Who’da thunk the day would ever come?
Mark Sanford buddy and guru Grover Norquist — whose anti-tax pledge has verged on paralyzing South Carolina government in recent years because he had so many GOP lawmakers signing it and afraid to cross him (thereby preventing comprehensive tax reform, among other things) has apparently miscalculated, leading to a very public rebuke, by Republicans, in the age of the Tea Party:
WASHINGTON — Grover Norquist’s grip on the Republican Party’s tax policy slipped dramatically on Tuesday, a development that is likely to have significant repercussions on the debate over spending, revenue and the federal deficit.
Norquist, the head of Americans for Tax Reform and a leading party power broker for a generation, drew a hard line in the sand against repealing ethanol subsidies, arguing that ending the tax breaks is equivalent to a tax increase and therefore a violation of The Pledge — a document nearly every Republican has signed promising never to vote to raise taxes.
Thirty-four Senate Republicans walked nonchalantly across that line on Tuesday, voting to move forward on an amendment sponsored by Sen. Tom Coburn (R-Okla.) that would repeal the subsidies.
Norquist has been vicious in his recent talks on Coburn, charging that his amendment means he “lied his way into office” and is breaking the pledge.
Coburn was unmoved. “I think you all think he has a whole lot more hold than I think he has,” Coburn told reporters before the vote. “I don’t disagree with him on a lot of principles. The fact is it’s not a good position to put yourself in when you say, ‘Here’s a tax expenditure that nobody needs, and yet we have to give somebody else a tax cut to take away this.'”…
Could this be the end?
I mean, it should be. Even if you agree with Norquist, for the guy who famously wanted to shrink government to where he could drown it in a bathtub to make his stand on KEEPING one of the more wasteful government boondoggles is not calculated to win credibility.
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We can hope this might affect the debate on oil and gas subsidies as well. John Boehner’s statement that those subsidies couldn’t be eliminated because it would be a tax increase, at the same time that he supported gutting Medicare (why wouldn’t that be a tax increase?) left me awestruck at his ability to entertain diametrically opposed ideas at once. He seemed to manage it without any awareness of the absurdity or the contradictions.
I never thought I’d write this, but I <3 Tom Coburn. Ethanol is terrible--it ruins your gas mileage--very obvious on a Prius when you lose 10%--and drives up food prices, especially hard for the poor.
Yes! An end to the ethanol subsidy!
Let’s hope so. The “no new taxes” bit is making it impossible to deal with tax reform or national debt.
Wonderful! I would love to see the federal government downsized and my taxes lowered. Grover Norquist and the Club for Greed, however, are ridiculous extremists that need to be ignored. Good for Senator Coburn; he’s working for the good of our country instead of for the good of Grover and his cronies.
Don’t get me started about Sanford and his unholy alliance with these people. Wasn’t it in Grover’s living room in NYC that Sanford was told he would be the next president? Oops. Guess they didn’t count on a problem like Maria. But we’re still stuck with Haley and a lot of crazy legislators. So this is only a beginning, but a good one nonetheless.
I’ll be very interested in seeing how this vote breaks down on party lines. If ever there was a bipartisan issue the ethanol subsidies would qualify.
We need to put an end to subsidies, exemptions and tax credits and treat every industry and taxpayer equally under the law. We have the perfect tax reform in South Carolina – the South Carolina FairTax Act (H-3993/S-274). It takes away the numerous exemptions in our sales tax code, keeps the sales tax rate at 6% and eliminates the state income taxes. Nothing will encourage job creation and per capita income growth in South Carolina than passing the South Carolina FairTax Act!
Nothing will encourage job creation and per capita income growth in South Carolina than passing the South Carolina FairTax Act!
-John
The Fair Tax is about the most unfair tax ever proposed. Of course it won’t do what it’s supporters say it will do and certainly won’t “encourage job growth”. Why? It’s just a windfall for the rich who don’t spend money but instead horde it and a ridiculous tax increase on the poor and middle class who actually do spend in the main street economy. Let’s just do away with exemptions on the income tax instead. This is one of those atrocious ideas that just won’t go away.
Hey “Bud” – the “rich” are the ones who actually create businesses and hire people. Get over your class warfare mindset!
According to research by Art Laffer and Stephen Moore in “Rich States, Poor States”, which analyzes the tax policies of the 50 states, the nine states which don’t collect a personal income tax have a significant advantage over their counterparts in job creation and per capita income growth. Texas alone has accounted for 37% of all jobs created since June 2009.
