Mitt Romney's 20% Income Tax Cut Idea

The most important issue for the November 6th, 2012 Presidential Election is the economy. The main reason Mitt Romney will be good for America is that he is proposing a permanent 20% income tax cut across the board so instead of rates like this: 

Tax Bracket        Married Filing Jointly     Single
10% Bracket       $0 – $17,400                    $0 – $8,700
15% Bracket       $17,400 – $70,700       $8,700 – $35,350
25% Bracket       $70,700 – $142,700    $35,350 – $85,650
28% Bracket       $142,700 – $217,450   $85,650 – $178,650
33% Bracket       $217,450 – $388,350    $178,650 – $388,350
35% Bracket       More Than $388,350      More Than $388,350

The rates would be: 

Tax Bracket        Married Filing Jointly      Single
8% Bracket         $0 – $17,400                      $0 – $8,700
12% Bracket       $17,400 – $70,700        $8,700 – $35,350
20% Bracket       $70,700 – $142,700     $35,350 – $85,650
22.4 Bracket       $142,700 – $217,450    $85,650 – $178,650
26.4 Bracket       $217,450 – $388,350    $178,650 – $388,350
28% Bracket        More Than $388,350      More Than $388,350

The Median Household Income in the United States in 2010 was $51,914, so on a joint filling the average American household would see an increase in income of $1,383.42 “annually” with the new tax rates under Romney. (The reason annually is in quotes is that the median income should increase so the additional amount people receive would be higher each next year.) Since there are approximately 114,235,996 households in the United States the additional spending power of Americans would be $158 billion “annually.” (These statistics are assuming, for the sake of simplicity, that all households are married and filing jointly.) 

$158 billion more in the hands of Americans is great for the American economy, but there is still one issue, a secondary issue, that people might bring up in order to argue against permanent income tax cuts and that is the change a permanent income tax cut has on Government Revenue. Before that issue is addressed, I’ll explain why this is a secondary issue. The Federal Government does not exist in order to rake in as much revenue as possible. The Federal Government is here for the people and does not exist to become as large and gain as much power as possible, so creating an atmosphere in which the economy can flourish so that people have jobs is more important than increasing revenue so politicians’ power increases and they can spend more. With that being said permanent income tax cuts increase revenue and, in this current specific case with unemployment (7.9%) and underemployment being as high as it is now, permanent income tax cuts would work very well. 

A tax cut that increases revenue goes against conventional wisdom, so how is this possible? When you permanently cut income tax rates people have more money to spend. They may save some initially and pay off some debts at first, but they will spend and spending will increase with time as they realize they are getting this new increase in income each year. When these people spend, businesses have to start hiring to keep up with demand and investors invest in companies and start new ones as they see the economy improving and consumer spending increasing. As these businesses hire employees, unemployment decreases and people who were formerly unemployed are now paying income taxes. Now that these formerly unemployed people are employed they have money to spend which creates the same effect over and over and over. This will spiral down until the economy levels out (unless there is a serious crisis that destroys the economy like the financial crisis and housing crisis in 2008). (Other benefits of permanent income tax cuts are increases in corporate income tax revenue, increases in capital gains tax revenue, increases in payroll tax revenue, increases sales tax revenue for local municipalities and state governments, increases in state income tax revenue, increases in excise tax revenue, increases in people covered by health insurance, decrease in unemployment benefit payments, decrease in entitlement payments, etc. etc.)

Don’t just take my word for it here are some historical examples that prove my point: 

1. Calvin Coolidge: Calvin Coolidge, at the urging of Andrew Mellon, reduced the top income tax bracket in the 1920s from 73% to 24% and “magically” unemployment reduced from 6.7% to 3.2% and real gross national product grew at an annual average rate of 4.7 percent between 1922 and 1929. Taxes paid by high income earners soared from roughly $300 million to $700 million per year. The share of overall income taxes paid by the group rose from about one-third in the early 1920s to almost two-thirds by the late 1920s. (Inflation was virtually zero between 1922 and 1930.) The total income tax revenue was $1.075 billion in 1922 and in 1928 revenue was $1.164 billion (a 7.7% increase with sharp income tax rate cuts). 

