The new downtown Des Moines YMCA should not receive federal funding for its new Olympic size swimming pool. The Register reported that the Y did not receive the $6 million in federal tax credits it had requested, but that it had reapplied for funding next year under the same program. I don’t blame the Y, or any of the thousands of similar organizations across the nation, for applying for available grants. I blame our federal government and elected representatives for creating such spending programs. Building swimming pools, and other local community projects, is clearly an improper role for our federal government. There is no authorization for this kind of spending in the Constitution. Wanting to fund good causes is not sufficient. (As a longtime member, financial supporter, and twice past board member, I believe in the good cause of the Y.) Spending proposals that are not authorized under the Constitution must be opposed for that reason alone – no matter how good the cause. Let’s see if the newly Republican controlled Congress will honor their oath to uphold the Constitution and work to reign in these Constitutionally abusive spending programs.
Don’t demonize Walgreens for taking action to legally lower its U.S. federal income taxes. The Des Moines Register and President Obama are wrong when they say that taking advantage of this legal tax break is unpatriotic. As the Register reported, Walgreens can save $4 billion in federal taxes over the next 5 years by changing its corporate headquarters to Switzerland. (See Register article: “Walgreens turns back on taxpayers” 8/3/2014)
The Register asked: “How much profit does a company need?” “How much is enough?” They went on to list all of the benefits that Walgreens receives by operating in the U.S. They tried to shame Walgreens for their proposed action, and effectively called for a boycott of Walgreens in protest.
The Register gave lip service to the fact that the U.S. has very high corporate tax rates compared to most other modern countries, and that tax reform is needed to close loopholes and bring down rates. That should have been the primary message of the editorial, that we need to close loopholes and lower rates, not that Walgreens might take advantage of one.
Many companies and other taxpayers pay substantially lower their taxes by taking advantage of loopholes: Oil and other natural resource extraction industries have their depletion allowance; hedge fund managers have their “carried interest” bonuses payments. There are many many types of tax credits and deductions that benefit only politically favored businesses. Many unfair loopholes go to very wealthy and profitable companies and individuals. How does Warren Buffet pay less than 20% in federal income taxes? Loopholes. Why do some of the largest, wealthiest, most profitable research based companies in Iowa pay no income tax? Loopholes. Are all of these people and companies unpatriotic because they don’t pay more taxes than required by law?
In this case, the problem is not Walgreens or the specific loophole. It is the high corporate income tax rates in the U.S. The U.S. needs to significantly lower its corporate income tax rates. Otherwise, over time, companies will actually move their headquarters to lower tax countries. Given the inherent unfairness of special interest loopholes, and given the unconscionably high U.S. federal debt, it seems obvious that we should close as many of these loopholes as possible, and lower tax rates at the same time in a revenue neutral way.
Full disclosure: I am a Walgreens stockholder.
Link to Register editorial: http://www.desmoinesregister.com/story/opinion/editorials/2014/08/03/editorial-walgreens-turns-back-taxpayers/13531911/
Taxpayers subsidize about 60% of the premiums that farmers pay for crop insurance – regardless of how wealthy the farmer is, regardless of the income of the farmer, and regardless of whether or not the owner actually even works on a farm. Crop insurance covers not only losses due to disasters, but it also covers losses due to low prices. There is no ethical, moral, or food security reason why wealthy farm owners should be receiving any subsidy. Most farms, like most other businesses, need disaster insurance. But, there is no good reason why taxpayers should subsidize the premiums. Farmers say they need a 5-year farm bill so that they can properly plan. That is understandable. Let’s let them plan on not receiving any subsidy on their crop insurance.
Republicans are right to not increase the debt ceiling without some action to reduce our Country’s spending deficit. They are not right to pick out Obamacare as the only possible target. President Obama and the Democrats are wrong to insist that the Republican in the House of Representatives pass a “clean” debt limit expansion bill. The compromise should be to agree on spending cuts that are not specifically related to Obamacare. The four big drivers of the Federal budget deficit are Medicare, Medicaid, Social Security and Military spending. Any other spending cuts, although helpful, do not really solve our long-term problem. Republicans should propose some type of binding agreement on entitlement and military spending cuts in return for passing a debt increase bill. The real problem to be solved is that we must stop spending beyond our means.
