle reference to his recent hectoring over the GOP’s failure to deliver on health care.

To the delight of Republican leaders, the one lawmaker Trump singled out for pressure was not one of their own; for the first time in weeks, the president picked on a Democrat, Missouri Senator Claire McCaskill, who is up for reelection in a state he won easily in November. If McCaskill doesn’t vote for tax reform—whatever it turns out to be—“you have to vote her out of office,” Trump demanded of the crowd.

Top Republicans were evidently pleased with the speech, or at least with the fact that the president stuck to the message they were told beforehand he would deliver. Within minutes after it ended, statements (undoubtedly prewritten) flowed in with glowing reviews. “President Trump is taking the case for tax reform straight to Main Street,” House Speaker Paul Ryan said. “We are united in our determination to get this done.” Representative Kevin Brady, the chairman of the Ways and Means Committee, said his remarks were “excellent.” Even members of Trump’s Cabinet that have no role in tax reform, like Health and Human Services Secretary Tom Price, or in domestic politics whatsoever, like Secretary of State Rex Tillerson, chimed in with praise.Yet while Trump talked at length about the need for tax reform, he said little about how Republicans would get it done. And that’s because they still don’t know themselves. GOP leaders haven’t made several crucial decisions. Will the legislation be a revenue-neutral tax reform that fully offsets the reduction in rates by eliminating costly—and popular—exemptions and deductions? Or will it be a more straightforward tax cut, that would likely have to expire within a decade to comply with Senate rules? How low will they try to push down the corporate rate? About all they’ve determined is that 15 percent is too low, but will it be closer to 20 percent or 25 percent? And on, and on.
The Ways and Means Committee is currently writing the tax bill, but the only timeline they’ve set is to get it done by the end of 2018. The longer they take to write it, however, the less realistic that deadline becomes. And as I explainedearlier this month, Republicans must first pass a budget before they can even get to tax reform, which, to this point, has been no easy task.These unresolved details have also tripped up Trump’s messaging toward Democrats. Does he want their support, or are Republicans planning to do it alone as they tried to do on health care? In his speech, the president started out by saying he wanted to work with both parties to enact tax reform. Later on, however, he attacked Democrats as “obstructionists” and called out McCaskill. By the end, he was back where he began, saying tax reform was an issue on which lawmakers should put aside partisanship.Democrats say there’s been no outreach from the administration on taxes, and they’ve noted that Republicans are, for now, planning to use the same budget reconciliation process on tax reform that they used in trying to repeal the Affordable Care Act. That would allow them to skirt a Democratic filibuster and pass tax reform with a simple majority of 51 votes in the Senate. Unlike Obamacare repeal, some Democrats have expressed a willingness to work with the administration on taxes, so long as the GOP plan is not skewed to benefit the wealthy. With so few details, they were unimpressed with Trump’s speech in Missouri. “Stepping to the podium to declare that we need tax reform does not signal leadership on this issue; rather, doing so without offering any proposals on how to achieve it is an abdication,” said Representative Steny Hoyer of Maryland, the second-ranking House Democrat. “If the president is serious about tax reform, he should focus on the how, not the why.”Trump is not a detail-oriented president. That much is clear. But while he may be able to stick to broad strokes in rally-the-public speeches and leave the rest to Congress, his party will eventually have to make the tough decisions about who’s going to pay more, who gets to pay less, and by how much. Until that happens, tax reform isn’t going anywhere.

https://www.theatlantic.com/politics/archive/2017/08/trumps-fill-in-the-blanks-tax-reform-plan/538509/

Trump’s populist message on taxes comes with heavy dose of corporate rate cuts

Trump’s speech didn’t mask the fact that lawmakers still face a wide range of knotty questions when they return to Washington next week.

08/30/2017 01:59 PM EDT

Updated 08/30/2017 04:08 PM EDT

Trump maintained that a new tax system was crucial to ushering in a new prosperity in the U.S., in a speech that White House officials acknowledged beforehand would be light on policy details.

“Instead of exporting our jobs, we will export our goods. Our jobs will both stay here in America and come back to America. We’ll have it both ways,” Trump said at a Springfield, Mo., manufacturer, adding that millions of people would move from welfare to work and “will love earning a big fat beautiful paycheck.”

“We believe that ordinary Americans know better than Washington how to spend their own money and we want to help them take home as much of their money as possible and then spend it,” he said. “So they’ll keep their money, they’ll spend their money, they’ll buy our product.”

But Trump’s speech also underscored just how big a challenge he and a Republican Congress will face in pulling off a true overhaul of the tax code. The president only briefly touched on policy details, saying that businesses would “ideally” be taxed at a top rate of 15 percent and that the tax code would contain incentives for child care — a top priority of his daughter, Ivanka Trump.

“I am fully committed to working with Congress to get this job done,” Trump said. “And I don’t want to be disappointed by Congress. Do you understand me?”

Trump’s speech was aimed at showing that Republicans have the message down on tax reform, but lawmakers have yet to confront the monumental task of turning the rhetoric into reality.

Senior White House officials this week repeatedly billed the president’s speech as an address focused on why tax reform needs to happen, not how it will materialize. That’s the sort of big-picture cover on taxes that Trump didn’t offer congressional leaders in their doomed efforts to repeal and replace Obamacare.

But while congressional leaders undoubtedly welcome the president making the broad case for a tax revamp, Trump’s speech doesn’t mask the fact that lawmakers still face a wide range of knotty questions when they return to Washington next week.

Republicans still have to figure out how to pass a budget this fall, a process that will play a big role in deciding how generous a tax plan they can write. They also have to decide whether tax changes should be permanent or temporary, or a mix of the two, and whether their plan should be a net tax cut that would add to the deficit.

And that’s before they will feel the full brunt of a massive lobbying push on what would be the first major tax overhaul in more than 30 years. Already, GOP lawmakers are starting to hear from industries that might be the losers in a tax overhaul, such as big corporations that don’t want a minimum tax on foreign earnings and a retirement sector wary of potential changes to savings plans.

The hurdles won’t be limited to policy, either, after a summer that saw both sides of Pennsylvania Avenue grow increasingly wary of the other as the GOP’s health care efforts imploded. Republicans on Capitol Hill steamed privately in July that Trump’s obsession with White House infighting and the Russia controversy was a major factor in the death of the repeal effort. They’re crossing their fingers that he won’t be so easily distracted on tax reform.

 

Fact-checking President Trump’s speech on his tax plan

 August 31 at 3:00 AM
The Fact Checker’s round-up of five fishy claims made by President Trump in his speech on Aug. 30. (Meg Kelly/The Washington Post)

President Trump on Wednesday delivered an address on his “principles” for a tax plan in Springfield, Mo., though he provided few details. He also shifted from extolling how well the economy is doing to language that suggested the United States was suffering terribly. As usual, some of the president’s  facts and figures were a bit fishy, so here’s a roundup of 10 of his claims.

“In the last 10 years, our economy has grown at only around 2 percent a year.”

This is misleading. By going back 10 years, Trump includes the worst recession since the Great Depression, which brings down the 10-year average. This chart shows that that quarterly average since the recession was well above 2 percent, even hitting 5 percent in the third quarter of 2014. The GDP growth rate for the United States averaged 3.22 percent from 1947 to 2017.


Source: Bureau of Economic Analysis via Federal Reserve Bank of St. Louis

“We just announced that we hit 3 percent in GDP. Just came out. And on a yearly basis, as you know, the last administration, during an eight-year period, never hit 3 percent.

Trump plays some sleight-of-hand with the numbers. He first cites an annualized quarterly figure — 3 percent GDP growth in the second quarter of 2017 — and then compares it to what appears to be calendar-year figures for former president Barack Obama.

As the chart above shows, the economy grew better than 3 percent in eight quarters during Obama’s presidency, most recently in the third quarter of 2016. (Technically, this is known as “annualized quarterly change” or SAAR — seasonally adjusted at annual rate.) Trump gets his terminology wrong, using the phrase “yearly basis,” which could mean from the third quarter of 2015 to the the third quarter of 2016, in which case Obama easily exceeded 3 percent numerous times. On an annual basis, Obama’s best year was 2015, when annual growth was 2.6 percent.

“If we achieve sustained 3 percent growth, that means 12 million new jobs and $10 trillion of new economic activity over the next decade. That’s some numbers.”

With this statement, Trump downgrades promises he made during the 2016 campaign — he said he would achieve 4 percent GDP growth and 25 million jobs over 10 years.

“In 1935, the basic 1040 form that most people file had two simple pages of instruction. Today, that basic form has 100 pages of instructions, and it’s pretty complex stuff.”

Trump is correct that in 1935, the basic 1040 individual income tax form had two pages of instructions, but this claim needs historical context.

There are many reasons the instructions were so simple back then — including that just about 4 percent of the population paid the federal individual income tax. In 1935, the individual income tax largely was a tax on the wealthy. In fact, the top rate in 1935 was 63 percent — and President Franklin D. Roosevelt raised it to 75 percent later that year.

This changed with World War II. “Driven by staggering revenue needs, lawmakers in both parties agreed to raise taxes on everyone: rich, poor, and — especially — the middle class,” wrote Joseph Thorndike, director of the Tax History Project.

“The tax code is so complicated that more than 90 percent of Americans need professional help to do their own taxes.”

This is misleading. The 90 percent figure he is referring to includes people using tax software, such as Turbo Tax, which helps people file their taxes on their own. According to the National Taxpayer Advocate’s 2016 report, 54 percent of individual taxpayers pay preparers and about 40 percent of individual taxpayers use software that costs about $50 or more.

Yet later during the speech, he made it sound as if the “professional help” is only referring to hired accountants: “That is why tax reform must dramatically simplify the tax code … and allow the vast majority of our citizens to file their taxes on a single, simple page without having to hire an accountant.”

“Our last major tax rewrite was 31 years ago. It eliminated dozens of loopholes and special interest tax breaks, reduced the number of tax brackets from 15 to two, and lowered tax rates for both individuals and businesses. At the time it was really something special … In 1986, Ronald Reagan led the world by cutting our corporate tax rate to 34 percent. That was below the average rate for developed countries at the time. Everybody thought that was a monumental thing that happened. But then, under this pro-America system, our economy boomed. It just went beautifully right through the roof. The middle class thrived, and median family income increased.”

Trump heaped praise on Reagan’s Tax Reform Act of 1986, which simplified tax brackets and eliminated tax shelters; it also lowered the top individual tax rate to 28 percent but raised the capital gains rate to the same level, giving them parity. But this is a rather strange flip-flop because Trump always has been a fierce critic of the bill, blaming it repeatedly for the savings and loan crisis, a decline in real estate investing and the 1990-1991 recession.

“This tax act was just an absolute catastrophe for the country, for the real estate industry, and I really hope that something can be done,” Trump told Congress in 1991. In a television interview with Joan Rivers, he said: “What caused the savings and loan crisis was the 1986 tax law change. It was a disaster. It took all of the incentives away from investors.”

Trump also frequently attacked one of the Democratic sponsors of the bill, Sen. Bill Bradley (D-N.J.), such as in a Wall Street Journal commentary in 1999. “Mr. Bradley’s last big idea to be enacted into legislation was also one of the worst ideas in recent history,” Trump wrote, saying Bradley was responsible for the elimination of a tax shelter for real estate investments. (He said the good parts of the bill could be attributed to Reagan.)

“We lost the jobs. We lost the taxes. They closed the buildings. They closed the plants and factories. We got nothing but unemployment. We got nothing.”

As Trump frequently notes, the unemployment rate in July was 4.3 percent — the lowest level in 16 years. So this overwrought language seems misplaced.

“We have gone from a tax rate that is lower than our economic competitors, to one that is more than 60 percent higher. … In other words, foreign companies have more than a 60 percent tax advantage over American companies.”

The United States certainly has one of the highest statutory corporate tax rates in the world, currently pegged as high as 39.1 percent when including state taxes. (The federal rate is 35 percent.) Trump says it is 60 percent higher than “our economic competitors,” comparing 39.1 percent to the average rate for the other members of the Organization for Economic Co-operation and Development, which is 25.5 percent when not weighted for GDP. (It is 29.6 percent when weighted for GDP.)

But the official rate does not necessarily tell the whole story. What also matters is the actual tax a company pays, after deductions and tax benefits. That is known as the effective tax rate, which can be calculated differently depending on the survey. According to the Congressional Research Service, the effective rate for the United States is 27.1 percent, compared to an effective GDP-weighted average of 27.7 percent for the OECD. “Although the U.S. statutory tax rate is higher, the average effective rate is about the same, and the marginal rate on new investment is only slightly higher,” the CRS says.

The Congressional Budget Office, when it examined the issue, said the U.S. effective tax rate was 18.6 percent, which it said was among the highest of the biggest economic powers, the Group of 20.

Trump, naturally, used the numbers that suggest the difference is really huge.

“Today, we are still taxing our businesses at 35 percent, and it’s way more than that. And think of it, in some cases, way above 40 percent when you include state and local taxes in various states. The United States is now behind France, behind Germany, behind Canada, Ireland, Japan, Mexico, South Korea and many other nations.”

As we noted, the statutory federal corporate tax rate in the United States is 35 percent, making the United States the highest among G-20 countries, including the countries Trump listed. But the effective corporate tax rate in the United States in 2012 was 18.6 percent, making it the fourth highest among G-20 countries, behind Argentina, Japan and Britain, according to the CBO.

“Because of our high tax rate and horrible, outdated, bureaucratic rules, large companies that do business overseas will often park their profits offshore to avoid paying a high United States tax if the money is brought back home. So they leave the money over there. The amount of money we’re talking about is anywhere from $3 trillion to $5 trillion.”

There are no official, current numbers on the profits held overseas by U.S. companies, just estimates. The White House would not respond to a query on where Trump is getting these numbers, but his high-end figure appears to be an exaggeration. The Internal Revenue Service in 2012 said the figure was $2.3 trillion, and the Joint Committee on Taxation estimated that it had risen to $2.6 trillion in 2015. There are other estimates as well, but none top $2.8 trillion, according to PolitiFact.

https://www.washingtonpost.com/news/fact-checker/wp/2017/08/31/fact-checking-president-trumps-speech-on-his-tax-plan/?utm_term=.8ea0dc0c4d24

973 oil crisis

From Wikipedia, the free encyclopedia

The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo. The embargo was targeted at nations perceived as supporting Israel during the Yom Kippur War.[1] The initial nations targeted were CanadaJapan, the Netherlands, the United Kingdom and the United States with the embargo also later extended to PortugalRhodesia and South Africa. By the end of the embargo in March 1974,[2] the price of oil had risen from US$3 per barrel to nearly $12 globally; US prices were significantly higher. The embargo caused an oil crisis, or “shock”, with many short- and long-term effects on global politics and the global economy.[3] It was later called the “first oil shock”, followed by the 1979 oil crisis, termed the “second oil shock.”

Summary

The embargo was a response to American involvement in the 1973 Yom Kippur War. Six days after Egypt and Syria launched a surprise military campaign against Israel, the US supplied Israel with arms. In response to this, the Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced an oil embargo against CanadaJapan, the Netherlands, the United Kingdom and the United States.[4]

The crisis had a major impact on international relations and created a rift within NATO. Some European nations and Japan sought to disassociate themselves from United States foreign policy in the Middle East to avoid being targeted by the boycott. Arab oil producers linked any future policy changes to peace between the belligerents. To address this, the Nixon Administration began multilateral negotiations with the combatants. They arranged for Israel to pull back from the Sinai Peninsula and the Golan Heights. By January 18, 1974, US Secretary of State Henry Kissinger had negotiated an Israeli troop withdrawal from parts of the Sinai Peninsula. The promise of a negotiated settlement between Israel and Syria was enough to convince Arab oil producers to lift the embargo in March 1974.[2]

Graph of oil prices from 1861–2015, showing a sharp increase in 1973 and again during the 1979 energy crisis. The orange line is adjusted for inflation.

Independently, OAPEC members agreed to use their leverage over the world price-setting mechanism for oil to stabilize their incomes by raising world oil prices after the recent failure of negotiations with Western oil companies.

The embargo occurred at a time of rising petroleum consumption by industrialized countries and coincided with a sharp increase in oil imports by the world’s largest oil consumer, the United States. In the aftermath, targeted countries initiated a wide variety of policies to contain their future dependency.

The 1973 “oil price shock”, with the accompanying 1973–74 stock market crash, was regarded as the first discrete event since the Great Depression to have a persistent effect on the US economy.[5]

The embargo’s success demonstrated Saudi Arabia‘s diplomatic and economic power. It was the largest oil exporter and a politically and religiously conservative kingdom.

Background

US oil production decline

In 1970, US oil production started to decline, exacerbating the embargo’s impact.[6] Following this, Nixon named James E. Akins as US Ambassador to Saudi Arabia to audit US production capacity. The confidential results were alarming—no spare capacity was available and production could only decrease.

USA oil production and imports. As shown, the import spike starts from the US production peak, and the embargo has little effect.

The oil embargo had little effect on overall supply, according to Akins.[7]

OPEC

The Organization of the Petroleum Exporting Countries (OPEC), which then comprised 12 countries, including Iran, seven Arab countries (IraqKuwaitLibyaQatarSaudi Arabia and the United Arab Emirates), plus VenezuelaIndonesiaNigeria and Ecuador, was formed at a Baghdad conference on September 14, 1960. OPEC was organized to resist pressure by the “Seven Sisters” (seven large, Western oil companies) to reduce oil prices.

At first, OPEC operated as an informal bargaining unit for resource-rich third-world countries. OPEC confined its activities to gaining a larger share of the profits generated by oil companies and greater control over member production levels. In the early 1970s it began to exert economic and political strength; the oil companies and importing nations suddenly faced a unified exporter bloc.

End of the Bretton Woods currency accord

On August 15, 1971, the United States unilaterally pulled out of the Bretton Woods Accord. The US abandoned the Gold Exchange Standard whereby the value of the dollar had been pegged to the price of gold and all other currencies were pegged to the dollar, whose value was left to “float” (rise and fall according to market demand).[8] Shortly thereafter, Britain followed, floating the pound sterling. The other industrialized nations followed suit with their respective currencies. Anticipating that currency values would fluctuate unpredictably for a time, the industrialized nations increased their reserves (by expanding their money supplies) in amounts far greater than before. The result was a depreciation of the dollar and other industrialized nations’ currencies. Because oil was priced in dollars, oil producers’ real income decreased. In September 1971, OPEC issued a joint communiqué stating that, from then on, they would price oil in terms of a fixed amount of gold.[9]

This contributed to the “Oil Shock”. After 1971, OPEC was slow to readjust prices to reflect this depreciation. From 1947 to 1967, the dollar price of oil had risen by less than two percent per year. Until the oil shock, the price had also remained fairly stable versus other currencies and commodities. OPEC ministers had not developed institutional mechanisms to update prices in sync with changing market conditions, so their real incomes lagged. The substantial price increases of 1973–1974 largely returned their prices and corresponding incomes to Bretton Woods levels in terms of commodities such as gold.[10]

Yom Kippur War

On October 6, 1973, Syria and Egypt, with support from other Arab nations, launched a surprise attack on Israel, on Yom Kippur.[11] This renewal of hostilities in the Arab–Israeli conflict released the underlying economic pressure on oil prices. At the time, Iran was the world’s second-largest oil exporter and a close US ally. Weeks later, the Shah of Iran said in an interview: “Of course [the price of oil] is going to rise… Certainly! And how!… You’ve [Western nations] increased the price of the wheat you sell us by 300 percent, and the same for sugar and cement… You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you’ve paid us… It’s only fair that, from now on, you should pay more for oil. Let’s say ten times more.”[12]

On October 12, 1973, US president Richard Nixon authorized Operation Nickel Grass, a strategic airlift to deliver weapons and supplies to Israel, after the Soviet Union began sending arms to Syria and Egypt.

Embargo

In response to American aid to Israel, on October 16, 1973, OPEC raised the posted price of oil by 70%, to $5.11 a barrel.[13] The following day, oil ministers agreed to the embargo, a cut in production by five percent from September’s output and to continue to cut production in five percent monthly increments until their economic and political objectives were met.[14] On October 19, Nixon requested Congress to appropriate $2.2 billion in emergency aid to Israel, including $1.5 billion in outright grants. George Lenczowski notes, “Military supplies did not exhaust Nixon’s eagerness to prevent Israel’s collapse…This [$2.2 billion] decision triggered a collective OPEC response.”[15] Libya immediately announced it would embargo oil shipments to the United States.[16] Saudi Arabia and the other Arab oil-producing states joined the embargo on October 20, 1973.[17] At their Kuwait meeting, OAPEC proclaimed the embargo that curbed exports to various countries and blocked all oil deliveries to the US as a “principal hostile country”.[15]

Price increases were also imposed greatly. Since short-term oil demand is inelastic, immediate demand falls little when the price rises. Thus, market prices rose from $3 per barrel to $12 per barrel to reduce demand to the new, lower level of supply.[18] The world financial system, which was already under pressure from the Bretton Woods breakdown, was set on a path of recessions and inflation that persisted until the early 1980s, with oil prices remaining elevated until 1986.

The price of oil during the embargo. The graph is based on the nominal, not real, price of oil, and so overstates prices at the end. However, the effects of the Arab Oil Embargo are clear—it effectively doubled the real price of crude oil at the refinery level, and caused massive shortages in the U.S.

Over the long term, the oil embargo changed the nature of policy in the West towards increased exploration, alternative energy research, energy conservation and more restrictive monetary policy to better fight inflation.[19]

Chronology

  • January 1973—The 1973–74 stock market crash commences as a result of inflation pressure and the collapsing monetary system.
  • August 23, 1973—In preparation for the Yom Kippur War, Saudi king Faisal and Egyptian president Anwar Sadat meet in Riyadh and secretly negotiate an accord whereby the Arabs will use the “oil weapon” as part of the military conflict.[20]
  • October 6—Egypt and Syria attack Israeli-occupied lands in the Sinai Peninsula and Golan Heights on Yom Kippur, starting the 1973 Arab–Israeli War.
  • Night of October 8—Israel goes on full nuclear alert. Kissinger is notified on the morning of October 9. United States begins to resupply Israel.
  • October 8–10—OPEC negotiations with major oil companies to revise the 1971 Tehran price agreement fail.
  • October 12—The United States initiates Operation Nickel Grass, a strategic airlift to provide replacement weapons and supplies to Israel. This followed similar Soviet moves to supply the Arab side.
  • October 16—Saudi Arabia, Iran, IraqAbu DhabiKuwait and Qatar raise posted prices by 17% to $3.65 per barrel and announce production cuts.[21]
  • October 17—OAPEC oil ministers agree to use oil to influence the West’s support of Israel. They recommended an embargo against non-complying states and mandated export cuts.
  • October 19—Nixon requests Congress to appropriate $2.2 billion in emergency aid to Israel, which triggers a collective Arab response.[15] Libya immediately proclaims an embargo on oil exports to the US.[16] Saudi Arabia and other Arab oil-producing states follow the next day.[16]
  • October 26—The Yom Kippur War ends.
  • November 5—Arab producers announce a 25% output cut. A further 5% cut is threatened.
  • November 23—The Arab embargo is extended to PortugalRhodesia and South Africa.
  • November 27—Nixon signs the Emergency Petroleum Allocation Act authorizing price, production, allocation and marketing controls.
  • December 9—Arab oil ministers agree to another five percent production cut for non-friendly countries in January 1974.
  • December 25—Arab oil ministers cancel the January output cut. Saudi oil minister Ahmed Zaki Yamani promises a ten percent OPEC production rise.
  • January 7–9, 1974—OPEC decides to freeze prices until April 1.
  • January 18—Israel signs a withdrawal agreement to pull back to the east side of the Suez Canal.
  • February 11—Kissinger unveils the Project Independence plan for US energy independence.
  • February 12–14—Progress in Arab-Israeli disengagement triggers discussion of oil strategy among the heads of state of Algeria, Egypt, Syria and Saudi Arabia.
  • March 5—Israel withdraws the last of its troops from the west side of the Suez Canal.
  • March 17—Arab oil ministers, with the exception of Libya, announce the end of the US embargo.
  • May 31—Diplomacy by Kissinger produces a disengagement agreement on the Syrian front.
  • December 1974—The 1973–74 stock market crash ends.

Effects

Immediate economic effects

A man at a service station reads about the gasoline rationing system in an afternoon newspaper; a sign in the background states that no gasoline is available. 1974

The effects of the embargo were immediate. OPEC forced oil companies to increase payments drastically. The price of oil quadrupled by 1974 to nearly US$12 per barrel (75 US$/m3).[3]

This price increase had a dramatic effect on oil exporting nations, for the countries of the Middle East who had long been dominated by the industrial powers seen to have taken control of a vital commodity. The oil-exporting nations began to accumulate vast wealth.

Some of the income was dispensed in the form of aid to other underdeveloped nations whose economies had been caught between higher oil prices and lower prices for their own export commodities, amid shrinking Western demand. Much went for arms purchases that exacerbated political tensions, particularly in the Middle East. Saudi Arabia spent over 100 billion dollars in the ensuing decades for helping spread its fundamentalist interpretation of Islam, known as Wahhabism, throughout the world, via religious charities such al-Haramain Foundation, which often also distributed funds to violent Sunni extremist groups such as Al-Qaeda and the Taliban.[22]

Control of oil became known as the “oil weapon.” It came in the form of an embargo and production cutbacks from the Arab states. The weapon was aimed at the United States, Great Britain, Canada, Japan and the Netherlands. These target governments perceived that the intent was to push them towards a more pro-Arab position.[23] Production was eventually cut by 25%.[24] However, the affected countries did not undertake dramatic policy changes.[25]

In the United States, scholars argue that there already existed a negotiated settlement based on equality between both parties prior to 1973. The possibility that the Middle East could become another superpower confrontation with the USSR was of more concern to the US than oil. Further, interest groups and government agencies more worried about energy were no match for Kissinger’s dominance.[26] In the US production, distribution and price disruptions “have been held responsible for recessions, periods of excessive inflation, reduced productivity, and lower economic growth.”[27]

The embargo had a negative influence on the US economy by causing immediate demands to address the threats to U.S. energy security.[28] On an international level, the price increases changed competitive positions in many industries, such as automobiles. Macroeconomic problems consisted of both inflationary and deflationary impacts.[29] The embargo left oil companies searching for new ways to increase oil supplies, even in rugged terrain such as the Arctic. Finding oil and developing new fields usually required five to ten years before significant production.[30]

Gas stealers beware, 1974

OPEC-member states raised the prospect of nationalization of oil company holdings. Most notably, Saudi Arabia nationalized Aramco in 1980 under the leadership of Saudi oil minister Ahmed Zaki Yamani. As other OPEC nations followed suit, the cartel’s income soared. Saudi Arabia undertook a series of ambitious five-year development plans. The biggest began in 1980, funded at $250 billion. Other cartel members also undertook major economic development programs.