2. JFK/LBJ: “It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.” – JFK

The Revenue Act of 1964 reduced the top marginal income tax rate from 91% to 70%. Individual income tax rates were cut across the board by approximately 20%. When the bill was passed in February of 1964 unemployment was 5.4%. Unemployment gradually decreased all the way down to 3.4% in 1968 and 1969. Total Federal Government Tax revenue in 1963, before the tax cuts, was $106.6 billion and individual tax revenue was $47.588 billion. In 1969 total Federal Government Tax revenue was $186.9 billion and individual income tax revenue was $87.249 billion (with a little less than 20% inflation in that time period). That is a significant gain in individual and total tax revenue in a 6 year period. 

3. Ronald Reagan: Ronald Reagan sharply cut the top income tax bracket rate from 1981-1988 from 70% to 28%, but he also raised taxes in other areas, however, the large individual income tax cut trumps all the other smaller tax increases. Unemployment reached the highest level in December of 1982 of 10.8% and by the time Reagan left office unemployment was 5.4% (in January of 1989). In 1980, before the Reagan tax cuts began, the individual income tax revenue was $244.069 billion. In 1988, individual income tax revenue was $401.181 billion. Inflation over that time period was 43.5%, so revenue was still higher when factoring in inflation. 

4. George W. Bush: The Bush Tax Cuts are the best example of effective income tax cuts (in terms of analyzing Mitt Romney’s 20% income tax cut) because they did not bring down an extremely high top income tax bracket like in the other examples. Bush cut the top income tax rate from 39.6% to 35%. The Bush Tax Cuts also cut the rates of the other income tax brackets including the bottom rate by 50% from 15% to 10%. These tax cuts went into full effect in 2003. Below are their results: 

Tax Receipts by Year:

2003: Individual ($793 billion), Corporate ($131 billion), Capital Gains ($51 billion), & SS & MED ($712 billion)

2004: Individual ($808 billion), Corporate ($189 billion), Capital Gains ($73 billion), & SS & MED ($733 billion)

2005: Individual ($927 billion), Corporate ($278 billion), Capital Gains ($102 billion), & SS & MED ($794 billion)

2006: Individual ($1.043 trillion), Corporate ($353 billion), Capital Gains ($117 billion), & SS & MED ($837 billion)

2007: Individual ($1.163 trillion), Corporate ($370 billion), Capital Gains ($137 billion), & SS & MED ($869 billion)

(Inflation over this time period was 12.7%) 

From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history. Unemployment in June of 2003 was 6.3% and unemployment dipped to 4.4% in May of 2007 (just before the financial crisis and housing crisis destroyed the economy). 

If Obama wanted to reduce unemployment he would permanently cut income taxes, but that does not fit with his ideology even though tax policy should be based on math, reason, and historical information. 

Vote for Romney as has the right ideas to get people working and to fix the economy!

Obama is Bush on Steroids

If you hated George W. Bush as President and you love Barack H. Obama as a President, I’m not sure exactly why. Perhaps it’s because one is a Democrat and the other is a Republican even though that’s not a good reason. They have their obvious differences, but their similarities are striking especially on some large issues. Here is a list of how Obama is similar to Bush or Bush on steroids:   

1. Increase in Spending:  Under President George W. Bush’s reign the Federal Government spent liberally. His last year in office the Federal Government’s outlays were $2.982 trillion. This year under Obama the projected outlays are $3.795 trillion. (Bush on Steroids)

2. Debt:  The total debt in 8 years under the Bush Presidency was $4.9 trillion. Under Obama the debt has increased by about $5.6 trillion in almost 4 years. (Bush on Steroids)

3. Increase in Size of Government:  The number of Federal Employees grew by 53,000, under President George W. Bush and by 123,000, or 6.2%, under President Obama. (Bush on Steroids)

