novatownhall blog

Where you are held accountable for your convictions and record

While I don’t think McCain is the best person for the office of the president (yet closer to that ideal than Obama) the main reason I will vote for Palin is that I would not want to see a Justice Hilary Clinton on the court. The Republican machine at this point is running on the presumption that the core conservative vote will not abandon them, and because of the person the Dems have up, that is true this time around. While Obama himself is bad enough, an even worse thought would be Justice Clinton — heaven help us — but with him in office, I could see that happening.

Sanity has proposed some good thoughts on the question of “What would companies do if there were no corporate income taxes?”  They are misconceptions, but they are easy ones to make and are commonly made, and they deserve to be addressed.

(1) Reduce investing money back in the company since it will be cheaper to pay dividends – Shareholders will put even more pressure on.

It is by investments (in R&D, new equipment, etc.) that companies grow.  They grow to make even more money for their investors.  As they grow, their stock prices generally go up.  Those gains are not taxed until the stock is sold.  This does provide a tax incentive to not pay dividends, which are subject to double taxation — once as corporate income, and once as personal income to the shareholders.

At some point, companies do get to the point at which they have more profits than they believe can be profitably invested, at which point they start paying dividends.   (By “profitably” I mean providing a reasonable return, not just a positive return.)  Microsoft is a classic example.  After many years of growth, and plowing the profits back into the company for R&D to fuel that growth, Microsoft’s board decided to start paying dividends.  I do not doubt that the reduction in the taxation of dividends had an effect on that decision.   But even with the tax advantages of not paying dividends, the board decided to pay dividends.

So where will the money go?  To the shareholders, of course.  What will the shareholders do with it?  Some will spend it, of course, but those people would have gotten the money out of their investments by selling shares if they were not getting it in dividends.  The rest, wanting their money invested, will reinvest it.  In other words, they will put their money into other companies that are putting their money into R&D, not dividends.  (Really, this only works for IPOs and secondary offerings, but the effect is that the money gets there eventually.)  In short, dividends move capital from one company, through the shareholders, to another that can more profitably employ that capital.

I would rather our tax code not hamper that flow of capital.

———————————————————————————————————

(2) Reduce or eliminate charitable spending as they will get no direct benefit from it.

At the highest corporate tax rate, 39%, a company will get $39 back for every $100 it gives in charity.  No matter how you slice it, that’s $61 in lost profit.  As in (1), that money could be reinvested for growth, or paid in dividends, which, in a roundabout way, ends up reinvested.  So in no case is charity a plus for a company, save perhaps in “goodwill.”

———————————————————————————————————

(3) Reduce payroll as this will not be deductible any more.

Possible, but not likely.  In fact, I would expect the opposite to be more likely, as companies, having more money to spend, would bid up the wages of workers to get them.

———————————————————————————————————

(4) Others that don’t come to mind immediately but I could easily research if I cared more.

Apathy — a most expensive commodity.

We have all heard Obama trumpeting his plan for a nationalized universal health care plan for America. If it is such a good idea, why is Hawaii dropping a similar program ?

Hawaii Ending Universal Child Health Care After 7 Mos.

HONOLULU — Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.

Gov. Linda Lingle’s administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan.

“People who were already able to afford health care began to stop paying for it so they could get it for free,” said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. “I don’t believe that was the intent of the program.”

Read Story at FOXNews

Huh, people were gaming the system. Ya think ? Wasn’t this one of the concerns raised against congressional attempts at expansion of the State Children’s Health Insurance Program ? Yes, it was !

Another state attempting universal health care is also experiencing fiscal problems :

Mass. gets $10.6b for healthcare insurance

At a time when many states are facing substantial cuts in federal financing, Massachusetts will be able to expand its first-in-the-nation healthcare law because of a federal promise of $10.6 billion over the next three years, Governor Deval Patrick said yesterday.

