Thursday, April 15, 2010

Stupid read of the day

By Donald Sensing

The New York Times never ceases to plumb new depths of ridiculousity. Today it is Gail Collins's column, "Celebrating the Joys of April 15." How silly is this piece? Let me count (a few of) the ways:

But, in fact, most people who file get money back. (Cue the horns and balloons.)
As anyone with the slightest financial acumen knows, if you get money back it means you overpaid through withholdings, or quarterly payments if self employed. As for the 47 percent of American households who had no tax liability at all, if they file and then get a check from the IRS, they are not getting a refund, they are getting welfare. I will get a refund of $59 myself, but my overall tax liability was several thousand dollars.
According to the Gallup polls, 45 percent of Tea Party supporters have incomes under $50,000.
Well, since the median income in the US is $50,000, then all this means is that Tea Party members reflect America as a whole, financially speaking. For some reason, Ms. Collins is offended by that. She continues,
The after-tax income of the top 1 percent more than tripled since 1979, while the bottom-dwellers barely moved an inch.

Still, good job, wealthy people! You worked hard, played by the rules and the nation appreciates your support for the national defense, highways, meat inspection and national parks.
Not so fast, Gail. First, the overall tax burden of the wealthy, as a percentage of total taxes paid, increased under both Presidents Reagan and G.W. Bush. Second, is the after-tax tripled income computed in constant dollars? Because since only 1992, the income taxes paid by the top filers has more than tripled in constant dollars.

What do our income taxes actually pay for? Gail seems uninformed about this subject, too. As long ago as 1984, when federal borrowing was not the ravenous monster that it is today, an independent panel called the Grace Commission (named after its chairman) answered the question.
The report said that one third of all income taxes is consumed by waste and inefficiency in the federal government, and another one third escapes collection owing to the underground economy. “With two thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services [that] taxpayers expect from their government."
Don't confuse federal revenue with federal spending. Revenue is money that comes in, spending is money that goes out. Income taxes account for 45 percent of federal revenues. In 2007, the latest year of IRS figures, income-tax revenue was $1.1156 trillion (paid for tax year 2006). The FY 2007 federal budget was $2.784 billion, of which $244 billion was borrowed. Or I should say, "only" $244 billion was borrowed. Today, according to the left-leaning National Priorities Project,
In FY09, the federal government financed over half – 57 cents of each dollar of the $2.7 trillion federal fund outlays for FY09 – through borrowing. Collected revenues accounted for only 43 cents of each dollar of federal fund outlays.
The Project goes on to show that income tax revenue brings in only 34 cents for each dollar spent. But:
  • One-third of those 34 cents, or 11.3 cents, is consumed by waste or inefficiency, according to the Grace Commission. Now we're down to 22.67 cents of each spent dollar paid by income taxes. 
  • Of those 22.67 cents, 13.6 cents are swallowed by the maw of paying interest on the federal debt. 
  • The Grace Commission pointed out that the 9.07 cents left of each income-tax dollar is spent on transfer payments, not services. Since money is fungible, I'll not pick that nit, but the fact is that only about 9 cents out of every 100 cents spent by the government un-wastefully or efficiently comes from income taxes. Almost all the rest is borrowed.
So Gail's snarky congratulations to the 53 percent of us who actually pay taxes for supporting national defense, highways, etc., is greatly overstated.

Gail closes with a typical liberal trope:
When President Obama gives a domestic policy speech, there’s usually a cleaning woman who has no health insurance or a laid-off firefighter invited to come onstage. But on April 15, maybe he could give a hug to a corporate lawyer who pulled down $3 million and gave half of it back.
"Gave half of it back" to whom? If he's a corporate lawyer, that means he was a employee of the corporation's legal department. So the only entity he could have "given back" $1.5 million to would be his employer. They are the ones who paid it to him. But that's not what Gail means. She means he was compelled by the government to pay it in taxes. That's what liberals call "giving back," to have your money taken from you by force because, as I wrote in criticizing President Bush's 2008 tax-rebate gimmick, the government has no money of its own.

The authors of federalbudget.com understand that.
Your money is spent through Appropriations Bills passed by The U. S. Senate and signed by the President. The Government does not have any money, it takes your money from you and, and borrows more, then spends that! The bailouts of 2008 and 2009 are purely deficit spending. Expect to see enormous deficits in the forseeable future, leading to much more debt; and interest payments on that debt will become the largest item in the federal budget.
Remember this?


Related: "Federal Borrowing and Debt," by the Office of Management and Budget, PDF.

The scariest picture on the Internet.

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