4. Unemployment:  Unemployment levels under Bush were subpar. The lowest level was 4.2% and the highest 7.3% when he left office. Bush instituted tax cuts after the first recession in 2001 and that helped lower the unemployment rate from 6.3% to 4.4%, but a severe recession struck in 2008 and the unemployment rate rose. Under Obama the unemployment level rose to 10%, largely due to the financial and housing crisis in 2008, and has bottomed out at 7.8% in September of 2012. The rate is currently 7.9% and Obama has been unable to return them near normal levels. (-)

5. War:  George W. Bush started two wars, in Iraq and Afghanistan. Barack Obama started two wars, one in Libya and a covert drone war in Yemen in addition to continuing the war in Afghanistan. (Mini George)

6. Guantanamo Bay:  Guantanamo Bay was open under Bush and is open under Obama despite Obama’s promise to close it in one year. He received the Nobel Peace Prize and stated that Gitmo would be closed, but it still isn’t. (Same)

7. Immigration:  George Bush and Barack Obama both failed to pass comprehensive immigration reform. In fact the issue was largely ignored during both Presidencies. (Same)

8. Patriot Act:  The Patriot Act was signed into Law under Bush and Obama signed the Patriot Act extension despite Obama criticizing the Bill in the past. (Same)

9. Healthcare:  George W. Bush expanded Federal Government Healthcare with Medicare Part D. The program cost $62 billion in 2010. Under Obama the Patient Protection and Affordable Care Act was passed (also known as ObamaCare). ObamaCare is projected to cost $1.674 trillion over the 9-year span from 2014 through 2022. That is an average of $186 billion per year. The cost will probably even be more than these projections assume. (Bush on Steroids)

10. Regulation:  If you love regulation, you’ll love George Bush and Barack Obama. In Bush’s first term, regulations increased by 4.4%. The first three years of Obama’s one term, regulations increased by 7.3% or a total of 11,327 pages. This does not even include the ObamaCare and Dodd-Frank regulations. (Bush on Steroids)

11. Bush Tax Cuts:  The Bush Tax Cuts were extended under Obama. (Same)

12. Czars:  Both President Bush and Obama greatly surpassed any other President’s usage of Czars. (Same)

13. Drone Usage:  Obama has already authorized 283 strikes in Pakistan, six times more than the number during President George W. Bush's eight years in office. As a result, the number of estimated deaths from the Obama administration's drone strikes is more than four times what it was during the Bush administration -- somewhere between 1,494 and 2,618. (Bush on Steroids)

14. Rendition:  Rendition - The CIA's "extraordinary rendition" program consists of seizing "terror suspects," detaining them without warrant or trial, and sending them offshore to outsource their "interrogation" to third world countries where they are tortured for information and confessions. Torture was one of the big criticisms faced by the Bush Administration, and in February 2009, the Obama Administration wasted no time in quietly retaining the practice of rendition. (Same)

15. Afghanistan Troop Casualties:  During the Bush presidency, which ended on Jan. 20, 2009 with the inauguration of President Obama, U.S. troops were present in Afghanistan for 87.4 months and suffered 570 casualties—a rate of 6.5 deaths per month. During the Obama presidency, through today, U.S. troops have been present in Afghanistan for 29.1 months and have suffered 970 casualties—a rate of 33.3 deaths per month. (Bush on Steroids)

16. Defense Spending:  Defense Spending Levels has only gone up during President Obama's first term from $616 billion under Bush in 2008 to $768 billion in 2011. (Bush on Steroids)

17. Habeas Corpus:  The Obama Administration also continued Bush's suspension of the long-standing legal tradition of habeas corpus, insisting that it has the right to detain suspected terrorists indefinitely without trial. (Same)

18. Post-Partisan President:  Despite promises of being a post-partisan president, Obama has tussled with Republicans and raised the rhetoric higher on healthcare and the economy, blaming them for trying to undermine his agenda despite having majorities in both the House and Senate for almost two years. Some say it's shades of former President Bush who also promised bipartisanship, but rarely made it work. (Bush on Steroids)