Really? I thought poor people could start businesses, too. This being the land of opportunity and all…
Yeah, I’ve heard that trinkle down crap for about 30 years now. Didn’t work during the Bush years with all his huge tax cuts and won’t work now.
As for class warfare, the rich have been waging it for decades now. It’s time for the poorer classes to fire a few salvos.
Brooklyn Bridge. For Sale. Just pay retail sales tax…
I would argue that the rich mostly piggyback on the work of others–you don’t get rich from most start-ups–you get rich from being a CEO in a big company that has likely been around forever, or being the heir of a rich person.
@Kathryn
Tell that to Bill Gates, Warren Buffett, Larry Ellison, Paul Allen, Mark Zuckerburg…
And then ask the millions of people who owe their jobs to those five people’s ideas and risk taking if they are grateful.
Why shouldn’t risk takers be rewarded?
I took a quick look at the Forbes 400 top richest Americans. The top 20 are either self-made or the children of self-made billionaires. 4 of the top 11 are college dropouts (including Gates and Ellison).
And the top three have all pledged to give away 95% of their wealth.
Rich people aren’t the problem.
Bill Gates owes his success to a stupid decision by IBM not to any brilliant entrepreneral skill. Jeez the man has hardly earned more than a couple million based on his actual contribution to society. In fact I’d go so far as to say Gates hindered the development of high quality software. Only through his ill-gotten monopoly position did he earn billions. And in the process the consumer suffered with crap like Windows 95 and Zune. Fortunatelly other more innovative companies are able to work around the Microsoft monopoly wall and we’re seeing true innovation again after it stalled out for decades under the tyranny of Gates. Hopefully it will continue until some other corporate tyrant blocks the way.
Doug, it’s the CHILDREN of the self-made billionaires I admire the most. They really had the right idea. I think we should all try to emulate them. They are who I want to be.
And Bud, aren’t you being way harsh on Windows 95? That was a pretty good step up at the time. If you want to trash something, trash Vista.
The one who always bugged me was Prince Charles. When I was young, I used to tell everyone who would listen that I thought it really, really unfair. I KNEW, deep down, that I was particularly suited to doing Prince Charles’ job, and would have done it far better than he.
I would say that events have born out my belief. Look what a hash he made of the job. All he had to do was marry well, STAY married (or at least not cause a scandal), produce heirs and keep his nose clean. And show up for ribbon-cuttings and such, of course.
I got married, stayed married, and produced — so far — nine heirs, counting grandchildren. (OK, so only two of them are males, but we’re over that Henry VIII obsession, right?) And I didn’t cause any significant scandals. OK, so I married a Catholic and converted, but don’t you think we could have hushed that up? I can fake it. My cousin, who is becoming an Anglican (or rather Episcopalian) priest had his ordination as a deacon a couple of weeks back in Charleston at the cathedral, and I was one of the ushers. And no one noticed. Not even the bishop noticed that a papist was bringing people up for the Eucharist.
I could DO it, man!
The very worst was the Windows that sat on type of the old DOS operating system. Now that was a dog.
Q-DOS–Quick and Dirty Operating System–says it all!
@bud
Your statements are ridiculous and reflect the complete envy you have for people who get rich via their own efforts. Bill Gates became the richest man in the world by overcoming mistakes, creating a cheap (if flawed) operating system that leapfrogged all the tired mainframe systems. He was and is a visionary and the market has rewarded him for it. And he’s gone from nobody to richest man in the world without any hint of personal scandal and now enters his later years doing more to help the world in terms of health and education than you could ever dream of. How could you possibly find something wrong with him as a person?
You can complain all you want about Windows. Nobody forces you to use it. Use Linux, it’s free. Buy a Mac, it’s cool.
As for the multiple heirs of Sam Walton who are now in the top 10, why not? Sam Walton built the business and he should have every right to divide the wealth he EARNED among whoever he chose. Whether it’s $10,000 or $10,000,000,000 why should any government bureauucrat decide that he made too much money? Estate taxes should be zero.
@bud
Look at this chart for 2009 and then tell me Bill Gates is one of those awful, greedy, lucky, rich s.o.b.’s you despise so much:
http://www.gatesfoundation.org/annualreport/2009/Pages/grants-paid-summary.aspx
$3 BILLION dollars in grants to aid the world in all sorts of areas… up from 2.8 BILLION the year before.
