by COLONEL DONALD J. MYERS USMC (Ret)
After listening to the State of the Union speech, it is obvious that the president is relying on class warfare and hoping that the electorate does not fully understand taxes. First of all, no one understands the tax code to include those people who write the laws and those people in the Internal Revenue Service who are expected to enforce the rules. The administration and the left continue to preach that the rich do not pay their fair share of taxes. Warren Buffet and other rich people are quoted as saying that they do not pay enough taxes. Why then has Warren Buffet continued to fight the IRS about a billion dollars in back taxes. If he thinks that he does not pay enough, then pay the billion dollars. I’m sure that Warren Buffett does not prepare his own taxes but rather has a platoon of accountants to search for every possible opportunity to pay the least amount that is legal. If he was serious he could fill out a form and not claim any deductions. Former president Clinton is another one who states that he does not pay enough taxes. Then why does he create various funds to protect his holdings from taxes?
Federal income taxes are the major source of revenue for the government. The social security withholding taxes pay for the social security system and until now there has been an excess that was used to reduce the federal deficit. Capital gains taxes are currently at 15% and are charged on the sale of property or investments. That is the major income for both Buffett and Romney. These are the major taxes that fund the government.
Each time that tax rates are reduced, the money increases to the federal coffers. When capital gains are reduced there is incentive to sell assets to make a profit and reinvest in other enterprises. President Clinton cut the capital gains taxes and the money poured into the federal coffers. That is why he now claims credit for the balanced budget. When income taxes are reduced, the economy grows because there is more incentive to gamble since the return is higher. Companies grow and new buildings and companies are created. It is always so no matter where it is tried. When President Bush reduced the taxes, revenues to the federal government grew by 44% four years later and the deficit was reduced by 57%. When President Reagan reduced taxes, the economy doubled.
Not that long ago, a study was taken in this country about the maximum tax rate that should be applied. The results shocked those taking the study. The rate was 25% for all inclusive taxes. Rich, poor, male, female, and all races came up with the same figure. When taxes are raised, investors move their money and investments other places where they can make a decent profit. If anyone had a choice of earning more money in one area as opposed to another one and everything else was balanced, one would probably choose more money. Businesses do the same. Several states have added extra taxes on millionaires and the millionaires have moved. They not only did not get more revenue, they got less. Companies do the same. We do not have a revenue problem, we have a spending problem and those footing the bill are tired of paying it.