US retail price gas prices rose from a national average of 38.5 cents in May 1973 to 55.1 cents in June 1974. State governments requested citizens not to put up Christmas lightsOregon banned Christmas and commercial lighting altogether.[18] Politicians called for a national gas rationing program.[31] Nixon requested gasoline stations to voluntarily not sell gasoline on Saturday nights or Sundays; 90% of owners complied, which produced long queues.[18]

The embargo was not uniform across Europe. Of the nine members of the European Economic Community (EEC), the Netherlands faced a complete embargo, the UK and France received almost uninterrupted supplies (having refused to allow America to use their airfields and embargoed arms and supplies to both the Arabs and the Israelis), while the other six faced partial cutbacks. The UK had traditionally been an ally of Israel, and Harold Wilson‘s government supported the Israelis during the Six-Day War. His successor, Ted Heath, reversed this policy in 1970, calling for Israel to withdraw to its pre-1967 borders.

The EEC was unable to achieve a common policy during the first month of the War. It issued a statement on November 6, after the embargo and price rises had begun. It was widely viewed as pro-Arab supporting the Franco-British line on the war. OPEC duly lifted its embargo from all EEC members. The price rises had a much greater impact in Europe than the embargo.

Despite being relatively unaffected by the embargo, the UK nonetheless faced an oil crisis of its own—a series of strikes by coal miners and railroad workers over the winter of 1973–74 became a major factor in the change of government.[32] Heath asked the British to heat only one room in their houses over the winter.[33] The UK, Germany, Italy, Switzerland and Norway banned flying, driving and boating on Sundays. Sweden rationed gasoline and heating oil. The Netherlands imposed prison sentences for those who used more than their ration of electricity.[18]

A few months later, the crisis eased. The embargo was lifted in March 1974 after negotiations at the Washington Oil Summit, but the effects lingered throughout the 1970s. The dollar price of energy increased again the following year, amid the weakening competitive position of the dollar in world markets.

Price controls and rationing

United States

Price controls exacerbated the crisis in the US. The system limited the price of “old oil” (that which had already been discovered) while allowing newly discovered oil to be sold at a higher price to encourage investment. Predictably, old oil was withdrawn from the market, creating greater scarcity. The rule also discouraged development of alternative energies.[31] The rule had been intended to promote oil exploration.[34] Scarcity was addressed by rationing (as in many countries). Motorists faced long lines at gas stations beginning in summer 1972 and increasing by summer 1973.[31]

In 1973, Nixon named William E. Simon as the first Administrator of the Federal Energy Office, a short-term organization created to coordinate the response to the embargo.[35] Simon allocated states the same amount of domestic oil for 1974 that each had consumed in 1972, which worked for states whose populations were not increasing.[36] In other states, lines at gasoline stations were common. The American Automobile Association reported that in the last week of February 1974, 20% of American gasoline stations had no fuel.[36]

Oregon gasoline dealers displayed signs explaining the flag policy in the winter of 1973–74

Odd–even rationing allowed vehicles with license plates having an odd number as the last digit (or a vanity license plate) to buy gas only on odd-numbered days of the month, while others could buy only on even-numbered days.[37]

In some states, a three-color flag system was used to denote gasoline availability at service stations—green for unrationed availability, yellow for restricted/rationed sales and red for out of stock.[38]

Gasoline ration stamps printed by the Bureau of Engraving and Printing in 1974, but not used.

Rationing led to violent incidents, when truck drivers chose to strike for two days in December 1973 over the limited supplies Simon had allocated for their industry. In Pennsylvania and Ohio, non-striking truckers were shot at by striking truckers, and in Arkansas, trucks of non-strikers were attacked with bombs.[36]

America had controlled the price of natural gas since the 1950s. With the inflation of the 1970s, the price was too low to encourage the search for new reserves.[39] America’s natural gas reserves dwindled from 237 trillion in 1974 to 203 trillion[clarification needed] in 1978. The price controls were not changed despite president Gerald Ford‘s repeated requests to Congress.[39]

Conservation and reduction in demand

United States

To help reduce consumption, in 1974 a national maximum speed limit of 55 mph (about 88 km/h) was imposed through the Emergency Highway Energy Conservation Act. Development of the Strategic Petroleum Reserve began in 1975, and in 1977 the cabinet-level Department of Energy was created, followed by the National Energy Act of 1978.[citation needed] On November 28, 1995, Bill Clinton signed the National Highway Designation Act, ending the federal 55 mph (89 km/h) speed limit, allowing states to restore their prior maximum speed limit.

Year-round daylight saving time was implemented from January 6, 1974, to February 23, 1975. The move spawned significant criticism because it forced many children to travel to school before sunrise. The prior rules were restored in 1976.[citation needed]

Gas stations abandoned during the crisis were sometimes used for other purposes. This station at Potlatch, Washington, was turned into a revivalhall.

The crisis prompted a call to conserve energy, most notably a campaign by the Advertising Council using the tagline “Don’t Be Fuelish”.[40] Many newspapers carried advertisements featuring cut-outs that could be attached to light switches, reading “Last Out, Lights Out: Don’t Be Fuelish.”[citation needed]

By 1980, domestic luxury cars with a 130-inch (3.3 m) wheelbase and gross weights averaging 4,500 pounds (2,041 kg) were no longer made. The automakers had begun phasing out the traditional front engine/rear wheel drivelayout in compact cars in favor of lighter front engine/front wheel drive designs. A higher percentage of cars offered more efficient 4-cylinder engines. Domestic auto makers also began offering more fuel efficient diesel powered passenger cars as well.

Though not regulated by the new legislation, auto racing groups voluntarily began conserving. In 1974, the 24 Hours of Daytona was cancelled and NASCAR reduced all race distances by 10%; the 12 Hours of Sebring race was cancelled.[citation needed]

In 1976, Congress created the Weatherization Assistance Program to help low-income homeowners and renters reduce their demand for heating and cooling through better insulation.[citation needed]

Alternative energy sources

A woman uses wood in a fireplacefor heat. A newspaper headline before her tells of the community’s lack of heating oil.

The energy crisis led to greater interest in renewable energynuclear power and domestic fossil fuels.[41] According to Peter Grossman, American energy policies since the crisis have been dominated by crisis-mentality thinking, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities. He wrote that instead of providing stable rules that support basic research while leaving plenty of scope for entrepreneurshipand innovation, congresses and presidents have repeatedly backed policies which promise solutions that are politically expedient, but whose prospects are doubtful.[42]

The Brazilian government implemented its “Proálcool” (pro-alcohol) project in 1975 that mixed ethanol with gasoline for automotive fuel.[43]

Israel was one of the few countries unaffected by the embargo, since it could extract sufficient oil from the Sinai. But to supplement Israel‘s over-taxed power grid, Harry Zvi Tabor, the father of Israel’s solar industry, developed the prototype for a solar water heater now used in over 90% of Israeli homes.[44]

Macroeconomy

The crisis was a major factor in shifting Japan’s economy away from oil-intensive industries. Investment shifted to industries such as electronics. Japanese auto makers also benefited from the crisis. Increased fuel costs allowed their small, fuel-efficient models to gain market share from the “gas-guzzling” American competition. This triggered a drop in American auto sales that lasted into the 1980s.

Western central banks decided to sharply cut interest rates to encourage growth, deciding that inflation was a secondary concern. Although this was the orthodox macroeconomic prescription at the time, the resulting stagflationsurprised economists and central bankers. The policy is now considered by some to have deepened and lengthened the adverse effects of the embargo. Recent research claims that in the period after 1985 the economy became more resilient to energy price increases.[45]

The price shock created large current account deficits in oil-importing economies. A petrodollar recycling mechanism was created, through which OPEC surplus funds were channeled through the capital markets to the West to finance the current account deficits. The functioning of this mechanism required the relaxation of capital controls in oil-importing economies. It marked the beginning of an exponential growth of Western capital markets.[46]

Many in the public remain suspicious of oil companies, believing they profiteered, or even colluded with OPEC.[citation needed] In 1974, seven of the fifteen top Fortune 500 companies were oil companies, falling to four in 2014.[47]

International relations

United States

America’s Cold War policies suffered a major blow from the embargo. They had focused on China and the Soviet Union, but the latent challenge to US hegemony coming from the third world became evident.

In 2004, declassified documents revealed that the U.S. was so distraught by the rise in oil prices and being challenged by under-developed countries that they briefly considered military action to forcibly seize Middle Eastern oilfields in late 1973. Although no explicit plan was mentioned, a conversation between U.S. Secretary of Defense James Schlesinger and British Ambassador to the United States Lord Cromer revealed Schlesinger had told him that “it was no longer obvious to him that the U.S. could not use force.” British Prime Minister Edward Heath was so worried by this prospect that he ordered a British intelligence estimate of U.S. intentions, which concluded America “might consider it could not tolerate a situation in which the U.S. and its allies were at the mercy of a small group of unreasonable countries,” and that they would prefer a rapid operation to seize oilfields in Saudi Arabia and Kuwait, and possibly Abu Dhabi in military action was decided upon. Although the Soviet response to such an act would likely not involve force, intelligence warned “the American occupation would need to last 10 years as the West developed alternative energy sources, and would result in the ‘total alienation’ of the Arabs and much of the rest of the Third World.”[48]

NATO

Western Europe began switching from pro-Israel to more pro-Arab policies.[49][50][51] This change strained the Western alliance. The US, which imported only 12% of its oil from the Middle East (compared with 80% for the Europeans and over 90% for Japan), remained staunchly committed to Israel. The percentage of U.S. oil which comes from the nations bordering the Persian Gulf remained steady over the decades, with a figure of a little more than 10% in 2008.[52]

With the embargo in place, many developed countries altered their policies regarding the Arab-Israeli conflict. These included the UK, which refused to allow the United States to use British bases and Cyprus to airlift resupplies to Israel along with the rest of the members of the European Community.[53]

Canada shifted towards a more pro-Arab position after displeasure was expressed towards Canada’s mostly neutral position. “On the other hand, after the embargo the Canadian government moved quickly indeed toward the Arab position, despite its low dependence on Middle Eastern oil”.[54]

Japan

Although lacking historical connections to the Middle East, Japan was the country most dependent on Arab oil. 71% of its imported oil came from the Middle East in 1970. On November 7, 1973, the Saudi and Kuwaiti governments declared Japan a “nonfriendly” country to encourage it to change its noninvolvement policy. It received a 5% production cut in December, causing a panic. On November 22, Japan issued a statement “asserting that Israel should withdraw from all of the 1967 territories, advocating Palestinian self-determination, and threatening to reconsider its policy toward Israel if Israel refused to accept these preconditions”.[54] By December 25, Japan was considered an Arab-friendly state.

Nonaligned nations

The oil embargo was announced roughly one month after a right-wing military coup in Chile led by General Augusto Pinochet toppled socialist president Salvador Allende on September 11, 1973. The response of the Nixon administration was to propose doubling arms sales. As a consequence, an opposing Latin American bloc was organized and financed in part by Venezuelan oil revenues, which quadrupled between 1970 and 1975.

A year after the start of the embargo, the UN’s nonaligned bloc passed a resolution demanding the creation of a “New International Economic Order” under which nations within the global South would receive a greater share of benefits derived from the exploitation of southern resources and greater control over their self-development.[55]

Arab states

Prior to the embargo, the geo-political competition between the Soviet Union and the United States, in combination with low oil prices that hindered the necessity and feasibility of alternative energy sources, presented the Arab States with financial security, moderate economic growth, and disproportionate international bargaining power.[56]

The oil shock disrupted the status quo relationships between Arab countries and the US and USSR. At the time, Egypt, Syria and Iraq were allied with the USSR, while Saudi Arabia, Turkey and Iran (plus Israel) aligned with the US. Vacillations in alignment often resulted in greater support from the respective superpowers.

When Anwar Sadat became president of Egypt in 1970, he dismissed Soviet specialists in Egypt and reoriented towards the US. Concerns over economic domination from increased Soviet oil production turned into fears of military aggression after the 1979 Soviet invasion of Afghanistan, turning the Persian Gulf states towards the US for security guarantees against Soviet military action.

The USSR’s invasion of Afghanistan was only one sign of insecurity in the region, also marked by increased American weapons sales, technology, and outright military presence. Saudi Arabia and Iran became increasingly dependent on American security assurances to manage both external and internal threats, including increased military competition between them over increased oil revenues. Both states were competing for preeminence in the Persian Gulf and using increased revenues to fund expanded militaries. By 1979, Saudi arms purchases from the US exceeded five times Israel’s.[57]

In the wake of the 1979 Iranian Revolution the Saudis were forced to deal with the prospect of internal destabilization via the radicalism of Islamism, a reality which would quickly be revealed in the Grand Mosque seizure in Mecca by Wahhabi extremists during November 1979, and a Shiite Muslim revolt in the oil rich Al-Hasa region of Saudi Arabia in December of the same year, which was known as the 1979 Qatif Uprising.[58] Saudi Arabia is a near absolute monarchy, an Arabic speaking country, and has a Sunni Muslim majority, while Persian speaking Iran since 1979 is an Islamist theocracy with a Shiite Muslim majority, which explains the current hostility between Saudi Arabia and Iran.[59]

In November 2010, Wikileaks leaked confidential diplomatic cables pertaining to the United States and its allies which revealed that the late Saudi King Abdullah urged the United States to attack Iran in order to destroy its potential nuclear weapons program, describing Iran as “a snake whose head should be cut off without any procrastination”.[60]

Automobile industry

The oil crisis sent a signal to the auto industry globally, which changed many aspects of production and usage for decades to come.

Western Europe

After World War II, most West European countries taxed motor fuel to limit imports, and as a result most cars made in Europe were smaller and more economical than their American counterparts. By the late 1960s increasing incomes supported rising car sizes.

The oil crisis pushed West European car buyers away from larger, less economical cars.[61] The most notable result of this transition was the rise in popularity of compact hatchbacks. The only notable small hatchbacks built in Western Europe before the oil crisis were the Peugeot 104Renault 5 and Fiat 127. By the end of the decade, the market had expanded with the introduction of the Ford FiestaOpel Kadett (sold as the Vauxhall Astra in Great Britain), Chrysler Sunbeam and Citroën Visa.

Buyers looking for larger cars were increasingly drawn to medium-sized hatchbacks. Virtually unknown in Europe in 1973, by the end of the decade they were gradually replacing saloons as the mainstay of this sector. Between 1973 and 1980, medium-sized hatchbacks were launched across Europe: the Chrysler/Simca HorizonFiat Ritmo (Strada in the UK), Ford Escort MK3Renault 14Volvo 340 / 360Opel Kadett, and Volkswagen Golf.

These cars were considerably more economical than the traditional saloons they were replacing, and attracted buyers who traditionally bought larger vehicles. Some 15 years after the oil crisis, hatchbacks dominated most European small and medium car markets, and had gained a substantial share of the large family car market.

United States

Before the energy crisis, large, heavy, and powerful cars were popular. By 1971, the standard engine in a Chevrolet Caprice was a 400-cubic inch (6.5 liter) V8. The wheelbase of this car was 121.5 inches (3,090 mm), and Motor Trend‘s 1972 road test of the similar Chevrolet Impala achieved no more than 15 highway miles per gallon. In the fifteen years prior to the 1973 oil crisis, gasoline prices in the U.S. had lagged well behind inflation.[62]

The crisis reduced the demand for large cars.[39] Japanese imports, primarily the Toyota Corona, the Toyota Corolla, the Datsun B210, the Datsun 510, the Honda Civic, the Mitsubishi Galant (a captive import from Chrysler sold as the Dodge Colt), the Subaru DL, and later the Honda Accord all had four cylinder engines that were more fuel efficient than the typical American V8 and six cylinder engines. Japanese imports became mass-market leaders with unibody construction and front-wheel drive, which became de facto standards.

From Europe, the Volkswagen Beetle, the Volkswagen Fastback, the Renault 8, the Renault LeCar, and the Fiat Brava were successful. Detroit responded with the Ford Pinto, the Ford Maverick, the Chevrolet Vega, the Chevrolet Nova, the Plymouth Valiant and the Plymouth Volaré. American Motors sold its homegrown GremlinHornet and Pacer models.

Some buyers lamented the small size of the first Japanese compacts, and both Toyota and Nissan (then known as Datsun) introduced larger cars such as the Toyota Corona Mark II, the Toyota Cressida, the Mazda 616 and Datsun 810, which added passenger space and amenities such as air conditioning, power steering, AM-FM radios, and even power windows and central locking without increasing the price of the vehicle. A decade after the 1973 oil crisis, Honda, Toyota and Nissan, affected by the 1981 voluntary export restraints, opened US assembly plants and established their luxury divisions (Acura, Lexus and Infiniti, respectively) to distinguish themselves from their mass-market brands.

Compact trucks were introduced, such as the Toyota Hilux and the Datsun Truck, followed by the Mazda Truck (sold as the Ford Courier), and the Isuzu-built Chevrolet LUV. Mitsubishi rebranded its Forte as the Dodge D-50 a few years after the oil crisis. Mazda, Mitsubishi and Isuzu had joint partnerships with Ford, Chrysler, and GM, respectively. Later the American makers introduced their domestic replacements (Ford Ranger, Dodge Dakota and the Chevrolet S10/GMC S-15), ending their captive import policy.

An increase in imported cars into North America forced General Motors, Ford and Chrysler to introduce smaller and fuel-efficient models for domestic sales. The Dodge Omni / Plymouth Horizon from Chrysler, the Ford Fiesta and the Chevrolet Chevette all had four-cylinder engines and room for at least four passengers by the late 1970s. By 1985, the average American vehicle moved 17.4 miles per gallon, compared to 13.5 in 1970. The improvements stayed even though the price of a barrel of oil remained constant at $12 from 1974 to 1979.[39] Sales of large sedans for most makes (except Chrysler products) recovered within two model years of the 1973 crisis. The Cadillac DeVille and FleetwoodBuick ElectraOldsmobile 98Lincoln ContinentalMercury Marquis, and various other luxury oriented sedans became popular again in the mid-1970s. The only full-size models that did not recover were lower price models such as the Chevrolet Bel Air and Ford Galaxie 500. Slightly smaller models such as the Oldsmobile CutlassChevrolet Monte CarloFord Thunderbird and various others sold well.

Economical imports succeeded alongside heavy, expensive vehicles. In 1976 Toyota sold 346,920 cars (average weight around 2,100 lbs), while Cadillac sold 309,139 cars (average weight around 5,000 lbs).

Federal safety standards, such as NHTSA Federal Motor Vehicle Safety Standard 215 (pertaining to safety bumpers), and compacts like the 1974 Mustang I were a prelude to the DOT “downsize” revision of vehicle categories.[63] By 1977, GM’s full-sized cars reflected the crisis.[64] By 1979, virtually all “full-size” American cars had shrunk, featuring smaller engines and smaller outside dimensions. Chrysler ended production of their full-sized luxury sedans at the end of the 1981 model year, moving instead to a full front-wheel drivelineup for 1982 (except for the M-body Dodge Diplomat/Plymouth Gran Fury and Chrysler New Yorker Fifth Avenue sedans).

Decline of OPEC

Fluctuations of OPEC net oil export revenues since 1972[65][66]

OPEC soon lost its preeminent position, and in 1981, its production was surpassed by that of other countries. Additionally, its own member nations were divided. Saudi Arabia, trying to recover market share, increased production, pushing prices down, shrinking or eliminating profits for high-cost producers. The world price, which had peaked during the 1979 energy crisis at nearly $40 per barrel, decreased during the 1980s to less than $10 per barrel. Adjusted for inflation, oil briefly fell back to pre-1973 levels. This “sale” price was a windfall for oil-importing nations, both developing and developed.

The embargo encouraged new venues for energy exploration including Alaska, the North Sea, the Caspian Sea, and the Caucasus.[67] Exploration in the Caspian Basin and Siberia became profitable. Cooperation changed into a far more adversarial relationship as the USSR increased its production. By 1980 the Soviet Union had become the world’s largest producer.[68][69]

Part of the decline in prices and economic and geopolitical power of OPEC came from the move to alternate energy sources. OPEC had relied on price inelasticity[70] to maintain high consumption, but had underestimated the extent to which conservation and other sources of supply would eventually reduce demand. Electricity generation from nuclear power and natural gas, home heating from natural gas, and ethanol-blended gasoline all reduced the demand for oil.

The drop in prices presented a serious problem for oil-exporting countries in northern Europe and the Persian Gulf. Heavily populated, impoverished countries, whose economies were largely dependent on oil—including MexicoNigeriaAlgeria, and Libya—did not prepare for a market reversal that left them in sometimes desperate situations.

When reduced demand and increased production glutted the world market in the mid-1980s, oil prices plummeted and the cartel lost its unity. Mexico (a non-member), Nigeria, and Venezuela, whose economies had expanded in the 1970s, faced near-bankruptcy, and even Saudi Arabian economic power was significantly weakened. The divisions within OPEC made concerted action more difficult. As of 2015, OPEC had never approached its earlier dominance.

See also

References

https://en.wikipedia.org/wiki/1973_oil_crisis

 

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EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Wednesday, August 30, 2017
BEA 17—42

* See the navigation bar at the right side of the news release text for links to data tables, contact personnel and their telephone numbers, and supplementary materials.

Lisa Mataloni: (301) 278-9083 (GDP) gdpniwd@bea.gov
Kate Pinard: (301) 278-9417 (Corporate Profits) cpniwd@bea.gov
Jeannine Aversa: (301) 278-9003 (News Media) Jeannine.Aversa@bea.gov
National Income and Product Accounts
Gross Domestic Product: Second Quarter 2017 (Second Estimate)
Corporate Profits: Second Quarter 2017 (Preliminary Estimate)
Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of
2017 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the
first quarter, real GDP increased 1.2 percent.

The GDP estimate released today is based on more complete source data than were available for the
"advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6
percent. With this second estimate for the second quarter, the general picture of economic growth
remains the same; increases in personal consumption expenditures (PCE) and in nonresidential fixed
investment were larger than previously estimated. These increases were partly offset by a larger
decrease in state and local government spending (see "Updates to GDP" below).

Real GDP: Percent Change from Preceding Quarter
Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an
increase of 2.7 percent (revised) in the first. The average of real GDP and real GDI, a supplemental
measure of U.S. economic activity that equally weights GDP and GDI, increased 3.0 percent in the
second quarter, compared with an increase of 2.0 percent in the first quarter (table 1).

The increase in real GDP in the second quarter reflected positive contributions from PCE, nonresidential
fixed investment, exports, federal government spending, and private inventory investment that were
partly offset by negative contributions from residential fixed investment and state and local government
spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The acceleration in real GDP in the second quarter primarily reflected upturns in private inventory
investment and federal government spending and an acceleration in PCE that were partly offset by
downturns in residential fixed investment and state and local government spending and a deceleration
in exports.

Current-dollar GDP increased 4.0 percent, or $189.0 billion, in the second quarter to a level of $19,246.7
billion. In the first quarter, current-dollar GDP increased 3.3 percent, or $152.2 billion (table 1 and table
3).

The price index for gross domestic purchases increased 0.8 percent in the second quarter, compared
with an increase of 2.6 percent in the first quarter (table 4). The PCE price index increased 0.3 percent,
compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index
increased 0.9 percent, compared with an increase of 1.8 percent (appendix table A).


Updates to GDP

The percent change in real GDP was revised up from the advance estimate, reflecting upward revisions
to PCE and to nonresidential fixed investment that were partly offset by a downward revision to state
and local government spending. For more information, see the Technical Note. A detailed "Key Source
Data and Assumptions" file is also posted for each release.  For information on updates to GDP, see the
“Additional Information” section that follows.

                                    Advance Estimate        Second Estimate
			           (Percent change from preceding quarter)
Real GDP                                  2.6                  3.0
Current-dollar GDP                        3.6                  4.0
Real GDI                                   …                   2.9
Average of Real GDP and Real GDI           …                   3.0
Gross domestic purchases price index      0.8                  0.8
PCE price index                           0.3                  0.3


For the first quarter of 2017, the percent change in real GDI was revised from 2.6 percent to 2.7 percent
based on revised first-quarter tabulations from the BLS Quarterly Census of Employment and Wages
program.

Corporate Profits (table 12)

Profits from current production (corporate profits with inventory valuation adjustment and capital
consumption adjustment) increased $26.8 billion in the second quarter, in contrast to a decrease of
$46.2 billion in the first quarter.

Profits of domestic financial corporations decreased $29.4 billion in the second quarter, compared with
a decrease of $40.7 billion in the first quarter. Profits of domestic nonfinancial corporations increased
$64.8 billion, compared with an increase of $3.8 billion. The rest-of-the-world component of profits
decreased $8.6 billion, compared with a decrease of $9.3 billion. This measure is calculated as the
difference between receipts from the rest of the world and payments to the rest of the world. In the
second quarter, receipts increased $8.5 billion, and payments increased $17.1 billion.





                                       *          *          *




                           Next release:  September 28, 2017 at 8:30 A.M. EDT
                     Gross Domestic Product:  Second Quarter 2017 (Third Estimate)
                      Corporate Profits:  Second Quarter 2017 (Revised Estimate)




                                       Additional Information

Resources

Additional resources available at www.bea.gov:
•	Stay informed about BEA developments by reading the BEA blog, signing up for BEA’s email
        subscription service, or following BEA on Twitter @BEA_News.
•	Historical time series for these estimates can be accessed in BEA’s Interactive Data Application.
•	Access BEA data by registering for BEA’s Data Application Programming Interface (API).
•	For more on BEA’s statistics, see our monthly online journal, the Survey of Current Business.
•	BEA's news release scheduleNIPA Handbook:  Concepts and Methods of the U.S. National Income and Product Accounts

Definitions

Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy
less the value of the goods and services used up in production. GDP is also equal to the sum of personal
consumption expenditures, gross private domestic investment, net exports of goods and services, and
government consumption expenditures and gross investment.

Gross domestic income (GDI) is the sum of incomes earned and costs incurred in the production of GDP.
In national economic accounting, GDP and GDI are conceptually equal. In practice, GDP and GDI differ
because they are constructed using largely independent source data. Real GDI is calculated by deflating
gross domestic income using the GDP price index as the deflator, and is therefore conceptually
equivalent to real GDP.

Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is,
at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.”
Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes.
The gross domestic purchases price index measures the prices of final goods and services purchased by
U.S. residents.

The personal consumption expenditure price index measures the prices paid for the goods and services
purchased by, or on the behalf of, “persons.”

Profits from current production, referred to as corporate profits with inventory valuation adjustment
(IVA) and capital consumption adjustment (CCAdj) in the NIPAs, is a measure of the net income of
corporations before deducting income taxes that is consistent with the value of goods and services
measured in GDP. The IVA and CCAdj are adjustments that convert inventory withdrawals and
depreciation of fixed assets reported on a tax-return, historical-cost basis to the current-cost economic
measures used in the national income and product accounts.

For more definitions, see the Glossary: National Income and Product Accounts.


Statistical conventions

Annual rates. Quarterly values are expressed at seasonally-adjusted annual rates (SAAR), unless
otherwise specified. Dollar changes are calculated as the difference between these SAAR values. For
detail, see the FAQ “Why does BEA publish estimates at annual rates?”

Percent changes in quarterly series are calculated from unrounded data and are displayed at annual
rates, unless otherwise specified. For details, see the FAQ “How is average annual growth calculated?”

Quantities and prices. Quantities, or “real” volume measures, and prices are expressed as index
numbers with a specified reference year equal to 100 (currently 2009). Quantity and price indexes are
calculated using a Fisher-chained weighted formula that incorporates weights from two adjacent
periods (quarters for quarterly data and annuals for annual data). “Real” dollar series are calculated by
multiplying the published quantity index by the current dollar value in the reference year (2009) and
then dividing by 100. Percent changes calculated from real quantity indexes and chained-dollar levels
are conceptually the same; any differences are due to rounding.

Chained-dollar values are not additive because the relative weights for a given period differ from those
of the reference year. In tables that display chained-dollar values, a “residual” line shows the difference
between the sum of detailed chained-dollar series and its corresponding aggregate.


Updates to GDP

BEA releases three vintages of the current quarterly estimate for GDP:  "Advance" estimates are
released near the end of the first month following the end of the quarter and are based on source data
that are incomplete or subject to further revision by the source agency; “second” and “third” estimates
are released near the end of the second and third months, respectively, and are based on more detailed
and more comprehensive data as they become available.

Annual and comprehensive updates are typically released in late July. Annual updates generally cover at
least the 3 most recent calendar years (and their associated quarters) and incorporate newly available
major annual source data as well as some changes in methods and definitions to improve the accounts.
Comprehensive (or benchmark) updates are carried out at about 5-year intervals and incorporate major
periodic source data, as well as major conceptual improvements.
The table below shows the average revisions to the quarterly percent changes in real GDP between
different estimate vintages, without regard to sign.

Vintage                               Average Revision Without Regard to Sign
                                         (percentage points, annual rates)
Advance to second                                     0.5
Advance to third                                      0.6
Second to third                                       0.2
Advance to latest                                     1.1
Note - Based on estimates from 1993 through 2015. For more information on GDP
updates, see Revision Information on the BEA Web site.

The larger average revision from the advance to the latest estimate reflects the fact that periodic
comprehensive updates include major statistical and methodological improvements.

Unlike GDP, an advance current quarterly estimate of GDI is not released because data on domestic
profits and on net interest of domestic industries are not available. For fourth quarter estimates, these
data are not available until the third estimate.

https://www.bea.gov/newsreleases/national/gdp/2017/gdp2q17_2nd.htm

 

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The Pronk Pops Show 544, September 30, 2015: Story 1: Breaking News — Part 3 of 3, Trump’s Timid Tax Tweak — Does Not Abolish Income Taxes or IRS and Does Not Abolish Regressive Payroll Taxes For Social Security and Medicare — Trump Wrong on Economic Incentives — Could Have Been A Contender — Carson (Flat Tax), Cruz (Flat Tax) , Paul (Flat Tax), and Huckabee (FairTax) — All Have Better Tax Plans — Trump Is Just Another Progressive Country Club “Rockefeller” Republican — Dump Trump! — Fair Tax Less Is The Answer To Making America Great Again — Videos

Posted on September 30, 2015. Filed under: 2016 Presidential Campaign, 2016 Presidential Candidates, American History, Banking System, Ben Carson, Blogroll, Breaking News, Budgetary Policy, Communications, Constitutional Law, Economics, Education, Employment, Fiscal Policy, Foreign Policy, Government, History, Independence, Labor Economics, Law, Media, News, Philosophy, Politics, Polls, Progressives, Radio, Rand Paul, Raymond Thomas Pronk, Success, Tax Policy, Taxation, Taxes, Ted Cruz, Videos, Violence, Wall Street Journal, Wealth, Wisdom | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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The Pronk Pops Show Podcasts

Pronk Pops Show 544: September 30, 2015 

Pronk Pops Show 543: September 29, 2015 

Pronk Pops Show 542: September 28, 2015 

Pronk Pops Show 541: September 25, 2015 

Pronk Pops Show 540: September 24, 2015 

Pronk Pops Show 539: September 23, 2015 

Pronk Pops Show 538: September 22, 2015 

Pronk Pops Show 537: September 21, 2015 

Pronk Pops Show 536: September 18, 2015 

Pronk Pops Show 535: September 17, 2015 

Pronk Pops Show 534: September 16, 2015 

Pronk Pops Show 533: September 15, 2015  

Pronk Pops Show 532: September 14, 2015 

Pronk Pops Show 531: September 11, 2015

Pronk Pops Show 530: September 10, 2015 

Pronk Pops Show 529: September 9, 2015 

Pronk Pops Show 528: September 8, 2015 

Pronk Pops Show 527: September 4, 2015 

Pronk Pops Show 526: September 3, 2015  

Pronk Pops Show 525: September 2, 2015 

Pronk Pops Show 524: August 31, 2015  

Pronk Pops Show 523: August 27, 2015  

Pronk Pops Show 522: August 26, 2015 

Pronk Pops Show 521: August 25, 2015 

Pronk Pops Show 520: August 24, 2015 

Pronk Pops Show 519: August 21, 2015 

Pronk Pops Show 518: August 20, 2015  

Pronk Pops Show 517: August 19, 2015 

Pronk Pops Show 516: August 18, 2015

Pronk Pops Show 515: August 17, 2015

Pronk Pops Show 514: August 14, 2015

Pronk Pops Show 513: August 13, 2015

Pronk Pops Show 512: August 12, 2015

Pronk Pops Show 511: August 11, 2015

Pronk Pops Show 510: August 10, 2015

Pronk Pops Show 509: July 24, 2015

Pronk Pops Show 508: July 20, 2015

Pronk Pops Show 507: July 17, 2015

Pronk Pops Show 506: July 16, 2015

Pronk Pops Show 505: July 15, 2015

Pronk Pops Show 504: July 14, 2015

Pronk Pops Show 503: July 13, 2015

Pronk Pops Show 502: July 10, 2015

Pronk Pops Show 501: July 9, 2015

Pronk Pops Show 500: July 8, 2015

Pronk Pops Show 499: July 6, 2015

Pronk Pops Show 498: July 2, 2015

Pronk Pops Show 497: July 1, 2015

Pronk Pops Show 496: June 30, 2015

Pronk Pops Show 495: June 29, 2015

Pronk Pops Show 494: June 26, 2015

Pronk Pops Show 493: June 25, 2015

Pronk Pops Show 492: June 24, 2015

Pronk Pops Show 491: June 23, 2015

Pronk Pops Show 490: June 22, 2015

Pronk Pops Show 489: June 19, 2015

Pronk Pops Show 488: June 18, 2015

Pronk Pops Show 487: June 17, 2015

Pronk Pops Show 486; June 16, 2015

Pronk Pops Show 485: June 15, 2015

Pronk Pops Show 484: June 12, 2015

Pronk Pops Show 483: June 11, 2015

Pronk Pops Show 482; June 10, 2015

Pronk Pops Show 481: June 9, 2015

Pronk Pops Show 480: June 8, 2015

Pronk Pops Show 479: June 5, 2015

Pronk Pops Show 478: June 4, 2015

Pronk Pops Show 477: June 3, 2015

Pronk Pops Show 476: June 2, 2015

Pronk Pops Show 475: June 1, 2015

Story 1: Breaking News — Part 3 of 3,  Trump’s Timid Tax Tweak — Does Not Abolish Income Taxes or IRS and Does Not Abolish Regressive Payroll Taxes For Social Security and Medicare — Trump Wrong on Economic Incentives — Could Have Been A Contender — Carson (Flat Tax), Cruz (Flat Tax) , Paul (Flat Tax), and Huckabee (FairTax) — All Have Better Tax Plans  — Trump Is Just Another Progressive Country Club “Rockefeller” Republican — Dump Trump! — Fair Tax Less Is  The Answer To Making America Great Again —  Videos

Rothbard

Acceptance Speech as the 1964 Republican Presidential candidate

“I would remind you that extremism in the defense of liberty is no vice!

And let me remind you also that moderation in the pursuit of justice is no virtue!”

~Senator Barry Goldwater 

Election 2016 Presidential Polls

Wednesday, September 30
Race/Topic   (Click to Sort) Poll Results Spread
2016 Republican Presidential Nomination USAT/Suffolk Trump 23, Carson 13, Fiorina 13, Rubio 9, Bush 8, Cruz 6, Kasich 2, Huckabee 2, Christie 1, Paul 2, Jindal 1, Santorum 0, Walker, Pataki 0, Graham 1 Trump +10
Michigan Democratic Presidential Primary FOX 2 Detroit/Mitchell Clinton 35, Biden 28, Sanders 22, Chafee, O’Malley, Webb Clinton +7
Michigan: Trump vs. Clinton FOX 2 Detroit/Mitchell Clinton 42, Trump 42 Tie
Michigan: Bush vs. Clinton FOX 2 Detroit/Mitchell Clinton 42, Bush 37 Clinton +5
Michigan: Rubio vs. Clinton FOX 2 Detroit/Mitchell Clinton 40, Rubio 43 Rubio +3
Tuesday, September 29
Race/Topic   (Click to Sort) Poll Results Spread
Georgia Republican Presidential Primary WSB/Landmark Trump 31, Carson 18, Bush 8, Fiorina 13, Cruz 8, Rubio 9, Huckabee 4, Kasich 2, Paul 1, Christie, Jindal, Graham, Walker, Perry Trump +13
North Carolina Republican Presidential Primary PPP (D) Trump 26, Carson 21, Fiorina 12, Rubio 10, Cruz 9, Bush 5, Huckabee 6, Kasich 4, Christie 2, Santorum 1, Paul 0, Jindal 1, Graham 0, Walker, Perry Trump +5
North Carolina Democratic Presidential Primary PPP (D) Clinton 37, Biden 30, Sanders 17, Webb 3, Chafee 2, O’Malley 1, Lessig 0 Clinton +7
North Carolina: Trump vs. Clinton PPP (D) Clinton 42, Trump 47 Trump +5
North Carolina: Bush vs. Clinton PPP (D) Bush 46, Clinton 41 Bush +5
North Carolina: Fiorina vs. Clinton PPP (D) Fiorina 48, Clinton 41 Fiorina +7
North Carolina: Carson vs. Clinton PPP (D) Carson 51, Clinton 41 Carson +10
North Carolina: Rubio vs. Clinton PPP (D) Rubio 50, Clinton 40 Rubio +10

Taxation by the State defined

Two of Ten planks of Karl Marx’s

Communist Manifesto

ARE Americans practicing Communism?

2. A heavy progressive or graduated income tax.

Americans know this as misapplication of the 16th Amendment of the U.S. Constitution, 1913, The Social Security Act of 1936.; Joint House Resolution 192 of 1933; and various State “income” taxes. We call it “paying your fair share”.

3. Abolition of all rights of inheritance.

Americans call it Federal & State estate Tax (1916); or reformed Probate Laws, and limited inheritance via arbitrary inheritance tax statutes.

http://www.libertyzone.com/Communist-Manifesto-Planks.html

income-tax-receiptsHighest-Marginal-Tax-Rates-1913-2013

ind_corp_taxesfederal-tax-revenue-by-sourceU.S._Federal_Receipts_-_FY_2014

2015 United States Income Tax Brackets

normal_tax_brackets

2015-Tax-Bracket-Table2015_Tax_Bracket_Chart.2

2015-Federal-Tax-Rates

Trump’s Tax Plan

Donald-Trump-Tax-Reform-Proposal-Individual-Income-Tax

FairTax and Fair Tax Less

fair taxFairTax Flag 32jpg

fairtax

Bill O’Reilly Interviews Donald Trump Regarding Tax Plan 1st Interview Since Trump’s Fox News Boycot

MARK LEVIN – Donald Trump Tax Plan Could Have Been Proposed by REAGAN

Grover Norquist breaks down Trump’s tax plan

FULL SPEECH: Trump unveils tax plan that would lower taxes for millions (1 of 2)

FULL SPEECH: Trump unveils tax plan that would lower taxes for millions (2 of 2)

BILL KRISTOL SAYS TRUMP’S TAX PLAN IS A STANDARD CONSERVATIVE PLAN, CALLS HIM A SMART POLITICIAN!

Donald Trump Destroys Critics with his Tax Plan

Donald Trump News Conference on Tax Policy. Trump Unveils Tax Plan

Is Donald Trump’s tax plan realistic?

Trump defends new tax plan

The pros and cons of Donald Trump’s tax plan

Trump uses tax plan to push back on criticisms

Donald Trump opens up about his tax plan

BREAKING: DONALD TRUMP says on tax plan: Many Americans will have ‘zero’ tax rate | 60 Minutes

Trump Pledges Tax Relief for Middle Class

Trump Is Lying About His Tax Position

What to expect from Donald Trump’s tax plan

Dr. Ben Carson breaks down his tax plan

Dr. Ben Carson on his flat-tax proposal

National Prayer Breakfast Speaker Ben Carson Lectured Obama on Flat Tax to ‘Please’ God

Dr. Benjamin Carson on Fairness of 10% Flat Tax “Tithe”: Everyone should have “Skin in the Game”

Ted Cruz: Abolish the IRS and move to a flat tax system

Rand Paul’s Fair And Flat Tax

Rand Paul unveils his ‘fair and flat’ tax plan

Rand Paul Explains Flat Tax Proposal on Fox News

Rand Paul: Donald Trump, Chris Christie, GOP Debate, Flat Tax (Fox News)

Mike Huckabee on the flat tax

Mike Huckabee – What is the “Fair Tax?”

Huckabee: Now not the time for Dems to talk tax hikes

RWW News: Mike Huckabee Supports The Fair Tax Because ‘Giving Proportionately Is Biblical’

Reagan supported fair tax policies

Reagan on Taxes

Congressman Woodall Discusses the FairTax

Flat Tax vs. National Sales Tax

What is the FairTax legislation?

FairTax Prebate Explained

pyramid-01fair_taxfairtax 4ft-irs-chartFairTax Flag jpgFairtax Truththe_fair_tax_bookcomp-ft-vs-nfittable 5 page

The Beatles – Revolution (1968)

FairTax: Fire Up Our Economic Engine (Official HD)

The FairTax: It’s Time

FAIRTAX AD

Freedom from the IRS! – FairTax Explained in Detail

Why is the FairTax better than a flat income tax?

Why is the FairTax better than other tax reform efforts?

How does the FairTax rate compare to today’s?

Is the FairTax rate really 23%?

Is consumption a reliable source of revenue?

How will used goods be taxed?

How does the “prebate” work?

Is it fair for rich people to get the same prebate as poor people?

Is the FairTax truly progressive?

How does the FairTax affect the economy?

What will the transition be like from the income tax to the FairTax?

Does the FairTax repeal the federal income tax?

How is the FairTax collected?

Isn’t it a stretch to say the IRS will go away?

Is education taxed under the FairTax?

How does the FairTax impact the middle class?

How will the FairTax impact seniors?

What will happen to government programs like Social Security and Medicare?

How will Social Security payments be calculated under the FairTax?

Will the FairTax impact tax deferred retirement accounts like 401(k)s?

Will the FairTax hurt home ownership with no mortgage interest deduction?

How does the FairTax affect compliance costs?

How does the FairTax impact retailers?

Will the FairTax tax services?

Can I pretend to be a business to avoid the sales tax?

Do corporations get a windfall break from the FairTax?

Will the FairTax lead to a massive underground economy?

How does the FairTax affect illegal immigration?

How is the FairTax different from a Value Added Tax (VAT)?

“The Case for the Fair Tax”

Freedom from the IRS! – FairTax Explained in Detail

Isakson Discusses Fair Tax in Finance Committee

The Progressive Income Tax: A Tale of Three Brothers

100 Years Of Income Taxes – TheBlazeTV – REAL HISTORY – 2013.02.05

Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending

US National Debt: A Ticking Time Bomb – @FutureMoneyTren #NationalDebt

U.S. debt Clock.org

http://www.usdebtclock.org/

Congressman Pence – FairTax and FlatTax

Gov. Mike Huckabee Speech at “Iowa Freedom Summit” – Complete

The Beatles – Taxman – Lyrics

Pure Communism VS Pure Socialism VS Pure Capitalism

Trump Could Have Been A Contender

On the Waterfront,

“I coulda been a contender”

Trump Reveals Himself As A Loser

The Beatles – I’m a Loser – Subtitulado en español

Mr. Conservative: Barry Goldwater at the 1964 Republican National Convention

Ronald Reagan Support of Barry Goldwater (10/27/1964)

A Classic Critique of Government Intervention & Manipulation in Markets: The Road to Serfdom (1994)

F.A. Hayek: Biography, Economics, Road to Serfdom, Quotes, Books, Nobel Prize (2001)

The New Road to Serfdom: Lessons to Learn from European Policy

Mind blowing speech by Robert Welch in 1958 predicting Insider’s plans to destroy America.

murray rothbard 2

TAX REFORM THAT WILL MAKE AMERICA GREAT AGAIN

The Goals Of Donald J. Trump’s Tax Plan

Too few Americans are working, too many jobs have been shipped overseas, and too many middle class families cannot make ends meet. This tax plan directly meets these challenges with four simple goals:

  1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.
  2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.
  3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.
  4. Doesn’t add to our debt and deficit, which are already too large.

The Trump Tax Plan Achieves These Goals

  1. If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.
  2. All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.
  3. No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.
  4. No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.

The Trump Tax Plan Is Revenue Neutral

The Trump tax cuts are fully paid for by:

  1. Reducing or eliminating most deductions and loopholes available to the very rich.
  2. A one-time deemed repatriation of corporate cash held overseas at a significantly discounted 10% tax rate, followed by an end to the deferral of taxes on corporate income earned abroad.
  3. Reducing or eliminating corporate loopholes that cater to special interests, as well as deductions made unnecessary or redundant by the new lower tax rate on corporations and business income. We will also phase in a reasonable cap on the deductibility of business interest expenses.

DETAILS OF DONALD J. TRUMP’S TAX PLAN

America needs a bold, simple and achievable plan based on conservative economic principles. This plan does that with needed tax relief for all Americans, especially the working poor and middle class, pro-growth tax reform for all sizes of businesses, and fiscally responsible steps to ensure this plan does not add to our enormous debt and deficit.

This plan simplifies the tax code by taking nearly 50% of current filers off the income tax rolls entirely and reducing the number of tax brackets from seven to four for everyone else. This plan also reduces or eliminates loopholes used by the very rich and special interests made unnecessary or redundant by the new lower tax rates on individuals and companies.

The Trump Tax Plan: A Simpler Tax Code For All Americans

When the income tax was first introduced, just one percent of Americans had to pay it. It was never intended as a tax most Americans would pay. The Trump plan eliminates the income tax for over 73 million households. 42 million households that currently file complex forms to determine they don’t owe any income taxes will now file a one page form saving them time, stress, uncertainty and an average of $110 in preparation costs. Over 31 million households get the same simplification and keep on average nearly $1,000 of their hard-earned money.

For those Americans who will still pay the income tax, the tax rates will go from the current seven brackets to four simpler, fairer brackets that eliminate the marriage penalty and the AMT while providing the lowest tax rate since before World War II:

Income Tax Rate Long Term Cap Gains/ Dividends Rate Single Filers Married Filers Heads of Household
0% 0% $0 to $25,000 $0 to $50,000 $0 to $37,500
10% 0% $25,001 to $50,000 $50,001 to $100,000 $37,501 to $75,000
20% 15% $50,001 to $150,000 $100,001 to $300,000 $75,001 to $225,000
25% 20% $150,001 and up $300,001 and up $225,001 and up

With this huge reduction in rates, many of the current exemptions and deductions will become unnecessary or redundant. Those within the 10% bracket will keep all or most of their current deductions. Those within the 20% bracket will keep more than half of their current deductions. Those within the 25% bracket will keep fewer deductions. Charitable giving and mortgage interest deductions will remain unchanged for all taxpayers.

Simplifying the tax code and cutting every American’s taxes will boost consumer spending, encourage savings and investment, and maximize economic growth.

Business Tax Reform To Encourage Jobs And Spur Economic Growth

Too many companies – from great American brands to innovative startups – are leaving America, either directly or through corporate inversions. The Democrats want to outlaw inversions, but that will never work. Companies leaving is not the disease, it is the symptom. Politicians in Washington have let America fall from the best corporate tax rate in the industrialized world in the 1980’s (thanks to Ronald Reagan) to the worst rate in the industrialized world. That is unacceptable. Under the Trump plan, America will compete with the world and win by cutting the corporate tax rate to 15%, taking our rate from one of the worst to one of the best.

This lower tax rate cannot be for big business alone; it needs to help the small businesses that are the true engine of our economy. Right now, freelancers, sole proprietors, unincorporated small businesses and pass-through entities are taxed at the high personal income tax rates. This treatment stifles small businesses. It also stifles tax reform because efforts to reduce loopholes and deductions available to the very rich and special interests end up hitting small businesses and job creators as well. The Trump plan addresses this challenge head on with a new business income tax rate within the personal income tax code that matches the 15% corporate tax rate to help these businesses, entrepreneurs and freelancers grow and prosper.

These lower rates will provide a tremendous stimulus for the economy – significant GDP growth, a huge number of new jobs and an increase in after-tax wages for workers.

The Trump Tax Plan Ends The Unfair Death Tax

The death tax punishes families for achieving the American dream. Therefore, the Trump plan eliminates the death tax.

The Trump Tax Plan Is Fiscally Responsible

The Trump tax cuts are fully paid for by:

  1. Reducing or eliminating deductions and loopholes available to the very rich, starting by steepening the curve of the Personal Exemption Phaseout and the Pease Limitation on itemized deductions. The Trump plan also phases out the tax exemption on life insurance interest for high-income earners, ends the current tax treatment of carried interest for speculative partnerships that do not grow businesses or create jobs and are not risking their own capital, and reduces or eliminates other loopholes for the very rich and special interests. These reductions and eliminations will not harm the economy or hurt the middle class. Because the Trump plan introduces a new business income rate within the personal income tax code, they will not harm small businesses either.
  2. A one-time deemed repatriation of corporate cash held overseas at a significantly discounted 10% tax rate. Since we are making America’s corporate tax rate globally competitive, it is only fair that corporations help make that move fiscally responsible. U.S.-owned corporations have as much as $2.5 trillion in cash sitting overseas. Some companies have been leaving cash overseas as a tax maneuver. Under this plan, they can bring their cash home and put it to work in America while benefitting from the newly-lowered corporate tax rate that is globally competitive and no longer requires parking cash overseas. Other companies have cash overseas for specific business units or activities. They can leave that cash overseas, but they will still have to pay the one-time repatriation fee.
  3. An end to the deferral of taxes on corporate income earned abroad. Corporations will no longer be allowed to defer taxes on income earned abroad, but the foreign tax credit will remain in place because no company should face double taxation.
  4. Reducing or eliminating some corporate loopholes that cater to special interests, as well as deductions made unnecessary or redundant by the new lower tax rate on corporations and business income. We will also phase in a reasonable cap on the deductibility of business interest expenses.

https://www.donaldjtrump.com/positions/tax-reform

Trump Plan Cuts Taxes for Millions

Middle class, businesses get break, but overseas profits would face a one-time 10% levy

By MONICA LANGLEY And JOHN D. MCKINNON

Republican presidential candidate Donald Trump unveiled an ambitious tax plan Monday that he says would eliminate income taxes for millions of households, lower the tax rate on all businesses to 15% and change tax treatment of companies’ overseas earnings.

Under the Trump plan, no federal income tax would be levied against individuals earning less than $25,000 and married couples earning less than $50,000. The Trump campaign estimates that would reduce taxes to zero for 31 million households that currently pay at least some income tax. The highest individual income-tax rate would be 25%, compared with the current 39.6% rate.

Many middle-income households would have a lower tax rate under Mr. Trump’s proposal, but because high-income households generally pay income tax at much higher rates, his proposed across-the-board rate cut could have a positive impact on them, too. For example, an analysis of Jeb Bush’s plan—taxing individuals’ incomes at no more than 28%—by the business-backed Tax Foundation found that the biggest percentage winners in after-tax income would be the top 1% of earners.

Mr. Trump’s plan appears designed to help him, as the GOP front-runner, cement his standing as a populist—though that message is complicated by the fact that the billionaire, like other Republican leaders, would eliminate the estate tax.

“My plan will bring sanity, common sense and simplification to our country’s catastrophic tax code,” Mr. Trump said in an interview. “It will create jobs and incentives of all kinds while simultaneously growing the economy.”

But Mr. Trump will face a challenge in convincing skeptics that his aggressive tax cuts can be implemented without adding to the federal deficit.

To pay for the proposed tax benefits, the Trump plan would eliminate or reduce deductions and loopholes to high-income taxpayers, and would curb some deductions and other breaks for middle-class taxpayers by capping the level of individual deductions, a politically dicey proposition. Mr. Trump also would end the “carried interest” tax break, which allows many investment-fund managers to pay lower taxes on much of their compensation.

A significant revenue gain would come from a one-time tax on overseas profits that could encourage U.S. multinational corporations to return an estimated $2.1 trillion in cash now sitting offshore, largely to avoid U.S. taxes. His proposal would impose a mandatory 10% tax on all of that money, even if the money stays overseas, but allow a few years for the tax to be paid. The Trump campaign estimates that many companies would choose to bring their money back home, boosting jobs and investment in the U.S.

Mr. Trump also would impose an immediate tax on overseas earnings of American corporations; currently, such tax payments can be deferred. All told, the campaign says the plan would be revenue neutral—neither raising nor lowering federal revenues—by the third year and then begin adding revenue.

