Some Candidates’ Tax Plans Go in ‘Less Freedom’ Bracket

TaxesAmerica’s first income tax was temporary. Abraham Lincoln signed it into law in 1861 to help pay for the Civil War.

Although that tax and a later one in 1894 were challenged as unconstitutional, the issue was settled in 1913 with the 16th Amendment, which changed the Constitution specifically to allow income taxes.

The income tax in 1913 was nothing like the one we know today. It was a flat 1 percent on income over $3,000, topping out at 7 percent for earnings above $500,000. Of course, most Americans earned a lot less than $3,000 in 1913, when you could buy a pound of sirloin steak for 24 cents.

Today a pound of sirloin steak is enough to make you swear off red meat, and the income tax is enough to make you swear, just generally.

The U.S. government now lays claim to as much as 39.6 percent of the income of individuals in the highest of seven brackets, and our corporate tax rate is 35 percent, among the highest in the world. The tax code is ornamented with multitudes of rewards and punishments, the result of a century of political deal-making for the benefit of various constituencies and the promotion of assorted goals.

The federal income tax has become a massive weapon of control over the lives of the American people, exactly the opposite of what the framers of the Constitution intended. With outrageously high tax rates, the government can force people or businesses to “voluntarily” take actions that will reduce their taxes. This neatly sidesteps the constitutional limits on the federal government’s power and makes your life the plaything of elected politicians.

As the tax plans of the 2016 presidential candidates are released, watch for the motive of the proposed changes. Are they designed to increase your freedom or to increase the government’s management of your freedom?

Dr. Ben Carson has proposed a flat tax of 10 percent to 15 percent. Score that as an increase to freedom. With a flat tax, the government has no say in what you do with your money.

Donald Trump has proposed a top tax rate of 25 percent, which begins at $150,000 of personal income, and a tax rate of 15 percent for all business income. His business tax rate would apply to people who work freelance, own a small business or otherwise derive income from business activity instead of wages. Trump’s plan includes a tax rate of zero for income up to $25,000 for single filers and $50,000 for married couples filing jointly. Score the plan as an increase to freedom, with bonus points for recognizing how many people are now independent contractors instead of employees.

Bernie Sanders would increase the death tax from 40 percent on estates worth over $5 million to 65 percent on estates worth more than $3.5 million. Score that as a reduction in freedom. The money has already been taxed, and the choice of what to do with it after death rightfully belongs to the person who owns it.

Hillary Clinton would raise the tax rate on short- and medium-term capital gains from the current top rate of 23.8 percent to between 24 and 39.6 percent. She says “short-termism” is bad for the economy and hurts workers. Score that as a reduction in freedom, moving us further down the road of government interference in our personal and business decisions.

Tax-reform ideas are a window into a candidate’s philosophy of government. How much power should Washington have over our decisions? More? Less? All? None?

Once, these questions were debated in a constitutional convention. Today they’re tax proposals.

Government is hardly the solution to short-term bias

Hillary Clinton’s latest campaign salvo attacked “quarterly capitalism,” the supposedly irresponsible corporate focus on short-term results at the expense of long-term growth. She promised government fixes. But she is short on logic and history.

Is there too much short-termism in business firms? Look at participants’ incentives.

Shareholders own the present value of their pro-rata share of net earnings, not just present earnings. They do not discard good investments which raise that expected present value. Good short-term results raise stock prices not because of short-termism, but because of their implications for the likely future course of net earnings.

Share prices are a primary metric for managerial success and basis for their rewards. That makes their time horizons reflect those of shareholders, far beyond the present. Bondholders, who want to be paid back, incorporate future repayment risks into their choices. Worker and supplier relationships also reflect firms’ future prospects.

Beyond misinterpreting share price responses to short-term results, Clinton’s main evidence was increased stock buybacks, supposedly sacrificing worthwhile investments by returning funds to shareholders. She ignores that those funds will largely be invested elsewhere. But she also ignores that the buyback binge reflects the Fed’s long-term artificial cheapening of borrowed money, leading firms to shift toward debt financing. But a firm substituting debt financing for equity controls no fewer funds for investments.

Confusing business responses to Fed interventions as business short-termism only begins the list of such government-created biases. For example, constant proposals to raise corporate tax rates and worsen capital gains treatment reduce the after-tax profitability of investments. Regulatory mandates and impositions pile up, with more coming, doing the same. Energy policy threatens cost hikes, reducing investment returns. And so on.

That government will put more emphasis on the future than the private sector is also contradicted by political incentives. Owners bear predictable future consequences in current share prices, but politicians’ incentives are far more short-sighted.