19. Transparency:  Amid promises of transparency, Obama is running secret wars a la Nixon and Bush. Today's Washington Post, for example, reveals that the administration, which arrived with plans to cut back on the wars, is expanding "a largely secret U.S. war against al-Qaeda and other radical groups" in Yemen, Africa, Central Asia, and the Middle East. Also, why won’t Obama release many of his records? Furthermore, Obama promised to publish all non-emergency legislation to a website for five days before the President signs it, but then broke that promise over and over again. (Bush on Steroids)

20. Executive Orders:  Both Bush and Obama have issued executive orders, a lot of executive orders. Obama and the left accused Bush of running an “imperial presidency.” Then Obama came along and did the same thing as Bush. (Same)

21. Stimulus:  Bush passed the Economic Stimulus Act of 2008. The law provided for tax rebates to low- and middle-income U.S. taxpayers, tax incentives to stimulate business investment, and an increase in the limits imposed on mortgages eligible for purchase by government-sponsored enterprises (e.g., Fannie Mae and Freddie Mac). The total cost of this bill was projected at $152 billion. Obama singed the American Recovery and Reinvestment Act of 2009. The cost of the bill is a principal amount of $840 billion, and when adding interest owed, a total amount of $1.2 trillion. (Bush on Steroids)

22. Lobbyists:  Despite promising to keep lobbyists out of his administration, Obama broke his word again and again, making 17 exceptions to this promise in his first two weeks as president. Bush was also greatly influenced by lobbyists. (Same)

23. Earmarks:  Obama did a shameless 180 degree turn on earmarks by sharply criticizing them (and bragging that he would pass legislation without a single one) and then signing a spending bill with literally thousands of them. (Same)
24. Bailouts:  Bush authorized $13.4 billion in bailouts for General Motors and when Obama took office he authorized tens of billions more for Detroit. (Same)

25. Ben Bernanke:  Another continuation of Bush era economics, fiscal policy, and monetary policy: Obama's appointment of Ben Bernanke to another term as Fed Chair. (Same)

26. Dealing with Disasters:  Bush poorly handled the aftermath Hurricane Katrina. Obama poorly handled the aftermath of the Gulf Oil Spill. (Mini George)

27. Golf:  In just ten months as U.S. President, Obama has already played as much golf as George W. Bush did in his entire eight years in power. (Bush on Steroids)

28. Said Ridiculous Things:  I’m sure some of you are surprised at this category as you may have thought Obama never makes a speaking mistake, but you’d be wrong. He rivals Bush in his speaking gaffes.  

Bush:

1. "I know how hard it is for you to put food on your family." —Greater Nashua, N.H., Jan. 27, 2000Name

2. "I know the human being and fish can coexist peacefully." —Saginaw, Mich., Sept. 29, 2000

3. "They misunderestimated me." —Bentonville, Ark., Nov. 6, 2000

4. "Rarely is the questioned asked: Is our children learning?" —Florence, S.C., Jan. 11, 2000

5. "Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we." —Washington, D.C., Aug. 5, 2004

6. "We spent a lot of time talking about Africa, as we should. Africa is a nation that suffers from incredible disease." --Gothenburg, Sweden, June 14, 2001

7. "Families is where our nation finds hope, where wings take dream." --LaCrosse, Wis., Oct. 18, 2000

Obama:

1. "I've now been in 57 states -- I think one left to go." --at a campaign event in Beaverton, Oregon

2. "One such translator was an American of Haitian descent, representative of the extraordinary work that our men and women in uniform do all around the world -- Navy Corpse-Man Christian Brossard." –mispronouncing "Corpsman" (the "ps" is silent) during a speech at the National Prayer Breakfast, Washington, D.C., Feb. 5, 2010 (The Corpsman's name is also Christopher, not Christian)

3. "The Middle East is obviously an issue that has plagued the region for centuries.”

