QUOTE OF THE DAY
WSJ: Crony Capitalist Blowout
In praising Congress's huge new tax increase, President Obama said Tuesday that "millionaires and billionaires" will finally "pay their fair share." That is, unless you are a Nascar track owner, a wind-energy company or the owners of StarKist Tuna, among many others who managed to get their taxes reduced in Congress's New Year celebration.
There's plenty to lament about the capital and income tax hikes, but the bill's seedier underside is the $40 billion or so in tax payoffs to every crony capitalist and special pleader with a lobbyist worth his million-dollar salary. Congress and the White House want everyone to ignore this corporate-welfare blowout, so allow us to shine a light on the merriment.
Forbes: As 2013 Begins, Get Ready For An ObamaCare Tax Onslaught
The third wave of ObamaCare taxes began on January 1, the latest blitz before the tsunami of changes from the health overhaul law hit in 2014. These new and higher taxes are being levied to partially pay for ObamaCare’s massive new subsidies for private health insurance and expansion of Medicaid.
The most controversial of the latest ObamaCare taxes is the Medical Device Tax that hits entrepreneurial firms making equipment such as heart valves and hip replacement parts. They face a 2.3% profit on gross sales – a tax they must pay even if they have no profit at all. Many firms say this tax – slated to collect $29 billion over 10 years – will soak up virtually all of their research budgets.
Bloomberg: High Tax Fabulists Naively Embrace the 1950s
Of course, 2013 will be fine, because the 1950s sure were. That’s the premise for the coming year, especially in regard to the agreement in Washington to raise U.S. tax rates on the well-off.
In the 1950s, after all, tax rates were far higher than what the House and Senate have agreed on, a top rate in the high 30 percent range. Back then, they were even higher than what President Barack Obama might have proposed, if left to his own counsel. Republicans in that era went along with the idea that high rates took something away from the rich and thereby stabilized society.
Republican President Dwight Eisenhower’s idea of a significant marginal rate cut was to push the top rate down to 91 percent from 92 percent. Corporate taxes hit 50 percent. Jobs proliferated, wages rose, and the economy prospered. Lately, several documentaries have tried to capture the period, including “Something Ventured,” about how the technology boom got its start.
The implications of this 1950s narrative are clear. High tax rates and the redistribution they might yield can stabilize us now, giving the economy “good directional stability,” to use an industry phrase for a 1950s car, the Nash Metropolitan. High rates can accelerate growth.
Washington Post: Get used to more fiscal cliffs
There is a fiscal cliff deal, and it will become law. That is the good news. Our long national nightmare of 34 hours having fallen off the fiscal cliff (and counting, until the president signs the legislation) is over.
But most important thing to know about the deal is this: This resolves nothing.
AEI: Why the Obama tax hikes have only just begun
When an economy is booming and jobs are plentiful, a “do no harm” approach to public policy will suffice. If GDP were expanding at a 4% annual rate, the unemployment rate were at 5%, and the national debt were low, then the fiscal cliff deal might be tolerable rather than terrible. While it won’t create any jobs or add to growth — just the opposite in fact — and it will only cut the national debt by a rounding-error amount, passage does avoid an across-the-board income tax hike and probable recession.
CNBC: What 'Fiscal Cliff' Deal Means for Those Paying AMT
The "fiscal cliff" deal will help millions of Americans avoid paying the dreaded alternative minimum tax—while making it harder for many upper-middle class taxpayers to escape it, analysts say.
The reason is that the minimum income levels subject to the AMT are going up, but wealthier Americans won't be able to take as many deductions as before.
CARTOON OF THE DAY