Tag: Taxes

MARCH 3RD PRIMARY- VOTE NO ON PROPOSITION 13

MARCH 3RD PRIMARY- VOTE NO ON PROPOSITION 13

The Proposition 13 on the March 3rd primary ballot is bad for taxpayers.

It will directly result in significant increases in property taxes and in additional assessments on properties to pay off the $27 Billion in bond payments that will be payable by taxpayers over the next 30 years. This will cause a reduction in real estate values and an increase in annual property tax assessments.

This is not a partisan issue and will affect everyone, so let your friends and family know no matter what their political party preference is. Continue reading “MARCH 3RD PRIMARY- VOTE NO ON PROPOSITION 13” →

We Will Not Be Saying "Thank You", Mr. President

We Will Not Be Saying "Thank You", Mr. President

President Obama (February 4, 2009):

“I can make a firm pledge, under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

In the fifteen months of his presidency, President Obama has enacted into law, 25 tax increases totaling more than $670 billion, at least 14 of the taxes were violations of the Obama’s pledge not to raise any kind of taxes on Americans earning less than $200,000 for singles and $250,000 for married couples.

The President’s list of violations include:

* Tobacco tax increase and expanded enforcement authority*

* New tax on individuals who do not purchase government‐approved health insurance

* A 40% excise tax on high-cost health insurance plans

* A new “medicine cabinet tax” on over-the-counter purchases from HSAs, FSAs, and HRAs increasing the non-medical early withdrawal HSA penalty from 10 to 20 percent

* A “special-needs kids” tax (capping FSA contributions at $2500)

* An increase in the top Medicare payroll tax rate from 2.9 to 3.8 percent (in so doing raising the top marginal tax rate on labor from 37.9 to 43.4 percent)

* A hike in the capital gains rate from 15 to 23.8 percent

* A hike in the dividends tax rate from 15 to 43.4 percent

* A hike in the “other” investment tax rate from 35 to 43.4 percent

* An increase in the “reduction of the deduction” for medical expenses from 7.5 to 10 percent of AGI

* New annual taxes on health insurance companies, innovator drug companies, and medical device manufacturers

* A 10% excise tax for tanning salon sessions eliminating the deduction for employer-provided retiree Rx coverage in coordination with Medicare Part D

* Creating the “economic substance doctrine,” which allows the IRS to disallow perfectly-legal tax deductions it deems are only being used to reduce tax liabilities

* Requiring 1099-MISC information reporting for small business payments to corporations, increasing compliance burdens for small employers

Yesterday the President showed his typical arrogance and disregard for the public as he “amused” himself at the expense of the tax party protesters:

“In all, we passed 25 different tax cuts last year. And one thing we haven’t done is raise income taxes on families making less than $250,000 a year — another promise that we kept,” he told supporters at the Arsht Center for the Performing Arts. “So I’ve been a little amused over the last couple of days where people have been having these rallies about taxes. You would think they would be saying thank you.”

Sorry, Mr. Obama, we will not thank you for raising our taxes and breaking your pledge not to raise taxes on those making less than $250,000. We will not thank you for further deepening the financial crisis by raising taxes in the midst of a severe recession. We will not thank you for creating the largest debt obligations ever in the history of the United States. We will not thank you for shoving a multi-trillion dollar healthcare insurance bill burden on American taxpayers when clearly a super-majority of Americans did not want it.

No thanks coming from here, Mr. Obama. You will have to look elsewhere for thanks.

h/t Yid with Lid

What You Should Know About the Democrat Health Bill – Hidden Taxes, Fines and Bribes

President Obama and his legion, Pelosi, Reid, Stupak, et al, have said basically that once the American people get to know what’s in the healthcare legislation, they’ll actually like it. We all know how very important it is to the President and Speaker Pelosi that the American people be happy.

One must assume, based on the President’s assurance, that once we get to know this health care reform legislation up-close and personally, we’ll be so happy that we’ll all gather on a hilltop and hold hands to sing a groovy song and will vote unanimously to usher in a new age of Aquarius.
Okay. Let’s see if that works.

Here are a couple of things I learned about this legislation since its passage that I had not known previously.

• When you buy your federally mandated, IRS enforced – either by penalty of a fine or imprisonment – health care insurance you may be buying from an insurance company that will donate a portion of what you spend for your insurance to a special fund to help pay for abortions. It is now mandatory that certain insurance carriers provide a portion of what you pay them for health care coverage to a special abortion fund – Stupak’s hastily scribbled hall pass aside, this is now law.
          o There is no special fund for Breast Cancer
          o There is no special fund for Heart Disease
          o There is no special fund for Diabetes or MS
          o There is ONLY a special fund to pay for abortions

• When you sell a home in Mr. Obama’s new and improved America a 4% tax will be levied on your proceeds from the sale which will go to cover Health Care costs.

• Tanning? Apparently Dems want us all to be pasty for some reason…if you frequent tanning salons, you will pay a 10% excise tax.

• Mobility be damned! If you purchase a wheelchair, you will pay a 2.3% excise tax. I’m sure those confined to wheelchairs will consider this to be a great step forward in care.

• Pharmaceutical companies will be allowed to pass a $3 billion annual fee on to you, the consumer, in the form of more expensive drugs and medication.