With the tax plan’s release, Mr. Trump is moving to quell criticism that his campaign has been more style and less substance. This tax proposal follows his well-known immigration plan in the summer and one on gun rights last week.

Mr. Trump saves some money and fiscal headaches by skipping some of the big but complicated and costly changes that other candidates have embraced, such as business-expensing breaks and so-called territorial taxation for multinational corporations.

On the individual side, Mr. Trump would consolidate the current seven rates to four, of 0%, 10%, 20% and 25%. Those changes alone would exempt all married couples making $50,000 or less from the income tax, as well as singles making $25,000 or less.

The 10% bracket would apply to incomes from $50,000 to $100,000 for a married couple; the current 10% bracket has a ceiling of $18,450. The new 25% top bracket would apply to married couples’ incomes in excess of $300,000, which currently are subject to rates as high as 39.6%. Mr. Trump also would cut the top capital gains rate to 20%, from the current 23.8%. And he would eliminate the alternative minimum tax.

But the candidate doesn’t propose to end taxation of individuals’ investment income, as some other Republicans propose, nor would he expand the standard deduction, child-credit and other middle-class breaks as some other GOP candidates have suggested.

For businesses, Mr. Trump’s 15% rate is among the lowest that have been proposed so far. Rand Paul has proposed a 14.5% flat-tax rate for all types of income. Marco Rubio, another candidate with a detailed plan, would tax all business income at no more than 25%. Mr. Bush has proposed a 20% top corporate rate. The current top corporate tax rate is 35%, and small business income is subject to rates of as much as 39.6% (although many small businesses pay out a lot of their profits as lower-taxed dividends or capital gains). The campaign argues the rate would be among the lowest among industrialized nations, giving U.S. companies an edge to compete.

The lower corporate rates would provide “a tremendous stimulus for the economy,” the campaign’s plan argues. Mr. Trump would not, however, allow businesses to expense all their new equipment purchases, as some other Republicans do.

The plan proposes to simplify tax filing for many lower- to middle-income households. The plan says that some 42 million households that currently file tax forms to establish that they don’t owe any federal income tax now will be able to file their returns on a single page.

The 31 million households that have been paying some taxes but now won’t have any tax liability can use the same single-page, and keep an average of $1,000 in tax savings, the Trump campaign says. Today, 36% of American households today pay no income taxes, and that number would grow to 50%.

The Trump plan would raise revenues in at least a couple of significant ways. It would limit the value of individual deductions, with middle-class households keeping all or most of their deductions, higher-income taxpayers keeping around half of theirs, and the very wealthy losing a significant chunk of theirs. It also would wipe out many corporate deductions.

All taxpayers would keep their current deductions for mortgage-interest on their homes and charitable giving.

The plan also proposes capping the amount of interest payments that businesses can deduct now, a change phased in over a long period, and would impose a corporate tax on future foreign earnings of American multinationals.

http://www.wsj.com/articles/trump-plan-cuts-taxes-for-millions-1443427200

ARE Americans practicing Communism?Read the 10 Planks of The Communist Manifesto to discover the truth and learn how to know your enemy…

Karl Marx describes in his communist manifesto, the ten steps necessary to destroy a free enterprise system and replace it with a system of omnipotent government power, so as to effect a communist socialist state. Those ten steps are known as the Ten Planks of The Communist Manifesto… The following brief presents the original ten planks within theCommunist Manifesto written by Karl Marx in 1848, along with the American adopted counterpart for each of the planks. From comparison it’s clear MOST Americans have by myths, fraud and deception under the color of law by their own politicians in both the Republican and Democratic and parties, been transformed into Communists.

Another thing to remember, Karl Marx in creating the Communist Manifesto designed these planks AS A TEST to determine whether a society has become communist or not. If they are all in effect and in force, then the people ARE practicing communists.

Communism, by any other name is still communism, and is VERY VERY destructive to the individual and to the society!!

The 10 PLANKS stated in the Communist Manifesto and some of their American counterparts are…

1. Abolition of private property and the application of all rents of land to public purposes.
Americans do these with actions such as the 14th Amendment of the U.S. Constitution (1868), and various zoning, school & property taxes. Also the Bureau of Land Management (Zoning laws are the first step to government property ownership)

2. A heavy progressive or graduated income tax.
Americans know this as misapplication of the 16th Amendment of the U.S. Constitution, 1913, The Social Security Act of 1936.; Joint House Resolution 192 of 1933; and various State “income” taxes. We call it “paying your fair share”.

3. Abolition of all rights of inheritance.
Americans call it Federal & State estate Tax (1916); or reformed Probate Laws, and limited inheritance via arbitrary inheritance tax statutes.

4. Confiscation of the property of all emigrants and rebels.
Americans call it government seizures, tax liens, Public “law” 99-570 (1986); Executive order 11490, sections 1205, 2002 which gives private land to the Department of Urban Development; the imprisonment of “terrorists” and those who speak out or write against the “government” (1997 Crime/Terrorist Bill); or the IRS confiscation of property without due process. Asset forfeiture laws are used by DEA, IRS, ATF etc…).

5. Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.
Americans call it the Federal Reserve which is a privately-owned credit/debt system allowed by the Federal Reserve act of 1913. All local banks are members of the Fed system, and are regulated by the Federal Deposit Insurance Corporation (FDIC) another privately-owned corporation. The Federal Reserve Banks issue Fiat Paper Money and practice economically destructive fractional reserve banking.

6. Centralization of the means of communications and transportation in the hands of the State.
Americans call it the Federal Communications Commission (FCC) and Department of Transportation (DOT) mandated through the ICC act of 1887, the Commissions Act of 1934, The Interstate Commerce Commission established in 1938, The Federal Aviation Administration, Federal Communications Commission, and Executive orders 11490, 10999, as well as State mandated driver’s licenses and Department of Transportation regulations.

7. Extension of factories and instruments of production owned by the state, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
Americans call it corporate capacity, The Desert Entry Act and The Department of Agriculture… Thus read “controlled or subsidized” rather than “owned”… This is easily seen in these as well as the Department of Commerce and Labor, Department of Interior, the Environmental Protection Agency, Bureau of Land Management, Bureau of Reclamation, Bureau of Mines, National Park Service, and the IRS control of business through corporate regulations.

8. Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.
Americans call it Minimum Wage and slave labor like dealing with our Most Favored Nation trade partner; i.e. Communist China. We see it in practice via the Social Security Administration and The Department of Labor. The National debt and inflation caused by the communal bank has caused the need for a two “income” family. Woman in the workplace since the 1920’s, the 19th amendment of the U.S. Constitution, the Civil Rights Act of 1964, assorted Socialist Unions, affirmative action, the Federal Public Works Program and of course Executive order 11000.

9. Combination of agriculture with manufacturing industries, gradual abolition of the distinction between town and country, by a more equitable distribution of population over the country.
Americans call it the Planning Reorganization act of 1949 , zoning (Title 17 1910-1990) and Super Corporate Farms, as well as Executive orders 11647, 11731 (ten regions) and Public “law” 89-136. These provide for forced relocations and forced sterilization programs, like in China.

10. Free education for all children in public schools. Abolition of children’s factory labor in its present form. Combination of education with industrial production.
Americans are being taxed to support what we call ‘public’ schools, but are actually “government force-tax-funded schools ” Even private schools are government regulated. The purpose is to train the young to work for the communal debt system. We also call it the Department of Education, the NEA and Outcome Based “Education” . These are used so that all children can be indoctrinated and inculcated with the government propaganda, like “majority rules”, and “pay your fair share”. WHERE are the words “fair share” in the Constitution, Bill of Rights or the Internal Revenue Code (Title 26)?? NO WHERE is “fair share” even suggested !! The philosophical concept of “fair share” comes from the Communist maxim, “From each according to their ability, to each according to their need! This concept is pure socialism. … America was made the greatest society by its private initiative WORK ETHIC … Teaching ourselves and others how to “fish” to be self sufficient and produce plenty of EXTRA commodities to if so desired could be shared with others who might be “needy”… Americans have always voluntarily been the MOST generous and charitable society on the planet.

Do changing words, change the end result? … By using different words, is it all of a sudden OK to ignore or violate the provisions or intent of the Constitution of the united States of America?????

The people (politicians) who believe in the SOCIALISTIC and COMMUNISTIC concepts, especially those who pass more and more laws implementing these slavery ideas, are traitors to their oath of office and to the Constitution of the united States of America… KNOW YOUR ENEMY …Remove the enemy from within and from among us.

VOTE LIBERTARIAN, the only political party in America that still firmly supports and diligently abides by the Constitution of the united States of America.

None are more hopelessly enslaved, as those who falsely believe they are free….http://www.libertyzone.com/Communist-Manifesto-Planks.html

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Pronk Pops Show 52, November 2, 2011: Segment 4: A Ron Paul tax reform plan: no income taxes or IRS — FairTax Less!–“When The Impossible Became The Inevitable”–Videos

Posted on November 2, 2011. Filed under: American History, Books, Budgetary Policy, Business, Coal, College, Computers, Culture, Economics, Education, Employment, Energy, Federal Government, Fiscal Policy, Foreign Policy, Government, Government Spending, Health Care Insurance, History, Housing, Illegal Immigration, Immigration, Labor Economics, Monetary Policy, Natural Gas, Nuclear, Philosophy, Politics, Public Sector Unions, Radio, Regulation, Resources, Social Networking, Solar, Tax Policy, Unions, Videos, Violence, War, Wisdom | Tags: , , , , , , , , , , , , , , , , , |

Pronk Pops Show 52:November 2, 2011

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Segment 4: A Ron Paul tax reform plan: no income taxes or IRS — FairTax Less!–“When The Impossible Became The Inevitable”–Videos

2012 Republican Presidential Nomination

Date Sample Cain Romney Perry Gingrich Paul Bachmann Santorum Huntsman Spread
RCP Average 10/13 – 10/31 26.0 24.0 10.0 9.4 8.2 3.8 1.8 1.2 Cain +2.0
Quinnipiac 10/25 – 10/31 869 RV 30 23 8 10 7 4 1 2 Cain +7
FOX News 10/23 – 10/25 328 RV 24 20 10 12 9 3 3 0 Cain +4
CBS News/NY Times 10/19 – 10/24 455 RV 25 21 6 10 8 2 1 1 Cain +4
CNN/Opinion Research 10/14 – 10/16 416 A 25 26 13 8 9 6 2 1 Romney +1
Associated Press/GfK 10/13 – 10/17 431 A 26 30 13 7 8 4 2 2 Romney +4

See All 2012 Republican Presidential Nomination Polling Data

When The Impossible Became The Inevitable

Ronald Reagan-Remarks on Signing the Tax Reform Act (October 22, 1986)

Ron Paul on Taxes

Ron Paul – Repeal The 16th Amndment

The Fair Tax

Taxes and the Republican Party by the Southern Avenger

Tax Code Roulette | THE PLAIN TRUTH by Judge Napolitano 10/25/11

Flat, Fair, VAT, or Gone? What Should be done with the Federal Income Tax- CPAC 2011 Pt.1

The FairTax… For a better America

Lugar Cosponsors the FairTax

The FairTax Versus the Obama ‘Jobs Plan’

Rob Woodall Floor Speech: The FairTax will bring jobs back to America

Pence on the Fair Tax

Tom Wright on the FairTax part 1

What is the FairTax legislation?

Why is the FairTax better than a flat income tax?

What is the impact of the FairTax on business?

How does the “prebate” work?

people bring home their whole paychecks how can prices fall?

Will the FairTax lead to a massive underground economy?

Is the FairTax rate really 23%?

How will used goods be taxed?

FairTax

Herman Cain on Fixing Deficit/Jobs/Fair Tax: “Replace Income and Payroll Tax”

Herman Cain Explains the Fair Tax

Johnson: What makes you a better Libertarian choice than Ron Paul?

Reagan on Taxes

Reagan; Taxes and Budget Deficit: Revenue 19% of GDP; Spending is 23%; Revenue is sufficient

Reagan on Balanced Budget

Ronald Reagan – Tax Reform Act Remarks

Ron Paul needs to come out with his own comprehensive tax reform plan. I recommend the FairTax as a starting point with some significant changes.

The FairTax is a national retail sales consumption tax that would replace the following federal taxes:

  • Personal income tax
  • Payroll taxes for Social Security and Medicare
  • Capital gains tax
  • Alternative Minimum Tax
  • Self-employment tax
  • Corporate income tax
  • Gift taxes
  • Estate taxes

When you buy goods or services, income and payroll taxes are included or embedded in the price. When these taxes are eliminated, the price of the goods or services would decline.

Thus when the FairTax replaces these taxes, the price of the good or service with the new FairTax included should result in the price of the good or service remaining about the same.

The proposed FairTax rate is 23 percent when the tax is included in the unit price of the good or service. For example, a loaf of bread with a selling price of $1 would include 23 cents for the FairTax.

Since Paul wants to significantly limit the size and scope of the federal government, I propose he reduce the FairTax rate to 20 percent for 2013.

The FairTax Less rate would be reduced by 1 percent a year for the next four years so that by 2017 the rate would be 16 percent.

A declining FairTax Less rate combined with a declining balanced budget will force a reduction of government spending outlays.

It should take four to eight years before the 16th Amendment (income tax) is repealed and the balanced budget amendment passes.

Therefore, I would like to see the repeal of the 16th Amendment and the passage of a balanced budget Amendment be immediately initiated in the House of Representatives and Senate.

If this is done, by 2017 the American people will never again want to go back to the complex and time-consuming income tax.

Instead, the American people will be demanding smaller government and an even lower FairTax Less rate.

Also, Paul needs to advocate a FairTax Less plan to complement his Plan to Restore America to a peace and prosperity economy by cutting government spending by $1 trillion in his first year as president and balance the budget in his third year.

The advantage is that a single FairTax Less rate of 20 percent would beat Herman Cain’s 9-9-9 plan. Cain’s plan would have a flat 9 percent business tax, a flat 9 percent personal income tax and a 9 percent national retail sales tax. The total tax rate paid would be 27 percent under Cain’s plan.

A single FairTax Less rate of 20 percent would easily defeat Perry’s optional flat tax of 20 percent personal income tax and a 15.3 percent payroll tax for Social Security or Medicare for a total of 30.3 percent. This does not include the 20 percent corporate income tax that would bring the total taxes paid to over 50 percent.

Only when the American people consume or spend their money on new goods and services would they pay the FairTax Less rate of 20 percent.

The American people would have a strong economic incentive to work, save and invest their money.

More savings would lead to more investment and in turn more jobs as businesses grow and prosper.

It’s time for Ron Paul to announce his support for a FairTax Less plan.

The dynamic combination of Paul’s Plan to Restore America and the FairTax Less plan would result in a peace and prosperity economy.

The U.S. would be the only nation on earth with no taxes on capital and labor!

The FairTax Less plan would attract trillions of dollars of new investment into the U.S. from around the world.

RESTORE AMERICA NOW! Ron Paul 2012 – Plan!

The FairTax: It’s Time

[Raymond Thomas Pronk is host of the Pronk Pops Show on KDUX web radio from 3-5 p.m. Wednesdays and author of the companion blog www.pronkpops.wordpress.com]

Background Articles and Videos

“…What is the FairTax plan?

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 13) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

The FairTax:

  • Enables workers to keep their entire paychecks
  • Enables retirees to keep their entire pensions
  • Refunds in advance the tax on purchases of basic necessities
  • Allows American products to compete fairly
  • Brings transparency and accountability to tax policy
  • Ensures Social Security and Medicare funding
  • Closes all loopholes and brings fairness to taxation
  • Abolishes the IRS

We offer a library of information throughout this Web site about the features and benefits of the FairTax plan. Please explore! …”

http://www.fairtax.org/site/PageServer?pagename=about_main

Tom Wright on the FairTax part 1

Tom Wright on the FairTax part 2

Tom Wright on the FairTax part 3

Tom Wright on the FairTax part 4

Tom Wright on the FairTax part 5

Tom Wright on the FairTax part 6

Tom Wright on the FairTax part 7

Why is the FairTax better than a flat income tax?

Dan Mitchell explains the fair tax

Q&A on the FAIRTAX pt.1

Q&A on the FAIRTAX pt.2

Americans For Fair Taxation

“…Americans For Fair Taxation (AFFT), also known as FairTax.org, states it is the United States’ largest, single-issue grassroots organization and taxpayers union dedicated to fundamental tax code replacement.[1] The Houston, Texas-based non-partisan political advocacy group is made up of volunteers who are working to get the Fair Tax Act (H.R. 25/S. 1025) enacted in the United States; a plan to replace all federal payroll and income taxes (both corporate and personal) with a national retail sales tax and monthly tax “prebate” to households of citizens and legal resident aliens. Americans for Fair Taxation state they subscribe to the ideals of simplicity, fairness, and freedom which they believe are embodied in the FairTax.[2][3] The organization claims to have signed up over 800,000 supporters.[4]

AFFT was founded in 1994 by three Houston businessmen, Jack Trotter, Bob McNair, and Leo Linbeck, who each pledged $1.5 million as seed money to hire tax experts to identify what they perceived as faults with the current tax system, to determine what American citizens would like to see in tax reform, and then to design the best system of taxation.[2] The three went on to raise an additional $17 million to fund focus groups with citizens around the country and tax policy studies.[2]

Some of the experts funded include:
  • Professors David Burton and Dan Mastromarco, University of Maryland and The Argus Group
  • Laurence Kotlikoff, Boston University
  • Stephen Moore, The Cato Institute
  • Professor Dale Jorgenson, Harvard University
  • Bill Beach (economist), the Heritage Foundation
  • Jim Poterba, The National Bureau of Economic Research
  • Professor George Zodrow, Rice University and the Baker Institute for Public Policy
  • Professor Joseph Kahn, Massachusetts Institute of Technology

http://en.wikipedia.org/wiki/Americans_For_Fair_Taxation

FairTax.org

http://www.fairtax.org/site/PageServer

Federal Insurance Contributions Act tax

Federal Insurance Contributions Act (FICA) tax (play /ˈfaɪkə/) is a United States payroll (or employment) tax[1] imposed by the federal government on both employees and employers to fund Social Security and Medicare[2] —federal programs that provide benefits for retirees, the disabled, and children of deceased workers. Social Security benefits include old-age, survivors, and disability insurance (OASDI); Medicare provides hospital insurance benefits. The amount that one pays in payroll taxes throughout one’s working career is indirectly tied to the social security benefits annuity that one receives as a retiree.[citation needed] This has led some to claim that the payroll tax is not a tax because its collection is tied to a benefit.[3] The United States Supreme Court decided in Flemming v. Nestor (1960) that no one has an accrued property right to benefits from Social Security.

The Federal Insurance Contributions Act is currently codified at Title 26, Subtitle C, Chapter 21 of the United States Code.[4]

Overview

The Center on Budget and Policy Priorities states that three-quarters of taxpayers pay more in payroll taxes than they do in income taxes.[5] The FICA tax is considered a regressive tax on income (with no standard deduction or personal exemption deduction) and is imposed (for the years 2009 and 2010) only on the first $106,800 of gross wages. The tax is not imposed on investment income (such as interest and dividends).

“Regular” employees (most wage-earners)

For 2008, the employee’s share of the Social Security portion of the tax is 6.2%[6] of gross compensation up to a limit of $102,000 of compensation (resulting in a maximum of $6,324.00 in tax). For 2009 and 2010, the employee’s share is 6.2% of gross compensation up to a limit of $106,800 of compensation (resulting in a maximum Social Security tax of $6,621.60).[7] This limit, known as the Social Security Wage Base, goes up each year based on average national wages and, in general, at a faster rate than the Consumer Price Index (CPI-U). For the calendar year 2011, the employee’s share has been temporarily reduced to 4.2% of gross compensation, with a limit of $106,800.[8] The employee’s share of the Medicare portion is 1.45% of wages, with no limit on the amount of wage subject to the Medicare tax.[6]

The employer is also liable for 6.2% Social Security and 1.45% Medicare taxes,[9] making the total Social Security tax 12.4% of wages, and the total Medicare tax 2.9%. (Self-employed people are responsible for the entire FICA percentage of 15.3% (= 12.4% + 2.9%), since they are in a sense both the employer and the employed; however, see the section on self-employed people for more details.)

If a worker starts a new job halfway through the year and has already earned the wage base limit with the old employer for Social Security purposes, the new employer is not allowed to stop withholding until the wage base limit has been earned with the new employer without regard to the wage base limit earned under the old employer. There are some limited cases, such as a successor-predecessor transfer, in which the payments that have already been withheld can be counted toward the year-to-date total.

If a worker has overpaid toward Social Security by having more than one job or by having switched jobs during the year, that worker can file a request to have that overpayment counted as tax paid when he or she files a Federal income tax return. If the taxpayer is due a refund, then the FICA overpayment is refunded.

Self-employed people

A tax similar to the FICA tax is imposed on the earnings of self-employed individuals, such as independent contractors and members of a partnership. This tax is imposed not by the Federal Insurance Contributions Act but instead by the Self-Employment Contributions Act of 1954, which is codified as Chapter 2 of Subtitle A of the Internal Revenue Code, 26 U.S.C. § 1401 through 26 U.S.C. § 1403 (the “SE Tax Act”). Under the SE Tax Act, self-employed people are responsible for the entire percentage of 15.3% (= 12.4% [Soc. Sec.] + 2.9% [Medicare]); however, the 15.3% multiplier is applied to 92.35% of the business’s net earnings from self-employment, rather than 100% of the gross earnings; the difference, 7.65%, is half of the 15.3%, and makes the calculation fair in comparison to that of regular (non-self-employed) employees. It does this by adjusting for the fact that employees’ 7.65% share of their SE tax is multiplied against a number (their gross income) that does not include the putative “employer’s half” of the self-employment tax. In other words, it makes the calculation fair because employees don’t get taxed on their employers’ contribution of the second half of FICA, therefore self-employed people shouldn’t get taxed on the second half of the self-employment tax. Similarly, self-employed people also deduct half of their self-employment tax (schedule SE) from their gross income on the way to arriving at their adjusted gross income (AGI). This levels the amount paid by self-employed persons in comparison to regular employees, who don’t pay general income tax on their employers’ contribution of the second half of FICA, just as they didn’t pay FICA tax on it either.[10][11]

These calculations are made on Schedule SE: Self-Employment Tax, although that is not readily apparent to novice self-employed taxpayers, owing to the schedule’s rather opaque name, which makes it sound like it is part of the general federal income tax. Some taxpayers have complained that Schedule SE’s title should be changed to something such as “Self-Employment FICA Tax”, so that its separateness from the general income tax is apparent,[12] perhaps not realizing that the SE tax is not imposed by the Federal Insurance Contributions Act (FICA) at all, and that neither SE taxes nor FICA taxes are “income taxes” imposed under Chapter 1 of the Internal Revenue Code.

Exemption for certain full-time students

A special case in FICA regulations includes exemptions for student workers. Students enrolled at least half-time in a university and working part-time for the same university are exempted from FICA payroll taxes, so long as their relationship with the university is primarily an educational one.[13] Medical residents working full-time are not considered students and are not exempt from FICA payroll taxes, according to a US Supreme Court ruling in 2011.[14] In order to be exempt from FICA payroll taxes, a student’s work must be “incident to” pursuit of a course of study, which is rarely the case with full-time employment.[14]

History

Prior to the Great Depression, the following presented difficulties for working-class Americans: [15]

  • The U.S. had no federal-government-mandated retirement savings; consequently, for those people who had not voluntarily saved money throughout their working lives, the end of their work careers was the end of all income.
  • Similarly, the U.S. had no federal-government-mandated disability income insurance to provide for citizens disabled by injuries (of any kind—non-work-related); consequently, for most people, a disabling injury meant no more income (since most people have little to no income except earned income from work).
  • In addition, there was no federal-government-mandated disability income insurance to provide for people unable to ever work during their lives, such as anyone born with severe mental retardation.
  • Further, the U.S. had no federal-government-mandated health insurance for the elderly; consequently, for many people, the end of their work careers was the end of their ability to pay for medical care.
  • Finally, the U.S. had no federal-government-mandated health insurance for all those who are not elderly; consequently, many people, especially those with pre-existing conditions, have no ability to pay for medical care.

In the 1930s, the New Deal introduced Social Security to rectify the first three problems (retirement, injury-induced disability, or congenital disability). It introduced the FICA tax as the means to pay for Social Security.

In the 1960s, Medicare was introduced to rectify the fourth problem (health care for the elderly). The FICA tax was increased in order to pay for this expense.

Criticism

Social Security regressivity debate

The Social Security component of the FICA tax is regressive, meaning the effective tax rate regresses (decreases) as income increases.[16] The Social Security component is actually a flat tax for wage levels under the Social Security Wage Base (see “Regular” employees above). But since no tax is owed on wages above the Wage Base limit, the total tax rate declines as wages increase beyond that limit. In other words, for wage levels above the limit, the absolute dollar amount of tax owed remains constant; since this number (the numerator) remains constant while the wage level (the denominator) increases, the effective tax rate steadily decreases as wage levels increase beyond the Wage Base limit.

FICA is also not collected on unearned income, including interest on savings deposits, stock dividends, and capital gains such as profits from the sale of stock or real estate. The proportion of total income which is exempt from FICA as “unearned income” tends to rise with higher income brackets.

