Taxes…and more taxes.

One way or another, Spring is tax time. This year could be like no other in our country’s history. More taxes will become effective—more taxes to be paid, than at any other time since George Washington was inaugurated.

You won’t hear about it from the MSM, nor from any mainstream news outlet. You won’t know the extent of these taxes until it comes time for them to be paid. And, pay you will.

The first item is, unsurprisingly, Obamacare. This is the first time you will pay your Obamacare tax. If you don’t have health care, you will have to pay a penalty. If you do have health care, your employer will have to pay a tax to support Obamacare. If you’re self-employed, your tax will be the increased cost of individual healthcare. Regardless of your circumstances, you will pay more.

Obamacare penalty may come as shock at tax time

– The Washington Times – Sunday, January 18, 2015

In a scene reminiscent of Pontius Pilate washing his hands after sentencing Jesus, President Barack Obama wipes his face with a cloth handed to him by White House Butler Von Everett in the Blue Room of the White House following an event with business leaders in the East Room, Jan. 28, 2009. (Official White House Photo by Pete Souza)

Those Americans who didn’t get health insurance last year could be in for a rude awakening when the IRS asks them to fork over their Obamacare penalty — and it could be a lot more than the $95 many of them may be expecting.

The Affordable Care Act requires those who didn’t have insurance last year and didn’t qualify for one of the exemptions to pay a tax penalty, which was widely cited as $95 the first year. But the $95 is actually a minimum, and middle- and upper-income families will actually end up paying 1 percent of their household income as their penalty.

TurboTax, an online tax service, estimated that the average penalty for lacking health insurance in 2014 will be $301.

“People would hear the $95, quit listening, and make an assumption that that was what their penalty was going to be,” said Chuck Lovelace, vice president of affordable care for Liberty Tax Service. “I think that a lot of people will be surprised when they get in there and find out that their penalty is [based] on their household income.”

The penalty is designed to prod Americans to buy insurance and the penalty for not having it is scheduled to rise considerably: to a $325 minimum or 2 percent of income in 2015, and to a $695 minimum or 2.5 percent of income in 2016. (The column continues on to a 2nd page at the Washington Times website.)

It may not have been in the forefront of everyone’s mind about Obamacare taxes (note: that’s plural,) we did know they were coming. Other taxes, or tax proposals are more recent.

With the dropping price of gasoline at the pump, a by-product of the Oil War between the US and OPEC, the Congress is considering raising the gas tax for the first time since 1993. The belief in Washington is that people will have more disposable income due to the lowering cost of gas at the pump so they can afford to pay a higher tax.

Corker calls for federal gas tax hike

Mary Troyan, Tennessean Washington Bureau 4:04 p.m. CST January 11, 2015

Low gas prices have rekindled talk on Capitol Hill about raising the federal gas tax to eliminate huge annual deficits in the federal Highway Trust Fund that pays for road and bridge work around the country.

While some top Republicans remain adamant a tax hike is not the answer, there are signs that the idea, including one from Sen. Bob Corker of Tennessee, is at least getting a fresh look.

Corker and Sen. Chris Murphy, D-Conn., have proposed raising the federal gas tax by 12 cents over two years and indexing it to inflation. To make the concept more palatable to fiscal conservatives, the measure would lower other taxes.

The 18.4-cent-per-gallon gas tax hasn’t been raised since 1993. As vehicles have become more efficient, the revenue generated by the tax has dropped. Current stopgap funding for the Highway Trust Fund expires in May, and transportation officials in Tennessee and other states are holding back projects until uncertainty about the federal money is addressed.

Sen. John Thune, R-S.D., chairman of the Senate Commerce, Science and Transportation Committee, said this week a gas tax increase could not be ruled out. Republican Sen. Jim Inhofe of Oklahoma, chairman of the Senate Environment and Public Works Committee, agreed. (Read more at the website.)

The feds aren’t the only ones eying consumers’ wallets, a number of states are covetously thinking the same as the feds. As usual, the excuse is the crumbling transportation infrastructure and dwindling Highway Trust Fund. The root cause isn’t insufficient taxes, the root cause is that, like the Social Security Trust Fund, the Feds have been robbing the Highway Trust fund to pay for more welfare.