4. "UPS and FedEx are doing just fine, right? It's the Post Office that's always having problems." –attempting to make the case for government-run healthcare, while simultaneously undercutting his own argument, Portsmouth, N.H., Aug. 11, 2009

5. "I think when you spread the wealth around, it's good for everybody." -- defending his tax plan to Joe the Plumber, who argued that Obama's policy hurts small-business owners like himself, Toledo, Ohio, Oct. 12, 2008

6. "What I was suggesting -- you're absolutely right that John McCain has not talked about my Muslim faith..." --in an interview with ABC's George Stephanopoulos

7. "On this Memorial Day, as our nation honors its unbroken line of fallen heroes -- and I see many of them in the audience here today -- our sense of patriotism is particularly strong."

ETC. ETC. ETC.

If you hated George W. Bush as a President than you should probably hate Barack Obama too. 

Obama's Unpatriotic Debt

Obama called the national debt increase under George W. Bush “irresponsible” and “unpatriotic.” The debt accumulated under the Bush Administration was about $4.9 trillion in 8 years. Under Obama the debt has increased by about $5.6 trillion in almost 4 years. According to Obama this means he is irresponsible and unpatriotic. Furthermore, spending levels from 2008-2012 have increased by more than $800 billion, so if you disliked Bush because of the amount of debt that ran up on his watch, you must really hate Obama.

Obama's Stimulus Failure

The Obama Administration has put forth two major pieces of legislation. One of those pieces of legislation is the “American Recovery and Reinvestment Act of 2009” otherwise known as the Stimulus. The Stimulus has cost American taxpayers a principal amount of $840 billion. After ten years the total cost to taxpayers, principal plus interest owed due to borrowing, will be about $1.2 trillion. Let’s see what kind of return Americans have received for such a costly piece of legislation.

The CBO has ESTIMATED (as of 2011) that the Stimulus has saved or created 1.3 million-3.6 million jobs based on a formula (not based on certain figures). Also, an increase in real GDP of 0.1-1% has been attributed to the Stimulus. Now that sounds decent, but you have to remember that the money will run out soon, so it’s merely a temporary boost in unemployment and to the economy. As of March 2012, 90% of the Stimulus had been used. This is of course why we heard Barack Obama pushing for a $447 billion Stimulus #2, also called the American Jobs Bill. He knew more money was needed to prop up the economy. When the money runs out though (which will be very soon), most of those 1.3 million-3.6 million jobs will vanish or, since more than 75% of the jobs saved or created were government jobs, the federal government could increase its “budget” to keep jobs adding even more to the debt than the calculated $1.2 trillion, but unfortunately what the country needs is more private sector jobs.

This month unemployment has started increasing again, from 7.8% to 7.9%. Obama’s economists predicted that unemployment would never rise above 8% with the stimulus and would be at about 5.6% now with the Stimulus. They were a “little” off. Unemployment rose to a height of 10% in August of 2009 and, as I said earlier, is currently at 7.9% (12.3 million unemployed) and rising.  This past quarter the smallest amount of Stimulus funds were distributed and unemployment increased. I don’t think that is a coincidence. Now that the Stimulus funds are dwindling down, unemployment will continue to increase since the Stimulus has not actually fixed the economy. On top of that, of the 88.9 million that are out of the workforce, just about 7 million people say they still want a job and can’t get one (as of September 07, 2012). Also, the labor-force participation rate, the percentage of the civilian working-age population that is either working or looking for a job, is 63.5%, the lowest since 1981. These are very bad numbers with an 840 billion infusion of cash into the economy.

The CBO has predicted that the Stimulus will have no long term affects. The Stimulus is a short-term patch work piece of legislation. It propped up the economy for more than three years, but fixed nothing while adding $1.2 trillion to the United States’ already massive debt. The Stimulus did make the recession not as steep, BUT it has prolonged the economic misery because it artificially propped up the economy and now that artificial crutch is almost gone, things will head downhill again (as we now see unemployment rising).

