The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Obama misleads my neighbors in Kokomo.

Posted by iusbvision on November 23, 2010

We are all glad that the plant in Kokomo was prevented from closing due to a large taxpayer bailout. The concerns with the bailout plan remains the same.  The bond holders were illegally hosed including Indiana retirement funds. That was real economic damage. The other problem with government rushing in to prevent loss to a highly inefficient corporation is that the reforms are done for political reasons and not economic ones. This can result in reforms that do not go far enough. The bailout was done in such a way where the union that had clearly over reached did not have to take its fair share of the shared sacrifice that the taxpayer and the rest of the private sector has taken. The result is that even after the reforms the labor costs are still excessively high when compared to foreign automakers that are making cars in Indiana, Kentucky and Tennessee.

I am by no means saying that people should not be paid well, but many of these union workers, much like many government union employees are paid beyond well, especially when it comes to Cadillac benefits that they contribute very little towards. The result is a company that may get along in the short term, but still faces a real disadvantage. These shortcomings are well known and have been covered by journalists, commentators, and blogs for a long time.

The problem I have with President Obama today is the dishonest narrative that he keeps repeating. If he gets his way it will cost Indiana even more jobs than the 40,000 plus that have left since the stimulus.

Fox News:

PERU, Ind. — President Obama used part of his appearance at a Chrysler factory on Tuesday to hammer home his argument that the country cannot afford to extend the Bush-era tax cuts for the wealthiest Americans — even though his speech was advertised by the White House as a celebration of the auto bailouts.

The tax cuts apparently are weighing heavily on Obama’s mind as he prepares for a meeting with GOP leaders at the White House on Nov. 30, the first one since his party was punished by voters in this month’s midterm elections.

Newly empowered Republicans, who captured the House and increased their presence in the Senate, are pushing to extend the Bush tax cuts to all Americans, saying that the economy is too fragile for a tax hike on anyone.

But Obama told the crowd at the Chrysler transmission plant that the country cannot afford the $700 billion cost for extending tax cuts to individuals making $200,000 and above or families making $250,000 and above.

“I don’t think that we can afford it right now, not when we are going to have to make some tough decisions to rein in our deficits,” he said.

 

This is coming from the man who signed budgets that increased yearly deficit spending over the Republicans by a factor of seven. Obama went on to say that we should not be giving tax cuts to millionaires and billionaires, but here is the problem. Even if the tax cuts all expire and we tax rates increase in January, the super rich will hardly be effected, but small businesses will get creamed and Obama knows it.

Why?

I – The super rich benefit from a 16,000 page tax code is not just filled with exceptions and shelters for those with influence, the code defines much of the super rich’s income as non taxable, or it is defined as income that is covered under a different rate than “taxable wages”. For Example: John Kerry made $5,072,000 in 2003 and his total combined federal tax burden was 12.34%. If all the Bush era tax cuts expired Kerry would have still only paid a fraction over 13%.

II – The truth is that there are not many people who make taxable wages over $200,000. The vast majority who pay that tax at what will be the 39.9% rate are small business “S-corporations”, not the John Kerrys of the world.  While these small businesses bring in that much money on paper, most of their income goes back into the business. These are not “millionaires and billionaires”, they are people who have a roofing business, or own a couple of pizza shops, or a small manufacturing company.  These are the businesses that do 75% of the hiring in this country.

III – Google is a multi-billion dollar company and they paid a federal tax of 2.4%. They gave $800,000 to Obama and the Democrat leadership and throw gala events for Obama, yet where is Obama’s class warfare rhetoric when Google skips out in many millions of taxes?  Obama has no problem attacking the Chamber of Commerce, who by the way represents most small business.

This brings us to Norton’s First Law: Big business loves big government, because big government taxes and regulates small and medium sized business, out of the competition.

Video: Government Strangling Small Business With Red Tape

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