• About those fines – Citizens who don’t purchase insurance would be subject to a fine of $325 in 2015 and $695 in 2016. Individuals may be subject to a charge equal to as much as 2.5 percent of their income in 2016.

• The Medicare payroll tax will now be applied to investment income, beginning in 2013.
          o A new 3.8 percent tax will be levied on interest, dividends,    capital gains and other investment income for individuals making more than $200,000 a year and couples making more than $250,000.

• The Medicare payroll tax will increase by 0.9 percentage point to 2.35 percent on wages above $200,000 for individuals and $250,000 for married couples filing jointly.

• A 40% tax on health benefits happens in 2018 and applies to premiums exceeding $10,200 a year for individuals and $27,500 for families. In other words, that phrase – “If you like your current insurance, it won’t change” was a big fat lie. If you have great insurance, you’ll now be taxed for the privilege. A 40% tax is a change.

• Taxes and more taxes –
          o According to the Joint Committee on Taxation, a nonpartisan agency, this legislation will generate $409.2 billion in additional taxes by 2019. The Congressional Budget Office also says that the Health Care Reform legislation will impose about $69 billion in penalties for both individual and businesses who don’t meet new mandates to buy health insurance.

• Here’s a really sneaky tax “increase” – if you itemize your tax returns, the deductible for medical expenses will change. You will only be allowed to deduct medical expenses in excess of 10% of your adjusted gross income. Currently that number is 7.5%.

• A medical plan tax that includes several different provisions to increase multiple taxes on things such as cosmetic surgery, cafeteria plans, health insurance providers, production and importation of drugs and medical devices, medical information providing, hospitals and the adjusted gross income floor of medical expenses.

• Doctors and hospitals will receive less compensation than they do now to control revenue streams.

• The Medicare program will see $500 billion in cuts to its program along with the Medicare tax being raised.

• 60% of new enrollees in health care programs will be fully subsidized by you.
Then there’s all those “incentives” laced into the legislation – strangely – only for those Representatives who voted “Yes” for this legislation.

• $300 Million more in Medicare subsidies for Louisiana

• NV, MT, WY, ND, UT all receive $2 billion in Medicare subsides

• Connecticut gets $100 Million to build a hospital

• 11 states total receive 8.5 Billion in Medicaid payments

Even the most casual observer must wonder how a struggling economy, with out-of-control unemployment can bear the burden of so much additional taxation and spending.

President Obama gloated, “This is what change looks like.”

To be fair, I suppose it is possible that Barack Obama never actually said the change he was promising would be positive change, or even change that the American people wanted.

This may be what change looks like, but it is also what bitter partisanship looks like.
Obama promised to reach across the aisle. He never mentioned that once he reached across he was going to sucker punch the Republicans.

Never did I hear Obama promise to ignore the will of the people.

Since last night, Obama, Pelosi and their legion have taken time to grin and pose for the cameras and proclaim the passage of this bill as “historic”. They’ve taken time to pat themselves on the back and to say that this legislation compares to the passage of Medicare, the passage of Social Security and the passage of Civil Rights.

In terms of the monumental impact this law will have on our nation, they are correct to rank it up there with all of those past life-changing pieces of legislation. There is however one incredibly glaring difference. Those milestone pieces of legislation all passed with bi-partisan support.

The only bi-partisanship exhibited in the passing of this legislation was on the side of dissent with more than 30 Democrats crossing over to the Republican side of the aisle to cast their “No” votes.  The only Democratic Representative from the state of Texas to vote “No” was Waco’s Chet Edwards.

Obama, Pelosi and the others have suddenly become aware of the words “prayer” and “constitution” and the terms “founding fathers” and to watch them use these words to justify their power grab is insulting. It’s every bit as insulting as the American people being told over and over again that “once you understand it” you’ll be happy to have it.

The condescending attitude from this President and this Congress is unprecedented.  The President added to the insult by saying, “We proved that this government — a government of the people and by the people — still works for the people.”

Mr. President that is perhaps your boldest and most condescending lie to date.
56% of the people in this nation opposed this health care reform legislation. Your actions have proven that your words have no meaning and that your government — a government of the politician and for the politician — views the people with absolute disdain.

John G. Winder , The Cypress Times 

Timeline of Major Provisions in the Democrats’ Health Care Package

Source:  Committee on Ways and Means Republicans

2009

•2‐year tax credit (total cap of $1B) for new chronic disease therapy investments
•Medicare cuts to hospitals begin (long‐term care (7/1/09) and inpatient and rehabilitation facilities (FY10))

