GOP tax plan designed to stimulate voters more than economy

The press is having a field day with something called the Paradise Papers. Maybe you’ve heard of it. It’s a pile of documents released by the International Consortium of Investigative Journalists (ICIJ). They detail the business dealings of celebrities like Bono and the Queen of England, and companies like Apple and Nike. Even U.S. Commerce Secretary Wilbur Ross. They show nothing illegal, really, just how the rich and famous move their money around to avoid paying too much in taxes.

The media are treating this like a scandal when it’s actually a wake-up call. This is why tax reform is so badly needed here in the United States. I’ve regaled you with the stats from the IRS, like the top five percent of wage-earners paying nearly 60 percent of the income tax. The House Republican tax legislation takes some steps in the right direction but it still leaves the basic problem unresolved. They won’t tell you what that is so I will. The rich pay way too much in taxes. They’re the ones who need a tax break, not the middle class.

The middle class now pays somewhere around eight percent of their income in taxes. That’s set to go to around five percent if the House Republicans and President Trump get their way. They always target the middle class for tax cuts because there’s more of them. They just don’t need another tax cut.

If the objective is really to stimulate the economy then you’re going to have to allow the filthy rich to keep more of their money and spend it in the economy. That means the dreaded one-percenters. I know, people don’t like to hear that, but it’s true. The rich are overtaxed and the middle class are under-taxed. The poor and working poor aren’t taxed at all. In fact, most of them get money from the government through the Earned Income Tax Credit that they never paid in.

Why aren’t the folks in Washington telling you this? Because they’re cowards. Cowards and panderers. They don’t really see this as a vehicle to stimulate the economy. They see it as a way to buy votes, not dissimilar from the way the Democrats operate. So, why aren’t the Democrats going for it? Simply because they didn’t think of it first. If this were their idea they’d be all over it.

The only thing that remotely comes close to doing what we need done is lowering the corporate rate from 35 percent to 20 percent. Mark my words, that’s the one thing that will probably not survive intact when the dust settles. It’s too tempting, even for the Republicans, to punish the very corporations that create the jobs.

And then there’s the SALT issue. That stands for state and local taxes. The current GOP plan would severely limit how much high-tax states can deduct those taxes. That’s raised the ire of Republicans and Democrats in high-tax states. Rep. Diane Black, chairman of the House Budget Committee and member of the tax-writing Ways and Means Committee pointed out to me that it’s wrong for the rest of us to subsidize high-tax states. She has a great point. Why is it fair for anyone to claw back some of the taxes they pay their own states through deductions to their federal income tax? The fact that some states tax their people to death is not the fault of the rest of us.

Getting rid of many of the deductions is the right move. Continuing to soak the rich is the wrong move.

Phil Valentine is the host of the award-winning, nationally syndicated talk radio show, The Phil Valentine Show.

Can Detroit be saved?

You wanna hear something hysterical?  Ed Schultz and the rest of the talking heads over at BSNBC are blaming Republicans for the bankruptcy of Detroit.  Here’s their rationale.  Republicans out-sourced jobs, cut public services and attacked the unions.  Actually, Ed, it was the unions that caused the out-sourcing with their unreasonable demands which led to Detroit’s population dropping in half since 1950 which led to fewer taxpayers thus less government services.

The problems plaguing Detroit are obvious.  They killed the proverbial goose that laid the golden egg.  Let’s face it.  Detroit automakers made some stupid mistakes over the years.  They scoffed at the Japanese and European imports in the ‘70s thinking they were invincible.  Bad design coupled with horribly-built cars led to a steep decline in American-made automobiles.  The unions convinced their membership that the car companies existed to provide them a job.  In fact, they came to believe that it was their job, not the company’s.

In the meantime, the Democrat machine took over Detroit politics.  The last Republican mayor was in the late ‘50s.  Since 1970 there’s been just one Republican on the city council.  For the last 50 years Detroit has been a one-party town.  Guess what?  The party’s over.

In typical fashion, the liberals who have run Detroit for the last half-century demonized the rich and exploited the poor.  Inflated wages and unreasonable pensions drove industry south or completely out of the country.  The city instituted a wage tax – on top of the state and federal income taxes – in 1962.  Detroit also tacks on an extra corporate tax.  You couldn’t ask for a less hospitable place for business.  Couple the high taxes with artificially-inflated union wages and it’s a wonder Detroit lasted this long without going broke.

I was reading a newspaper report that said nearly $6 billion of Detroit’s $20 billion debt is due to health insurance obligations to retired city employees.  The article lamented that Detroit may push those people off on the Obamacare exchanges.  Now, understand that these ex-employees are eligible for Medicare at age 65.  That means that $6 billion is for people who are retired but not yet at retirement age.  Here’s a thought.  Go back to work!

That’s symptomatic of the problem.  Too many sweetheart union deals were negotiated.  The companies that made that mistake either closed down or moved but the city was stuck.  At this point all bets should be off.  I hate it for those folks who thought they could retire at 45 and live off the taxpayers but the bulk of the taxpayers are gone.