An election loser will be out of office, and capture no appreciable benefit from efforts invested. So when an upcoming election is in doubt, everything goes on the auction block to buy short-term political advantage. And politicians’ incentives drive those facing the D.C. patronage machine. That is why so much “reform” meets Ambrose Bierce’s definition of “A thing that mostly satisfies reformers opposed to reformation.” The mere passage of bills in the political nick of time, even largely unread ones, can be declared victorious legacies, with harmful consequences never effectively brought to bear on decision-makers.
There is also a cornucopia of examples of government short-termism at the expense of the future, whose magnitude dwarfs anything it promises to reform.

Unwinding Social Security and Medicare’s 14-digit unfunded liabilities will punish future generations, caused by massive government overpromising to buy earlier elections. Other underfunded trust and pension funds threaten similar future atonement for earlier short-term “sins.” Expanding government debt similarly represents future punishment for short-term political payoffs. Foreign and military policy have similarly turned away from dealing with long-term issues. But serious long-run issues like immigration escape serious attention because “public servants” are afraid of short-run interest group punishment.

Political attacks on short-termism, and reforms to fix it, are beyond confused. They ignore financial market participants’ clear incentives to take future effects into account. They are clueless about what provides evidence of short-termism. They treat private sector responses to government impositions as private sector failures. They ignore far worse political incentives facing “reformers.” And they act as if the most egregious examples of short-termism in America, all government progeny, didn’t exist.
There is little to Clinton’s criticism and alleged solutions beyond misunderstanding and misrepresentation. We should recognize, with Henry Hazlitt, that “today is already the tomorrow which the bad economist yesterday urged us to ignore,” and that expanding government’s power to do more of the same is not in Americans’ interests.

Gary M. Galles is Professor of Economics at Pepperdine University

CARTOON: Inspecting Hillary


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Hillary email cartoon

Hillary Clinton’s ‘Stars and Bars’ Problem

hillary-clinton-biopics-cancelled-ftrWhen it comes to the confederate flag, presidential candidate Hillary Clinton has smugly added that she “has always” been in favor of taking it down in South Carolina.

Yet as first lady of Arkansas, we heard not a peep of concern about the prominent rebel “stars and bars” symbolism of that southern state’s official flag that flew on her official residence grounds in Little Rock while husband Bill was governor.

And a good question for Hillary today, is that if she “has always” favored taking down South Carolina’s relic of the Civil War, what about all the same rebel symbolism embodied in her own Arkansas flag that flew on her own official residence lawn? Shouldn’t it also be banned, for the same reasons as in South Carolina, to combat divisiveness?

There is no question that the Arkansas state flag is intended, by its symbols, to “commemorate the Confederate States of America.” In fact, then Gov. Bill Clinton signed a law in 1987 that says so, designating a special star on the flag for that exact purpose.

Hillary Clinton may have objections to Confederate sympathies in state flags still flying in South Carolina or Mississippi, but what makes Arkansas an exception and why has she never had anything to say about it?

Hillary, should the state flag of Arkansas, which can be seen as just as offensive to African Americans and other minorities who have been subject to racism as the Confederate battle flag of South Carolina, also be banned? Voters need to know.

Especially in culturally diverse and deeply blue states like California, perplexed voters will need to understand from Hillary Clinton why the South Carolina flag must come down but the Arkansas flag’s Confederate roots draws no comment from her.

California voters are the most unlikely in the nation to understand Hillary’s silence and see honor in the distinction between the “southern valor” that “stars and bars” supporters urge their flags represent in contrast to the general negative perception of slavery and racism more commonly associated with the rebel flag.

These voters are becoming the most diverse ethnic conglomeration in the nation, and include Latinos, who now compromise the largest ethnic group in the state at 39 percent, non-Hispanic whites at about 38 percent, and Asians, with over 14 percent of the population. There are two times more Latinos and Asians in California by percentage than in the entire United States. About 7 percent of Californians are black. Overwhelmingly, Californian’s “voting cues” gleaned by the entire state let alone the 60 percent of the state that represent minority groups who have experienced racism, are simply not connected to some sort of sympathy to the rebel cause when they see a Confederate flag.

In view of the tragedy in Charleston, it is now inescapable that Hillary’s opponents will raise her failure to object and indeed passively embrace the Confederate symbolism in Arkansas as an issue in the campaign. Even deeply blue California, with the most electoral votes in the nation, and its voters, are hardly going to accept a voting cue that the Confederate flag is bad for South Carolina but good for Arkansas just because Hillary Clinton has nothing to say about it.