2010

•States and Federal officials review premium increases
•FDA authorized to approve “follow‐on” biologics
•Increase brand name pharmaceutical Medicaid rebate (from 15.1% to 23.1%)
•Medicare payments to physicians in primarily rural areas increase (2 years)
•Deny “black liquor” eligibility for cellulosic biofuel producers credit
•Tax credits provided to certain small employers for health care‐related expenses
•Increase adoption tax incentives for 2 years
•Codify economic substance doctrine and impose penalties for underpayments (transactions on/after 3/23/10)
•Provide income exclusion for specified Indian tribe health benefits provided after 3/23/10
•Temporary high‐risk pool and high‐cost union retiree reinsurance ($5 B each for 3.5 years) (6/23/10)
•Impose 10% tax on indoor UV tanning (7/1/10)
•Medicare cuts to inpatient psych hospitals (7/1/10)
•Prohibits lifetime and annual benefit spending limits (plan years beginning 9/23/10)
•Prohibits non‐group plans from canceling coverage (rescissions) (plan years beginning 9/23/10)
•Requires plans to cover, at no charge, most preventive care (plan years beginning 9/23/10)
•Allows dependents to stay on parents’ policies through age 26 (plan years beginning 9/23/10)
•Provides limited protections to children with pre‐existing conditions (plan years beginning 9/23/10)
•Hospitals in “Frontier States” (ND, MT, WY, SD, UT ) receive higher Medicare payments (FY11)
•Hospitals in “low‐cost” areas receive higher Medicare payments for 2 yrs ($400 million, FY11)

2011

•Medicare Advantage cuts begin
•No longer allowed to use FSA, HSA, HRA, Archer MSA distributions for over‐the-counter medicines
•Medicare cuts to home health begin
•Wealthier seniors ($85k/$170k) begin paying higher Part D premiums (not indexed for inflation in Parts B/D)
•Medicare reimbursement cuts when seniors use diagnostic imaging like MRIs, CT scans, etc.
•Medicare cuts begin to ambulance services, ASCs, diagnostic labs, and durable medical equipment
•Impose new annual tax on brand name pharmaceutical companies
•Americans begin paying premiums for federal long‐term care insurance (CLASS Act)
•Health plans required to spend a minimum of 80% of premiums on medical claims
•Physicians in “Frontier States” (ND, MT, WY, SD, UT ) receive higher Medicare payments
•Prohibition on Medicare payments to new physician‐owned hospitals
•Penalties for non‐qualified HSA and Archer MSA distributions double (to 20%)
•Seniors prohibited from purchasing power wheelchairs unless they first rent for 13 months
•Brand name drug companies begin providing 50% discount in the Part D “donut hole”
•10% Medicare bonus payment for primary care and general surgery (5 years)
•Employers required to report value of health benefits on W‐2
•Steps towards health insurance administrative simplification (reduced paperwork, etc) begins (5 yr process)
•Additional funding for community health centers (5 years)
•Seniors who hit Part D “donut hole “in 2010 receive $250 check (3/15/11)
•New Medicare cuts to long‐term care hospitals begin (7/1/11)
•Additional Medicare cuts to hospitals and cuts to nursing homes and inpatient rehab facilities begin (FY12)
•New tax on all private health insurance policies to pay for comp. eff. research (plan years beginning FY12)

2012

•Medicare cuts to dialysis treatment begins
•Require information reporting on payments to corporations
•Medicare to reduce spending by using an HMO‐like coordinated care model (Accountable Care Organizations)
•Medicare Advantage plans with a 4 or 5 star rating receive a quality bonus payment
•New Medicare cuts to inpatient psych hospitals (7/1/12)
•Hospital pay‐for‐quality program begins (FY13)
•Medicare cuts to hospitals with high readmission rates begin (FY13)
•Medicare cuts to hospice begin (FY13)

2013

•Impose $2,500 annual cap on FSA contributions (indexed to CPI)
•Increase Medicare wage tax by 0.9% and impose a new 3.8% tax on unearned, nonactive business income for those earning over $200k/$250k (not indexed to inflation)
•Generally increases (7.5% to 10%) threshold at which medical expenses, as a % of income, can be deductible
•Eliminate deduction for Part D retiree drug subsidy employers receive
•Impose 2.3% excise tax on medical devices
•Medicare cuts to hospitals who treat low‐income seniors begin
•Post‐acute pay for quality reporting begins
•CO‐OP Program: Secretary awards loans and grants for establishing nonprofit health insurers
•$500,000 deduction cap on compensation paid to insurance company employees and officers
•Part D “donut hole” reduction begins, reaching a 25% reduction by 2020

2014

•Individuals without gov’t‐approved coverage are subject to a tax of the greater of $695 or 2.5% of income
•Employers who fail to offer “affordable” coverage would pay a $3,000 penalty for every employee that receives a subsidy through the Exchange
•Employers who do not offer insurance must pay a tax penalty of $2,000 for every fulltime employee
•More Medicare cuts to home health begin
•States must have established Exchanges
•Employers with more than 200 employees can auto‐enroll employees in health coverage, with opt‐out
•All non‐grandfathered and Exchange health plans required to meet federally mandated levels of coverage
•States must cover parents /childless adults up to 138% of poverty on Medicaid, receive increased FMAP
•Tax credits available for Exchange‐based coverage, amount varies by income up to 400% of poverty
•Insurers cannot impose any coverage restrictions on pre‐existing conditions (guaranteed issue/renewability)
•Modified community rating: individual or family coverage; geography; 3:1 ratio for age; 1.5 :1 for smoking
•Insurers must offer coverage to anyone wanting a policy and every policy has to be renewed
•Limits out‐of‐pocket cost‐sharing (tied to limits in HSAs, currently $5,950/$11,900 indexed to COLA)
•Insurance plans must include government‐defined “essential benefits ” and coverage levels
•OPM must offer at least two multi‐state plans in every state
•Employers can offer some employees free choice vouchers for health insurance in the Exchange
•Government board (IPAB) begins submitting proposals to cut Medicare
•Impose tax on nearly all private health insurance plans
•Medicare payment cuts for hospital‐acquired infections begin (FY15)

