Links 05-01-2013

By: admin
Published: May 1st, 2013

When Is Government Debt Risky?

A government that does not tax sufficiently to cover its spending will eventually run into all manner of debt-generated trouble. Its nominal interest rates will rise as bondholders fear inflation. Its business leaders will hunker down and try to move their wealth out of the companies they run for fear of high future corporate taxes.

Moreover, real interest rates will rise, owing to policy uncertainty, rendering many investments that are truly socially productive unprofitable. And, when inflation takes hold, the division of labor will shrink. What once was a large web held together by thin monetary ties will fragment into very small networks solidified by thick bonds of personal trust and social obligation. And a small division of labor means low productivity.

ll of this is bound to happen – eventually – if a government does not tax sufficiently to cover its spending. But can it happen as long as interest rates remain low, stock prices remain buoyant, and inflation remains subdued? I and other economists – including Larry SummersLaura Tyson, Paul Krugman, and many more – believe that it cannot.

‘Real’ Jobless Rate Still Above 10% In Most States

Two months from now, revised government estimates are likely to show that the economy is even bigger than the currently stated $15 trillion.

And while the numbers may make some blink or gasp, the mere size of gross domestic product won’t hide the reality that in terms of actual growth, this is also the worst economy in 83 years.

GDP growth is in the midst of its longest sub-3 percent annual growth rate since 1929, the beginning of the Great Depression, according to Bespoke Investment Group. The economy hasn’t topped 3 percent since 2005—before Federal Reserve Chairman Ben Bernanke took over—and is unlikely to do so this year.

Obama has a sweet retirement package. Will you?

President Obama’s proposal to limit the value of 401(k)s, pensions, and other tax-favored retirement accounts to about $3.4 million certainly sounds reasonable. After all, at a time of big budget deficits, we shouldn’t subsidize “the rich” with tax breaks, should we?

On May Day, Communism Is A Much-Closeted Joke

Communism cannot create wealth in a sustainable manner. While capitalism invigorates, communism enervates. This is why it not only cannot have capitalism within it – because the contrast is too great and too obvious – but even contiguous to it. In both cases, communism’s victims will seek to escape from it. Within communism, they will patronize the pockets of capitalism. Outside its borders, they will run to it.

It is noteworthy and telling that never in numbers have people sought to escape capitalism for communism. The misguided few who have, almost invariably soon sought to leave. Those who stayed found themselves literally trapped or effectively so – by being such pariahs in the broader world that they had nowhere else to go.

Communism and the attempts to restrict capitalism are bound to fail. It will come sooner or later, but come it will. As evidence just recall: On May 1, the communists used to sing The Internationale, today they sound the international distress signal: Mayday.

 The Massive Obamacare Taxes Just Ahead

In 2013 (via American’s for Tax Reform):

Obamacare Surtax on Investment Income:  A  new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). (Bill: PPACA, Reconciliation Act; Page: 2,000-2,003; 87-93)

Obamacare Medical Device Tax:  . Obamacare imposes a new 2.3 percent excise tax on gross sales. This will make everything from pacemakers to artificial hips more expensive. (Bill: PPACA; Page: 1,980-1,986)
Obamacare High Medical Bills Tax: Before Obamacare, Americans facing high medical expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI).  Obamacare now imposes a threshold of 10 percent of AGI.  Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income. According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. Almost all are middle class. The average taxpayer claiming this deduction earned just over $53,000 annually. ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 – $400 per year.  (Bill: PPACA; Page: 1,994-1,995)
Obamacare Flexible Spending Account Tax:  The 30 – 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.) Now, a parent looking to sock away extra money to pay for braces will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars.
There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. Nationwide there are several million families with special needs children and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax provision will limit the options available to these families. (Bill: PPACA; Page: 2,388-2,389)
Starting in Tax Year 2014:
Obamacare Individual Mandate Non-Compliance Tax:  Starting in 2014, anyone not buying “qualifying” health insurance – as defined by President Obama’s Department of Health and Human Services — must pay an income surtax to the IRS. The Congressional Budget Office recently estimated that six million American families will be liable for the tax, and as pointed out by the Associated Press:  “Most would be in the middle class.”
In addition, 100 percent of Americans filing a tax return (140 million filers) will be forced to submit paperwork to the IRS showing they either had “qualifying” health insurance for every month of the tax year or they obtained an exemption to the mandate.
Americans liable for the surtax will pay according to the following schedule
1 Adult 2 Adults 3+ Adults
2014 1%AGI/$95 1%AGI/$190 1%AGI/$285
2015 2%AGI/$325 2%AGI/$650 2%AGI/$975
2016 2.5%AGI/$695 2.5%AGI/$1390 2.5%AGI/$2085
(Bill: PPACA; Page: 317-337)
Obamacare Employer Mandate Tax:  If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2,000 for all full-time employees.  This provision applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3,000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). (Bill: PPACA; Page: 345-346)
Obamacare Tax on Health Insurers:  Annual tax on the industry imposed relative to health insurance premiums collected that year.  The tax phases in gradually until 2018.  Fully imposed on firms with $50 million in profits. (Bill: PPACA; Page: 1,986-1,993)
Starting in tax year 2018
Obamacare Tax on Union Member and Early Retiree Health Insurance Plans:  Obamacare imposes a new 40 percent excise tax on high cost or “Cadillac” health insurance plans, effective in 2018. This tax increase will most directly affect union families and early retirees, who are likely to be covered by such plans. This Obamacare tax will be levied on insurance policies whose premiums exceed $10,200 for an individual and $27,500 for a family.  Middle class union members tend to be covered by such plans in states like Ohio, Pennsylvania, Wisconsin, and Michigan.  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. (Bill: PPACA; Page: 1,941-1,956)

‘Obamacare’ Poll Finds 42% of Americans Unaware It’s Law

A new poll finds that many Americans are confused about the health care overhaul legislation commonly called “Obamacare.”

The Kaiser Family Foundation released results of a non-partisan study today finding more than 40 percent did not even know the law was in place.

Nico Vega – Beast

Stand tall for the beast of America.
Lay down like a naked dead body,
keep it real for the people workin’ overtime,
they can’t stay living off the governments dime.

Stand tall for the people of America.
Stand tall for the man next door,
we are free in the land of America,
we aint goin’ down like this.

Stand tall for the beast of America.
Lay down like a naked dead body,
keep it real for the people workin’ overtime,
they can’t stay living off the governments dime.

Stand tall for the people of America.
Stand tall for the man next door,
we are free in the land of America,
we aint goin’ down like this.

I will be right to you,
I will be right to you,
I will be right to you,
and together we can stand up to the beast.
You see…Suppression is a m*thxr f*cken prison
SO i hand you the key to your cell,
you’ve got to love you neighbor,
love your neighbor.
And let your neighbor, love you back.

Stand tall for the beast of America.
Lay down like a naked dead body,
keep it real for the people workin’ overtime,
they can’t stay living off the governments dime.

Stand tall for the people of America.
Stand tall for the man next door,
we are free in the land of America,
we aint goin’ down like this.

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