Originally published by the Blaze

CARTOON: The Clinton Zapper

Clinton scandal

Nate Beeler, The Columbus Dispatch

Ready for Condi (as VP)

453px-Condoleezza_Rice_croppedI’m not ready for Hillary. I’m not ready for a coronation. I believe — as Barbara Bush is reported to have said at some point — there are more families in this country than the Bushes and Clintons.

Right.

But America has increasingly become a country of brand equity and, rather than winning an election with ideas, parties look to overwhelm with soundbite sloganeering and the power of the brand.

There can be no doubt: for all the pitfalls, the Clinton brand is strong. And it would be made even stronger by the historic notion of electing the first woman president. Indeed, the time has come for a female president.

Just not Hillary…

Some Democratic pols have suggested that efforts to “Romnify” Hillary Clinton would be bound to fail. Mitt Romney was born rich. Hillary wasn’t. But what cost Mitt Romney the 2012 election was the fact that he by nature seemed incapable of understanding the Little Guy/Gal. Comments like “I’ll bet you $10,000…” simply symbolized the distance between him and us, no matter how hard he tried to be relatable.

Hillary’s comments about leaving the White House “dead broke” fall distinctly into this same category. Most Americans simply can’t identify with such statements, which are so foreign to their own lives. The fact that Hillary wasn’t born into wealth hardly mitigates the effect of such an attitude — if anything, quite the opposite. Mitt Romney seemed to be a patrician by nature, even if his father wasn’t. He was “to the manor born.” A genuinely nice guy (or so it seems), but completely out of touch with the average American.

As such, “Romnifying” Hillary should mean trying to portray Hillary Clinton as a well-meaning elitist. Nice, authentic, but simply too distanced from the Little Guy/Gal to really connect. Yet while she is going to great lengths to create the opposite impression, the main difference between Romney and Hillary seems to be one of authenticity. Mitt Romney seems like a genuinely nice, albeit out-of-touch rich dude. You might be able to have a beer with him, but probably wouldn’t have a lot to talk about. Hillary Clinton’s persona seems anything but authentic. The projected veneer of caring about the Little Guy/Gal seems poll-tailored and purely calculated for political gain.

Beyond the obvious other considerations, most Americans would like a president who we could have a beer with, and with whom the conversation wouldn’t feel forced or phony. In many ways, Hillary Clinton no longer seems like a real person; she seems like she has become the prototype of a virtual politician created by focus groups, pollsters and strategic marketing gurus. Her well-polled positions may seem better to many Americans than those which Romney espoused, but they seem almost robotic, lacking heart and authenticity, motivated by what seems to be bottomless ambition.

Beyond the Clinton transparency problems; beyond the sense that Hillary Clinton seems to feel there are two sets of rules: one for the Clintons and one for everybody else; beyond the authenticity issues so brilliantly captured by Kate McKinnon’s SNL portrayal of Clinton, there are voters who simply believe that they are “ready for Hillary” because she’s a woman and it’s time.

It’s not an argument as much as a feeling, but it is a very powerful feeling and difficult to counteract with anything but another female candidate. However, the Republican side, unfortunately, seems to be fresh out of viable female presidential candidates. But the Republicans still could — and should — put a woman on the 2016 presidential ticket.

No, not Sarah Palin.

How about Condoleezza Rice?

In a way, Condi is not only the anti-Sarah Palin, she’s also the anti-Hillary. Personally, I think she would make a great presidential candidate, but she has never run for office, and she refused to allow herself to be drafted to run for the U.S. Senate seat which Senator Barbara Boxer is vacating in California, even though polls in blue California put Condi on top. (When urged to run for Senate, she supposedly quipped that she didn’t want to be one of a hundred of anything.)

But Condi Rice could be the perfect Republican VP candidate in 2016.

Condi would be hard-pressed to say no to Jeb Bush, with whom she is close, should he get the Republican nomination. But a Bush-Rice ticket might reinforce the notion that a Bush 3.0 presidency is a blast from the past with the dynastic downside which a lot of Americans (including myself) want to avoid.

Condi would be the perfect VP to a number of other viable Republican candidates. Scott Walker has the executive experience, but lacks active foreign policy chops. Condi Rice, with all of her foreign policy experience, would be a marvelous counterbalance and complement to a governor like Walker or John Kasich from Ohio, whose jobs just don’t naturally involve a lot of international relations.