The question should not be whether the Stimulus did some good the past few years. The two critical questions should be: 1. Is the Stimulus overall a good piece of legislation? No, and 2. Were there better options available to help the economy and unemployment? Yes. A better option would be a permanent cut to income tax rates and in this specific case, because the recession in 2008 was so severe, the best option would be a permanent cut to income tax rates and a much smaller stimulus (of about $100-$150 billion). I say that because the income tax cuts do not fix the economy instantly. They take a year or two to take hold on the economy. The small stimulus would prop up the economy in the short-term while the economy is actually being repaired.

Now we all know what Obama wants, more Stimulus, which is only a short-term band aid. If Romney is elected President, he said he will slash income tax rates by 20% across the board which is the move the economy needs as it will truly fix the economy and not just prop it up like the Stimulus has. How do I know that will work? History tells me so. Coolidge, JFK, Reagan, & George W. Bush all cut income tax rates and all of them saw employment increase and revenue increase.  Would you rather the wasteful, inefficient, and crony capitalist Federal Government handing out money or a direct income tax cut to the people that eliminates the chance of waste? The answer is quite obvious to me.  

If you want the next President of the United States to have good economic ideas than your man is Mitt Romney. He’ll bring this country back to being the economic powerhouse that it should be. Not the 5th place ranked country in Global Economic Competitiveness below Switzerland, Singapore, Sweden, and Finland like it is currently! (The United States was last ranked #1 in 2008 or in other words right before Obama became President)

I leave with a video of Obama laughing about how those shovel ready jobs weren’t shovel ready.

http://www.youtube.com/watch?v=4p4-vPrcDBo

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Other things to consider about the Stimulus: 1. I find it interesting that the Stimulus funds just miraculously happen to last until a little after the 2012 Election Day. Of course, this was done on purpose by Obama and the Democrats so that the economy didn’t start slipping too much before the election, so it would appear that they had actually done something to fix the economy over these past 4 years., 2. Billions in Stimulus money wasted on failed companies such as Solyndra., and 3. 50% of the Stimulus was used in 2010 and unemployment that year never went below 9.4% (from a height of 10% in 2009). This just shows how ineffective $420 billion in government spending was.

The Obama Administration's Mishandling of the Benghazi Terror Attacks

On September 11th, 2012, 11 years after the 9/11 Twin Tower attacks, 4 people at the United States Embassy in Benghazi, Libya died including a United States Ambassador (the first Ambassador to die while on duty since 1979). When you consider who to vote for as the next President of the United States remember that the Obama Administration brought home 16 United States security agents just before the attack despite a dangerous situation at the Embassy (2 recent attacks at the Embassy and an attack on the United Kingdom Ambassador's motorcade), ignored requests for increased security despite direct attacks on the Embassy (even while the United Kingdom withdrew their Ambassador and Staff from their Embassy in Libya), denied 3 requests for help by those who were under attack for 12 hours at the Embassy and Annex despite having forces available just a few miles away and a ship just off the coast, and then flat out lied for two weeks about a riot breaking out relating to a demonstration about a video when there was no such riot. The Administration knew it was a terrorist attack, but that didn't play into the narrative that Obama had Al Qaeda on the run. A live feed of the attack was available and communication between the Embassy and Annex was fluid and clear with Washington D.C.. The Administration knew the truth, but lied anyways. Even a military drone was flying overhead during the attack. The Administration put people in harms way for political reasons and that is disgraceful. Whether it was the Administration ignoring the reality of the terrorist threat in Libya or trying to create a false alternate reality in order to down play Islamic Terrorism and the situation in Libya for the American voters, the Administration is at fault and heads should roll. If you don't think the Obama Administration cares about the politics ask yourself why Obama went campaigning the next day to Nevada. It's almost always politics with Obama. Don't you want a President that serves others and not himself? 

Keep this in mind what transpired throughout the Benghazi attacks and after when you are in the voting booth this November 6th.