2015

•More Medicare cuts to home health begin

2016

•States can form interstate insurance compacts if the coverage with HHS approval (2016)

2017

•Physician pay‐for‐quality program begins for all physicians
•States may allow large employers and multi‐employer health plans to purchase coverage in the Exchange.
•States may apply to the Secretary for a limited waiver from certain federal requirements

2018

•Impose “Cadillac tax on “high cost” plans, 40% tax on the benefit value above a certain threshold: ($10,200 individual coverage, $27,500 family or self‐only union multiemployer coverage)

20 Ways ObamaCare Will Take Away Our Freedoms

20 Ways ObamaCare Will Take Away Our Freedoms
By:  David Hogberg

With House Democrats poised to pass the Senate health care bill with some reconciliation changes later today, it is worthwhile to take a comprehensive look at the freedoms we will lose.

Of course, the overhaul is supposed to provide us with security. But it will result in skyrocketing insurance costs and physicians leaving the field in droves, making it harder to afford and find medical care. We may be about to live Benjamin Franklin’s adage, “People willing to trade their freedom for temporary security deserve neither and will lose both.”

The sections described below are taken from HR 3590 as agreed to by the Senate and from the reconciliation bill as displayed by the Rules Committee.

1. You are young and don’t want health insurance? You are starting up a small business and need to minimize expenses, and one way to do that is to forego health insurance? Tough. You have to pay $750 annually for the “privilege.” (Section 1501)

2. You are young and healthy and want to pay for insurance that reflects that status? Tough. You’ll have to pay for premiums that cover not only you, but also the guy who smokes three packs a day, drink a gallon of whiskey and eats chicken fat off the floor. That’s because insurance companies will no longer be able to underwrite on the basis of a person’s health status. (Section 2701).

3. You would like to pay less in premiums by buying insurance with lifetime or annual limits on coverage? Tough. Health insurers will no longer be able to offer such policies, even if that is what customers prefer. (Section 2711).

4. Think you’d like a policy that is cheaper because it doesn’t cover preventive care or requires cost-sharing for such care? Tough. Health insurers will no longer be able to offer policies that do not cover preventive services or offer them with cost-sharing, even if that’s what the customer wants. (Section 2712).

5. You are an employer and you would like to offer coverage that doesn’t allow your employers’ slacker children to stay on the policy until age 26? Tough. (Section 2714).

6. You must buy a policy that covers ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services; chronic disease management; and pediatric services, including oral and vision care.

You’re a single guy without children? Tough, your policy must cover pediatric services. You’re a woman who can’t have children? Tough, your policy must cover maternity services. You’re a teetotaler? Tough, your policy must cover substance abuse treatment. (Add your own violation of personal freedom here.) (Section 1302).

7. Do you want a plan with lots of cost-sharing and low premiums? Well, the best you can do is a “Bronze plan,” which has benefits that provide benefits that are actuarially equivalent to 60% of the full actuarial value of the benefits provided under the plan. Anything lower than that, tough. (Section 1302 (d) (1) (A))

8. You are an employer in the small-group insurance market and you’d like to offer policies with deductibles higher than $2,000 for individuals and $4,000 for families? Tough. (Section 1302 (c) (2) (A).

9. If you are a large employer (defined as at least 101 employees) and you do not want to provide health insurance to your employee, then you will pay a $750 fine per employee (It could be $2,000 to $3,000 under the reconciliation changes). Think you know how to better spend that money? Tough. (Section 1513).

10. You are an employer who offers health flexible spending arrangements and your employees want to deduct more than $2,500 from their salaries for it? Sorry, can’t do that. (Section 9005 (i)).

11. If you are a physician and you don’t want the government looking over your shoulder? Tough. The Secretary of Health and Human Services is authorized to use your claims data to issue you reports that measure the resources you use, provide information on the quality of care you provide, and compare the resources you use to those used by other physicians. Of course, this will all be just for informational purposes. It’s not like the government will ever use it to intervene in your practice and patients’ care. Of course not. (Section 3003 (i))

12. If you are a physician and you want to own your own hospital, you must be an owner and have a “Medicare provider agreement” by Feb. 1, 2010. (Dec. 31, 2010 in the reconciliation changes.) If you didn’t have those by then, you are out of luck. (Section 6001 (i) (1) (A))

13. If you are a physician owner and you want to expand your hospital? Well, you can’t (Section 6001 (i) (1) (B). Unless, it is located in a country where, over the last five years, population growth has been 150% of what it has been in the state (Section 6601 (i) (3) ( E)). And then you cannot increase your capacity by more than 200% (Section 6001 (i) (3) (C)).