Some argue that since Social Security taxes are eventually returned to taxpayers, with interest, in the form of Social Security benefits, the regressiveness of the tax is effectively negated.[citation needed] That is, the taxpayer gets back what he or she put into the Social Security system. Others, including the Congressional Budget Office, point out that the Social Security system as a whole is progressive; individuals with lower lifetime average wages receive a larger benefit (as a percentage of their lifetime average wage income) than do individuals with higher lifetime average wages.[17][18]

http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax

Related Posts On Pronk Palisades

Ron Paul’s Economic Plan for Restoring America to Peace and Prosperity–Videos

The FairTax (National Consumption Sales Tax) vs. The Flat Tax (One Rate Federal Income Tax)–Who Pays The Most Federal Individual Income Tax? Videos

Related Posts On Pronk Pops

Pronk Pops Show 52, November 2, 2011: Segment 0: 50 Year American Tax Revolution: When The Impossible Became The Inevitable–Flat Tax or FairTax–Videos

Pronk Pops Show 52, November 2, 2011: Segment 1: Newt Gingrich’s Optional 15% Flat Tax Plus 15.3% Social SecurityTax–More Taxes Than Cain’s-9-9-9 (27%) Tax Plan But Less Than Perry’s Optional 20% Flat Tax Plus 15.3% Social SecurityTax–Videos

Pronk Pops Show 52, November 2, 2011: Segment: 2: Herman Cain’s 9-9-9 Plan: 9% Business Income Flat Tax, 9% Personal Income Flat Tax, 9% National Retail Consumption Tax–Videos

Pronk Pops Show 52, November 2, 2011: Segment 3: Perry proposes optional flat 20 percent income tax and cap on government spending–Videos

Pronk Pops Show 52, November 2, 2011: Segment 4: A Ron Paul tax reform plan: no income taxes or IRS — FairTax Less!–”When The Impossible Became The Inevitable”–Videos

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Pronk Pops Show 52, November 2, 2011: Segment 3: Perry proposes optional flat 20 percent income tax and cap on government spending–Videos

Posted on November 1, 2011. Filed under: American History, Budgetary Policy, Business, College, Economics, Education, Employment, Energy, Federal Government, Fiscal Policy, Foreign Policy, Government, Government Spending, Health Care Insurance, History, Housing, Illegal Immigration, Immigration, Investments, Labor Economics, Monetary Policy, Philosophy, Politics, Polls, Pro Life, Public Sector Unions, Radio, Resources, Science, Security, Social Science, Success, Tax Policy, Technology, Unions, Videos, Violence, War, Wisdom | Tags: , , , , , , , , |

Pronk Pops Show 52:November 2, 2011

Pronk Pops Show 51:October 26, 2011

Pronk Pops Show 50:October 19, 2011

Pronk Pops Show 49:October 12, 2011

Pronk Pops Show 48:October 5, 2011

Listen To Pronk Pops Podcast or Download Shows 52

Listen To Pronk Pops Podcast or Download Shows 49-51

Listen To Pronk Pops Podcast or Download Shows 45-48

Listen To Pronk Pops Podcast or Download Shows 41-44

Listen To Pronk Pops Podcast or Download Shows 38-40

Listen To Pronk Pops Podcast or Download Shows 34-37

Listen To Pronk Pops Podcast or Download Shows 30-33

Listen To Pronk Pops Podcast or Download Shows 27-29

Listen To Pronk Pops Podcast or Download Shows 22 (Part 2)-26

Listen To Pronk Pops Podcast or Download Shows 16-22 (Part 1)

Listen To Pronk Pops Podcast or Download Shows 10-15

Listen To Pronk Pops Podcast or Download Shows 1-9

Segment 3: Perry proposes optional flat 20 percent income tax and cap on government spending–Videos

2012 Republican Presidential Nomination

Date Sample Cain Romney Perry Gingrich Paul Bachmann Santorum Huntsman Spread
RCP Average 10/13 – 10/31 26.0 24.0 10.0 9.4 8.2 3.8 1.8 1.2 Cain +2.0
Quinnipiac 10/25 – 10/31 869 RV 30 23 8 10 7 4 1 2 Cain +7
FOX News 10/23 – 10/25 328 RV 24 20 10 12 9 3 3 0 Cain +4
CBS News/NY Times 10/19 – 10/24 455 RV 25 21 6 10 8 2 1 1 Cain +4
CNN/Opinion Research 10/14 – 10/16 416 A 25 26 13 8 9 6 2 1 Romney +1
Associated Press/GfK 10/13 – 10/17 431 A 26 30 13 7 8 4 2 2 Romney +4

See All 2012 Republican Presidential Nomination Polling Data

Rick Perry ad: Cut, Balance and Grow

Rick Perry Announces His Plan to Cut, Balance & Grow

With 20% Flat-Tax Plan, Perry Eyes Distinction From GOP Field

Rick Perry CNBC

Perry wants flat tax… Almost

Political Checklist: Perry’s Flat Tax Plan and Obama’s Solo Plan

Steve Forbes Endorses Rick Perry and His Plan to Cut, Balance, and Grow

The FairTax Is Better Than Any Flat Tax!

What is the FairTax?

Why is the FairTax better than a flat income tax?

The FairTax: It’s Time

Perry’s Cornerstone Speech Highlights–Was he drunk, snorting cocaine or just Rick trying to be funny?

In Grey Court, South Carolina, on Oct.25, GOP presidential hopeful Rick Perry unveiled his plan for the U.S economy, “Cut, Balance and Grow.” The Texas governor’s proposed an optional flat income tax rate of 20 percent to replace the existing federal income tax system. Taxpayers would have the option to pay either the new flat 20 percent rate or continue paying income taxes based on the existing complex system.

Perry said, “It takes money from spendthrift bureaucrats and returns it to families. It puts fewer job-killing regulations on employers and more restrictions on politicians. It gives more freedom to Americans to control their own destiny. And just as importantly, the Cut, Balance and Grow plan paves the way for the job creation, balanced budgets and fiscal responsibility we need to get America working again.”

The individual standard tax exemption would be increased to $12,500, plus each dependent would also have a $12,500 tax exemption. A family of four earning $50,000 per year would be exempt from income taxes. Perry’s tax reform plan would also keep the mortgage interest, state taxes and charitable deductions for families earning less than $500,000.

Dividend, interest and capital gains taxes, the Alternative Minimum tax and estate taxes would all be eliminated. Social Security benefits would no longer be taxed.

Perry would not change Social Security and Medicare benefits for those currently receiving or soon-to-be receiving these benefits. However, Perry would gradually increase the eligibility age for Social Security and Medicare.

Young workers would be permitted to invest part of their Social Security payroll taxes in investment private accounts.

Americans eligible for Medicare would receive either a credit or payment to purchase a health insurance plan of their choice. Currently, the government pays benefits directly.

Companies doing business abroad would be encouraged to return their profits to the U.S. with a one-time reduced tax of 5.25 percent. With this tax incentive, more than $1 trillion in profits is estimated would be returned to the U.S. This would create several million new jobs as the profits are invested in the U.S. The corporate rate would be reduced from the second highest in the world at 35 percent to a more competitive 20 percent.

By design the Perry plan would deeply cut tax rates and in turn this may lead to lower tax revenues. In order to avoid large deficits, where government spending outlays exceed tax revenues, the federal budget would need to be massively cut, including discretionary spending and non-discretionary entitlement spending.

In terms of federal government spending, Perry’s plan theoretically would balance the budget in 2020, end all earmarks, reform entitlement spending for Social Security and Medicare, and limit government spending outlays to 18 percent of the Gross Domestic Product (GDP). Perry would propose to amend the Constitution to require balanced budgets.

Steve Forbes, who twice ran for the Republican presidential nomination on a proposed 17 percent flat tax, is Perry’s chief adviser for the optional flat tax plan.

Club for Growth president Chris Chocola said “Rick Perry’s plan for tax reform would be massively pro-growth.”

Perry’s plan is already being compared and contrasted with his two leading rivals for the nomination, Herman Cain and Mitt Romney. Cain’s 9-9-9 tax reform plan would scrap the existing income tax code and replace it and payroll taxes with a flat 9 percent business tax, a flat 9 percent individual tax and a 9 percent national sales consumption tax on the sale of new goods and services.

Cain’s plan is a hybrid of both flat income taxes and a consumption tax. The 9-9-9 plan was designed to be a bridge to the FairTax, which is a national sales tax that would replace all federal income, payroll, capital gains, Alternative Minimum Tax, gift and estate taxes.

Romney has proposed a plan that would cut the tax rates for corporations and personal savings and investment. Romney would eliminate taxes on dividend, interest and capital gains for individuals earning less than $200,000. In the past, Romney has favored a flat tax provided it did not hurt the middle class.

Perry’s tax reform plan is positioned between the bolder Cain plan and the more modest Romney plan. Ron Paul has yet to explicitly disclose his own tax reform plan. Paul has stated he would eliminate the Internal Revenue Service (IRS), permanently close five departments and cut spending by $1 trillion in the first year. This would seem to indicate he might support the FairTax with a lower rate, such as 20 percent or less-call it FairTax Less.

[Raymond Thomas Pronk is host of the Pronk Pops Show on KDUX web radio from 3-5 p.m. Wednesdays and author of the companion blog www.pronkpops.wordpress.com]

Background Articles and Videos

Rush Limbaugh Talks About Rick Perry’s Flat Tax Plan

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Pronk Pops Show 52, November 2, 2011: Segment 1: Newt Gingrich’s Optional 15% Flat Tax Plus 15.3% Social SecurityTax–More Taxes Than Cain’s-9-9-9 (27%) Tax Plan But Less Than Perry’s Optional 20% Flat Tax Plus 15.3% Social SecurityTax–Videos

Pronk Pops Show 52, November 2, 2011: Segment: 2: Herman Cain’s 9-9-9 Plan: 9% Business Income Flat Tax, 9% Personal Income Flat Tax, 9% National Retail Consumption Tax–Videos

Pronk Pops Show 52, November 2, 2011: Segment 3: Perry proposes optional flat 20 percent income tax and cap on government spending–Videos

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Pronk Pops Show 52, November 2, 2011: Segment: 2: Herman Cain’s 9-9-9 Plan: 9% Business Income Flat Tax, 9% Personal Income Flat Tax, 9% National Retail Consumption Tax–Videos

Posted on November 1, 2011. Filed under: American History, Books, Budgetary Policy, Business, College, Economics, Education, Employment, Energy, Federal Government, Fiscal Policy, Foreign Policy, Government, Government Spending, Health Care Insurance, History, Housing, Illegal Immigration, Immigration, Investments, Labor Economics, Monetary Policy, Philosophy, Politics, Polls, Pro Life, Public Sector Unions, Radio, Regulation, Resources, Tax Policy, Unions, Videos, Violence, War, Weapons, Wisdom | Tags: , , , , , , , , , , , |

Pronk Pops Show 52:November 2, 2011 

Pronk Pops Show 51:October 26, 2011

Pronk Pops Show 50:October 19, 2011

Pronk Pops Show 49:October 12, 2011

Pronk Pops Show 48:October 5, 2011

Listen To Pronk Pops Podcast or Download Shows 52

Listen To Pronk Pops Podcast or Download Shows 49-51

Listen To Pronk Pops Podcast or Download Shows 45-48

Listen To Pronk Pops Podcast or Download Shows 41-44

Listen To Pronk Pops Podcast or Download Shows 38-40

Listen To Pronk Pops Podcast or Download Shows 34-37

Listen To Pronk Pops Podcast or Download Shows 30-33

Listen To Pronk Pops Podcast or Download Shows 27-29

Listen To Pronk Pops Podcast or Download Shows 22 (Part 2)-26

Listen To Pronk Pops Podcast or Download Shows 16-22 (Part 1)

Listen To Pronk Pops Podcast or Download Shows 10-15

Listen To Pronk Pops Podcast or Download Shows 1-9

Segment: 2: Herman Cain’s 9-9-9 Plan: 9% Business Income Flat Tax, 9% Personal Income Flat Tax, 9% National Retail Consumption Tax–Videos

2012 Republican Presidential Nomination

Date Sample Cain Romney Perry Gingrich Paul Bachmann Santorum Huntsman Spread
RCP Average 10/13 – 10/31 26.0 24.0 10.0 9.4 8.2 3.8 1.8 1.2 Cain +2.0
Quinnipiac 10/25 – 10/31 869 RV 30 23 8 10 7 4 1 2 Cain +7
FOX News 10/23 – 10/25 328 RV 24 20 10 12 9 3 3 0 Cain +4
CBS News/NY Times 10/19 – 10/24 455 RV 25 21 6 10 8 2 1 1 Cain +4
CNN/Opinion Research 10/14 – 10/16 416 A 25 26 13 8 9 6 2 1 Romney +1
Associated Press/GfK 10/13 – 10/17 431 A 26 30 13 7 8 4 2 2 Romney +4

See All 2012 Republican Presidential Nomination Polling Data

Herman Cain on Taxes

Herman Cain on Fixing Deficit/Jobs/Fair Tax: “Replace Income and Payroll Tax”

Herman Cain on Fair Tax Dick Morris TV: Lunch ALERT!

Herman Cain’s 9-9-9 Tax Plan

AEI Panel Discussion on Herman Cain’s Tax Plan 10-31-11 (1 of 2)

AEI Panel Discussion on Herman Cain’s Tax Plan 10-31-11 (2 of 2)

9-9-9: A Vision for Economic Growth

Herman Cain breaks down his 9-9-9 plan

Herman Cain Explains His ‘9-9-9 Plan’

Now is the time for action!

Herman Cain Phase2 The FairTax

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Herman Cain lied to Ron Paul regarding Federal Reserve Audit

Alex Jones Calls Out Uncle Tom Herman Cain

Mark Block addresses smoking role in latest Cain video

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Pronk Pops Show 52, November 2, 2011: Segment: 2: Herman Cain’s 9-9-9 Plan: 9% Business Income Flat Tax, 9% Personal Income Flat Tax, 9% National Retail Consumption Tax–Videos

Pronk Pops Show 52, November 2, 2011: Segment 3: Perry proposes optional flat 20 percent income tax and cap on government spending–Videos

Pronk Pops Show 52, November 2, 2011: Segment 4: A Ron Paul tax reform plan: no income taxes or IRS — FairTax Less!–”When The Impossible Became The Inevitable”–Videos

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Pronk Pops Show 52, November 2, 2011: Segment 1: Newt Gingrich’s Optional 15% Flat Tax Plus 15.3% Social SecurityTax–More Taxes Than Cain’s-9-9-9 (27%) Tax Plan But Less Than Perry’s Optional 20% Flat Tax Plus 15.3% Social SecurityTax–Videos

Posted on November 1, 2011. Filed under: American History, Books, Budgetary Policy, Business, Coal, College, Economics, Education, Employment, Energy, Federal Government, Fiscal Policy, Foreign Policy, Government, Government Spending, Health Care Insurance, History, Housing, Illegal Immigration, Immigration, Investments, Labor Economics, Monetary Policy, Oil, Philosophy, Politics, Pro Life, Public Sector Unions, Regulation, Resources, Science, Security, Tax Policy, Technology, Unions, Videos, Violence, War, Wisdom | Tags: , , , , , , , , |

Pronk Pops Show 52:November 2, 2011

Pronk Pops Show 51:October 26, 2011

Pronk Pops Show 50:October 19, 2011

Pronk Pops Show 49:October 12, 2011

Pronk Pops Show 48:October 5, 2011

Listen To Pronk Pops Podcast or Download Shows 52

Listen To Pronk Pops Podcast or Download Shows 49-51

Listen To Pronk Pops Podcast or Download Shows 45-48

Listen To Pronk Pops Podcast or Download Shows 41-44

Listen To Pronk Pops Podcast or Download Shows 38-40

Listen To Pronk Pops Podcast or Download Shows 34-37

Listen To Pronk Pops Podcast or Download Shows 30-33

Listen To Pronk Pops Podcast or Download Shows 27-29

Listen To Pronk Pops Podcast or Download Shows 22 (Part 2)-26

Listen To Pronk Pops Podcast or Download Shows 16-22 (Part 1)

Listen To Pronk Pops Podcast or Download Shows 10-15

Listen To Pronk Pops Podcast or Download Shows 1-9

Segment 1: Newt Gingrich’s Optional 15% Flat Tax Plus 15.3% Social SecurityTax–More Taxes Than Cain’s-9-9-9 (27%) Tax Plan But Less Than Perry’s Optional 20% Flat Tax Plus 15.3% Social SecurityTax–Videos

2012 Republican Presidential Nomination

Date Sample Cain Romney Perry Gingrich Paul Bachmann Santorum Huntsman Spread
RCP Average 10/13 – 10/31 26.0 24.0 10.0 9.4 8.2 3.8 1.8 1.2 Cain +2.0
Quinnipiac 10/25 – 10/31 869 RV 30 23 8 10 7 4 1 2 Cain +7
FOX News 10/23 – 10/25 328 RV 24 20 10 12 9 3 3 0 Cain +4
CBS News/NY Times 10/19 – 10/24 455 RV 25 21 6 10 8 2 1 1 Cain +4
CNN/Opinion Research 10/14 – 10/16 416 A 25 26 13 8 9 6 2 1 Romney +1
Associated Press/GfK 10/13 – 10/17 431 A 26 30 13 7 8 4 2 2 Romney +4

See All 2012 Republican Presidential Nomination Polling Data

Presidential Candidate Newt Gingrich: My Opponent is Barack Obama

Newt Gingrich on the Fair Tax

21st Century Contract with America

PART 1: LEGISLATIVE PROPOSALS

Executive Summary

  1. Repeal Obamacare and pass a replacement that saves lives and money by empowering patients and doctors, not bureaucrats and politicians.
  2. Return to robust job creation with a bold set of tax cuts and regulatory reforms that will free American entrepreneurs to invest and hire, as well as by reforming the Federal Reserve and creating a training requirement for extended federal unemployment benefits to encourage work and improve the quality of our workforce.
  3. Unleash America’s full energy production potential in oil, natural gas, coal, biofuels, wind, nuclear oil shale and more, creating jobs, stimulating a sustainable manufacturing boom, lowering gasoline and other energy prices, increasing government revenues, and bolstering national security.
  4. Save Medicare and Social Security by giving Americans more choices and tools to live longer, healthier lives with greater financial independence.
  5. Balance the federal budget by freeing job-creators to grow the economy, reforming entitlements, and implementing waste cutting and productivity improvement systems such as Lean Six Sigma to eliminate waste and fraud. Pass a balanced budget amendment to keep it balanced.
  6. Control the border by January 1, 2014 and establish English as the official language of government; reform the legal visa system, and make it much easier to deport criminals and gang members while making it easier for law abiding visitors to come to the US.
  7. Revitalize our national security system to meet 21st century threats by restructuring and adequately funding our security agencies to function within a grand strategy for victory over those who seek to kill us or limit American power.
  8. Maximize the speed and impact of medical breakthroughs by removing unnecessary obstacles that block new treatments from reaching patients and emphasizing research spending towards urgent national priorities, like brain science with its impact on Alzheimer’s, autism, Parkinson’s, mental health and other conditions knowledge of the brain will help solve.
  9. Restore the proper role of the judicial branch by using the clearly delineated powers available to the president and Congress to correct, limit, or replace judges who violate the Constitution.
  10. Enforce the Tenth Amendment by starting an orderly transfer of power and responsibility from the federal government back “to the states, respectively, or to the people,” as the Constitution requires. Over the next year, state and local officials and citizens will be asked to identify the areas which can be transferred back home.

2. Return to robust job creation with a bold set of tax cuts and regulatory reforms that will free American entrepreneurs to invest and hire, as well as by reforming the Federal Reserve and creating a training requirement for extended federal unemployment benefits to encourage work and improve the quality of our workforce.

Government does not create jobs. The American people create jobs.

Ronald Reagan understood this truth. His bold series of tax cuts and deregulatory measures upon taking office ended the economic stagnation of the 1970s for good by freeing American businesses to create nearly 20 million new jobs in less than a decade. In September 1983 alone the Reagan recovery led the American people to create 1,100,000 new jobs, more jobs than the first eight months of 2011 combined.

We understood these principles when we won the first Republican majority in the House in 40 years in 1994. Balanced budgets, streamlined government and the biggest capital gains tax cut in history led to unemployment falling to under 4% by 2000.

My administration will build on this time-tested model: A profound restructuring and reduction of the tax and regulatory burden on Americans, with the very achievable goal of 4% unemployment and millions of new jobs within only a few years.

JOBS AND PROSPERITY PLAN: LOWERING TAXES

First, I pledge to veto any tax increase. American families and businesses deserve certainty and predictability, and I will work to make permanent all current rates of taxation that would otherwise increase automatically in 2013.

My Jobs and Prosperity plan will then make four major tax cuts:

    • Reduce the Corporate Tax to 12.5%. Reducing the corporate income tax, currently the second highest in the developed world, will make America the number one destination in the world for foreign investment and the millions of jobs that will accompany this designation. Most of the $1.4 trillion in profits locked up overseas by the current 35% tax rate will come home to be reinvested and distributed at a 12.5% rate.
    • Abolish the Capital Gains Tax. Lowering the cost of investment means hundreds of thousands of more jobs will be created. It happens every time we lower the capital gains tax. At a zero percent rate, hundreds of billions of dollars in new investments will pour into the United States to create new firms and build new factories.
    • Abolish the Death Tax. This law is economically misguided and morally indefensible, and it is time for the government to stop destroying family wealth. Abolishing the death tax ensures family-owned businesses can focus on creating jobs and growing rather than on dealing with tax law.
    • 100% Expensing. We want American workers to have the most modern and most productive equipment in the world, and we can encourage this development by allowing companies to write off all their new equipment in one year.

JOBS AND PROSPERITY PLAN: TAX SIMPLIFICATION WITH AN OPTIONAL FLAT TAX

My legislation will also include an optional flat tax of 15% or less. All tax filers would be given the option to pay their income taxes subject to current income tax provisions or to pay under a lower single rate of taxation with limited deductions. A revenue neutral flat tax reform would save hundreds of billions of dollars in compliance costs each year and would eliminate the need for taxes on savings, dividends, and capital gains.

This optional flat tax system will create a new personal deduction of $12,000 for every American. This deduction is well above the current poverty level, ensuring that this new system does not unfairly target the poor. The current $1,000 tax credit for each child aged sixteen or younger would also apply, as would the current earned income tax credit (EITC).

An optional flat tax reform will be simple: tax returns can be done on one sheet of paper. Subtract from income a standard deduction and deductions for charity and home ownership, multiply the result by the fixed single rate of taxation of at most 15%, and the process is over.

Gone will be the stressful hours spent figuring out whether your military service or marital status will adversely affect your return. No more headaches trying to determine where estimated tax payments go. Tax preparation fees could be money spent on something more rewarding.

Such an optional flat tax system would create a new standard deduction, which would be above the established poverty level, meaning an optional flat tax would not unfairly target the poor.

An optional flat tax would eliminate the Alternative Minimum Tax. And if a person had twice as much income as another, he or she would be taxed twice as much. Furthermore, a single rate tax structure would eliminate taxes on savings, capital gains, and dividends. Saving would increase and businesses would expand to create new jobs.

This concept of an optional flat tax would give American taxpayers an opportunity to choose simplicity versus complexity and a single rate over a lot of deductions.

Because the flat tax is optional, it does not raise taxes on a single person or unfairly impact seniors, lower income workers, or the poor.

http://www.newt.org/contract/legislative-proposals#Two

Let’s Bump Plans: A Comparison of Gingrich and Perry’s Flat Tax Plans

http://www.newt.org/news/lets-bump-plans-comparison-gingrich-and-perrys-flat-tax-plans

Gingrich’s Plan Far Bolder than Perry’s Plan and Will Lead to Far More Robust Job Creation and Capital Investment in United States

Gingrich Perry Verdict: Gingrich Plan Better
Rate 15% 20% Gingrich has advocated for several years an optional flat tax rate of 15%, which when coupled with Gingrich’s bold entitlement and regulatory reforms, will usher in another era of booming economic growth and new, higher-paying jobs. The Perry rate of 20% is higher than the 17% that Steve Forbes proposed in his 1996 and 2000 presidential campaign.
Who Gets to Make Deductions for Charitable Giving and Home Ownership?? Everyone Families making less than $500,000/year By creating two separate classes of taxpayers, the Perry plan buys into the same class warfare that characterizes the Obama and Romney economic plans. The fact that there are still two brackets – even under a supposed “flat tax” plan – calls into question whether this is really a flat tax at all.
State and Local Tax Deductions Not deductible in optional flat tax plan Deductible in optional flat tax plan The Gingrich plan has a lower rate so less need for state and local deductions. The deduction is a federal subsidy for states to adopt higher state and local taxes. Removing the subsidy would lead states to reduce state and local taxes, or adopt their own flat tax reforms. The Perry plan erodes states’ competitive advantages by making state and local taxes deductible in his optional flat tax plan.
Who Benefits from Elimination of Capital Gains Tax? Everyone Depends whether capital gains is long term or short term. Perry’s plan eliminates cap gains only for long term. The Gingrich plan maximizes the capital investment and job creation that will accompany the elimination of this tax. The Perry plan only goes halfway, and by levying up to 35% tax on short-term capital gains, it will discourage investment, venture capital, and new jobs creation.
Corporate Income Tax 12.5% 20% The Gingrich plan will create a boom of new American entrepreneurship by dramatically cutting the corporate tax rate to one of the lowest in the developed world. The Perry plan relies upon a short term “tax holiday,” then only drops the corporate tax rate to 20% — only average in the developed world, and still over 20% higher than our closest economic competitor Canada, which has a rate of only 16.5%. Gingrich rate makes U.S. more competitive than Canada.
Payroll Taxes Eventually replace payroll tax with personal accounts, financing better results No change in existing payroll tax Gingrich supports personal savings investment and insurance accounts that would eventually be expanded to finance all of the benefits now financed by the payroll tax, allowing that tax ultimately to be phased out altogether.
Family Deductions Under Flat Tax Plan $12,000 personal deduction for every individual. Both the EITC and the Child Tax Credit are preserved in Gingrich’s optional flat tax system. $12,500 personal deduction for every individual. No information provided. Preserving the EITC and Child Tax Credit are critical to ensure that the optional flat tax system does not unfairly target low-income Americans. Gingrich passed the first child tax credit as Speaker in 1997, and will preserve this credit and the EITC under his optional flat tax system.
Record in Achieving Dramatic Jobs and Economic Recovery at the National Level? Yes. Substantial. See record at right. None. Speaker Gingrich’s Record (1995-1999):• Eleven Million New Jobs
• Four Straight Balanced Budgets for the First Time Since the 1920s.
• Unemployment rate of 4.2%.
• Federal Spending Held to the Slowest Growth Rate Since the Early 1950s (avg. of 2.9% a year).
• Venture capital investments grew 500% in three years and manufacturing sector grew to 17.43 million jobs.
• Bipartisan Welfare Reform that Lifted Millions from Poverty.
• Over $400 Billion of National Debt Paid Down
Gingrich Romney Verdict: Gingrich Plan Better
Personal Income Tax Choice of current system or 15% flat tax with personal, homeowner, and charitable deductions Maintain current tax rates The Gingrich plan gives Americans a choice to continue to file under the existing system, or to eliminate compliance costs and hours of paperwork by filing with a flat rate of 15%. The Romney plan hopes to make taxes “flatter” in the future, but offers no immediate choice and no immediate relief.
Capital Gains Tax for Individuals Eliminate tax completely Depends how much money the taxpayer makes. Romney’s plan eliminates capital gains taxes for those making less than $200,000/year, but maintains the current system, with rates of up to 35%, for the rest. The Gingrich plan maximizes the capital investment and job creation that will accompany the elimination of this tax, and acknowledges that a tax reform is only fair if all Americans receive relief. The Romney plan determines that some Americans should pay no taxes on a particular investment, while other Americans should pay taxes of up to 35% on the same investment.
Capital Gains Tax for Corporations Eliminate tax completely Maintain current system The Gingrich plan is modeled on the success of the 1997 capital gains cut, which spurred job creation and a 500% increase in venture capital in just 3 years. The Romney plan maintains the corporate capital gains tax, an unequivocal burden on American job-creators who need to be freed to grow, prosper, and compete in a 21st century global economy.
Corporate Income Tax 12.5% 25% The Gingrich plan will create a boom of new American entrepreneurship by dramatically cutting the corporate tax rate to one of the lowest in the developed world. The Romney plan will still be average-to-high compared to the rest of the developed world, and still over 50% higher than our closest economic competitor Canada, which has a rate of only 16.5%. Gingrich rate makes U.S. more competitive than Canada.
Payroll Tax Eventually replace payroll tax with personal accounts, financing better results No information Gingrich supports personal savings investment and insurance accounts that would eventually be expanded to finance all of the benefits now financed by the payroll tax, allowing that tax ultimately to be phased out altogether.
Medicare reform Choice between the traditional system or opportunity to purchase private insurance with premium support No information Under the Gingrich Plan, any American who wants to enjoy the existing Medicare system will be able to do so. Americans can also opt to transition to a more personalized system in the private sector with greater options for better care, where they would receive premium support to purchase private insurance.

http://www.newt.org/news/lets-bump-plans-comparison-gingrich-and-romneys-tax-plans

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Pronk Pops Show 52, November 2, 2011: Segment 0: 50 Year American Tax Revolution: When The Impossible Became The Inevitable–Flat Tax or FairTax–Videos

Posted on November 1, 2011. Filed under: American History, Books, Budgetary Policy, Business, Computers, Economics, Education, Employment, Energy, Federal Government, Fiscal Policy, Government, Government Spending, Health Care Insurance, History, Housing, Illegal Immigration, Immigration, Labor Economics, Monetary Policy, Philosophy, Politics, Polls, Pro Life, Public Sector Unions, Tax Policy, Unions, Videos, Violence, War, Wisdom | Tags: , , , , , , , , , , , , , , , , , , |

Pronk Pops Show 52:November 2, 2011

Pronk Pops Show 51:October 26, 2011

Pronk Pops Show 50:October 19, 2011

Pronk Pops Show 49:October 12, 2011

Pronk Pops Show 48:October 5, 2011

Listen To Pronk Pops Podcast or Download Shows 52

Listen To Pronk Pops Podcast or Download Shows 49-51

Listen To Pronk Pops Podcast or Download Shows 45-48

Listen To Pronk Pops Podcast or Download Shows 41-44

Listen To Pronk Pops Podcast or Download Shows 38-40

Listen To Pronk Pops Podcast or Download Shows 34-37

Listen To Pronk Pops Podcast or Download Shows 30-33

Listen To Pronk Pops Podcast or Download Shows 27-29

Listen To Pronk Pops Podcast or Download Shows 22 (Part 2)-26

Listen To Pronk Pops Podcast or Download Shows 16-22 (Part 1)

Listen To Pronk Pops Podcast or Download Shows 10-15

Listen To Pronk Pops Podcast or Download Shows 1-9

Segment 0: 50 Year American Tax Revolution: When The Impossible Became The Inevitable–Flat Tax or FairTax–Videos

http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/

The Recession and Recovery in Perspective

Post-WWII Recessions

The Business Cycle Dating Committee of the National Bureau of Economic Research determines the beginning and ending dates of U.S. recessions. http://www.nber.org/cycles.html

        It has determined that the U.S. economy experienced 10 recessions from 1946 through 2006. The committee determined that the 2007-2009 recession began in December 2007 and ended in June of 2009.  Ending dates are typically announced several months after the recession officially ends. Read the June 2009 trough announcement by the NBER.

