Chris Prandoni

Top Five Tax and Spending Lies from the State of the Union


Posted by Ryan Ellis, Mattie Duppler, Chris Prandoni on Wednesday, February 13th, 2013, 11:06 AM PERMALINK


Obama Claim #1:  “[The American people] know that broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue, and with everybody doing their fair share.”

Reality:  According to the Congressional Budget Office (CBO), tax revenues to the federal government will double over the next decade, from $2.5 trillion in 2012 to $5 trillion in 2023.  Tax revenues will settle in at 19 percent of economic output, a full percentage point higher than the historical average.  That means that tax revenues every year will be running $150 billion to $200 billion higher than what we’ve come to experience as the norm since the Second World War. 

American taxpayers are already doing their part, Mr. President.  It’s time for Washington to go on a spending diet.

Obama Claim #2:  “We should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and well-connected.”

Reality:  Most so-called “tax expenditures” are actually common, everyday tax benefits enjoyed by the middle class.  As for denying these tax preferences to high-income households, that was already done as part of the fiscal cliff deal.  Besides, the tax code is already very steeply-progressive, and is only getting more so.  Washington’s giant debt and deficit problems are caused by overspending, not undertaxing.

Obama Claim #3:  “The American people deserve a tax code that…ensures billionaires with high-powered accountants can’t pay a lower rate than their hard-working secretaries.”

Reality:  This is a straw man argument and is intellectually-dishonest.  CBO has already shown that billionaires pay taxes at a far greater rate than a middle class family.

A typical middle income family faces an average federal tax rate (total federal taxes divided by income) of 11 percent.  The top one percent of families face an average tax rate of 29 percent.  That’s nearly three times as high. 

The middle quintile of taxpayers finance less than 10 percent of all federal taxes paid.  The top one percenters finance over 22 percent of all federal taxes.  This is more than twice as much as the middle quintile.

Whether it’s expressed as percent of income paid in taxes or as percent of all taxes paid to the government, it’s clear that progressivity is not one of the problems in our tax code.  Tax reform is not about punishing households (many of whom are small businesses paying taxes using individual rates), but about creating a pro-growth tax system that creates jobs and wealth for all Americans.

Obama Claim #4:  “Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion...Democrats, Republicans, business leaders, and economists have already said that these cuts, known here in Washington as ‘the sequester,’ are a really bad idea.”

Reality:  The President is claiming credit for the sequester savings while at the same time demanding the cuts be avoided. The $2.5 trillion in savings the President claims to have “worked together” with Congress to achieve are derived partially from spending caps in the Budget Control Act, and partially from $1.2 trillion in automatic spending cuts scheduled to take place over the next ten years. President Obama can’t avert those cuts while counting the savings as a successful token of bipartisan deficit reduction. Not mentioned in the speech? This “really bad idea” was Obama’s idea.

Obama Claim #5:  “So tonight, I propose we use some of our oil and gas revenues to fund an Energy Security Trust that will drive new research and technology to shift our cars and trucks off oil for good.”

Reality:  President Obama is triple-counting these tax hikes. Elsewhere in the speech he suggests that the tax increases on oil and natural gas companies should be used to reduce the deficit, pay for the sequester, and now to create a new “Energy Security Trust.” Raising taxes on oil and natural gas companies gives the government about $5 billion dollars in additional revenue annually, which is enough to avert about six percent of the sequester, reduce the deficit by 0.5 percent, or create a new “Energy Security Trust” but not do all three. And the repercussions of these tax hikes would be substantial, killing 48,000 jobs and reducing our domestic production by 700,000 barrels of oil. 

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Top Five Obama Tax Lies from the First Debate


Posted by Ryan Ellis, Chris Prandoni on Thursday, October 4th, 2012, 4:24 PM PERMALINK


Below are the top five tax lies Obama told during the first presidential debate of 2012:

1. Obama: “Governor Romney's central economic plan calls for a $5 trillion tax cut.”
 
The Romney plan is tax-revenue neutral, not a tax cut.  Governor Romney has made it clear that he wants to do revenue-neutral tax reform (lower rates, but the same amount of money collected as an unreformed system would generate).  Romney will have a tax reform revenue target of 18-19 percent of GDP, the historical revenue average.

The Romney plan is a classic example of tax reform.  He wants to cut each individual marginal income tax rate by 20 percent.  In order to pay for this rate reduction, he would take away deductions and credits from high income households.  Thus, the plan is a tax cut for the middle class (who will see their rate fall, and their deductions remain unchanged).

Current Tax Brackets

Romney Tax Brackets

10%

8%

15%

12%

25%

20%

28%

22.4%

33%

26.4%

35%

28%


2. Obama: Under Romney’s plan, “The average middle-class family with children would pay about $2,000 more.”

The Romney plan will cut taxes for lower and middle-income households. The lowest rate will drop from 10 to 8 percent.  The 15 percent rate (which most middle income families face at the margin) will drop from 15 to 12 percent. Furthermore, Romney will repeal Obamacare, including the 20 new or higher taxes in that law.  No fewer than seven Obamacare tax hikes fall directly on middle class families, and many more will raise costs indirectly for these families.  

Obama has clearly broken his 2008 “firm pledge” not to sign “any form of tax increase” on families making less than $250,000.

Of recent note, Obama has altered his tax pledge: In a second term, he only promises not to raise income taxes on those making less than $250,000, and only for one year. After the one year has come and gone, all taxes are fair game, and at any income level.

3. Obama: “I also lowered taxes for small businesses 18 times. And what I want to do is continue the tax rates — the tax cuts that we put into place for small businesses and families.”