14. You are a health insurer and you want to raise premiums to meet costs? Well, if that increase is deemed “unreasonable” by the Secretary of Health and Human Services it will be subject to review and can be denied. (Section 1003)

15. The government will extract a fee of $2.3 billion annually from the pharmaceutical industry. If you are a pharmaceutical company what you will pay depends on the ratio of the number of brand-name drugs you sell to the total number of brand-name drugs sold in the U.S. So, if you sell 10% of the brand-name drugs in the U.S., what you pay will be 10% multiplied by $2.3 billion, or $230,000,000. (Under reconciliation, it starts at $2.55 billion, jumps to $3 billion in 2012, then to $3.5 billion in 2017 and $4.2 billion in 2018, before settling at $2.8 billion in 2019 (Section 1404)). Think you, as a pharmaceutical executive, know how to better use that money, say for research and development? Tough. (Section 9008 (b)).

16. The government will extract a fee of $2 billion annually from medical device makers. If you are a medical device maker what you will pay depends on your share of medical device sales in the U.S. So, if you sell 10% of the medical devices in the U.S., what you pay will be 10% multiplied by $2 billion, or $200,000,000. Think you, as a medical device maker, know how to better use that money, say for R&D? Tough. (Section 9009 (b)).

The reconciliation package turns that into a 2.9% excise tax for medical device makers. Think you, as a medical device maker, know how to better use that money, say for research and development? Tough. (Section 1405).

17. The government will extract a fee of $6.7 billion annually from insurance companies. If you are an insurer, what you will pay depends on your share of net premiums plus 200% of your administrative costs. So, if your net premiums and administrative costs are equal to 10% of the total, you will pay 10% of $6.7 billion, or $670,000,000. In the reconciliation bill, the fee will start at $8 billion in 2014, $11.3 billion in 2015, $1.9 billion in 2017, and $14.3 billion in 2018 (Section 1406).Think you, as an insurance executive, know how to better spend that money? Tough.(Section 9010 (b) (1) (A and B).)

18. If an insurance company board or its stockholders think the CEO is worth more than $500,000 in deferred compensation? Tough.(Section 9014).

19. You will have to pay an additional 0.5% payroll tax on any dollar you make over $250,000 if you file a joint return and $200,000 if you file an individual return. What? You think you know how to spend the money you earned better than the government? Tough. (Section 9015).

That amount will rise to a 3.8% tax if reconciliation passes. It will also apply to investment income, estates, and trusts. You think you know how to spend the money you earned better than the government? Like you need to ask. (Section 1402).

20. If you go for cosmetic surgery, you will pay an additional 5% tax on the cost of the procedure. Think you know how to spend that money you earned better than the government? Tough. (Section 9017).

Company Picnic Speech – A Lesson in Economics

Company Picnic Speech – A Lesson in Economics

[Neal Boortz created this fictional talk of a small business CEO to his employees. While it may be fictional, it conveys some important lessons about economics. GA]

Transcript of remarks made by Leo Carrington (who doesn’t exist) to a mandatory meeting of all employees of Carrington Automotive Enterprises, Inc. (which doesn’t exist either) on August 17th, 2009 at the Royal Payne Hotel (a purely imaginary place) in Norfolk, Virginia (which does, in fact, exist).

I would like to start by thanking you for attending this meeting, though it’s not like you had much of a choice. After all, attendance was mandatory. I’m also glad many of you accepted my invitation to your family members to be here as well. I have a few remarks to make to all of you, and then we’ll retire to the ballroom for a great lunch and some employee awards.

I felt that this meeting was important enough to close all 12 of our tire and automotive shops today so that you could be here. To reassure you, everybody is being paid for the day — except me. Since our stores are closed we’re making no money. That economic loss is mine to sustain. Carrington Automotive has 157 full time employees and around 30 additional part-timers. All of you are here. I thank you for that.

When you walked into this auditorium you were handed a rather thick 78-page document. Many of you have already taken a peek. You were probably surprised to see that it’s my personal tax return for 2008. Those of you who are adept at reading these tax returns will see that last year my taxable income was $534,000.00. Now I’m sure this seems rather high to many of you. So … let’s talk about this tax return.

Carrington Automotive Enterprises is what we call a Sub-S – a Subchapter S corporation. The name comes from a particular part of our tax code. Sub-S status means that the income from all 12 of our stores is reported on my personal tax return. Businesses that report their income on the owner’s personal tax return are referred to as “small businesses.” So, you see now that this $534,000 is really the total taxable income – the total combined profit from all 12 of our stores. That works out to an average of a bit over $44,000 per store.

Why did I feel it important for you to see my actual 2008 tax return? Well, there’s a lot of rhetoric being thrown around today about taxes, small businesses and rich people. To the people in charge in Washington right now I’m a wealthy American making over a half-million dollars a year. Most Americans would agree: I’m just another rich guy; after all … I had over a half-million in income last year, right? In this room we know that the reality is that I’m a small business owner who runs 12 retail establishments and employs 187 people. Now here’s something that shouldn’t surprise you, but it will: Just under 100 percent … make that 99.7 percent of all employers in this countries are small businesses, just like ours. Every one of these businesses reports their income on a personal income tax return. You need to understand that small businesses like ours are responsible for about 80 percent of all private sector jobs in this country, and about 70 percent of all jobs that have been created over the past year. You also need to know that when you hear some politician talking about rich people who earn over $200,000 or $500,000 a year, they’re talking about the people who create the jobs.