Length of Recessions

The 10 previous postwar recessions ranged in length from 6 months to 16 months, averaging about 10 1/2 months. The 2007-09 recession  was    the longest recession in the postwar period, at 18 months.

Depth of Recessions

The severity of a recession is determined in part by its length; perhaps even more important is the magnitude of the decline in economic activity. The 2007-09 recession was the deepest recession in the postwar period; at their lowest points employment fell by 6.3 percent and output fell by 5.1 percent.

http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/

http://seekingalpha.com/article/142954-two-charts-imply-current-u-s-recession-may-be-longest-in-history

the National Bureau of Economic Research

US Business Cycle Expansions and Contractions

http://www.nber.org/cycles.html

Taxes and Long-Term Economic Growth

Executive Summary

The 1960s and 1980s were periods of sustained high growth rates in the economy. The major reason for this growth is the tax cuts enacted in the beginning of each decade. President Kennedy’s and President Reagan’s tax cuts resulted in higher investment, lower unemployment, and improved overall economic performance.

Since March 1991, the U.S. economy has been expanding, though at a slower rate than previous post-war expansions. Productivity growth has been weak and must be improved. A tax cut that improves incentives to work, save, and invest is necessary to provide a framework for prosperity. As President Kennedy said, “A rising tide lifts all boats.”

http://www.house.gov/jec/growth/longterm/longterm.htm

2011 IRS Tax Brackets

Here are the 2011 tax tables, which make it easy to find which marginal tax bracket you are in:

Tax Bracket Single Married Filing Jointly Head of Household
10% Bracket $0 – $8,500 $0 – $17,000 $0 – $12,150
15% Bracket $8,500 – $34,500 $17,000 – $69,000 $12,150 – $46,250
25% Bracket $34,500 – $83,600 $69,000 – $139,350 $46,250 – $119,400
28% Bracket $83,600 – $174,400 $139,350 – $212,300 $119,400 – $193,350
33% Bracket $174,400 – $379,150 $212,300 – $379,150 $193,350 – $379,150
35% Bracket $379,150+ $379,150+ $379,150+

http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html

Source: Internal Revenue Service

Table 1 Summary of Federal Income Tax Data, 2009

 

Number of Returns with Positive AGI

AGI ($ millions)

Income Taxes Paid ($ millions)

Group’s Share of Total AGI

Group’s Share of Income Taxes

Income Split Point

Average Tax Rate

All Taxpayers 137,982,203 $7,825,389 $865,863 100.0% 100.0% 11.06%
Top 1% 1,379,822 $1,324,572 $318,043 16.9% 36.7% $343,927.00 24.01%
1-5% 5,519,288 $1,157,918 $189,864 14.8% 22.0% 16.40%
Top 5% 6,899,110 $2,482,490 $507,907 31.7% 58.7% $154,643.00 20.46%
5-10% 6,899,110 $897,241 $102,249 11.5% 11.8% 11.40%
Top 10% 13,798,220 $3,379,731 $610,156 43.2% 70.5% $112,124.00 18.05%
10-25% 20,697,331

$1,770,140

$145,747 22.6% 17.0% 8.23%
Top 25% 34,495,551 $5,149,871 $755,903 65.8% 87.3% $ 66,193.00 14.68%
25-50% 34,495,551 $1,620,303 $90,449 20.7% 11.0% 5.58%
Top 50% 68,991,102 $6,770,174 $846,352 86.5% 97.7% > $32,396 12.50%
Bottom 50% 68,991,102

$1,055,215

$19,511 13.5% 2.3% < $32,396 1.85%

Source: Internal Revenue Service

Table 6 

Total Income Tax Shares, 1980-2009 (Percent of federal income tax paid by each group)

Year

Total

Top 0.1%

Top 1%

Top 5%

Between 5% & 10%

Top 10%

Between 10% & 25%

Top 25%

Between 25% & 50%

Top 50%

Bottom 50%

1980

100%

19.05%

36.84%

12.44%

49.28%

23.74%

73.02%

19.93%

92.95%

7.05%

1981

100%

17.58%

35.06%

12.90%

47.96%

24.33%

72.29%

20.26%

92.55%

7.45%

1982

100%

19.03%

36.13%

12.45%

48.59%

23.91%

72.50%

20.15%

92.65%

7.35%

1983

100%

20.32%

37.26%

12.44%

49.71%

23.39%

73.10%

19.73%

92.83%

7.17%

1984

100%

21.12%

37.98%

12.58%

50.56%

22.92%

73.49%

19.16%

92.65%

7.35%

1985

100%

21.81%

38.78%

12.67%

51.46%

22.60%

74.06%

18.77%

92.83%

7.17%

1986

100%

25.75%

42.57%

12.12%

54.69%

21.33%

76.02%

17.52%

93.54%

6.46%

Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable

1987

100%

24.81%

43.26%

12.35%

55.61%

21.31%

76.92%

17.02%

93.93%

6.07%

1988

100%

27.58%

45.62%

11.66%

57.28%

20.57%

77.84%

16.44%

94.28%

5.72%

1989

100%

25.24%

43.94%

11.85%

55.78%

21.44%

77.22%

16.94%

94.17%

5.83%

1990

100%

25.13%

43.64%

11.73%

55.36%

21.66%

77.02%

17.16%

94.19%

5.81%

1991

100%

24.82%

43.38%

12.45%

55.82%

21.46%

77.29%

17.23%

94.52%

5.48%

1992

100%

27.54%

45.88%

12.12%

58.01%

20.47%

78.48%

16.46%

94.94%

5.06%

1993

100%

29.01%

47.36%

11.88%

59.24%

20.03%

79.27%

15.92%

95.19%

4.81%

1994

100%

28.86%

47.52%

11.93%

59.45%

20.10%

79.55%

15.68%

95.23%

4.77%

1995

100%

30.26%

48.91%

11.84%

60.75%

19.62%

80.36%

15.03%

95.39%

4.61%

1996

100%

32.31%

50.97%

11.54%

62.51%

18.80%

81.32%

14.36%

95.68%

4.32%

1997

100%

33.17%

51.87%

11.33%

63.20%

18.47%

81.67%

14.05%

95.72%

4.28%

1998

100%

34.75%

53.84%

11.20%

65.04%

17.65%

82.69%

13.10%

95.79%

4.21%

1999

100%

36.18%

55.45%

11.00%

66.45%

17.09%

83.54%

12.46%

96.00%

4.00%

2000

100%

37.42%

56.47%

10.86%

67.33%

16.68%

84.01%

12.08%

96.09%

3.91%

2001

100%

16.06%

33.89%

53.25%

11.64%

64.89%

18.01%

82.90%

13.13%

96.03%

3.97%

2002

100%

15.43%

33.71%

53.80%

11.94%

65.73%

18.16%

83.90%

12.60%

96.50%

3.50%

2003

100%

15.68%

34.27%

54.36%

11.48%

65.84%

18.04%

83.88%

12.65%

96.54%

3.46%

2004

100%

17.44%

36.89%

57.13%

11.07%

68.19%

16.67%

84.86%

11.85%

96.70%

3.30%

2005

100%

19.26%

39.38%

59.67%

10.63%

70.30%

15.69%

85.99%

10.94%

96.93%

3.07%

2006

100%

19.56%

39.89%

60.14%

10.65%

70.79%

15.47%

86.27%

10.75%

97.01%

2.99%

2007

100%

20.19%

40.41%

60.61%

10.59%

71.20%

15.37%

86.57%

10.54%

97.11%

2.89%

2008

100%

18.47%

38.02%

58.72%

11.22%

69.94%

16.40%

86.34%

10.96%

97.30%

2.70%

2009

100%

17.11%

36.73%

58.66%

11.81%

70.47%

16.83%

87.30%

10.45%

97.75%

2.25%

Source: Internal Revenue Service

http://www.taxfoundation.org/news/show/250.html#table1

JFK – Path to Prosperity

Excerpts from President John F Kennedy’s speech delivered on December 14, 1962 to the Economic Club of New York.

Income Tax Cut, JFK Hopes To Spur Economy 1962/8/13

JFK speech on tax cuts

John F. Kennedy State of the Union Address to a Joint Session of the United States Congress (1963)

JFK State of the Union Address (1963) (Part 1)

Interesting that the audio for the tax cut part of the speech is missing. “This net reduction in tax liabilities of $10 billion will increase the purchasing power of American families and business enterprises in every tax bracket, with greatest increase going to our low-income consumers. It will, in addition, encourage the initiative and risk-taking on which our free system depends–induce more investment, production, and capacity use–help provide the 2 million new jobs we need every year…”

January 14, 1963 – John F. Kennedy’s delivers the State of the Union address

State of the Union Address (January 14, 1963)

John Fitzgerald Kennedy

“…At home, the recession is behind us. Well over a million more men and women are working today than were working 2 years ago. The average factory workweek is once again more than 40 hours; our industries are turning out more goods than ever before; and more than half of the manufacturing capacity that lay silent and wasted 100 weeks ago is humming with activity.

In short, both at home and abroad, there may now be a temptation to relax. For the road has been long, the burden heavy, and the pace consistently urgent.

But we cannot be satisfied to rest here. This is the side of the hill, not the top. The mere absence of war is not peace. The mere absence of recession is not growth. We have made a beginning–but we have only begun.

Now the time has come to make the most of our gains–to translate the renewal of our national strength into the achievement of our national purpose.

America has enjoyed 22 months of uninterrupted economic recovery. But recovery is not enough. If we are to prevail in the long run, we must expand the long-run strength of our economy. We must move along the path to a higher rate of growth and full employment.

For this would mean tens of billions of dollars more each year in production, profits, wages, and public revenues. It would mean an end to the persistent slack which has kept our unemployment at or above 5 percent for 61 out of the past 62 months–and an end to the growing pressures for such restrictive measures as the 35-hour week, which alone could increase hourly labor costs by as much as 14 percent, start a new wage-price spiral of inflation, and undercut our efforts to compete with other nations.

To achieve these greater gains, one step, above all, is essential–the enactment this year of a substantial reduction and revision in Federal income taxes.

For it is increasingly clear–to those in Government, business, and labor who are responsible for our economy’s success–that our obsolete tax system exerts too heavy a drag on private purchasing power, profits, and employment. Designed to check inflation in earlier years, it now checks growth instead. It discourages extra effort and risk. It distorts the use of resources. It invites recurrent recessions, depresses our Federal revenues, and causes chronic budget deficits.

Now, when the inflationary pressures of the war and the post-war years no longer threaten, and the dollar commands new respect-now, when no military crisis strains our resources–now is the time to act. We cannot afford to be timid or slow. For this is the most urgent task confronting the Congress in 1963.

In an early message, I shall propose a permanent reduction in tax rates which will lower liabilities by $13.5 billion. Of this, $11 billion results from reducing individual tax rates, which now range between 20 and 91 percent, to a more sensible range of 14 to 65 percent, with a split in the present first bracket. Two and one-half billion dollars results from reducing corporate tax rates, from 52 percent–which gives the Government today a majority interest in profits-to the permanent pre-Korean level of 47 percent. This is in addition to the more than $2 billion cut in corporate tax liabilities resulting from last year’s investment credit and depreciation reform.

To achieve this reduction within the limits of a manageable budgetary deficit, I urge: first, that these cuts be phased over 3 calendar years, beginning in 1963 with a cut of some $6 billion at annual rates; second, that these reductions be coupled with selected structural changes, beginning in 1964, which will broaden the tax base, end unfair or unnecessary preferences, remove or lighten certain hardships, and in the net offset some $3.5 billion of the revenue loss; and third, that budgetary receipts at the outset be increased by $1.5 billion a year, without any change in tax liabilities, by gradually shifting the tax payments of large corporations to a . more current time schedule. This combined program, by increasing the amount of our national income, will in time result in still higher Federal revenues. It is a fiscally responsible program–the surest and the soundest way of achieving in time a balanced budget in a balanced full employment economy.

This net reduction in tax liabilities of $10 billion will increase the purchasing power of American families and business enterprises in every tax bracket, with greatest increase going to our low-income consumers. It will, in addition, encourage the initiative and risk-taking on which our free system depends–induce more investment, production, and capacity use–help provide the 2 million new jobs we need every year–and reinforce the American principle of additional reward for additional effort.

I do not say that a measure for tax reduction and reform is the only way to achieve these goals.

–No doubt a massive increase in Federal spending could also create jobs and growth-but, in today’s setting, private consumers, employers, and investors should be given a full opportunity first.

–No doubt a temporary tax cut could provide a spur to our economy–but a long run problem compels a long-run solution.

–No doubt a reduction in either individual or corporation taxes alone would be of great help–but corporations need customers and job seekers need jobs.

–No doubt tax reduction without reform would sound simpler and more attractive to many–but our growth is also hampered by a host of tax inequities and special preferences which have distorted the flow of investment.

–And, finally, there are no doubt some who would prefer to put off a tax cut in the hope that ultimately an end to the cold war would make possible an equivalent cut in expenditures-but that end is not in view and to wait for it would be costly and self-defeating.

In submitting a tax program which will, of course, temporarily increase the deficit but can ultimately end it–and in recognition of the need to control expenditures–I will shortly submit a fiscal 1964 administrative budget which, while allowing for needed rises in defense, space, and fixed interest charges, holds total expenditures for all other purposes below this year’s level.

This requires the reduction or postponement of many desirable programs, the absorption of a large part of last year’s Federal pay raise through personnel and other economies, the termination of certain installations and projects, and the substitution in several programs of private for public credit. But I am convinced that the enactment this year of tax reduction and tax reform overshadows all other domestic problems in this Congress. For we cannot for long lead the cause of peace and freedom, if we ever cease to set the pace here at home.

Tax reduction alone, however, is not enough to strengthen our society, to provide opportunities for the four million Americans who are born every year, to improve the lives of 32 million Americans who live on the outskirts of poverty.

The quality of American life must keep pace with the quantity of American goods.

This country cannot afford to be materially rich and spiritually poor.

Therefore, by holding down the budgetary cost of existing programs to keep within the limitations I have set, it is both possible and imperative to adopt other new measures that we cannot afford to postpone. …”

http://millercenter.org/president/speeches/detail/5762

Reagan on Taxes

Ronald Reagan-Remarks on Signing the Tax Reform Act (October 22, 1986)

President Reagans Remarks on Signing the Tax Reform Act of 1986 – 10/22/86

Dan Mitchell explains the fair tax

The Flat Tax: How it Works and Why it is Good for America

What is the FairTax legislation?

Herman Cain breaks down his 9-9-9 plan (Fox Debate)

Herman Cain’s 9-9-9 Tax Plan (AEI Interview)

Herman Cain on Taxes (Interview)

Milton Friedman – The Free Lunch Myth

Ron Paul on Taxes (Speech)

Ron Paul – THE FAIRTAX REVOLUTION (speech)

Herman Cain 999 plan will add new taxes explained by Ron Paul

Herman Cain Lied To Ron Paul

Reagan; Taxes and Budget Deficit: Revenue 19% of GDP; Spending is 23%; Revenue is sufficient

JFK Defends The First Amendment

Background Articles and Videos

Taxes Due

If you are trying to calculate your taxes due, these tables may be more helpful. Remember that taxes are due on your adjusted income after accounting for deductions and other adjustments.

Single Filers

These tables are for single filers who are not surviving spouses or heads of household:

Taxable Income Tax
$0 – $8,500 10% of taxable income
$8,500 – $34,500 $850 plus 15% of excess over $8,500
$34,500 – $83,600 $4,750 plus 25% of excess over $34,500
$83,600 – $174,400 $17,025 plus 28% of excess over $83,600
$174,400 – $379,150 $42,449 plus 33% of excess over $174,400
$379,150+ $110,016.50 plus 35% of excess over $379,150

Married & Surviving Spouses

These tables are for married filing jointly or surviving spouses:

Taxable Income Tax
$0 – $17,000 10% of taxable income
$17,000 – $69,000 $1,700 plus 15% of excess over $17,000
$69,000 – $139,350 $9,500 plus 25% of excess over $69,000
$139,350 – $212,300 $27,087.50 plus 28% of excess over $139,350
$212,300 – $379,150 $47,513.50 plus 33% of excess over $212,300
$379,150+ $102,574 plus 35% of excess over $379,150

Head of Household

These tax tables are for those considered Heads of Household:

Taxable Income Tax
$0 – $12,150 10% of taxable income
$12,150 – $46,250 $1,215 plus 15% of excess over $12,150
$46,250 – $119,400 $6,330 plus 25% of excess over $46,250
$119,400 – $193,350 $24,617.50 plus 28% of excess over $119,400
$193,350 – $379,150 $45,323.50 plus 33% of excess over $193,350
$379,150+ $106,637.50 plus 35% of excess over $379,150

Married Filing Separately

These are tax tables for those filing as Married Filing Separately:

Taxable Income Tax
$0 – $8,500 10% of taxable income
$8,500 – $34,500 $850 plus 15% of excess over $8,500
$34,500 – $69,675 $4,750 plus 25% of excess over $34,500
$69,675 – $106,150 $13,543.75 plus 28% of excess over $69,675
$106,150 – $189,575 $23,756.75 plus 33% of excess over $106,150
$189,575+ $51,287 plus 35% of excess over $189,575

With the passage of the Bush era tax cut extension, these brackets aren’t much different than the 2010 tax brackets after an adjustment for inflation.

http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html

History of Federal Individual Income Bottom and Top Bracket Rates

Historical Income Tax Rates & Brackets

Tax Rates 1

Bottom bracket

Top bracket

Calendar Year

Rate
(percent)

Taxable Income Up to

Rate
(percent)

Taxable
Income over

1913-15 1 20,000 7 500,000
1916 2 20,000 15 2,000,000
1917 2 2,000 67 2,000,000
1918 6 4,000 77 1,000,000
1919-20 4 4,000 73 1,000,000
1921 4 4,000 73 1,000,000
1922 4 4,000 56 200,000
1923 3 4,000 56 200,000
1924 2 1.5 4,000 46 500,000
1925-28 2 1? 4,000 25 100,000
1929 2 4? 4,000 24 100,000
1930-31 2 1? 4,000 25 100,000
1932-33 4 4,000 63 1,000,000
1934-35 3 4 4,000 63 1,000,000
1936-39 3 4 4,000 79 5,000,000
1940 3 4.4 4,000 81.1 5,000,000
1941 3 10 2,000 81 5,000,000
1942-434 3 19 2,000 88 200,000
1944-45 23 2,000 5 94 200,000
1946-47 19 2,000 5 86.45 200,000
1948-49 16.6 4,000 5 82.13 400,000
1950 17.4 4,000 5 91 400,000
1951 20.4 4,000 5 91 400,000
1952-53 22.2 4,000 5 92 400,000
1954-63 20 4,000 5 91 400,000
1964 16 1,000 77 400,000
1965-67 14 1,000 70 200,000
1968 14 1,000 6 75.25 200,000
1969 14 1,000 6 77 200,000
1970 14 1,000 6 71.75 200,000
1971 14 1,000 7 70 200,000
1972-78 814 1,000 7 70 200,000
1979-80 814 2,100 7 70 212,000
1981 8 9 13.825 2,100 7 9 69.125 212,000
1982 8 12 2,100 50 106,000
1983 8 11 2,100 50 106,000
1984 8 11 2,100 50 159,000
1985 8 11 2,180 50 165,480
1986 8 11 2,270 50 171,580
1987 8 11 3,000 38.5 90,000
1988 8 15 29,750 1028 29,750
1989 8 15 30,950 1028 30,950
1990 8 15 32,450 1028 32,450
1991 8 15 34,000 31 82,150
1992 8 15 35,800 31 86,500
1993 8 15 36,900 39.6 250,000
1994 8 15 38,000 39.6 250,000
1995 8 15 39,000 39.6 256,500
1996 8 15 40,100 39.6 263,750
1997 8 15 41,200 39.6 271,050
1998 8 15 42,350 39.6 278,450
1999 8 15 43,050 39.6 283,150
2000 8 15 43,850 39.6 288,350
2001 8 15 45,200 39.1 297,350
2002 8 10 12,000 38.6 307,050
200311 8 10 14,000 35.0 311,950
2004 8 10 14,300 35.0 319,100
2005 8 10 14,600 35.0 326,450
2006 8 10 15,100 35.0 336,550
2007 8 10 15,650 35.0 349,700
2008 8 10 16,050 35.0 357,700
2009
10
16,700 35.0 372,950
2010
10
16,700 35.0 373,650
201112
10
17,000 35.0 379,150

1 Taxable income excludes zero bracket amount from 1977 through 1986. Rates shown apply only to married persons filing joint returns beginning in 1948. Does not include either the add on minimum tax on preference items (1970-1982) or the alternative minimum tax (1979-present). Also, does not include the effects of the various tax benefit phase-outs (e.g. the personal exemption phase-out). From 1922 through 1986 and from 1991 forward, lower rates applied to long-term capital gains.

2 After earned-income deduction equal to 25 percent of earned income.

3 After earned-income deduction equal to 10 percent of earned income.

4 Exclusive of Victory Tax.

5 Subject to the following maximum effective rate limitations.

[year and maximum rate (in percent)] 1944-45 –90; 1946-47 –85.5; 1948-49 –77.0; 1950 –87.0; 1951 –87.2; 1952-53 –88.0; 1954-63 –87.0.

6 Includes surcharge of 7.5 percent in 1968, 10 percent in 1969, and 2.6 percent in 1970.

7 Earned income was subject to maximum marginal rates of 60 percent in 1971 and 50 percent from 1972 through 1981.

8 Beginning in 1975, a refundable earned-income credit is allowed for low-income individuals.

9 After tax credit is 1.25 percent against regular tax.

10 The benefit of the first rate bracket is eliminated by an increased rate above certain thresholds. The phase-out range of the benefit of the first rate bracket was as follows: Taxable income between $71,900 and $149,250 in 1988; taxable income between $74,850 and $155,320 in 1989; and taxable income between $78,400 and $162,770 in 1990. The phase-out of the benefit the first rate bracket was repealed for taxable years beginning after December 31, 1990. This added 5 percentage points to the marginal rate for those by the phaseout, producing a 33 percent effective rate.

11 Rates for 2003 are after enactment of the Jobs and Growth Tax Relief Reconciliation Act. Prior to enactment the rates were 10% up to $12,000 and 38.6% on amounts over $311,950.