Which leads to the next point.  It never occurred to these liberals when they were waging class warfare that once they ran the rich people off there would be no money left to pay for city services.  They may still have 700,000 residents but those who stayed behind are disproportionately poor and disproportionately unemployed.  If Detroit is ever going to come back they’re going to have to eliminate the city wage and corporate taxes.  They’re going to have to welcome rich folks back with open arms instead of demonizing them.

Now that Michigan is a right-to-work state there’s hope.  The unions that ran industry away in the first place need to be dissolved and good, old-fashioned capitalism needs to be reintroduced to Detroit.  The moochers and looters have run the city into the ground.  The producers are what built it and they can rebuild it but in order for that to happen those running the city have to stop listening to the likes of Ed Schultz.  Or all hope is lost.

Phil Valentine is the host of the award-winning, nationally syndicated talk radio show, The Phil Valentine Show.

Live free . . . or move

There’s an interesting study that was just released by George Mason University.  It’s called Freedom in the 50 States.  It found that people in the United States are migrating from less free states to more free states.  Yeah.  Whether people are even conscious of why they’re doing it they’re moving to states with less government regulation, lower taxes and more freedom.

As it turns out, these are the states that offer the greatest opportunity, not only for finding a job but for increasing your quality of life.  This runs counter to what President Obama, himself, has been claiming.  He said, “They tell us if we just cut more regulations and more taxes – especially for the wealthy – our economy will grow stronger.  Here’s the problem.  It doesn’t work.”

Well, Mr. President, as it turns out, it does work.  One’s income growth potential is greater in states that lower taxes and regulation.  The trouble is, some of these transplants don’t even realize why they left the state they left.  These confused few seem to want to bring those same big government ideas with them.

I’ve watched Nashville, which has now been governed by three consecutive mayors from big government, high-tax states, transformed into the same model that has rotted many of the nation’s large cities from within.

As I’ve often said, there are really only three things that matter in a city: taxes, schools and crime.  Everything else is superfluous.  If that three-legged stool of low taxes, low crime and good schools isn’t solid then little else matters. 

The Office of Revenue Analysis of the Government in Washington released a study on taxes recently that showed a direct correlation between high taxes and high unemployment.  The cities with higher tax burdens tended to be the cities struggling with stubbornly high unemployment.

Trouble is President Obama and the Democrats in Washington want the entire country to look like that.  They truly believe that taxing – especially burdensomely taxing the rich – is the way to prosperity for the country.  They could not be more wrong.

And even though Mr. Obama won re-election, people are voting with their feet – and their moving vans.  People are shaking the oppressive big-government states for the more promising freer states.

And although Washington can’t seem to get the message those who operate the states certainly do.  Louisiana, Nebraska, Kansas and North Carolina are all considering eliminating their state income taxes in order to spur growth.  Even before this most recent study on free states and prosperity was published these states already had a handle on what needs to be done to grow an economy.  You cut taxes.

Now, granted, some of these states aren’t quite in the zone yet since their plans are currently revenue neutral but they’re heading in the right direction.

I grew up in North Carolina and one of the telling signs to me that the state had grown far too government-dependent was a recent radio ratings report that showed the number one station in Raleigh was public radio.  That’s emblematic of a whole host of problems.  First, too many people are getting their news from the liberal-leaning, state-run radio station.  It also indicated the dependence on the government in that state.

Name the top five reasons why you live where you live.  If more than a couple have anything to do with the government then you’re too dependent on the government.

Ever wonder why we spend so much time and money on dependency issues?  It’s because dependence on anything or anybody is not a good thing.  Being free means changing one’s mindset from dependence to independence.

Bill Maher is finally starting to get it

Notoriously liberal television host Bill Maher may actually be starting to get it.  He complained recently that he was paying too much in taxes.  He said, "It’s outrageous what we’re paying (in California) – over 50 percent. I’m willing to pay my share, but yeah, it’s ridiculous.”

The question is no longer about fair share.  It's about reasonable spending.  Maher's point - and I'm not even sure he knows he made it - is that none of us really minds paying taxes as long as our tax dollars are being wisely spent.  Maher obviously makes millions per year and having over half of his money confiscated is starting to trouble him.

California just raised taxes on people like Bill Maher.  The implication is they're not paying their fair share.  The assumption is the government is putting that money to good use.  That assumption is now starting to crumble, even in the eyes of die-hard liberals.

The question has historically been what kind of country do we want?  Because of the reckless spending the question now is how much country can we afford?  We have enticed and trapped literally millions on government dependency. 

I was at the ACC Basketball Tournament in Greensboro recently and one of the main sponsors was the North Carolina Lottery.  They had a booth set up at the entrance where they were urging people to come over and buy a lottery ticket.  I thought of how pathetic it was that the government outlaws gambling but spends untold millions trying to lure you into gambling with them.

Our government dollars have been spent on public nuisances like housing projects which not only trap their residents in a miserable existence, they terrorize the surrounding neighborhoods with crime.  According to the Chicago Housing Authority, when they demolished these petri dishes of societal decay they saw violent crime reduced by 60 percent, property crime down almost 50 percent and gun crime reduced an astonishing 70 percent.

Like the failed green energy companies our government has chosen to back, government bureaucrats are famously horrid stewards of our money.  The poor and Bill Maher's money are much better served by private sector solutions to our problems rather than government programs that simply exacerbate them.