The people who are now running the show in Washington have been talking for months about raising taxes on wealthy Americans. I already know that in two years my federal income taxes are going to go up by about 4.5 percent. That happens when Obama and the Democrats allow the Bush tax cuts to expire. When my taxes climb by 4.5 percent the Democrats will be on television saying that this really isn’t a tax increase. They’ll explain that the Bush tax cuts have expired .. nothing more. Here at Carrington we’ll know that almost 5% has been taken right off of our bottom line. And that means it will be coming off your bottom line.

Numbers are boring, I know … but let’s talk a bit more about that $534,000. That’s the money that was left last year from company revenues after I paid all of the salaries and expenses of running this business. Now I could have kept every penny of that for myself, but that would have left us with nothing to grow our business, to attract new customers and to hire new employees. You’re aware that we’ve been talking about opening new stores in Virginia Beach and Newport News. To do that I will have to buy or lease property, construct a building and purchase inventory. I also have to hire additional people to work in those stores. These people wouldn’t immediately be earning their pay. So, where do you think the money for all of this comes from? Right out of our profits .. right out of that $534,000. I need to advertise to bring customers in, especially in these tough times. Where do you think that money comes from? Oh sure, I can count it as an expense when I file my next income tax return .. but for right now that comes from either current revenues or last year’s profits. Revenues right now aren’t all that hot … so do the math. A good effective advertising campaign might cost us more than $300,000.

Is this all starting to come together for you now?

Right now the Democrats are pushing a nationalized health care plan that, depending on who’s doing the talking, will add anywhere from another two percent to an additional 4.6 percent to my taxes. If I add a few more stores, which I would like to do, and if the economy improves, my taxable income … our business income … could go over one million dollars! If that happens the Democrats have yet another tax waiting, another five percent plus! I’ve really lost tract of all of the new government programs the Democrats and President Obama are proposing that they claim they will be able to finance with new taxes on what they call “wealthy Americans.”

And while we’re talking about health care, let me explain something else to you. I understand that possibly your biggest complaint with our company is that we don’t provide you with health insurance. That is because as your employer I believe that it is my responsibility to provide you with a safe workplace and a fair wage and to do all that I can to preserve and grow this company that provides us all with income. I no more have a responsibility to provide you with health insurance than I do with life, auto or homeowner’s insurance. As you know, I have periodically invited agents for health insurance companies here to provide you with information on private health insurance plans. The Democrats are proposing to levy yet another tax against Carrington in the amount of 8 percent of my payroll as a penalty for not providing you with health insurance. You should know that if they do this I will be reducing every person’s salary or hourly wage by that same 8 percent. This will not be done to put any more money in my pocket. It will be done to make sure that I don’t suffer financially from the Democrat’s efforts to place our healthcare under the control of the federal government. It is your health, not mine. It is your healthcare, not mine. These are your expenses, not mine. If you think I’m wrong about all this, I would sure love to hear your reasoning.

Try to understand what I’m telling you here. Those people that Obama and the Democrats call “wealthy Americans” are, in very large part, America’s small business owners. I’m one of them. You have the evidence, and surely you don’t think that the owner of a bunch of tire stores is anything special. That $534,000 figure on my income tax return puts me squarely in Democrat crosshairs when it comes to tax increases.

Let’s be clear about this … crystal clear. Any federal tax increase on me is going to cost you money, not me. Any new taxes on Carrington Automotive will be new taxes that you, or the people I don’t hire to staff the new stores I won’t be building, will be paying. Do you understand what I’m telling you? You’ve heard about things rolling downhill, right? Fine .. then you need to know that taxes, like that other stuff, roll downhill. Now you and I may understand that you are not among those that the Democrats call “wealthy Americans,” but when this “tax the rich” thing comes down you are going to be standing at the bottom of the mud slide, if you get my drift. That’s life in the big city, my friends … where elections have consequences.

You know our economy is very weak right now. I’ve pledged to get us through this without layoffs or cuts in your wages and benefits. It’s too bad the politicians can’t get us through this without attacking our profits. To insure our survival I have to take a substantial portion of that $534,000 and set it aside for unexpected expenses and a worsening economy. Trouble is, the government is eyeing that money too … and they have the guns. If they want it, they can take it.

I don’t want to make this too long. There’s a great lunch waiting for us all. But you need to understand what’s happening here. I’ve worked hard for 23 years to create this business. There were many years where I couldn’t take a penny in income because every dollar was being dedicated to expanding the business. There were tough times when it took every dollar of revenues to replenish our inventory and cover your paychecks. During those times I earned nothing. If you want to see those tax returns, just let me know.

OK .. I know I’m repeating myself here. I don’t hire stupid people, and you are probably getting it now. So let me just ramble for a few more minutes.

Most Americans don’t realize that when the Democrats talk about raising taxes on people making more than $250 thousand a year, they’re talking about raising taxes on small businesses. The U.S. Treasury Department says that six out of every ten individuals in this country with incomes of more than $280,000 are actually small business owners. About one-half of the income in this country that would be subject to these increased taxes is from small businesses like ours. Depending on how many of these wonderful new taxes the Democrats manage to pass, this company could see its tax burden increase by as much as $60,000. Perhaps more.