12 The 2011 rates were extended for two years after enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

Sources: Joint Committee on Taxation, “Overview of Present Law and Economic Analysis Relating to Marginal Tax Rates and the President’s Individual Income Tax Rate Proposals” (JCX-6-01), March 6, 2001, and Congressional Research Service, “Statutory Individual Income Tax Rates and Other Elements of the Tax System: 1988 through 2008,” (RL34498) May 21, 2008. Tax Foundation, “Federal Individual Income Tax Rates History: Income Years 1913-2011,”

http://ntu.org/tax-basics/history-of-federal-individual-1.html

Paul Samuelson and Tax Policy in the Kennedy
Administration

Joseph J. Thorndike

“…Recovery from the recession of 1958 had been anemic. The nation had never
returned to anything like high employment, with more than 5 percent of workers
continually idle: “A most disappointing performance in comparison with earlier
post-war recoveries and desirable social goals.” Such sluggishness threatened to
become permanent, unless Congress did something to foster not just short-term
recovery, but long-term growth.

Expansionary fiscal policy was the only viable solution, Samuelson explained,
because monetary policy was constrained by a chronic balance of payments
deficit. Policymakers should move quickly to increase and accelerate spending
programs that were “desirable for their own sake.” They should also boost
unemployment benefits, foster residential housing construction through various
incentives, and pursue a variety of other socially desirable spending programs,
including urban renewal and natural resource development.

Tax Cuts

Samuelson warned that additional spending might not be
enough to win the battle against recession — and keep it won. In that case, the
nation must turn to a second line of economic defense: tax cuts. Samuelson
understood that expansionary tax cuts were controversial, not least because they
seemed to flout the hoary traditions of fiscal conservatism. If deficits were a
natural byproduct of recession, then making them even bigger by slashing tax
rates seemed rash — at least to many policymakers.

But Samuelson directly challenged such atavistic orthodoxies. Deficits that
arose from stimulatory fiscal policy were not just tolerable, but desirable.
They had to be distinguished, he insisted, from shortfalls brought on by
excessive spending:

The deficits that come automatically from recession or which are a necessary part of a determined effort to restore the economic system to health are quite different phenomena [from deficits driven by out-of-control spending].They are signs that our automatic built-in stabilizers are working, and that we no longer will run the risk of going into one of the great depressions that characterized our economic history before the war.

In the face of persistently high unemployment, policymakers should enact temporary tax cuts,
Samuelson advised. “Congress could legislate, for example, a cut of three or
four percentage points in the tax rate applicable to every income class, to take
effect immediately under our withholding system, in March or April and to
continue until the end of the year,” he wrote. Also, the president might be
granted authority to extend those tax cuts for six months or a year after their
initial expiration.

Tax cuts must be temporary, however, if only to preserve the nation’s
long-term fiscal health. “With the continued international uncertainty and with
new public programs coming up in the years ahead,” Samuelson wrote, “sound
finance may require a maintenance of our present tax structure, and any
weakening of it in order to fight a recession might be tragic.”

The report left room for more permanent reductions in personal income tax
rates, which most economists considered excessively high. But such cuts should
be part of more fundamental tax reform, including efforts to broaden the tax
base by reducing preferences. That sort of tax program should be advanced on its
own merits, Samuelson wrote, not as part of an antirecession package.

A Moderate Manifesto

Samuelson’s report was ambitious, but it
was hardly radical. By stressing a few relatively moderate spending increases —
and the acceleration of existing spending programs — it sought to draft
expansionary fiscal policy out of existing spending priorities. It also stressed
that major new spending programs should await further analysis of the
economic situation.

“It is just as important to know what not to do as to know what to do,” the
report noted. “What is definitely not called for in the present situation is a
massive program of hastily devised public works whose primary purpose is merely
that of making jobs and getting money pumped into the economy.” The New Deal was
replete with such spending, but 1961 was not 1933. There was no need to “push
the panic button and resort to inefficient spending devices,” the report said.

The Samuelson report received a generally warm welcome, especially from the
press. Most observers seemed to understand that it was carefully designed to put
a moderate face on Democratic policies, and they valued the effort. Still, not
everyone was convinced that it would succeed. “The recommendations, of course,
are those of a small group of men operating independently of the many political
and bureaucratic factors that go into the formation of national policy,” The
New York Times
observed. “That gives the recommendations the virtue of being
relatively ‘pure,’ but it also makes them subject to some revision in the
government wringer.”9

http://www.taxhistory.org/thp/readings.nsf/ArtWeb/AAFB5F763226FD37852576A80075F253?OpenDocument

Economics USA, Fiscal Policy

The Kennedy Tax Cut John F. Kennedy took office as the country was
already beginning its recovery from the Recession of 1960, but unemployment
remained high. Kennedy’s advisors realized the government would soon be taking
in ore than it was spending. That surplus would stop economic growth, well short
of full employment. That could be corrected in two ways: by tax cuts or
increased expenditures. Kennedy was committed to tax cuts despite calls from
John Kenneth Galbraith, a long-time friend, who lobbied that social programs on
the behalf of the poor were in need of more support. The Treasury Department was
dubious about a big tax-cut and wanted only a 4 billion cut. Kennedy advisor and
chairman of the Council of Economic Advisors Walter Heller was pushing for a 12
billion cut. Kennedy tried to sell the $12 billion tax-cut to a reluctant
congress. Congress passed the Kennedy tax program following his death. The
economy immediately took off in a burst of prosperity.

Comment and
Analysis by Richard Gill.
What the tax cut did was simply give more
disposable income to consumers. It shifted private spending up. The gap between
spending and full employment was eradicated.. The apparent success of the
tax-cut of 1964 was hailed by many as a total vindication of Keynesian ideas

http://www.crawfordsworld.com/rob/ape/EconU$A/Pgm06.html

Economic Policy and the Road to Serfdom: The Watershed of 1913
Brian Domitrovic

“…The answer to the first question is that the saved pay did not retain its value, meaning that one cannot really hold that there had been a true return to full employment during the war. From 1944 to 1948, the United States experienced inflation of 42 percent (the Fed had been expansionist again), devaluing savings accrued before that time. Moreover, redemptions of U.S. war bonds (where so much of workers’ pay had gone during World War II) were taxed at one’s marginal income tax rate, and rates were jacked up across the board, the top one reaching 91 percent. Therefore, when World War II employees redeemed the bonds after the war, the World War II employer—the government—recovered much of what it had laid out in pay to its workers. A conservative estimate is that given inflation and taxes, the average World War II worker lost half of his or her pay to the government. In economic terms, this means that World War II solved the unemployment problem of the 1930s only half as much as is commonly supposed.

As for the second question, GDP fell precipitously from 1944 to 1947, by 13 percent, as prices soared. This was a clear indication that the growth of the war years was artificial. Nonetheless, living standards improved, as the real sector made huge inroads into the government’s share of economic production. Then a transition hit: the postwar inflation stopped. This occurred because the U.S. government focused on its commitment to the world made at the 1944 Bretton Woods conference that it would not overproduce the dollar so as to jeopardize the $35 gold price. And when Republicans won control of Congress in 1946, they insisted on getting a tax cut; they finally passed it over President Harry Truman’s veto in April 1948. The institutions of 1913 had signaled a posture of retreat.

That is when postwar prosperity got going. From 1947 to 1953, growth rolled in at the old familiar rate of 4.6 percent per annum, as unemployment dived and prices stayed at par except for a strange 8 percent burst just as the Korean War started.

Taxes were still high, however, with rates that started at 20 percent and peaked at 91 percent. When recession hit in 1953, a chorus rose that they be hacked away. But for the eight years of his presidency, Dwight D. Eisenhower resisted these calls for tax relief. Despite the common myth of “Eisenhower prosperity,” the years 1953 to 1960 saw economic growth far below the old par, at only 2.4 percent, and there were three recessions during this period. Monetary policy, for its part, was unremarkable. Once again the coincidence held: unremarkable monetary policy and aggressive tax policy led to a half-baked result.

Much ink has been spilled on how the JFK tax cuts of 1962 and 1964 were “Keynesian” and “demand-side.” Whatever we want to call the policy mix of the day, in the JFK and early Lyndon B. Johnson years, fiscal and monetary policy clearly retreated. Income taxes got cut across the board, with every rate in the Eisenhower structure going down, the top from 91 percent to 70 percent, the bottom from 20 percent to 14 percent. And monetary policy zeroed in (at least through 1965) on a stable value of the dollar, with the gold price and the price level sticking at par after making startling moves up with the final Eisenhower recessions. The results: from 1961 to 1968, real U.S. growth was 5.1 percent yearly; unemployment hit peacetime lows; and inflation held in the heroic 1 percent range before the latter third of the period, when it began creeping up by a point a year. The real effects inspired slogans. If four decades prior had been the “Roaring ’20s,” these were the “Swingin’ ’60s” and “The Go-Go Years.”

At the end of the decade, however, the government loudly signaled a reversal in fiscal and monetary policy. The Fed volunteered that it would finance budget deficits, and LBJ pleaded for and got an income tax surcharge, soon accompanied (under Richard M. Nixon) by an increase in the capital-gains rate on the order of 100 percent. This two-front reassertion of fiscal and monetary policy held for a dozen years. The nickname eventually given to that period, in view of the real effects, was the “stagflation era” (for stagnation plus inflation). From 1969 to 1982, real GDP went to half that of the Go-Go Years, to 2.46 percent; the price level tripled (with gold going up twentyfold); average unemployment roughly doubled to 7.5 percent; three double-dip recessions occurred; and stocks and bonds suffered a 75 percent real loss. It was the worst decade of American macroeconomic history save the 1930s …”

http://www.firstprinciplesjournal.com/articles.aspx?article=1484

How the Government Dealt With Past Recessions

Since the Great Depression, presidents have frequently experimented with Keynesian economics to combat recessions. Three economists chronicle the history of government policy during past recessions and explain what worked and what didn’t.
FISCAL POLICY: ITS MACROECONOMIC PERSPECTIVEby James Tobin
“…In making a major cut in federal income taxes the centerpiece of his program,
George w. Bush has followed two influential precedents, one of Democratic
Presidents Kennedy and Johnson in 1962-64 and the other of course that of
Republican President Reagan in 1981. Candidate Bob Dole obeyed Republican
tradition by proposing in his 1996 campaign a 15% across-the-board cut in income
tax rates. Instead the reelection of Bill Clinton continued the regime of fiscal
discipline and monetary wisdom begun by Treasury Secretary Rubin and Federal
Reserve Chairman Greenspan in 1993. The economy and the federal budget were
doing so well in election year 2000 that it seemed unlikely that young Mr. Bush
could be elected, much less succeed in reviving Reaganomic fiscal policies. Yet
now in 2001 it seems quite probable that a substantial permanent cut in income
taxes will be enacted, along with an emergency package to encourage spending
soon this year.
The story of macroeconomic and fiscal developments over the last
forty years is an amalgam of economic theory, politics, and ideology. I admit to
being both a Keynesian and a neoclassical economist and both a liberal and a
conservative in public policy. I was an adviser to President Kennedy, and an
informal consultant to other Democratic candidates. Win or lose, my advice was
very often not taken. In 1962-64, when JFK first considered and then recommended
cutting taxes, the economy was hesitantly recovering from the 1959-60 recession.
Kennedy’s first measures were incentives for business plant and equipment
investments, accelerated depreciation allowances and tax credits. The major tax
legislation, in 1964, was intended to keep the recovery from petering out
prematurely. Unemployment had fallen from 7% at JFK’s inauguration in 1961 to
the 5-6% range, but the Administration’s target was 4%. It was reached in 1965.
The stimulus of the tax cut was unexpectedly augmented by spending for Vietnam.
The combined spending was excessive, reducing unemployment a point below the 4%
target and unleashing unwelcome inflation in 1966-68. President Johnson
belatedly and reluctantly was persuaded to prevail on the Congress to raise
taxes temporarily in 1968. It was too late, and the Nixon Administration
inherited a difficult economy. Moral: unforeseen events may make you regret a
permanent loss of federal revenue, and it is awfully difficult ever to raise
taxes. This is even truer now that any tax increase is a deadly sin in the
litany of the G.O.P.
REAGAN’S 1981 CUT: SUPPLY-SIDE REFORM WAS DEMAND STIMULUS
INSTEAD

Ronald Reagan’s tax cut took effect at the depths of the worst
recession since World War II. Unemployment had hit double digits. This was the
cost of the crusade of the Federal Reserve under Chairman Paul Volcker against
an inflation that itself had in 1979-80 hit double digits. The tax cut was a big
stimulus to consumer and business spending, reinforced by Reagan’s buildup of
the U.S. military.

The period 1981-88 was one of recovery from the recession,
bringing unemployment back down to 6%. The high year-to-year rates of increase
of economic activity and real Gross Domestic Product (GDP) during such
business-cycle upswings reflect the re-employment of idle resources, both
workers and industrial capacity. This additional output growth is the essence of
prosperity. But this pace cannot be sustained. Once the economy returns to full
employment, the economy can grow only at its long-run sustainable rates of
increase in the supplies of economic resources and, especially, in their
productivity.

The architects of Reaganomics styled themselves Supply-Siders.
They scorned the Demand-Side theories and policies they attributed to John
Maynard Keynes and to his “liberal” followers, whom they held responsible for
the stagflation of the 1970s. In their view the Federal Reserve could and should
control inflation by stabilizing the supply of money, as preached in the
Monetarism of Milton Friedman. Keynesians were, they argued, dangerously wrong
to think that demand-side stimuli to spending could lift employment, GDP, and
economic welfare. Instead what the country needs are policies to enhance supply,
in particular by lowering taxes, providing incentives to work, save, innovate,
take risks. That was the spirit and the purpose of Reagan fiscal policy.

In practice Reaganomics turned out to be the biggest and most
successful Demand-side fiscal gambit in peacetime U.S. history. What it was not
was what it was intended to be, a Supply-side transformation of the economy.
There was zero evidence that the American economy’s capacity to produce goods
and services at full employment was any greater at the end of the
eighties than would have been prophesied a decade earlier without Reagan fiscal
policy. The trend of productivity growth was the same as before.

These Supply-side failures may seem surprising, since income tax
cuts were meant to embody incentives for more productive and innovative
behavior. Unfortunately these cuts in tax rates also bring windfalls for
behavior that already took place. For example, offering concessions for capital
gains on future acquisitions of assets might be socially useful, while reducing
taxes on gains realized on holdings bought years ago clearly is not. The test is
whether the taxpayer must in order to benefit change his behavior in the desired
supply-side direction. If yes, the touted incentives work. If no, the individual
taxpayers’ gains have to be defended otherwise, as deserved and just.
Undergraduate microeconomics students know the difference between the “income
effects” and “substitution effects” of variations in prices or taxes. The
substitution effects are responses to incentives, but they are often outweighed
by income effects in the perverse direction. Income effects may sometimes be
what the doctor ordered, more consumer spending. But those effects can overwhelm
Supply-side objectives. A cut in marginal income tax rates may elicit more work
from some taxpayers, but workers whose taxes are reduced anyway may take some of
their gains in leisure. The same objections apply to tax credits intended to
induce desirable behavior, for example saving or paying school and college
tuitions. These devices have long been favorites of politicians in both
parties. …”

http://www.econ.yale.edu/news/tobin/jt_01_tp_perspective.htm

Econ 101: How do Tax Cuts Work?

Despite the medias portrayal, tax cuts for the rich arent bad and they boost the economy.

By Gary Wolfram, Ph.D.

http://www.mrc.org/bmi/commentary/2006/Econ__How_do_Tax_Cuts_Work_.html

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Pronk Pops Show 51, October 26, 2011: Segment 0: Perry proposes optional flat 20 percent income tax and cap on government spending–Videos

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Pronk Pops Show 51:October 26, 2011

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Segment 0: Perry proposes optional flat 20 percent income tax and cap on government spending–Videos

Rick Perry ad: Cut, Balance and Grow

Rick Perry Announces His Plan to Cut, Balance & Grow

With 20% Flat-Tax Plan, Perry Eyes Distinction From GOP Field

Rick Perry CNBC

Perry wants flat tax… Almost

Political Checklist: Perry’s Flat Tax Plan and Obama’s Solo Plan

Steve Forbes Endorses Rick Perry and His Plan to Cut, Balance, and Grow

The FairTax Is Better Than Any Flat Tax!

What is the FairTax?

Why is the FairTax better than a flat income tax?

The FairTax: It’s Time

Perry’s Cornerstone Speech Highlights–Was he drunk, snorting cocaine or just Rick trying to be funny?

In Grey Court, South Carolina, on Oct.25, GOP presidential hopeful Rick Perry unveiled his plan for the U.S economy, “Cut, Balance and Grow.” The Texas governor’s proposed an optional flat income tax rate of 20 percent to replace the existing federal income tax system. Taxpayers would have the option to pay either the new flat 20 percent rate or continue paying income taxes based on the existing complex system.

Perry said, “It takes money from spendthrift bureaucrats and returns it to families. It puts fewer job-killing regulations on employers and more restrictions on politicians. It gives more freedom to Americans to control their own destiny. And just as importantly, the Cut, Balance and Grow plan paves the way for the job creation, balanced budgets and fiscal responsibility we need to get America working again.”

The individual standard tax exemption would be increased to $12,500, plus each dependent would also have a $12,500 tax exemption. A family of four earning $50,000 per year would be exempt from income taxes. Perry’s tax reform plan would also keep the mortgage interest, state taxes and charitable deductions for families earning less than $500,000.

Dividend, interest and capital gains taxes, the Alternative Minimum tax and estate taxes would all be eliminated. Social Security benefits would no longer be taxed.

Perry would not change Social Security and Medicare benefits for those currently receiving or soon-to-be receiving these benefits. However, Perry would gradually increase the eligibility age for Social Security and Medicare.

Young workers would be permitted to invest part of their Social Security payroll taxes in investment private accounts.

Americans eligible for Medicare would receive either a credit or payment to purchase a health insurance plan of their choice. Currently, the government pays benefits directly.

Companies doing business abroad would be encouraged to return their profits to the U.S. with a one-time reduced tax of 5.25 percent. With this tax incentive, more than $1 trillion in profits is estimated would be returned to the U.S. This would create several million new jobs as the profits are invested in the U.S. The corporate rate would be reduced from the second highest in the world at 35 percent to a more competitive 20 percent.

By design the Perry plan would deeply cut tax rates and in turn this may lead to lower tax revenues. In order to avoid large deficits, where government spending outlays exceed tax revenues, the federal budget would need to be massively cut, including discretionary spending and non-discretionary entitlement spending.

In terms of federal government spending, Perry’s plan theoretically would balance the budget in 2020, end all earmarks, reform entitlement spending for Social Security and Medicare, and limit government spending outlays to 18 percent of the Gross Domestic Product (GDP). Perry would propose to amend the Constitution to require balanced budgets.

Steve Forbes, who twice ran for the Republican presidential nomination on a proposed 17 percent flat tax, is Perry’s chief adviser for the optional flat tax plan.

Club for Growth president Chris Chocola said “Rick Perry’s plan for tax reform would be massively pro-growth.”

Perry’s plan is already being compared and contrasted with his two leading rivals for the nomination, Herman Cain and Mitt Romney. Cain’s 9-9-9 tax reform plan would scrap the existing income tax code and replace it and payroll taxes with a flat 9 percent business tax, a flat 9 percent individual tax and a 9 percent national sales consumption tax on the sale of new goods and services.

Cain’s plan is a hybrid of both flat income taxes and a consumption tax. The 9-9-9 plan was designed to be a bridge to the FairTax, which is a national sales tax that would replace all federal income, payroll, capital gains, Alternative Minimum Tax, gift and estate taxes.

Romney has proposed a plan that would cut the tax rates for corporations and personal savings and investment. Romney would eliminate taxes on dividend, interest and capital gains for individuals earning less than $200,000. In the past, Romney has favored a flat tax provided it did not hurt the middle class.

Perry’s tax reform plan is positioned between the bolder Cain plan and the more modest Romney plan. Ron Paul has yet to explicitly disclose his own tax reform plan. Paul has stated he would eliminate the Internal Revenue Service (IRS), permanently close five departments and cut spending by $1 trillion in the first year. This would seem to indicate he might support the FairTax with a lower rate, such as 20 percent or less-call it FairTax Less.

[Raymond Thomas Pronk is host of the Pronk Pops Show on KDUX web radio from 3-5 p.m. Wednesdays and author of the companion blog www.pronkpops.wordpress.com]

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Pronk Pops Shows 1-27–Podcasts or Download–Give It A Listen!

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Pronk Pops Show 27

May 11, 2011 10:13 AM PDT

Pronk Pops Show 27, May 10, 2011

Segment 1: Bureau of Labor Statistics Official Unemployment Rate (U-3) Increased To 9.0% With 13.7 Million Americans Unemployed and Total Unemployment Rate (U-6) Increased To 15.9% With 24.4 Million Americans Seeking Full Time Job–Economy Adds 244,000 Jobs But Initial Unemployment Claims Hit Eight Month High of 474,000!–Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/05/09/pronk-pops-show-27-may-9-2011-segment-1-bureau-of-labor-statistics-offical-unemployment-rate-u-3-increased-to-9-0-with-13-7-million-americans-unemployed-and-total-unemployment-rate-u-6-increas/

Segment 2: OMI-Obama Misery Index–U.S. Misery Index Is Rising As Both The Unemployment Rate and Inflation Rate Increase!–Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/05/10/pronk-pops-show-27-may-10-2011-segment-2-omi-obama-misery-index-u-s-misery-index-is-rising-as-both-the-unemployment-rate-and-inflation-rate-increase-vidoes/

Segment 3: Segment 3: Speaker Boehner’s Address to the Economic Club of New York on Jobs, Debt, Gas Prices–Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/05/10/pronk-pops-show-27-may-10-2011-segment-3-speaker-boehners-address-to-the-economic-club-of-new-york-on-jobs-debt-gas-prices/

 

 

Pronk Pops Show 26

April 27, 2011 11:28 AM PDT

Pronk Pops Show 25, April 26, 2011

Segment 0: Eva Cassidy–A Singer’s Singer

Segment 1: Ron Paul Is Running For President of The United States In 2012!–The Third Time Is The Charm–A Man Of Integrity–A Candidate For Peace and Prosperity–Neither A Big Government Warfare Republican Nor A Massive Government Welfare Democrat–A Man Of And For The American People–A Tea Party Patriot–Ron Paul–Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/04/26/pronk-pops-show-25-april-26-2011-segment-0-eva-cassidy-a-singers-singer-segment-1-ron-paul-is-running-for-president-of-the-united-states-in-2012%E2%80%93the-third-time-is-the-charm%E2%80%93a/?preview=true&preview_id=808&preview_nonce=d3d9842e9a

Segment 3: President Obama Is The Reason Your Gasoline Prices Are Going Up!–American People Favor Drilling For Oil and Gas!–Drill Baby Drill–Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/04/26/pronk-pops-show-25-april-26-2011-segment-3-president-obama-is-the-reason-your-gasoline-prices-are-going-up-american-people-favor-drilling-for-oil-and-gas-drill-baby-drill-videos/

Pronk Pops Show 24

April 20, 2011 12:47 PM PDT

Pronk Pops Show 24: April 19, 2011

Segment 0: S&P Rating Outlook Changed From “Stable” To “Negative” For U.S. Treasury Debt–Videos

Segment 1: Who is John Galt? Who is Ayn Rand–Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/04/17/pronk-pops-show-24-april-19-2011-segment-1-who-is-john-galt-who-is-ayn-rand-videos/

Segment 2: President Obama’s Fiscal Year 2012 Budget Speech Of April 13, 2011–Eat The Rich And Killing The American Dream Class Warfare–Cuts National Security Spending and Raise Taxes On The Rich–Produces Massive Deficits, National Debt, and Higher Unemployment For 12 More Years–Progressive Radical Socialist Economic Stagflation–Videos

For additional information and videos:
https://pronkpops.wordpress.com/2011/04/18/pronk-pops-show-24-april-18-2011-segment-2-president-obamas-fiscal-year-2012-budget-speech-of-april-13-2011-eat-the-rich-and-killing-the-american-dream-class-warfare-cuts-national-security-sp/

Segment 3: The FairTax (National Consumption Sales Tax) vs. The Flat Tax (One Rate Federal Income Tax)–Who Pays The Most Federal Individual Income Tax? Videos

For additional information and videos:

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Pronk Pops Show 23

April 13, 2011 10:31 AM PDT

Pronk Pops Show 23: April 12, 2011

Segment 0: Sidney Lumet–Rest In Peace–Videos

Segment 1: Tea Party Movement Demands Passage of Balanced Budget Amendment and The FairTax As The Price For Raising The National Statutory Debt Limit of $ 14,294,000,000 One Last Time By $1,000,000,000,000!–Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/04/11/tea-party-movement-demands-passage-of-balance-budget-amendment-and-balanced-budget-rule-as-the-price-for-raising-the-national-debt-ceiling-one-last-time-by-1000000000000-videos/?preview=true&preview_id=701&preview_nonce=5e679dbc1d

Segment 2: The FairTax (National Consumption Sales Tax) vs. The Flat Tax (One Rate Federal Income Tax)–Who Pays The Most Federal Individual Income Tax? Videos

For additional information and videos:

https://pronkpops.wordpress.com/2011/04/11/pronk-pops-show-23-april-12-2011-segment-2the-fairtax-national-consumption-sales-tax-vs-the-flat-tax-one-rate-federal-income-tax-who-pays-the-most-federal-individual-income-tax-videos/

Pronk Pops Show 22 (Part 2)

April 08, 2011 11:16 AM PDT

Pronk Pops Show 22, April 7, 2011

Segment 1: 3,500,000 Million Americans Unemployed in March 2011 Still Exceeds Great Depression High of 13,000,000 In March 1933–The Obama Depressions Continues–Bureau of Labor Statistics: 8.8% Official Unemployment Rate (U-3) vs. Gallup Unemployment Rate of 10.0%–Nonfarm Payroll Increased By 216,000–The Government Makes The Depression Worse!–Videos

Segment 2: Obama’s Anti-American, Anti-Capitalist, Anti-Growth, Anti-Jobs, and Anti-Security Energy Policy–Videos

Segment 3: Republican Establishment Will Propose A Ten Year $6,200 Billion Cut In Spending Over Ten Years–The Problem Is It Does Not Balance The Budget For Another Five Years At The Earliest–Tea Party Movement Demands Balanced Budgets Starting In 2012 For The Next Ten Years!–A Jet Plane To Prosperity Not A Path To Prosperity–Videos

Segment 4: Just One More Thing Congressman Ryan: When Does The Republican’s Path To Prosperity Balance The Budget?–The Twelth of Never!–Videos