Emotionally and demographically, Condi as the Republican VP candidate could neutralize the zeal of certain voters to “create history” by voting for a female president. Condi Rice on the ticket allows voters to make another kind of history by electing a minority woman. Strategically, the inclusion of Condi on the ticket would allow the Republicans to contrast her record and persona with that of Hillary. Just look at the email situation when each was Secretary of State. Condi plays by the rules. Hillary plays by her own set of rules. Condi is erudite and seems somewhat shy, but she passes the “beer test” with flying colors.

This isn’t exactly the case with Hillary Clinton. As Jonah Goldberg wrote in 2007: “She may have star power, but you get the sense that most Americans would like to have their picture taken with her and then drink alone.” If anything, this has only gotten more extreme over the past few years, especially against the background of the Clinton Foundation’s squirrelly quest for foreign cash; there is a running SNL skit series yet to be written with Kate McKinnon as Hillary, struggling to have a beer with average Americans.

In short, Condi, brilliant as she is, seems both humble and authentic. Hillary, brilliant as she is, can’t help herself from exuding a thinly-veiled, self-entitled, ambition-fueled phoniness.

Obviously the top name on the ballot is extremely important; but on, say, a Walker-Rice or Kasich-Rice ticket, Condi could not only make the difference in the 2016 election, she could also play a major role in the succeeding Republican administration. She could help redefine the Republican Party as inclusive, tolerant and not just for rich people: a party of freedom, fairness and a force for the Little Guy/Gal.

One of Hillary Clinton’s campaign slogans is “Hillary for America.” It feels like it really should be “Hillary for Hillary.” Sorry, I’m just not ready for that. I’m not ready for a new flood of foundation donations from foreign governments and others anxious to gain access and presumably influence; not ready for a whole new panoply of conflicts of interest and appearances of impropriety; not ready for reasonable criticism to be dismissed with curt, Nixonian waves of the hand; not ready for dynastic politicians being held to lower standards than everyone else. If anything, I’m ready for some more realness in our political system, wherever it may come from. Heck, despite differences on some of the issues, I’d even be readier for Bernie or Elizabeth than I am for Hillary.

But I most certainly am ready for Condi. And for any number of reasons so should the Republican Party, so should the nation be ready for her, too.

John Mirisch is Vice Mayor of Beverly Hills

The Unemployed Overwhelmingly Support Hillary

Hillary Clinton now has an endorsement from a prominent group of unemployed people as she moves to become the Democratic nominee for president.

The announcement came Monday after the Union of Unemployed (UCubed), a nonprofit which represents unemployed Americans, conducted an online poll over Facebook. The poll showed its members overwhelmingly support Hillary compared to other candidates. Rick Sloan, president of UCubed, notes much of the support is a result of Hillary indirectly addressing concerns the group brought up in a letter.

“We wrote an open letter to Hillary Clinton in late March,” Sloan told The Daily Caller News Foundation. “At the end of the letter we made an appeal to Hillary Clinton to become our champion.”

Sloan said that when her announcement video was released, his members noticed Hillary used language similar to the group’s letter. Though she never directly replied to the group, the members feel the video signaled she had received their letter and that she was listening.

“They knew that she had responded,” Sloan continued. “It’s the language she used during her announcement; it’s a history of fighting for blue collar workers.”

Hillary received 59.4 percent of the votes followed by Bernie Sanders at 32.4 percent and Martin O’Malley at 3.3 percent. The poll surveyed roughly a thousand of the group’s members. No Republican made the top five.

Despite this, some policies Hillary supports may actually contribute to unemployment according to some economists. Specifically, her support for raising the minimum wage which, as Correct the Record noted, has been a hallmark of her career. The National Bureau of Economic Research found in a recent report that, despite popular belief, employment for low skilled workers actually falls as the minimum wage goes up.

Originally published by the Daily Caller News Foundation

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The California Introduction Machine

Much is made during presidential election periods that the state is merely an ATM machine for candidates. As a solid blue state that has not voted for a Republican for the White House since 1988, California is considered safe for whoever the Democratic nominee will be (we’re talking to you, Hillary Clinton.)

Yet, candidates from both major parties come to the Golden State for the gold – dollars for their campaign accounts.

In this coming election, however, at least on the Republican side, the race is wide open. Before GOP candidates can hit up the California ATM machine, many need to introduce themselves to California voters and donors. And that’s been happening now.

Potential Republican candidates have been making the trek to the Left Coast to meet and greet without necessarily asking for money. There have been, and are scheduled, a number of non-fundraising events.