The deal, struck after months of delicate negotiations, gives Massachusetts about $2.1 billion more than it received from the government in its last round of negotiations three years ago for its Medicaid waiver package. The waiver allows Massachusetts to provide subsidized health insurance to some residents with incomes higher than would typically be allowed under traditional Medicaid rules.
Read Story at Boston.com

Massachusetts is also finding that government subsidized health care is also fiscally unworkable, without the infusion of massive federal subsidies.

Obamacare, Hillarycare, whatever you want to call it, is nothing more than another feel good Fannie Mae, Freddie Mac scheme destined to blow up in our faces, taking our economy down with it.

Yes, 0bama (yes, that’s a zero) was in fine form in the final debate,  showing the nation and the world that he is stone-stupid.  Sadly, McCain was too much of a gentleman to pick up the stone and smash 0bama between the eyes with it.  I am not.

0bama has been spouting this nonsense for a while, not just at the debate:

Now, Senator McCain, the centerpiece of his economic proposal is to provide $200 billion in additional tax breaks to some of the wealthiest corporations in America. Exxon Mobil, and other oil companies, for example, would get an additional $4 billion in tax breaks.

I asked this question of our resident leftists, but none had the nerve to answer me — even the stupidest of mammals learns to be wary of someone who hits it with a sledge-hammer when it sticks its head out of its hole.  McCain should have asked it of 0bama:

Senator 0bama, what do the oil companies do when the price of crude oil goes up?

We all know the answer — they raise the gas prices.  So now comes the follow-up in the one-two punch:

Well, then, Senator, what do you expect them to do when you raise their taxes?

We all know the answer to that, too — they will raise the gas prices.  Thank you very much, Senator 0bama.  Let’s keep following this line of reasoning:

OK, then, what has happened to gasoline prices in the last few weeks?

Well, they’ve come down.

Why?

Crude oil prices have come down.  So, having beaten him about the head and shoulders, it is time for the coup de grace:

So, what should we expect to happen when their taxes come down?

It doesn’t take a rocket-scientist to figure this stuff out, folks.  (Disclaimer: I am a rocket scientist.)  This is nothing new or revelatory.  Adam Smith wrote about the pass-through effect of taxes on profits in 1776 in The Wealth of Nations, Book V, Chapter II, Part II, Article II.  The whole book is worth the read, though it goes over 1000 pages.

Another stupidity is the idea of a graduated corporate income tax rates — if a company makes $50,000 a year, it should be taxed at a 15% rate, but if it makes $100,000 a year, it should be taxed at a 34% rate.  So, let us say that I have a company with two government contracts, each earning $50,000.  Assume each contract will require an outlay of $500,000, so I will get a 10% return on my investments.  If I break up the company into two entities, one for each contract, my taxes will be $15,000.  But if I have a single company, the taxes will be $22,250.  I’ve invested the same amount of money, done the same work, and made the same profit.  But in one case I pay $7,250 more in taxes.

Is that stupidity, or just insanity?  After all, liberalism is a mental disorder.

Obama’s numbers in the polls shot back up when the mortgage mess fueled by Fannie Mae and Freddie Mac destroyed our banking system and wrecked the stock market. With 3-4 trillion dollars down the tubes, we need to look at who lit the fire and played the fiddle while Rome burned …

Before we decide to punish someone for this mess, let us not forget who helped drive the two largest mortgage companies in the country over the cliff.  That is correct, our friend the Democrats also are greedy, not for money but political power. Chris Dodd, Barney Frank and their pal, the anointed one a.k.a. Barak H. Obama used Freddie Mac and Fannie Mae as vehicles for social engineering.  The rest of us are now paying a steep price for this experiment with our wealth.

The Democrats accused the whistle blowers of racism.  The color of money is green.  Numbers do not have a continent of origin.  The left has used the cry of racism to silence those who oppose their aims.  A great example of this is shown below …

That is correct, the video above shows, the problem is not Fannie Mae and the illegal accounting practices of Raines, its those evil Republicans who are out to politically lynch Raines.  The Republicans called the Democrats on this three years ago.  Where was ABC, NBC and CBS then?  Where was the NYT then?  Even the moron in the White house could see there was a problem, while Raines said that home mortgages are ZERO risk entities. That is one of those statements that just boggles the mind.