I guess you’d be happier if the $3 billion was funneled through the IRS to be dispensed on whatever pork barrel projects Congress can come up with. Sad.
Oh, and that $3 billion that was spent was exceeded by the $3.7 billion that Gates donated to the Foundation. Imagine that! A program that doesn’t spend more than it takes in. What a concept. Too boring for the government.
bud doesn’t have time to look at reports and charts, he’s too busy blowing a gasket about Petra Ecclestone and her new home in Los Angeles (http://blogs.forbes.com/morganbrennan/2011/06/14/billionaire-heiress-petra-ecclestone-to-buy-150-million-spelling-manor/). Poor thing had to go with her second choice because the $125M deal fell through on the other house. Last word was she was seen pouting in her $95M, 6-floor, London apartment.
I still wait a Fair Tax proponent who can show how it will be the only self-administering, self-enforcing tax law ever written.
@Steve
How do you avoid paying sales taxes now? That’s all fair tax is. Please let me know your secret.
Just buy from Amazon. Didn’t they just win that fight?
I avoid sales tax by buying most non-food items online, it’s cheaper, it’s tax free, and it’s delivered to my front door.
I’d love to see a national sales tax (10% for example) if it would get rid of Federal Income Taxes. Everyone pays what they are able to spend, the rich pay more because they buy more. It’d be almost impossible to get around and simple to administer, everyone would just add 10% to the selling price… similar to shipping charges.
Thing is, Steven, I’d buy them online even if I paid sales tax–they are considerably cheaper, even with tax factored in, and yes, they deliver them to me door!
I just cut to the chase and bought some odd things online rather than go store to store looking for them (pet emergency stickers, for one, a specific book)
Steven, I hate to tell you this but to be revenue neutral a national sales tax would have to be at least 30% and probably much higher to replace the income tax, payroll tax, capital gains and business taxes that are to be done away with by the Fair Tax.
As for buying on line, legally you’re still supposed to pay taxes but I doubt more than 5% of folks actually do. That would require a huge new bureucracy to achieve anything like the amount of money needed to run the government. How are we going to avoid a barter economy that will surely flourish under these kinds of repressive sales taxes. How about overseas purchases? It might be worth a trip to Canada or Mexico to buy that new big screen TV. Could we see offshore shopping centers that operate just inside international waters. We could pass follow-on laws to reduce these types of activities but of course part of the selling point for the “fair” tax is how it will do away with enforcement activities.
Steven,
that is against the law. You are supposed to do it on the honor system, and apply the tax on your state tax form.
@bud, the Windows that sat on top of DOS was everything up through the Moron-I-mean-Millenium Edition: 1, 2, 3.0, 3.1, 3.11, 95, 98, and ME.
@doug, the problem I have with the ‘Fair Tax’ is that it is a sales tax and it falls disproportionately on those who can afford it least.
Let’s compare one situation to the other. Let’s also assume that the sales tax on groceries is a more realistic 4%. Everybody has to eat. At a 4% rate, the $10/hour warehouse worker pays an additional 1% of his weekly income in tax for a $100 grocery bill. However, his annual income falls below the threshold set by the standard deduction and family exemptions, so he has no net taxable income and therefore pays no income tax. The $40/hour programmer pays only .25% of his weekly income in tax for that same bag of groceries, but his income is substantial enough that even after all deductions and exemptions, he has a net taxable income of $60,000, on which he pays taxes.
Go to the Fair Tax at 10%. The warehouse worker is now paying 2.5% of his weekly income and the programmer is now paying .625% of his weekly income in tax on that bag of groceries. Neither pays income tax.
Who is better off under Fair Tax? It’s only those who already earn enough to pay income tax that win in that scenario. Those doing their best to get by, but who don’t have either the skills or luck to have a good-paying job will take it on the chin.
“It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion. ”
– Adam Smith, Wealth of Nations
Tim says:”Steven, that is against the law. You are supposed to do it on the honor system, and apply the tax on your state tax form.”
You a cop?
bud, you say 30%, I say 10%… I bet I’m closer to the actual number than you are. How many people don’t pay any income tax compared to those who do now?
Nick, you just make necessities like food and medicine tax exempt. Several states already have that.
