Video: How Tax Cuts Work & Why Tax Increases Achieve the Exact Opposite of the Stated Intent

Lee Doren of “How The World Works” explains how tax cuts and increases work in a progressive income tax system like we have here in the United States.

Let us examine some charts that help to illustrate this further.

Here is the tax burden by taxable income that came out at the middle of the Bush Presidency:

You see when tax rates are cut and the economy grows the upper and top parts of the PRODUCER CLASS (notice I did not say rich as many of the super rich are NOT producers) pay the lions share of federal income taxes. Those who produce actually produce more, invest more, take more risk and hire more people when the economy grows. So as they pay a lower tax rate they actually pay more in real dollars because they are punished less by moving their money and takling risk.

Now let us look at the tax burden as it is today. According to the Tax Foundation:

Incomes reported by tax returns at the high end of the income spectrum plummeted from 2007 to 2008, as did their share of the nation’s income and income taxes paid.

In 2008, the top 1 percent of tax returns paid 38.0 percent of all federal individual income taxes and earned 20.0 percent of adjusted gross income, compared to 2007 when those figures were 40.4 percent and 22.8 percent, respectively. Both of those figures—share of income and share of taxes paid—were their lowest since 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes.

Each year from 2005 to 2007, the top 1 percent’s constantly growing share of income earned and taxes paid set a record. That trend reversed in 2008. In fact, the income share for the top 1 percent of tax returns was lower in 2008 than in 2000, largely due to differences in capital gains.

Another indicator of this reversal in the income and tax shares of the top 1 percent is that during 2007, the top 1 percent had actually paid more in federal income tax than the bottom 95 percent, a comparison that was much remarked on a year ago. But the diminished income of the top 1 percent in 2008 means that the comparison no longer holds. During 2008, the bottom 95 percent (AGI under $159,619) paid 41.3 percent of the total collected, a larger share than the 38.0 percent paid by the top 1 percent (AGI over $380,354).

The top-earning 5 percent of taxpayers (AGI over $159,619), however, still paid far more than the bottom 95 percent. The top 5 percent earned 34.7 percent of the nation’s adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.

So why did the percentage of the tax burden of “the rich” during most of the Bush presidency go UP year after year till 2007, even after the so called “tax cuts to the rich”?

And why in 2008 did a huge portion of the tax burden get shifted to the working middle class and poor?

It is just as we said, if the incentive is there to produce, if the taxes are low and if the risk is measurable those wealthier Americans and producers will take more risk and be more economically active. If you remove the incentive by threatening them with taxes, cap & trade, ObamaCare, tons of regulations, bureaucrats and the corruption that always follows such policies it creates uncertainty investors and producers can no longer make a measured risk. This is when they bottle their money up or invest it in China, who is smart enough not to punish investors and producers for taking risk.

This shows that the tax rate that the producers or “the rich” pay is secondary to certainty, confidence, and economic growth as to how much tax they pay in real dollars.

It is ironic that the left, who claims to pass this stuff in the name of the middle class and “soaking the rich”, in real dollars accomplish exactly the opposite of their stated intent. It ends up that it is the producing middle class who gets soaked with more tax burden and more inflation.

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

ABC’s Jake Tapper Blasts Obama’s Double Standard on Jobs and Outsourcing

ABC’s Jake Tapper on the double standard: “What would candidate Obama have said if Bush’s jobs adviser ran a company which outsourced thousands of jobs and paid no taxes on $14 billion in profits?

Jeffery Immelt with Obama

Politico (and Politico is very left friendly folks):

The results of GE’s tight relationship with the Obama administration are starting to show.

The company’s CEO, Jeffrey Immelt, went from being an Obama ally on green energy to being one of his top outside advisers on the economy in the last two years.

In the process, The New York Times reports, GE had one of its best years in 2010, in part by getting a huge tax benefit from Uncle Sam.

Last year, the company paid nothing to the government. Instead, the government paid GE $3.2 billion in tax breaks.

“Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore,” according to The Times.

Some combination of aggressive lobbying for green energy tax incentives — for which the administration had pushed aggressively in the Recovery Act and in President Obama’s budgets to Congress over the last two year — and strategies run out of its in-house tax department have made GE one of the leading companies in reducing its corporate tax burden.