The highway crumbling infrastructure isn’t due to a lack of taxes, it’s due to redirecting the money to other non-transportation projects. Cut those other projects, stop robbing the trust funds, and there would be plenty of funding to rebuild the highways and bridges.

The same reasoning applies to the states.

States look at hiking gas tax as fuel prices plunge

Aamer Madhani, USA TODAY 12:09 p.m. EST January 17, 2015

With gas prices dipping to their lowest level in years, lawmakers in state capitals throughout the USA are increasingly open to the idea of raising fuel taxes to help rebuild crumbling roadways and bridges.

The movement at the state level comes as House Speaker John Boehner, R-Ohio, said last week that he’s doubtful that there will be enough backing for a bi-partisan push to raise the federal gas tax, which has stood at 18.4 cents per gallon since 1993.

The Obama administration has also declined to endorse raising the federal gas tax to finance road funding, but says it will take a look at anything Congress comes up with.

State legislators and governors, however, aren’t waiting for Washington.

Republican leaders who typically find talk of raising taxes a non-starter are making the issue a priority in 2015, even though polling consistently has shown broad opposition among Americans to fuel tax hikes.

“The states have shown that they are more likely to act on the gas tax than the federal government is,” said Carl Davis, a senior policy analyst at the Institute on Taxation and Economic Policy, a research group in Washington. “The states have to balance their budgets. If they see, their roads are in bad shape or their bridges are literally falling down—in some cases—they need to come up with a way to pay to improve that. And there’s a limited number of things you can do at the state level.” (Read more here.)

The column notes that a number of states have raised gas taxes in recent years. I also note that most of those states are in the liberal north-east, the area commonly known as the rust belt for good reason—tax flight by businesses.

The final example of taxes for this post comes from Missouri. At least one bill has been filed to convert the state to the ‘Fair Tax.’ I’m of two minds on this. I don’t like consumption taxes, sales taxes. Sales taxes have many unintended consequences, the least of which is to drive consumers to buy large ticket items out-of-state where taxes may be lower. On the other hand, I wouldn’t mind seeing Missouri’s Department of Revenue taken down a very large peg.

A bill has been filed for the 2015 Missouri session that would reduce Missouri’s income tax by 25% per year until it is eliminated. It also proposes an increase of the current 4% sales tax to 7% sales tax on “retail sales of new tangible personal property and taxable services.” It idea is that the sales tax would be gradually increased as the income tax is decreased to make the scheme, “revenue neutral.” Frankly, I’ve never seen a bill work as it was envisioned. Something always goes wrong. It is the unintended consequences that make our lives harder and they are never fully corrected.

Be that as it may, we must be eternally vigilant on taxes. I’ve yet to meet a tax I liked. Every tax I’ve ever seen failed to meet its original purpose.



For all you “Fair Tax” folks who think you can eliminate the IRS and Income Tax and replace both with a National Sales Tax, here’s what the dems are already proposing.

Never forget, if you ever realized it, a consumption tax kills business and leads to illegal avenues to by-pass the tax. We’ve had a tax on liquor almost since the beginning of the republic (look up the Whiskey Rebellion) and there are still people making moonshine. Any form of consumption tax is filled with unintended consequences. Foremost is that you’ll end up with a larger IRS, the VAT tax and an Income Tax.

If you want to replace the Income Tax, your first goal is to repeal the 16th Amendment. A flat tax as proposed by Malcolm Forbes, achieves many of your goals without the unintended consequences.

Just so you don’t forget, here is Michael Ramirez’s opinion of the VAT tax.

Just what is fair about a "Fair Tax"?

One disappointing theme, for me at least, at the KC Tea Party last week, was the push by just about everyone it seemed, for the “Fair Tax.” My question is, “Which Fair Tax?” Everyone there seemed to think a consumption tax is the way to go.

I’ll take some heat for this but I don’t think the current “Fair Tax” concept being preached is fair. Everyone seems to think that a consumption tax, whether is a state or federal sales tax or a VAT, is fair. They are wrong. It’s another nanny-state concept to tax behavior and the result is most likely to be another Unintended Consequence.