Wisconsin Governor Scott Walker recently made a number of appearances in Orange and Los Angeles Counties. On Monday of next week former Texas Governor Rick Perry will be in Los Angeles and Ventura County for gatherings. Tuesday will find Florida Senator Marco Rubio speaking to Town Hall Los Angeles and a month later at the same venue Ohio Governor John Kasich will make an appearance. Ted Cruz is expected to be back in May and Rand Paul in June.

Carly Fiorina, who should need no introduction to California Republican donors after her U.S. Senate run in 2010, is expected to make the rounds here next month.

With so many potential candidates, California donors want to get to know the candidates before they decide whom to back.

So the mating ritual is in full swing. But let’s not be fooled – in the end its all about the money.

Joel Fox is editor of Fox & Hounds and President of the Small Business Action Committee.

Originally published by Fox and Hounds Daily

Does Hillary Earn More Money Than America’s Top CEOs?

In an effort to drum up populist support for her presidential campaign Hillary Clinton is painting herself as a middle-class warrior, but the image she’s trying to build doesn’t exactly jive with the lavish fees she commands to speak at events.

Clinton’s shillary-clinton-biopics-cancelled-ftrpeaking fee of $300,000 per speech puts her hourly wage far ahead of America’s top-paid CEOs when taken into account that one speech generally runs for about an hour, the Washington Examiner reported.

Clinton makes a massively larger sum per hour than the highest paid CEO, John Hammergren of the pharmaceutical company McKesson. Hammergren makes $63,077 an hour.

She is paid per-hour more than the top five CEOs combined, and almost the 6th, which comes out to be $302,116 total, compared to her $300,000.

By this hourly measure, Clinton is slaying the salaries of America’s CEOs, who bring in a measly per-hour average of just over $54,000, which is about one-sixth of Clinton’s $300,000.

In terms of politician’s speaking fees, Clinton is topped only by Donald Trump who reportedly earned a staggering $1.5 million per speech while speaking at “real estate wealth expos” in 2006 and 2007. Her husband is typically paid around $200,000 per speech, but was once paid $750,000 for one speech in 2011.

For reference, former president George W. Bush earns between $100,000 and $150,000 per speaking engagement, and back when she was relevant, Sarah Palin asked for around $100,000.

If Clinton were to give a speech every hour for a 40-hour work week, that would net her around $624 million per year. That is larger than the annual salaries of the 10 highest paid CEOs in the country combined. Hammergren makes roughly $131 million a year, with the rest of the top 10 pulling in between $43 and $67 million.

Obviously Clinton isn’t giving speeches full-time. So, if she needs roughly four hours to prepare for and travel to a speech location, that still puts her hourly wage at around $75,000, or nearly $20,000 above the average pay of America’s top 10 CEOs.

The Democratic presidential candidate doesn’t discriminate in terms of who she is speaking to, either. She’s spoken before industry groups ranging from private-equity managers and business executives to travel agents and car dealers, but always collects more than $200,000 per appearance.

She’s spoken at events directed at both Republicans and Democrats, according to the Washington Post. Clinton gave the keynote address at an event for the Economic Club of Grand Rapids in 2013 that was honoring Amway President Doug DeVos, a prominent Republican donor. Earlier that year, Henry Kissinger introduced her at a black-tie gala for the Atlantic Council in Washington, D.C.

Clinton sparked a bit of an uproar in the summer of 2014 when she charged a Nevada college $225,000 shortly after officials in the state signed off on a plan to raise tuition at the school by 17 percent. The invitation-only fundraiser charged guests $200 each for a seat, with premium seating ranging from $3,000 to $20,000 for reserved tables.

Clinton attempted to quell the flames by agreeing to direct the funds to the Bill, Hillary and Chelsea Clinton Foundation, rather than her own pocket, but even that raises some questions, since contributions to the $2 billion tax-exempt charitable foundation could result in tax deductions for the Clintons.

Originally published by the Daily Caller News Foundation

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Hillary Clinton buoyed by Bay Area donors, tech talent and goodwill

As reported by the San Jose Mercury News:

Not many candidates can draw more than 10,000 people into the Bay Area’s streets for a campaign rally, but two did so eight years ago — one of them is now president, and the other is running to succeed him.

As Hillary Clinton officially begins her quest for the White House by courting voters this week in Iowa, her campaign will feel a westward tug toward the money, technology and brainpower in the Bay Area. For months, Clinton supporters have been holding fundraisers and scouting Silicon Valley talent.

Days before Sunday’s announcement that she was running for president, Clinton hired Stephanie Hannon, Google’s director of product management for civic innovation and social impact, as her campaign’s chief technology officer — probably the first of many local hires, if the 2008 and 2012 Obama campaigns are any measure. …

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