Who spends more total dollars, the rich or the poor? At 10%, a rich woman might pay an extra $250 on a single pair of shoes whereas a “normal” woman might pay $4 – $10. It doesn’t matter about percentage of household income, it’s about total dollars. I might buy a new vehicle every 6-7 years, whereas someone who makes 10x what I make might buy multiple vehicles during that same period.
@Nick
The Fair Tax also has a built in rebate system (as I understand it) up to some multiple of the poverty level.
Doug, the “fair” tax people like to talk in circles and here’s a perfect example. If the rebate system eliminates the taxes for a family then how is that different from what we have now where they don’t pay any income tax? I’ve heard ad nauseum how 47% of all people pay no tax, so one of the selling points of the “fair” tax is that it expands the taxpayer base. Seems like the rebate aspect would return us back to the status quo. If not then why would anyone in that 47% group be in favor of the “fair” tax?
Steve,
No, I am not a cop. Please continue to enjoy your Amazon “Discount” with a clear conscience.
Nah, I wouldn’t say “with a clear conscience.” I would just say, “without fear of prosecution.”
It’s wrong not to pay the tax. But you’ll get away with it. It’s kind of like driving 10 mph over the speed limit in SC — you shouldn’t, but who’s gonna stop you?
I’m reminded of “Gran Torino,” perhaps the best movie in the past five years. Did you see it? Remember how, at the end, Walt finally gives in to the priest’s insistence that he go to confession, and after all these years, he has three things to confess — and one of them is that years before he had sold a boat motor for $900, and had not paid the sales tax on it, “which is the same as stealing.” (And the priest says, “That’s it?”)
That Walt was my kind of conservative. The kind you don’t hear much about any more.
I always think of the speeding analogy, but part of the prob with that is when you try to drive the speed limit, you sort of become the road pariah, and you have to deal with a ton of enraged tailgaters, annoyed semi-trucks and other issues that sort of compel you to keep up. Its close, but not quite. This is what I find unsettling about the Amazon deal: It is really an encouragement to skirt the law.
@bud
The rebate won’t cover all taxes paid.
Actually, I personally would not be in favor of the rebate. Every member of society should have a stake in the game where they pay taxes. Having a single rate encourages people to earn more, knowing that each additional dollar will be taxed the same. Having a system where a significant number of people can be net recipients year after year is not the model I would think helps people escape poverty.
I can see keeping track of big purchases and reporting them–but I don’t buy big stuff online–and I would gladly pay tax if Amazon sent me a W-something with a statement of all my purchases, but hundreds of smaller transactions–not gonna happen.
Just want to weigh in as one of the chumps who pays the sales tax on my Amazon purchases every year. My accountant encourages his clients to at least estimate their total purchases and pay based on that, which we do.
(I’m one of those people that would have been called a conservative until a few years ago, and while I haven’t changed, somehow my label has).
Kathryn,
It really isn’t that hard to do. Look at your Amazon purchases when you are doing your taxes. You can see a listing of everything for the year, get a caculator and add up the total. Add sales tax to it. It took me 3 minutes.
Login, go to your account, then order history. There is a dropdown on the upper right. You can view “all orders from 2011, or 2010, etc”. Its easy.
Virtually all my online purchases are for my business. Since I file a quarterly Sales/Use Tax return with the state,and since small businesses are frequent targets for compliance actions, I’m pretty rigorous about paying up.
Doug wants the poor to pay more. I want the rich to pay much, much more since they obviously don’t actually earn that wealth.
I went back and looked up the development of the MS-DOS operating system. It was actually written by a guy named Tim Paterson. Gates only roll in the whole process was to serve as a sort of intermediary between IBM and the company who actually developed the operating systems that would ultimately create the PC revolution. Microsoft purchased that system for the paltry sum of about $50k and wisely maintained ownership rights. Gates never produced much of anything but instead happened to be in the right place at the right time. Paterson even quiped that Gates had not written anything in years when he discussed the rise of Microsoft in the late 80s. Gates ultimate contribution to the welfare of society was negligible at best and perhaps even detrimental to the development of computers and computer software given his tyrannical grip on the industry through Microsoft’s monopoly position. To suggest Bill Gates actually earned the billions he controls is laughable. These lucky millionares need to be taxed far more than they are. If they were we’d be in a whole lot better fiscal shape than we’re in.