When Immelt was named the chairman of Obama’s Council on Jobs and Competitiveness in January, he acknowledged that his company has a reputation for running most of its business overseas, the result of more than three decades of reducing its domestic operations to minimize costs.

“I know that despite the fact that 60 percent of GE’s revenues are outside of the United States, I personally and this company share in the responsibly and the accountability to make sure that this is the most competitive and productive country in the world,” Immelt said in January.

But he neglected to mention that GE’s offshore operation also allows it to avoid paying most of its taxes to the federal government.

GE’s spokesman told the Times that reducing its tax burden is part of the company’s “responsibility” to its shareholders.

But it also appears to run contrary to Obama’s rhetoric about slowing the rapid offshoring of American jobs.

This lizard (read government) could cost up to 60,000 jobs and 25% of our national oil production.

Some believe that party of this story is the Obama Administration sticking it to Texas just as the Obama Administration is also doing to Texas in regards to the fires.

The government says that where there is oil drilling there are less of these lizards per mile. An interesting method of measurement as there are no shortage of deer and how much space in my home town is covered by parking lots and malls? Deer can be seen every day and is hunted just to keep the numbers from getting out of control.

Massive new oil shale finds have been found in Texas and parts of New Mexico, enough to increase domestic production by 25%. The Obama Administration, if recent history is a guide, won’t have that. The lizard is very skiddish and lives mostly under the sand, so most people have never seen one (hmm I wonder how hard that makes them to count).

ABC News:

The sand dune lizard is a small reptile that has become the scourge of the Texas Oil industry, not because it is dangerous but because the threatened species could put land ripe for oil exploration off limits.

“As far as I am concerned, it is Godzilla,” Texas land commissioner Jerry Paterson told ABC News. “[It’s] the biggest threat facing the oil business in memory,” said Ben Shepperd, president of the Permian Basin Petroleum Association. They believe the small tan-colored, insectivorous lizard could cost the oil industry and surrounding communities thousands of jobs.

About 63,000 Americans work in the oil and gas well industry as of September 2009, the most recent period available from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program. Most of those jobs are in Texas.

The federal government said the sand lizard is on the verge of extinction, and is expected to place it on the endangered species list soon.

If the species makes the list, its 800,000 acre habitat in the shinnery oak sand dune communities of southeastern New Mexico and southwestern Texas would receive protected status. That habitat happens to be right in the heart of Texas oil country.

“If the lizard is put on the endangered species list, then [rigs] would [be] shutdown,” Leslyn Wallace, a land manager at RSP Permian, told ABC News. That would cost many Texans their jobs.

But here is the rub, The eco-radicals in the government have used the Endangered Species Act as a weapon before to target the industries they despise. After the polar bear population had risen 30% the government decided to put the polar bear on the endangered species list anyways because of reductions in polar sea ice, which saw a cyclical low in 2007, but had already rebounded 27% in the following year and is still growing today.

Gadaffi, Obama, Mubarak, and Carter

Today the elite media is almost orgasmic in praise for President Obama in the reported death of Libyan dictator Moammar Gaddafi.

So let me get this straight:

Gadaffi dead = good.

Saddam Hussein’s murderous sons killed = possible violation of international law.

Iraqi regime taken down = bad. Unnecessary war of choice. Who cares if they shot at our planes, invaded an ally, threatened to invade another, handed cash to terror groups and violated a cease fire agreement.

Elected government takes power in Iraq with a successful and peaceful change of power after successive elections = bad. Hopeless lost cause time to leave.

Egypt ousting of Mubarak with US help = good.

Muslim Brotherhood (Al-Qaeda grandparent) take over of Egypt with Lara Logan gang raped, women given “virginity tests” by the military, and armored military vehicles used against Coptic Christians in Egypt =  Obama inspired democratic revolution.

Obama sells 125 M1 tanks to Egypt = good.

Obama helps oust Gaddafi = good.

Al-Qeada and Muslim Brotherhood commanders lead rebels in Libya = stay tuned for the Obama inspired democratic revolution.

1979: Carter helps oust Shaw of Iran, a dictator who wasn’t all peaches and cream but was certainly better than Gaddafi or Mubarak = good.