For additional information and videos on the above segments:

https://pronkpops.wordpress.com/2011/04/04/pronk-pops-show-22-april-5-2011-segment-113500000-million-americans-unemployed-in-march-2011-still-exceeds-great-depression-high-of-13000000-in-march-1933%E2%80%93the-obama-depressions-contin/

Pronk Pops Show 22 (Part 1)

April 07, 2011 10:41 AM PDT

Pronk Pops: Show 22, April 7, 2011

Segment 0: Glenn Beck Ending His Show At Fox News

Segment 1: 3,500,000 Million Americans Unemployed in March 2011 Still Exceeds Great Depression High of 13,000,000 In March 1933–The Obama Depressions Continues–Bureau of Labor Statistics: 8.8% Official Unemployment Rate (U-3) vs. Gallup Unemployment Rate of 10.0%–Nonfarm Payroll Increased By 216,000–The Government Makes The Depression Worse!–Videos

Segment 2: Obama’s Anti-American, Anti-Capitalist, Anti-Growth, Anti-Jobs, and Anti-Security Energy Policy–Videos

Segment 3: Republican Establishment Will Propose A Ten Year $6,200 Billion Cut In Spending Over Ten Years–The Problem Is It Does Not Balance The Budget For Another Five Years At The Earliest–Tea Party Movement Demands Balanced Budgets Starting In 2012 For The Next Ten Years!–A Jet Plane To Prosperity Not A Path To Prosperity–Videos

Segment 4: Just One More Thing Congressman Ryan: When Does The Republican’s Path To Prosperity Balance The Budget?–The Twelth of Never!–Videos

For additional information and videos on the above segments:

https://pronkpops.wordpress.com/2011/04/04/pronk-pops-show-22-april-5-2011-segment-113500000-million-americans-unemployed-in-march-2011-still-exceeds-great-depression-high-of-13000000-in-march-1933%E2%80%93the-obama-depressions-contin/

Pronk Pops Show 21

March 29, 2011 03:41 PM PDT

Pronk Pops Show 21, March 29, 2010

Segment 1: The Truth And Consequences About Undeclared Wars–Real Strange Bedfellows–Obama Allies U.S. with Libyan Rebels Including Islamic Jihadists, Moslem Brotherhood, and Al-Qaeda!–Give Peace A Chance–AC-130 Gunship–A-10 Warthogs–F-15E Strike Eagles and Special Operation Smash Squads

For Additional Information and Videos:

https://pronkpops.wordpress.com/2011/03/29/pronk-pops-show-21-march-29-2011-the-truth-and-consequences-about-undeclared-wars%E2%80%93real-strange-bedfellows%E2%80%93obama-allies-u-s-with-libyan-rebels-including-islamic-jihadists-moslem-b/

Pronk Pops Show 20

March 23, 2011 12:02 PM PDT

Pronk Pops Show 20: March 22, 2011

Segment 1:F-15 Crashes In Libya

Segment 2surprisedne Unconstitutional and Undeclared War Too Many: The Great Pretender, Peace Candidate And Noble Peace Prize Winner, President Barack Obama Undeclared War On Libya’s Muammar Ghaddafi In Defense Of Libyian Islamic Fighting Group (LIFG) Rebels Linked To al-Qaeda and The BP Libyian Oil Deal Linked To Obama Campaign Contributions–A Political Payoff!–Obama Has To Go In 2012–Videos

Segment 3:Earthquake Damages Japanese Nuclear Plant At Fukushima Daiichi, Four Explosions and Four Nuclear Reactors Flooded With Seawater To Contain Release Of Radioactive Material and Plant Released Radioactive Materials To Stop Pressure Buildup–Partial Meltdown Of Nuclear Core Feared–Radioactive Material Escaping From Plant–Over 250,000 Ordered Evacuated From 20 Kilometer (12.4 Miles) Radius From Plant–Videos

For Additional Information and Videos:

https://pronkpops.wordpress.com/2011/03/22/pronk-pops-show-20-march-22-2011-segment-1-f-15-crashes-in-libya-segment-2-videos/?preview=true&preview_id=569&preview_nonce=40500c814b

Pronk Pops Show 19

March 09, 2011 10:57 AM PST

Pronk Pops Show 19: March 8, 2011

Segment 1: The Washington Political Elites of Both Parties Are Not Serious About Balancing The Federal Budget And Funding Entitlement Liabilities–Send In The Clowns–Don’t Bother There Here–Videos

Segment 2, Gallup–U.S. Unemployment Hits 10.3% In February 2011 Vs. Bureau of Labor Statistics (BLS) U.S. Unemployment Rate Declined By .1% To 8.9% in February 2011 With Job Creation of 192,000 In February 2011–Over 13.7 Million Americans Unemployed More Than Worse Month of Great Depression!

For more information and videos related to this show click on links below:

https://pronkpops.wordpress.com/2011/03/08/pronk-pops-show-19-march-8-2011segment-1-the-washington-political-elites-of-both-parties-are-not-serious-about-balancing-the-federal-budget-and-funding-entitlement-liabilities-send-in-the-clowns/

https://pronkpops.wordpress.com/2011/03/08/pronk-pops-show-19-march-8-2010-segment-2-gallup-u-s-unemployment-hits-10-3-in-february-2011-vs-bureau-of-labor-statistics-bls-u-s-unemployment-rate-declined-by-1-to-8-9-in-february-2011-wi/

Pronk Pops Show 18

March 03, 2011 03:35 PM PST

Pronk Pops Show 18: March 3, 2011

Segment 1: Remembering The Brooklyn Dodgers and Duke Snider

Segment 2: The National Debt Will Hit $20,000,000,000,000 By 2020!

Segment 3 Public Sector Unions vs. The America People: Replacing The American Dream With The Socialist Union Nightmare

For additional information and videos on the above segments:

https://pronkpops.wordpress.com/2011/03/01/pronk-pops-show-18-march-1-2011-remembering-the-brooklyn-dodgers-and-duke-snider-the-union-corruption-of-government-delusion-of-the-unconstrained-vision-of-unlimited-government-and-the-2000000/

Pronk Pop Show 17

February 22, 2011 03:47 PM PST

Pronk Pops Show 17: February 22, 2011

Black History Month–Progressives–Eugenics–Black Population Control–Abortion–Black Genocide–Planned Parenthood–Barack Obama

For more information and videos relating to the show:

https://pronkpops.wordpress.com/2011/02/22/pronk-pops-show-17-february-22-2011-black-history-month-progressives-eugenics-black-population-control-abortion-black-genocide-planned-parenthood-barack-obama-videos/

Pronk Pops Show 16

February 15, 2011 03:49 PM PST

Pronk Pops Show 16: February 15, 2011

Conservative Political Action Conference 2011

President Obama’s Saint Valentine’s Massacre of The American People–Fiscal Year 2012 Budget Buster–Spending $3,729 Billion–Taxes $2,627 Billion–Deficit $1,101 Billion–Dead On Arrival–DOA– 3 Million Tea Party Patriots To March On Washington D.C. On Friday, April 15, 2011 In Protest!

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2011/02/15/pronk-pops-show-16-february-15-2011-conservative-political-action-conference-cpac-2011-and-president-obamas-saint-valentines-massacre-of-the-american-people-fiscal-year-2012-budget-buster-s/

Pronk Pops Show 15: Hour 3

February 10, 2011 03:32 PM PST

Pronk Pops Show 15:February 8,2011, Hour 3

Lies, Damn Lies, Statistics, and Obama’s Unbelievable Unemployment Numbers

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2011/02/08/pronk-pops-show-15-february-8-2011-from-texas-snow-storm-to-washington-snow-job-lies-damn-lies-statistics-and-obamas-unbelievable-unemployment-numbers-obama-care-unconstitutional-and-void-pa-2/

Pronk Pops Show 15: Hour 2

February 10, 2011 03:23 PM PST

Pronk Pops Show 15: February 8, 2011 Hour 2

Rolling Power Outages in Texas

Obama Care Declared Unconstitutional and Void By Federal Judge

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2011/02/08/pronk-pops-show-15-february-8-2011-from-texas-snow-storm-to-washington-snow-job-lies-damn-lies-statistics-and-obamas-unbelievable-unemployment-numbers-obama-care-unconstitutional-and-void-pa/

Pronk Pops Show 15: Hour 1

February 10, 2011 03:10 PM PST

Pronk Pops Show 15: February 8,2011, Hour 1

Super Storm and Super Bowl In Dallas, Texas

Man-Made Carbon Dioxide Emission and Global Warming–Science vs. Politics

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2011/02/08/pronk-pops-show-15-february-8-2011-from-texas-snow-storm-to-washington-snow-job-lies-damn-lies-statistics-and-obamas-unbelievable-unemployment-numbers-obama-care-unconstitutional-and-void-pa/

Pronk Pops Show 14

January 28, 2011 02:10 PM PST

Pronk Pops Show 14: January 27, 2011

The Big Lie and Free Speech

President Obama’s State of the Union Campaign Speech

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2011/01/27/pronk-pops-show-14-january-27-2011-the-big-lie-and-free-speech-and-president-obamas-state-of-the-union-campaign-speech-videos/

Pronk Pops Show 13

December 09, 2010 01:22 PM PST

Pronk Pops Show 13: December 9, 2010

Latest News Update on WikiLeaks

Federal Reserve Unconventional Monetary Policy

President Obama and Republicans Agree To Two Year Tax Rate Extension and

One Year Unemployment Benefit Extension–More Deficit Spending and Debt!

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/12/09/pronk-pops-show-december-9-2010-president-obama-and-republican-cut-tax-and-spend-deal-time-for-serious-spending-cuts-balance-budgets-and-the-flat-tax/

Pronk Pops Show 12

December 08, 2010 04:18 PM PST

Pronk Pops Show 12: December 8, 2010

News Update On WikiLeaks and Julian Assange

The Chairman of The Federal Reserve and Quantitative Easing 2

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/12/08/pronk-pops-show-12-december-8-2010-news-update-on-julian-assange-wikileaks-ben-benanke-the-fed-barack-obama-tax-and-spend-democrats-videos/

Pronk Pops Show 11

December 03, 2010 02:18 PM PST

Pronk Pops Show 11: December 3, 2010

News and Commentary On November 2010 Unemployment Rate and Level Statistics

WikiLeaks

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/12/03/pronk-pops-show-11-december-3-2010-news-unemployment-rate-up-to-9-8-with-over-15-million-unemployed-wikileaks-food-prices-rising-the-fairtax-videos-2/?preview=true&preview_id=245&preview_nonce=e49c7ff2d2

Pronk Pops Show 10

December 02, 2010 12:35 PM PST

Pronk Pops Show 10: December 1, 2010

Update on new TSA Airport Screening Procedures

Portland, Oregon Terrorist Bomber Arrested by F.B.I.

WikiLeaks Posts Department of State Cables

For more information and videos related to this show click on link below:
https://pronkpops.wordpress.com/2010/11/24/pronk-pops-show-10-november-24-2010-food-prices-rising-fairtax-updates-on-tsa-and-quantitative-easing-money-printing-videos/

Pronk Pops Show 9

November 19, 2010 02:23 PM PST

Pronk Pops Show 9: November 19, 2010

Federal Reserve Chairman Bernanke Responds To Critics of Monetary Policy

Transportation Security Administration or TSA New Screening Procedures:
Full Body Scanners and Extended Pat-Downs

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/11/15/pronk-pops-show-9-november-17-2010-quantitative-easing-2-update-g-20-summit-a-bust-tsa-tyrants-scanning-americans-videos/

Pronk Pops Commentary 1

November 11, 2010 03:42 PM PST

Pronk Pops Commentary 1: November 11, 2010

Stop Federal Reserve Quantitative Easing or Money Printing

Pronk Pops Show 8

November 10, 2010 04:24 PM PST

Pronk Pops Show 8: November 10, 2010

Tea Party Major Issues: Jobs, Spending, Deficits, Debt, Taxes, Health Care and Illegal Immigration

Tea Party Stars: Senators: Rand Paul and Marco Rubio

Republican Tea Party Test: Cutting Federal Spending By Over $1,000 Billion To Balance The Budget For Fiscal Years 2011, 2012, and 2013.

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/11/10/pronk-pops-show-8-november-10-2010-fiscal-policy-cut-spending-balanced-budgets-no-new-taxes-monetary-policy-no-quantitative-easing-or-printing-money-hidden-tax-videos/

Pronk Pops Show 7

November 09, 2010 02:45 PM PST

Pronk Pops Show 7: November 9, 2010

Unemployment News

Tea Party Effect On 2010 Elections

Key Issues: Federal Budget Deficits and National Debt

Cutting Federal Government Spending and Balancing The Federal Budget

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/11/05/pronk-pops-show-7-november-8-2010-the-tea-party-effect-what-is-next-and-update-on-feds-qe2/

Pronk Pops Show 6

November 03, 2010 03:58 PM PDT

Pronk Pops Show 6: November 3, 2010

Winning Elections With MOMMA (Money, Organization, Message, Momentum, Ambition) and The Tea Party Movement Effect

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/11/03/pronk-pops-show-6-november-3-2010-winning-elections-with-momma-money-organization-message-momentum-ambition-and-the-tea-party-movement-effect-videos/

Pronk Pops Show 5

October 28, 2010 03:49 PM PDT

Pronk Pops Show 5: October 27, 2010

Democratic Party’s National Attack Ad Campaign on Candidates and the Flat Tax

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/10/28/pronk-pops-show-5-october-27-2010-democratic-party-national-attack-ad-campaign-on-fairtax-videos/

Pronk Pops Show 4

October 28, 2010 03:43 PM PDT

Pronk Pops Show 4: October 20, 2010

Money, Quantitative Easing and Inflation in the United States Economy

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/10/20/pronk-pops-number-4-videosquantitive-easying-ii-printing-money-to-finance-federal-govenment/

Pronk Pops Show 3

October 28, 2010 03:32 PM PDT

Pronk Pops Show 3: October 14, 2010

Unemployment and inflation in the United States economy

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/10/28/pronk-pops-show-3-october-14-2010unemployment-and-inflation/

Pronk Pops Show 2

October 28, 2010 03:27 PM PDT

Pronk Pops Show 2: October 13, 2010

The 10:10 carbon emission ad campaign on climate change

http://www.youtube.com/watch?v=wliC2Eiwoyw

http://www.1010global.org/uk

Secretary of State Hillary Clinton replacing Vice President Joseph Biden on the 2010 Democratic Party ticket

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/10/05/pronk-pops-number-2-october-6-2010-1010-campaign-the-progressive-radical-socialists-method-of-cutting-carbon-emissions-kill-those-who-disagree-with-you-no-pressure-your-choice-the-big-lie-v/

Pronk Pops Show 1

October 28, 2010 03:01 PM PDT

Pronk Pops Show 1: September 29, 2010

University of Texas at Austin shooting/suicide

The Tea Party Movement in the United States

For more information and videos related to this show click on link below:

https://pronkpops.wordpress.com/2010/09/29/pronk-pops-program-number-1-september-29-2010-clips-and-notes-videos/

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Pronk Pops Show 24: April 19, 2011, Segment 3: The FairTax (National Consumption Sales Tax) vs. The Flat Tax (One Rate Federal Income Tax)–Who Pays The Most Federal Individual Income Tax? Videos

Posted on April 18, 2011. Filed under: Budgetary Policy, Business, Crime, Culture, Economics, Federal Government, Fiscal Policy, Government, Government Spending, History, Philosophy, Politics, Private Sector Unions, Public Sector Unions, Tax Policy, Unions, Violence, War, Wisdom | Tags: , , , |

Pronk Pops Show 24: April 19, 2011

Pronk Pops Show 23: April 12, 2011

Pronk Pops Show 22 (Part 2): April 7, 2011

Pronk Pops Show 22 (Part 1): April 7, 2011

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Segment 3: The FairTax (National Consumption Sales Tax) vs. The Flat Tax (One Rate Federal Income Tax)–Who Pays The Most Federal Individual Income Tax? Videos

“The income tax created more criminals than any other single act of government.”
~Barry Goldwater

Income Tax vs. Consumption Tax

What is the FairTax legislation?

“…What is the FairTax plan?

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 13) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

The FairTax:

  • Enables workers to keep their entire paychecks
  • Enables retirees to keep their entire pensions
  • Refunds in advance the tax on purchases of basic necessities
  • Allows American products to compete fairly
  • Brings transparency and accountability to tax policy
  • Ensures Social Security and Medicare funding
  • Closes all loopholes and brings fairness to taxation
  • Abolishes the IRS

We offer a library of information throughout this Web site about the features and benefits of the FairTax plan. Please explore! …”

http://www.fairtax.org/site/PageServer?pagename=about_main

The FairTax: It’s Time

Tom Wright on the FairTax part 1

Why is the FairTax better than a flat income tax?

Dan Mitchell explains the fair tax

Laura Ingraham Interviews John Linder And Steve Forbes On Fair Tax Or Flat Tax

Five Key Reasons to Reject Class-Warfare Tax Policy

Who Pays Federal Income Taxes?

Uncle Sam Wants Your Money

It’s Simple to Balance The Budget Without Higher Taxes

Controlling Leviathan: The Battle for Limited Government

Question and Answer Session: The Fight Against Big Government

Table 1
Summary of Federal Individual Income Tax Data, 2008

(Updated October 2010)

Number of Returns with Positive AGI

AGI
($ millions)

Income Taxes Paid
($ millions)

Group’s Share of Total AGI

Group’s Share of Income Taxes

Income Split Point

Average Tax Rate

All Taxpayers 139,960,580 8,426,625 1,031,512 100% 100% 12.24%
Top 1% 1,399,606 1,685,472 392,149 20.00% 38.02% $380,354 23.27%
1-5% 5,598,423 1,241,229 213,569 14.73% 20.70% 17.21%
Top 5% 6,998,029 2,926,701 605,718 34.73% 58.72% $159,619 20.70%
5-10% 6,998,029 929,761 115,703 11.03% 11.22% 12.44%
Top 10% 13,996,058 3,856,462 721,421 45.77% 69.94% $113,799 18.71%
10-25% 20,994,087 1,821,717 169,193 21.62% 16.40% 9.29%
Top 25% 34,990,145 5,678,179 890,614 67.38% 86.34% $67,280 15.68%
25-50% 34,990,145 1,673,932 113,025 19.86% 10.96% 6.75%
Top 50% 69,980,290 7,352,111 1,003,639 87.25% 97.30% >$33,048 13.65%
Bottom 50% 69,980,290 1,074,514 27,873 12.75% 2.70% <$33,048 2.59%
Source: Internal Revenue Service

Table 6

Total Income Tax Shares, 1980-2008 (Percent of federal income tax paid by each group)

Year

Total

Top 0.1%

Top 1%

Top 5%

Between 5% & 10%

Top 10%

Between 10% & 25%

Top 25%

Between 25% & 50%

Top 50%

Bottom 50%

1980

100%

19.05%

36.84%

12.44%

49.28%

23.74%

73.02%

19.93%

92.95%

7.05%

1981

100%

17.58%

35.06%

12.90%

47.96%

24.33%

72.29%

20.26%

92.55%

7.45%

1982

100%

19.03%

36.13%

12.45%

48.59%

23.91%

72.50%

20.15%

92.65%

7.35%

1983

100%

20.32%

37.26%

12.44%

49.71%

23.39%

73.10%

19.73%

92.83%

7.17%

1984

100%

21.12%

37.98%

12.58%

50.56%

22.92%

73.49%

19.16%

92.65%

7.35%

1985

100%

21.81%

38.78%

12.67%

51.46%

22.60%

74.06%

18.77%

92.83%

7.17%

1986

100%

25.75%

42.57%

12.12%

54.69%

21.33%

76.02%

17.52%

93.54%

6.46%

Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable

1987

100%

24.81%

43.26%

12.35%

55.61%

21.31%

76.92%

17.02%

93.93%

6.07%

1988

100%

27.58%

45.62%

11.66%

57.28%

20.57%

77.84%

16.44%

94.28%

5.72%

1989

100%

25.24%

43.94%

11.85%

55.78%

21.44%

77.22%

16.94%

94.17%

5.83%

1990

100%

25.13%

43.64%

11.73%

55.36%

21.66%

77.02%

17.16%

94.19%

5.81%

1991

100%

24.82%

43.38%

12.45%

55.82%

21.46%

77.29%

17.23%

94.52%

5.48%

1992

100%

27.54%

45.88%

12.12%

58.01%

20.47%

78.48%

16.46%

94.94%

5.06%

1993

100%

29.01%

47.36%

11.88%

59.24%

20.03%

79.27%

15.92%

95.19%

4.81%

1994

100%

28.86%

47.52%

11.93%

59.45%

20.10%

79.55%

15.68%

95.23%

4.77%

1995

100%

30.26%

48.91%

11.84%

60.75%

19.62%

80.36%

15.03%

95.39%

4.61%

1996

100%

32.31%

50.97%

11.54%

62.51%

18.80%

81.32%

14.36%

95.68%

4.32%

1997

100%

33.17%

51.87%

11.33%

63.20%

18.47%

81.67%

14.05%

95.72%

4.28%

1998

100%

34.75%

53.84%

11.20%

65.04%

17.65%

82.69%

13.10%

95.79%

4.21%

1999

100%

36.18%

55.45%

11.00%

66.45%

17.09%

83.54%

12.46%

96.00%

4.00%

2000

100%

37.42%

56.47%

10.86%

67.33%

16.68%

84.01%

12.08%

96.09%

3.91%

2001

100%

16.06%

33.89%

53.25%

11.64%

64.89%

18.01%

82.90%

13.13%

96.03%

3.97%

2002

100%

15.43%

33.71%

53.80%

11.94%

65.73%

18.16%

83.90%

12.60%

96.50%

3.50%

2003

100%

15.68%

34.27%

54.36%

11.48%

65.84%

18.04%

83.88%

12.65%

96.54%

3.46%

2004

100%

17.44%

36.89%

57.13%

11.07%

68.19%

16.67%

84.86%

11.85%

96.70%

3.30%

2005

100%

19.26%

39.38%

59.67%

10.63%

70.30%

15.69%

85.99%

10.94%

96.93%

3.07%

2006

100%

19.56%

39.89%

60.14%

10.65%

70.79%

15.47%

86.27%

10.75%

97.01%

2.99%

2007

100%

20.19%

40.41%

60.61%

10.59%

71.20%

15.37%

86.57%

10.54%

97.11%

2.89%

2008 100% 18.47% 38.02% 58.72% 11.22% 69.94% 16.40% 86.34% 10.96% 97.30% 2.70%
Source: IRS

http://www.taxfoundation.org/news/show/250.html

US State Sales Tax Rates – 2010
State
State sales tax rate (January 1st, 2010)%
Alabama
4.0
Alaska
nil
Arizona
5.6
Arkansas
6.0
California
8.25
Colorado
2.9
Connecticut
6.0
Delaware
nil
Florida
6.0
Georgia
4.0
Hawaii
4.0
Idaho
6.0
Illinois
6.25
Indiana
7.0
Iowa
6.0
Kansas
5.3
Kentucky
6.0
Louisiana
4.0
Maine
5.0
Maryland
6.0
Massachusetts
6.25
Michigan
6.0
Minnesota
6.875
Mississippi
7.0
Missouri
4.225
Montana
nil
Nebraska
5.5
Nevada
6.85
New Hampshire
nil
New Jersey
7.0
New Mexico
5.0
New York
4.0
North Carolina
5.75
North Dakota
5.0
Ohio
5.5
Oklahoma
4.5
Oregon
nil
Pennsylvania
6.0
Rhode Island
7.0
South Carolina
6.0
South Dakota
4.0
Tennessee
7.0
Texas
6.25
Utah
4.7
Vermont
6.0
Virginia
5.0
West Virginia
6.0
Wisconsin
5.0
Washington
6.5
Washington DC
6.0
Wyoming
4.0

http://www.usa-sales-use-tax-e-commerce.com/table_sales_rates.asp

The 48 Contiguous States and DC
Persons in family Poverty guideline
1 $10,830
2 14,570
3 18,310
4 22,050
5 25,790
6 29,530
7 33,270
8 37,010
For families with more than 8 persons, add $3,740 for each additional person.

http://www.atdn.org/access/poverty.html

Background Articles and Videos

Tom Wright on the FairTax part 1

Tom Wright on the FairTax part 2

Tom Wright on the FairTax part 3

Tom Wright on the FairTax part 4

Tom Wright on the FairTax part 5

Tom Wright on the FairTax part 6

Tom Wright on the FairTax part 7

Why is the FairTax better than other tax reform efforts?

Does the FairTax repeal the federal income tax?

How does the FairTax affect the economy?

Is the FairTax truly progressive?

How does the “prebate” work?

Is it fair for rich people to get the same prebate as poor people?

Do corporations get a windfall break from the FairTax?

How do we keep exemptions and exclusions from undermining the FairTax?

Wouldn’t it be more fair to exempt food and medicine from the FairTax?

How does the FairTax rate compare to today’s?

Is the FairTax rate really 23%?

How is the FairTax different from a Value Added Tax (VAT)?

Will the prebate create a massive new entitlement system?

How does the FairTax impact the middle class?

How will the FairTax impact seniors?

How does the FairTax affect tax preparers and CPAs?

How does the FairTax impact charitable giving?

How does the FairTax affect compliance costs?

Will the FairTax hurt home ownership with no mortgage interest deduction?

Will the FairTax hurt home ownership with no mortgage interest deduction?

How will the FairTax help people who don’t hire an accountant?

How will the FairTax impact people who don’t file income taxes?

Will the FairTax drive the economy down if people stop buying?

How will the FairTax affect state sales tax systems?

Are any significant economies funded by a sales tax?

Is education taxed under the FairTax?

Will government pay taxes under the FairTax?

Will the FairTax impact tax deferred retirement accounts like 401(k)s?

What will happen to cities who depend on tax free bonds?

How does the FairTax impact tax free bonds?

How will Social Security payments be calculated under the FairTax?

What will happen to government programs like Social Security and Medicare?

How can you tax life saving medical treatment?

Will bartering present a compliance problem under the FairTax?

How will used goods be taxed?

Can’t Americans just cross the border to avoid the FairTax

How does the FairTax affect illegal immigration?

Isn’t it a stretch to say the IRS will go away?

What will the transition be like from the income tax to the FairTax?

FairTax Show – Part 1

FairTax Show – Part 2

Ron Paul on Taxes

Policy Resources

The following organizations provide policy analysis on taxation and related issues:

Tax Policy Organizations:

Small Business Policy Organizations:

General Public Policy Research Organizations:

http://www.fairtax.org/site/PageServer?pagename=about_links

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