Thanks to the Des Moines Register for the article, “Crop insurance payment soar” on 3/14/2013. It is not right that we taxpayers are required to subsidize crop insurance premiums for farmers. I can accept our government administering a crop insurance insurance program if there is no viable private market. But I cannot understand why taxpayers should subsidize the crop insurance program. Farmers make higher than average incomes. Many farmers and farm owners are very wealthy. Both large corporate farms and wealthy absentee owner investors get Insurance premium subsidies. Fees and commissions paid to crop insurance companies and sales representatives appear to be very generous. We need to stop the farm welfare. Charging the full cost of the insurance to farmers will cause farmers to help keep cost down and prevent abuse.
Maybe it would be best to let the Sequestration spending cuts to take effect. It appears that elected politicians are unable to make significant cuts to any specific federal spending items.If cuts could be prioritized, here would be my short list in order of priority:
- The Medicare eligibility age should be coupled with Social Security and they both should be gradually moved to age 70. The federal government should not be responsible to pay for 15 – 30 years of retirement for healthy adults. (see below)
- Freeze the dollar amount of federal spending on Medicaid – block grant the money to the states and let States decide on the priorities. There will always be more demand than there is supply for free medical care.
- Cut military spending, in actual dollars, by at least 5%. Let the defense department decide on priorities to give us the best defense that the budget can buy. We would still have greatest defense on Earth.
- Eliminate the Dept. of Education – leave education to the states entirely.
- Limit farm subsidies to $50,000 per farmer maximum, $100,000 per family maximum. Phase out all subsidies for farmers who have a Adjusted Gross Income between $100,000 and $200,000. Require 100% of the cost of crop insurance to be charged to the farmers. Why do we keep paying subsidies to farmers when they have record profits? Something is wrong.
- Cut the FEMA budget by 50%, and make States pay a 50% co-insurance payment for all federal money that flows into any State. States would be much more efficient, and there would be much less abuse and fraud.
- Eliminate subsidies and special tax breaks for all forms of energy. All energy producers fight to protect their subsidies by claiming that the other forms of energy get subsidies and all they want is a fair playing field. Well, lets make the playing field very fair – no subsidies for anyone.
- Eliminate spending on arts, and humanities, public broadcasting, etc. Contributions to these kinds of organizations should be left to charitable organizations.
I’m sure the list would be different and much larger if I took enough additional time.
According to data compiled by the Social Security Administration:
- A man reaching age 65 today can expect to live, on average, until age 83.
- A woman turning age 65 today can expect to live, on average, until age 85.
And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.
Thanks to the Des Moines Register for printing the editorial by Peter Morici on 2/16/2013. (Obama blackmailing taxpayers to stick blame on Republicans – see link below.) President Obama and other politicians and pundits who say the sky will fall if the sequestration cuts are allowed to go into effect are using misleading fear tactics. Politicians at all levels of government who don’t want to see spending cuts always say that the services that will be cut are those that are the most needed and the most visible. Examples include President Obama’s statement in his State Of The Union address: “These sudden, harsh, arbitrary cuts would jeopardize our military readiness. They’d devastate priorities like education, energy, and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs.” Agriculture Secretary Vilsack has warned us that layoffs of food inspector will result in food shortages. A top general stated that troops in Afghanistan will have their stay extended because there won’t be enough money to train replacement troops. Homeland Security Secretary Napolitano said the we should expect increased wait times in airports due to mandatory furloughs of security staff.
I just don’t believe most people think we should raise the top income rate above the current 35%. All of the examples given are of the super rich, like Warren Buffet and Mitt Romney, who earn millions each year and pay a total tax of between 15% and 20%. This is the unfair situation that most people think of and most politicians describe when they ask the rich to pay their fair share. Maybe the easiest way to fix this problem is to revamp the Alternative Minimum Tax. Why can’t we simply tax all earnings over $250,000, no matter the source, at the maximum 35% rate? This would include interest earned on tax exempt bonds, dividends, capital gains, carried interest, and any other type of income that is otherwise tax exempt or taxed at lower rates. It that doesn’t generate enough revenue, then start taking away itemized deductions based on income. If need be, take away all itemized deductions.
The idea above presumes that we need to increase revenues (taxes) to help solve our deficit problem. Of course, the biggest cause of our problem is that spending has increased too rapidly. So, the biggest part of the solution should be to reduce spending.
The chart at the link below shows clearly that our deficit problem is due to uncontrolled spending, not that revenues (taxes) are too low.
Chart showing the history of federal revenues and federal spending: http://www.heritage.org/federalbudget/growth-federal-spending-revenue