The President’s plan to raise the top two marginal income tax rates will not just affect high-income families.  Because small businesses pay taxes using the individual rates, a hike in these rates is a hike in the small business tax rate.  According to IRS data, a majority of small business profits face taxation in the top two brackets. 

Romney cited a study which shows that a majority of everyone in America who works for a small business works for one that will see its tax rate rise under the President’s plan.  A recent study by Ernst and Young projects that this tax hike will kill over 700,000 small employer jobs.  The study shouldn’t come as a surprise, as higher taxes on businesses often means layoffs.

The principal tax cut for small business that President Obama is bragging about is a small employer tax credit to purchase health insurance.  The only problem is that this tax credit is so complicated to comply with, very few small employers are actually using it.  The IRS and HHS practically have to beg employers to even take a look at it.  According to CBO, their estimated score for this tax provision is half of what they originally thought it would be, or $20 billion over the next decade.  Meanwhile, even this small amount is dwarfed by the rate hike small employers will face under the President’s plan.

4. Obama: “The oil industry gets $4 billion a year in corporate welfare. Basically, they get deductions that those small businesses that Governor Romney refers to, they don't get.”

President Obama speaks of these tax deductions as if they are exclusively employed by energy companies. In fact, cost recovery deductions are available to all industries.

After an oil and natural gas producer spends millions of dollars developing a well, they are allowed to deduct many of the costs associated with this construction project. Obama is unintentionally accurate when he says that oil companies “get deductions that small businesses…don’t get.” Oil companies, in fact, get inferior deductions. For example, according to Sec. 199 of the IRS code, every domestic manufacturer can deduct 9 percent of all qualifying income from their end of year profits—except oil and natural gas companies, which must claim this deduction at the politically-motivated rate of 6 percent. After forcing the oil and natural gas industry to claim a smaller deduction, Obama now argues for total repeal of Sec. 199 for oil and natural gas producers.

An increase in taxes like Obama is calling for could result in 48,000 jobs lost, and 700,000 barrel's worth of oil and natural gas per day, and $29 billion less in government revenue - all by 2020, according to a study by Wood Mackenzie.

5. Obama: “Governor Romney and I both agree that our corporate tax rate is too high. So I want to lower it, particularly for manufacturing, taking it down to 25 percent.”

And…

Obama: “I have said that for incomes over $250,000 a year that we should go back to the rates that we had when Bill Clinton was president.”

Obama claims to be for corporate tax reform, but it isn’t in his budget. His administration released a plan in the spring, but he hadn’t said a word about it until last night.

Even that plan would have been a net corporate income tax hike of hundreds of billions of dollars.  With a federal rate of 28 percent, the U.S. would still have a higher corporate tax rate than major trading partners Canada, the United Kingdom, Germany, and Mexico.  It would be higher than the OECD (developed nation) average of 25 percent.

Furthermore, Obama has already signed into law tax hikes on corporate shareholders. This disproves his claim that he wants to bring tax rates where they were under the Clinton Administration:

 

Current Rate

Clinton Rate

Obama Rate

Capital Gains

15%

20%

23.8%

Dividends

15%

39.6%

43.4%


The tax on corporate owners is a second bite at the apple of corporate profits, and Obama signed these rate hikes into law when he signed Obamacare.  The capital gains and dividends rate hike will hit middle class savings hard by lowering stock prices, impacting everyone’s 401(k) and IRA.

Click here for a PDF version of this document
 

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Attention Job Creators: Ready for 5,000 new regulations?


Posted by Mattie Corrao, Kelly Cobb, Chris Prandoni on Friday, September 9th, 2011, 2:03 PM PERMALINK


In his “jobs” speech Thursday night, President Obama claimed: “I ordered a review of all government regulations.  So far, we’ve identified over 500 reforms, which will save billions of dollars over the next few years.”

In reality, the White House currently has 5,000 more regulatory actions waiting in the wings. Regulations under the Obama administration have stifled economic growth and eliminated job opportunities for Americans across the country.

According to the 2011 Cost of Government Report, the President’s projected $2.5 billion increase in regulatory budgets in 2012 will cost the economy 6.2 million jobs over five years.  What’s more, Obama’s suggested regulatory reviews take credit for regulations never really enacted; the “billions” in savings he imagines under this guidance are imaginary, while the costs of actual rulemakings imposed on employers are real.

Regulatory overreach from the Obama Administration has and will continue to punish business:

-Technology: The FCC enacted “Net Neutrality” to regulate the Internet for the first time in history and approved new, costly roaming mandates on wireless providers with little legal authority. Meanwhile, the Department of Justice is using its regulatory power to stall investment and job-creation by attempting to halt the AT&T and T-Mobile merger.

-Banking: The Dodd-Frank Act promises over 500 new regulations that prevent lending and raise costs for consumers and small business. New price controls on debit card transactions have eliminated free checking. The Volcker Rule will stymie investments deemed “too risky” by bureaucrats. A new financial regulatory agency has proposed over 60 regulations that will limit credit and lending to small businesses.

-Energy: Requiring America’s energy producers and utility companies to meet arbitrary emissions and efficiency standards, the EPA has prolonged job creation and induced layoffs. With compliance costs totaling in the tens of billions, many of America’s energy producers have no choice but to close their doors, increase energy prices, or fire workers.

-Labor: With union membership declining, the Obama Administration has utilized the National Labor Relations Board, National Mediation Board, and Department of Labor to inflate unions’ numbers by changing union election laws, rolling back transparency measures and codifying card check.

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