Written by Matt Blumenfeld, State Policy Associate at Americans for Tax Reform. Posted with permission from Americans for Tax Reform.
As reported this week, Super Bowl MVP Joe Flacco and the Baltimore Ravens have agreed to a six-year, $120.6 million contract making the star quarterback the highest-paid player in NFL history, earning an estimated $20.1 million per year. But being the “highest paid player” and earning the most after tax pay are two very different things.
By choosing to remain a Raven, Flacco is now set to pay a combined marginal income tax rate of 51.98 percent. This overwhelming tax rate is composed of the federal, Maryland, and Baltimore County income tax rate, as well as the Medicare tax. And that’s excluding his “jock tax” liability for away games – play the Patriots at Gillette Stadium, pay Massachusetts income tax on earnings for that game - and other taxes levied against him such as Maryland’s property tax.
Given that Flacco is coming off of his best season, the franchise quarterback could have commanded a similar contract from any other team in the league while keeping a greater percentage of his contract. Four of the nine no-income-tax states have professional teams in need of the Super Bowl MVP’s caliber and skill.
State and County
Sometimes a single statement can say everything. Often these statements come as off-hand remarks, or in a setting where the speaker does not believe he or she will be recorded. A recent example from the 2008 campaign was Barack Obama’s infamous “bitter clingers” comment, which is still repeated today by his critics to depict him as elitist and disdainful towards many Americans. And now the 2012 race has its counterpart.
In comments recorded secretly from a private event, Mitt Romney laid out his assessment of 47% of America, and it’s a doozy:
There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax…[M]y job is is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.
Utah Senator Mike Lee has been speaking out against proposed tax increases. He makes some great points in this article on the Daily Caller last week.
Lee points out first that it’s a partisan issue. It seems like everything these days in Washington is strictly partisan. The bickering between parties gets old (especially when both parties are saying the same thing), but I don’t think this is typical Republican finger pointing. Lee is one of a select few senators who isn’t utterly useless; he is the type of senator who would call out his Republican colleagues if this weren’t specifically an issue of Democrats being ridiculous.
Despite his would-be willingness for exposing hypocrisy within his party, Lee does make a few points the Republicans would like you to remember as we head toward November.
For example, the pushing of tax increases to push class warfare, or, in Lee’s words, “dividing Americans by income and pitting them against one another.” Lee even goes as far to say that these calls for higher taxes are out of desperation because “the electorate realizes Democrats are out of ideas.”
He also says that the responsibility for fixing budget woes lies with the Congress, not with the American people, and that the proposed tax increases will stifle job growth. He’s right on all accounts, but this is all buzzword stuff that every Republican regurgitating through November.
Lee is one of the strongest members of the Senate on fiscal issues, and though he included the big buzzwords, he was exactly right when he said, “The proposal does not solve the problem of out-of-control deficits and debt.”
Debt and deficits. There’s the real problem.
Rep. Thomas Massie (R-KY) has filed legislation that would eliminate the federal income tax on Social Security benefits, which, he argues, would boost retirement incomes for Americans dependent on the program.
“Seniors have already paid tax on their Social Security contributions, so taxing Social Security is double-taxing by the Federal Government,” said Massie in a statement from his office. “Taxing Social Security reduces benefits to seniors.”
“Taxing these benefits is an accounting sleight of hand that redistributes portions of the Social Security trust fund to other areas of government,” he added.
Every American pays a 6.2% tax on all earned wages up to $113,700. When a taxpayer reaches 62 years of age, they can begin to collect benefits from Social Security. Those benefits, however, are treated as income for federal tax purposes if they surpass a certain earnings threshold. Critics, including Massie, note that this double-taxation.
The Senior Citizens Tax Elimination Act, H.R. 3894, would ensure that Social Security benefits are not taxable, nor would seniors have to report that income to the Internal Revenue Service (IRS).
“Congressman Massie’s bill blows the whistle on the federal government for double taxing the Social Security benefits of senior citizens,” said Ron DeSantis (R-FL), an original cosponsor to the measure. “Individuals already pay taxes to support Social Security, so there is no reason why these earned benefits should be taxed on the back end.”
Rep. Jim Bridenstine (R-OK) is also an original cosponsor to the measure.
Sen. Rand Paul (R-KY) formally introduced a measure on Wednesday to empower impoverished cities by giving them and their residents a break from the onerous federal tax and regulatory burdens which keep them from prosperity in tough economic times.
The Economic Freedom Zones Act of 2013 would lower personal and corporate income tax rates in cities, counties or zip codes that meets certain criteria, such as those that have either filed for Chapter 9 bankruptcy and an unemployment rate of 1.5 times the national average. The measure would also provide federal regulatory relief, including exemptions from onerous EPA rules that result in the loss of federal highway and transit funds and Davis-Bacon prevailing wage work requirements.