I know a lot of you voted for President Obama. A lot of you voted for Democrats across the board. Whether you voted out of support for some specific policies, or because you liked his slogans, you need to learn one very valuable lesson from this election. Elections have consequences. You might have thought it would be cool to have a president who looks like you; or a president who is young, has a buff bod, and speaks eloquently when there’s a teleprompter in the neighborhood. Maybe you liked his promises to tax the rich. Maybe you believed his promise not to raise taxes on people earning less than a certain amount. Maybe you actually bought into his promise to cut taxes on millions of Americans who actually don’t pay income taxes in the first place. Whatever the reason .. your vote had consequences; and here they are.

Bottom line? I’m not taking this hit alone. As soon as the Democrats manage to get their tax increases on the books, I’m going to take steps to make sure that my family isn’t affected. When you own the business, that is what you’re allowed to do. I built this business over a period of 23 years, and I’m not going to see my family suffer because we have a president and a congress who think that wealth is distributed rather than earned. Any additional taxes, of whatever description, that President Obama and the Democrats inflict on this business will come straight out of any funds I have set aside for expansion or pay and benefit increases. Any plans I might have had to hire additional employees for new stores will be put aside. Any plans for raises for the people I now have working for me will be shelved. Year-end bonuses might well be eliminated. That may sound rough, but that’s the reality.

You’re going to continue to hear a lot of anti-wealth rhetoric out there from the media and from the left. You can chose to believe what you wish .. .but when it comes to Carrington Automotive you will know the truth. The books are open to any of you at any time. I have nothing to hide. I would hope that other small business owners out there would hold meetings like this one, but I know it won’t happen that often. One of the lessons to be learned here is that taxes … all taxes … and all regulatory costs that are placed on businesses anywhere in this country, will eventually be passed right on down to individuals; individuals such as yourself. This hasn’t been about admonishing anyone and it hasn’t been about issuing threats. This is part of the education you should have received in the government schools, but didn’t. Class is now dismissed.

Let’s eat.

© 2009 Neal Boortz

California: Paradise Lost

In the wee hours this morning,in an egregious act of irresponsibility,the California Legislature imposed new taxes on the People of California to the extent of a minimum of $70 Billion.

Rather than doing the hard work of reducing spending, lawmakers felt it was easier to solve the problem mostly by raising new taxes. The legislators voting to impose these additional taxes on Californians were 100% of the Democrats in the Assembly, 100% of the Democrats in the State Senate, three Republican Senators, Maldonado, Cogdill and Ashburn and three Republican Assemblymen, Niello, Villines and Adams, all of whom broke their word because they signed a “no new taxes” pledge. No other Republicans supported the tax increase proposal. I want to congratulate those Republicans who stood strong and tried to defend the people of California against these taxes. In particular, Assemblyman Chuck Devore, candidate for U.S. Senate, and State Senator Dennis Hollingsworth, new Minority Leader, although all Republicans who chose not to vote for the measure should be commended.

It is, in my view, unconscionable for Republicans to have supported the imposition of this huge additional tax burden on the residents of California. I know that those who voted for it thought that it was the only way that anything was going to get passed that would close the budget gap and prevent the State from having to go bankrupt, and I also know that they were strongly pressured by the Governor. I think they chose the easy way out rather than doing the hard work.

What were the alternatives, you ask? Well, let me say that one possibility was going back to the 2003 budget, which was the year we recalled Gray Davis and Arnold came in, and increase each line item in that budget by two factors: 1) the increase in population since 2003, and 2) the inflation rate for those years. The other possibility was to start over. Do Zero-based budgeting. That is you start with each line of the budget and decide what is necessary and what isn’t. Each line starts out at zero and then you justify each addition.

Let me give you some examples of why the budget is out of whack (a professional term). In 2003 the population of California was approximately 35 Million. Today the population of California is about 38.5 Million. An increase in population of approximately 10% in five years, or roughly 2% per year.

The State spent a total of $78 Billion in the 2002-2003 fiscal year. The State spent a total of $105 Billion in the 2007-2008 fiscal year. That is an increase of 35% in spending in 5 years, or roughly 7% increase in spending every year. The population is increasing at the rate of 2% per year and spending is increasing at the rate of 7% per year. Is something wrong here?

The number of employees of the State of California in 2003 was approximately 321,000. The number of employees of the State of California today is approximately 360,000. An increase of 40,000 employees in five years, or an increase of an average of 8,000 new State employees per year, or roughly 30 new employees on the State payroll added EVERY DAY. Is the legislature saying that the State can’t run without adding 30 new employees every day? Is the legislature saying that the State can’t run if we lay off 20,000 of the new employees that we have added since 2003? Why not? The state ran with 40,000 fewer employees in 2003.

Are you telling me that the only way to make up the budget deficit is by raising taxes? Is reducing spending not an option?

The special interests in California who have Democratic legislators in their pocket are running the state and driving it into bankruptcy, and driving businesses out of California. California was the sixth highest taxed state in the nation before this bill was passed. We will soon have the distinction of being the highest taxed state in the nation.