We talk about greed. Greed for money is only one kind. Greed for political power is another kind. Fannie Mae and Freddie Mac were converted into financial time bombs that have crippled our economy. We should never allow this to happen again.

I guess when you can’t find smoke, you set your own fire.  It appears the whole ‘Kill him’ episode was the result of a delusion from the fevered mind of a liberal.  The Secret Service takes this sort of thing seriously, and launched an immediate investigation of a possible threat to the Democrat candidate for President.

SCRANTON – The agent in charge of the Secret Service field office in Scranton said allegations that someone yelled “kill him” when presidential hopeful Barack Obama’s name was mentioned during Tuesday’s Sarah Palin rally are unfounded.

The Secret Service could not find anyone who heard the threat aside from the one reporter at the event.  Why is that?  Over 20 people who were in that area of the stands had been interviewed …

“We have yet to find someone to back up the story,” Slavoski said. “We had people all over and we have yet to find anyone who said they heard it.”

From CBS …

The incident was originally reported by Times-Tribune reporter David Singleton and the paper’s managing editor Lawrence K. Beaupre said they stand by their report, saying of the reporter, “he heard what he heard. He reported what he heard.”

So, who is Beaupre?  It appears he was ground zero for a previous story at the Cincinnati Enquirer where he got canned for not following the rules

[The] Enquirer was apologizing for and renouncing an 18-page series of hard-hitting articles it had published only 56 days earlier. The paper had agreed to pay the subject of the pieces, Chiquita Brands International, in excess of $10 million and run an apology on the front page three times as well as on the Enquirer’s Web site.

Newspapers don’t print retractions on the front page, ask the NYT.  They certainly don’t shell out that kind of money unless they are dead-to-rights wrong.

Beaupre appeared to have learned his leasson and wrote in another matter

Until then, my decision is that, although this certainly is titillating, it is not news.

OK, so why did he not spend five minutes to ask someone in the crowd if they heard what he heard?  The Scranton Times is owned by the Lynett’s, a family long known in NE PA for being partisan Democrats.  Any connection?  The Lynetts have in the past interfered in what is to be covered for partisan reasons.  Is this just another such interference?

A friend forwarded me this story:


A young woman was about to finish her first year of college. Like so many others her age, she considered herself to be a very liberal Democrat, and among other liberal ideals, was very much in favor of higher taxes to support more government programs, in other words redistribution of wealth.

She was deeply ashamed that her father was a rather staunch Republican, a feeling she openly expressed. Based on the lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his.

One day she was challenging her father on his opposition to higher taxes on the rich and the need for more government programs. The self-professed objectivity proclaimed by her professors had to be the truth and she indicated so to her father.

He responded by asking how she was doing in school. Taken aback, she answered rather haughtily that she had a 4.0 GPA, and let him know that it was tough to maintain, insisting that she was taking a very difficult course load and was constantly studying, which left her no time to go out and party like other people she knew. She didn’t even have time for a boyfriend, and didn’t really have many college friends because she spent all her time studying.

Her father listened and then asked, “How is your friend Audrey doing?”  She replied, “Audrey is barely getting by. All she takes are easy classes, she never studies, and she barely has a 2.0 GPA. She is so popular on campus; college for her is a blast. She’s always invited to all the parties, and lots of times she doesn’t even show up for classes
because she’s too hung over.”

Her wise father asked his daughter, “Why don’t you go to the Dean’s office and ask him to deduct a 1.0 off your GPA and give it to your friend who only has a 2.0. That way you will both have a 3.0 GPA and certainly that would be a fair and equal distribution of GPA.”

The daughter, visibly shocked by her father’s suggestion, angrily fired back, “That’s a crazy idea, how would that be fair! I’ve worked really hard for my grades! I’ve invested a lot of time, and a lot of hard work! Audrey has done next to nothing toward her degree. She played while I worked my tail off!”

The father slowly smiled, winked and said gently, “Welcome to the Republican Party.”