The logic is that we would eliminate the Income Tax and the IRS.

Won’t happen. First to eliminate the Income Tax, you would have to repeal the 16th Amendment and do that first. That Amendment reads, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

Do you think the dems and liberals would allow this? Not without a BIG fight. Most likely outcome if you didn’t repeal the 16th Amendment would be having a consumption or worse, a VAT tax, AND income taxes. The dems are already planning for that. Their next tactic is to impose a European VAT tax on us. Why would we ever want to help them?

But, suppose it passed? Do you think the IRS would go away? No. You would still need an enforcement, audit, and collection agency for the remaining sources of revenue. The IRS, or whatever it would be renamed, would still exist. This time their focus would be on every retail, wholesale and on-line business in the country. Guess who owns most of the retail businesses? The small business owner. There’d be a new level of documentation and control for the feds in additional the those for the state and local governments. I just wonder how many more small businesses will drop out when they can’t or won’t cover the additional cost of more government regulation?

And what about those unintended consequences? Remember Prohibition? Well say hello to Prohibition II when the more popular consumer items start being smuggled across the borders. I’ll give you an existing example. The gasoline tax for Kansas is much higher than Missouri. Just stop and read the license plates of the cars filling up in nearby stations in Missouri. The majority of them are from Kansas.

When KCMO prohibited smoking in restaurants and bars, Missourians shifted their patronage to Kansas locations. When Missouri holds their annual back-to-school tax holiday each year, the Missouri Wal-Marts are filled with Kansas cars.

A consumption tax affects everyone’s buying for the necessities of life. In that aspect, I suppose it is fair for the consumer, but not for the businessman.

Remember a decade or so ago when the dems levied a luxury tax on high dollar items like yachts and personal aircraft. That tax destroyed those industries. Who owns Cessna, Piper, Beech and other small aircraft companies now? Well, they aren’t owned by Americans. Piper and Cessna almost ceased to exist. The yacht and small watercraft construction industry did, for all practical purposes, ceased to exist.

And stop for a moment and consider. Today’s income tax, which I do not support in its current progressive form, is fairly transparent to most taxpayers. Just how many of us examine the withholding line items on our paychecks? Most of us just look at the “net pay” box. More have direct deposits and simply file the remittance forms we received instead of an actual check.

A national sales tax or a VAT tax in whatever form, will be visible—with every purchase you make. Go to the grocery, mentally add-up the cost of the item in your shopping cart (my wife does) and when you check out, see all the taxes. The state sales tax, the local sales tax, and the federal sales/VAT tax. It will make an impression every time.

The result? People will still buy groceries, gasoline, maintenance drugs. They will still buy those basic items necessary for modern life. But everything else? No. All discretionary buying will be closely examined. Eating out? Watch that cost. Movies? Ditto. A consumption tax will be a slap in the fact of every consumer and it will hurt those least able to support it.

No, I cannot support any consumption taxes in any form. The fact that some already exist notwithstanding. All consumption taxes are the epitome of statist tyranny.

If you want a truly fair tax, change that consumption tax to a flat tax. The Heritage Foundation studied the flat tax and wrote this report. Forbes proposed the Flat Tax some years ago. If I remember correctly, he proposed a 15% flat income tax. No exemptions, no other income taxes, no capital gains tax, just a flat percentage with no lower cut-off. How much did you make last year? Send in 15% of that. A flat tax would include all those who currently pay nothing. Income would be defined as income derived from salary or wages. If you want to see how well this works, take a look at the economy of Chile. They imposed a flat tax a number of years ago. Guess whose economy has continued to grow during this current global recession? Guess whose economy is one of the strongest in the world? Yes, Chile’s. There’s a lesson there for those who want to see it.

I don’t subscribe to the concept of a consumption tax. I do support a flat tax. Neither will eliminate the IRS or whatever it will be called. But the tax burden will be implemented fairly on the rich, the middle class, and the poor. It’s time for that latter portion of our economy to pony up their share instead of being part of the problem.