Here are just a few of the new taxes Californians can look forward to:

* You will pay a state income tax “surcharge” of 5.25%
* Your sales tax on most everything you buy will boosted a full 1.00%
* Your car tax (Vehicle License Fee) will mushroom to 77% higher than now.
* Your dependent tax credit will be slashed by two-thirds, in effect, costing you $200 per child

I don’t understand why any Republican would vote for a bill that will cost the average family between $1,000 and $2,000 per year in additional taxes. If you want to get an idea of what this new bill will cost your family, you can calculate it here.

But wait, there’s more.

This tax increase will not solve the problem. I can almost guarantee that the projected tax revenues will not be received. There will be another shortfall within a few months and they will be back to take more money out of your pocket. This is not the end of your being over-taxed by a Democratic legislature that wants to take your money, because they feel they know how to spend it better than you do, and because they would rather take more money from you than make the difficult choices about cutting spending. More to come.

Because Abel Maldonado knew that he could not win a statewide election in the future where there were only Republicans voting, he made, as a condition of his agreeing to the tax increase bill, that there be open primaries in the State of California. That will be on your ballot soon. What does that mean? It means that Democrats will be able to vote in Republican primaries, and vice versa. That means that, if the measure passes, from now on, Democrats will choose who the Republican candidates are.

This bill is going to cause severe economic problems in the State of California, along with AB32 which places impossible burdens on businesses in California. Business are already moving out of state. California is now ranked as one of the most business-unfriendly states in the union.

This tax increase bill, coming on top of the huge devaluation in our currency (inflation) which will result from the gigantic federal stimulus spending package, will mean much economic pain for Californians over the next five or six years.

The car tax increase will not generate the revenue that the legislature and the Governor think it will. I heard two people today tell me that they are now going to postpone buying a new car because of the car tax. How does that help the auto industry? There are always unintended consequences of raising taxes.

What can we do about it? There is only one answer. Elect fiscally conservative honorable Republicans to the State legislature to replace profligate Democrats. California Democrats, as well as Republicans, will be hurt by this bill, and they may be more willing to listen in the future to candidates who care about their financial well-being and who will take a stand for them in the legislature.

My daughter and son-in-law left Los Angeles to move to Nevada in 2008. While I personally hadn’t considered leaving the State before, I feel it is now something to think about. Nevada has no state income tax.

Obama’s First Tax Increase

Today President Obama signed into law the first tax increase of his administration. From Amanda Carpenter at Townhall:

President Obama approved his first tax hike today.

The bill he signed to expand the State Children’s Health Insurance Program contains a provision to increase taxes on tobacco by a whopping 155 percent. That means the federal taxes on cigarettes have gone up an additional 61 cents a pack. This brings federal taxes on a pack of cigarettes to $1 per pack total.

(It also means the nation will need to maintain a steady level of smokers to subsidize kids health care, an unlikely outcome in light of a fledgling economy and increased taxes on the tobacco.)

Despite his pledges not to tax low-income Americans, Obama’s tax increase on tobacco will disproportionately punish the poor, who are more likely to become addicted to cigarettes.

55 percent of smokers are considered “working poor” and one in four live below the poverty line.

This will be the first of many new taxes or tax increases. Many of those will adversely impact the poor. Raising taxes, we all know, has a depressive affect on tax revenue, so the funding of the SCHIP program will have a funding source that should diminish over time. New sources of funding will have to be found for this new bureaucracy for this new law that will not achieve what it is intended to achieve.

Important Action Needed This Week

The Economic Stimulus Plan proposed by the Administration is a pork-laden bill and will not stimulate the economy. You can’t stimulate the economy by increasing our national debt or by printing more money.

In addition to the hyper-inflation that this bill will cause, and in addition to the pet projects of various Democrats that would never pass if it weren’t included in a so-called emergency funding program, there are other reasons to oppose the bill:

1. Tax Relief. Tax relief is predominately for people who do not pay taxes. “For individuals, the plan would cut taxes for most workers this year through a $500 tax credit that would be delivered by reducing paycheck withholding, a key proposal from Mr. Obama’s team. But to reduce the cost of the proposal, House lawmakers pared down that benefit so that higher-income workers are excluded. The credit would begin to phase out at $75,000 for individual taxpayers and at $150,000 for couples.” WSJ, 1/16/08

2. Illegal aliens will be qualify for cash payouts. “The legislation, which would send tax credits of $500 per worker and $1,000 per couple, expressly disqualifies nonresident aliens, but it would allow people who don’t have Social Security numbers to be eligible for the checks.Undocumented immigrants who are not eligible for a Social Security number can file tax returns with an alternative number. A House-passed version of the economic recovery bill and one making its way through the Senate would allow anyone with such a number, called an individual taxpayer identification number, to qualify for the tax credits.” AP 1/29/09

3. Expanding health care and Medicade coverage. “The new Medicaid Coverage for the Unemployed program is supposedly a temporary program to cover laid-off individuals via Medicaid. And the $30 billion COBRA coverage provision, provides assistance in paying for COBRA for individuals making up to $1 million a year. All of these short-term benefits, once granted, will be hard for any Congress, of any party, to take away.” The Weekly Standard 1/29/09

If you would like to be involved in action to stop the passage of this bill that would not do anything to help the economy, go to TCOT ACTION PROJECTS and register. Then go to the action group: Operation “MOVE OVER MoveON.” You will find a plan of action as to how you can help.