“In order to change our course, we must reverse the trend toward more Big Government by ending the corporate welfare and crony capitalism that limits choice and stifles competition,” said Paul in a statement. “We must encourage policies that will lift up the individual, allow for the creation of new jobs, improve the school system and get these communities back to work.”
“The answer to poverty and unemployment is not another government bailout; it is simply leaving more money in the hands of those who earned it. The Economic Freedom Zones Act of 2013 will do just that,” he added.
Amid falling poll numbers, thanks to the Obamacare meltdown, President Barack Obama has tried to change the narrative with familiar, tired themes of income equality and higher taxes on the wealthy. But a new study from the Congressional Budget Office (CBO), via CNS News, undermines these themes, showing that the 40% of households paid 106.2% of net income taxes in 2010 (emphasis added):
The top 40 percent of households by before-tax income actually paid 106.2 percent of the nation’s net income taxes in 2010, according to a new study by the Congressional Budget Office.
At the same time, households in the bottom 40 percent took in an average of $18,950 in what the CBO called “government transfers” in 2010.
Taxpayers in the top 40 percent of households were able to pay more than 100 percent of net federal income taxes in 2010 because Americans in the bottom 40 percent actually paid negative income taxes, according to the CBO study entitled, “The Distribution of Household Income and Federal Taxes, 2010.”
Although they paid negative federal income taxes on average in 2010, Americans in the bottom 40 percent of households did end up paying some taxes to the federal government that year, according to the CBO.
There are a number of reasons why an American may renounce their citizenship, but more often than not, United States’ tax laws are to blame. But the number of those renouncing their citizenship, for whatever reason, soared in the second quarter of this year:
While the numbers of those renouncing their U.S. citizenship are small—more than 1,000 people in the second quarter of 2013, out of more than six million Americans estimated to be living abroad—the numbers have climbed this year, according to recently released figures.
A growing number of wealthy Americans in Asia—and others with green cards—are exploring whether to renounce their U.S. citizenship or give up their green cards to avoid onerous tax obligations.
Some U.S. citizens say they are exasperated by a growing raft of paperwork that forces U.S. citizens living abroad to declare the minutiae of their financial holdings and other assets. That has increased the attraction of becoming a citizen in places such as Hong Kong, where the individual tax rate is capped at 15%.
Kelly Phillips Erb of Forbes notes that the number of citizens renouncing their citizenship in the first quarter of this year, when 679 people opted for friendlier confines, was the longest in 15 years. Of course, that coiencided with a huge tax hike passed in January, with increases on individual income and capital gains taxes included. She also points out that the list in the second quarter came very close to breaking the record set in 1997.
You didn’t read the headline wrong. Bill Maher, an entertainer who has staked himself out as a leftist on his HBO talk show, has just about had it with California’s tax burden. During the show on Friday, Rachel Maddow, a MSNBC host, complained that the new House GOP budget is too helpful to “rich people.”
“The Ryan budget is a document that says the big problems in America right now are that rich people do not have enough money, they need relief from confiscatory tax rates,” she said sarcastically. “And poor people have too much access to affordable healthcare, and those things must stop. And if we fix those things, America will be on a better path.”
As Maddow started praising the atrocious House Progressive Caucus’ budget, which was blasted by David Brooks earlier this week, it was noted by former Rep. Tom Davis (R-VA) that the House budget also raises real issue — that Washington has a spending problem.
Maddow continued, explaining that post-9/11 defense spending should be cut. Maher jumped in. “That’s the key!” he said. But he turned the conversation towards taxes, which went against Maddow’s argument.
“You know what? Rich people –- I’m sure you’d agree with this — actually do pay the freight in this country,” he said, pointing to Davis. “I just saw these statistics. I mean, something like 70 percent.”
Written by David Boaz, executive vice president at the Cato Institute. It is cross-posted with permission from Cato @ Liberty.
The radical abolitionist Thaddeus Stevens is enjoying a rediscovery as the moral center of Steven Spielberg’s film Lincoln. As portrayed in the film, he confronts the sort of dilemma faced by many people of strong ideological convictions forced to deal with political reality: Will he disavow his radical belief in full racial equality in order to ease passage of the Thirteenth Amendment to abolish slavery? (No spoilers here.)
Stevens’s belief in equality under the law went beyond race, as Karen Tumulty notes in a Washington Post article on the fiscal cliff negotiations:
House Ways and Means Chairman Thaddeus Stevens (now enjoying a return to popular consciousness as Tommy Lee Jones’s character in the movie “Lincoln”) denounced the idea of a graduated rate structure as a “strange way to punish men because they are rich.”
President Obama supports higher taxes, but he usually claims he only wants higher tax rates on rich people. Heck, he promised back in 2008 that “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.”
Obama’s other rhetorical trick is to claim he wants a “balanced approach.” Translated from Washington-speak to English, that means he wants more of our money. But it’s a soothing way to demand more money. After all, who’s against “balance”?