How Much Is Too Much?

January 15th, 2010

By Larry Ennis

Somewhere between health care reform and pay raises for politicians, I lost all track of the non-stop Obama tax machine. I’m surrendering myself to the reality that my descendants will have to pay for taxes imposed during my lifetime. The thought of such a hateful legacy is best ignored lest I go into a “postal” frame of mind.

So it was as I watched what is arguably one of the poorest nations in the world try to survive a massive earthquake, a crisis of human suffering and death that will be historic. White House Chief of Staff Rahm Emanuel has said, “You never want a serious crisis to go to waste.” In layman’s terms, that means to slip something past while everyone’s attention is focused elsewhere. This is a perfect example of that philosophy.

While media attention is on Haiti, the President announced a plan to institute a $90 billion tax on the banking industry in an effort to recover stimulus funds that have been loaned to banks.

It goes without saying that such a tax on the banks is really a tax on the American people simply because the cost of the taxes will be recovered by charging customers added fees. This would be less questionable were it not for the fact that in the beginning the banks were supposed to pay back from their profits. What do you suppose happened to that noble idea? Could it be that this Administration is already shifting into campaign mode? 2012 is only two years away, and it’s not too early to start courting contributors for a second-term run. Remember that Obama spent most of his brief Senate career campaigning to become President.

So what if the taxpayers get used to preserve big contributors’ profit margins — isn’t that what politics is all about?

I’m thankful that I live where I have something to be taxed away instead of being in Haiti with nothing but devastation and death.

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12 Responses to “How Much Is Too Much?”

  1. Tom |

    What do you mean when you refer to the “hateful legacy” of the “non-stop Obama tax machine?” The Obama Administration and Congress haven’t raised taxes on average people (aside from a tobacco tax increase) — in fact, about 90% of people got tax refunds from the stimulus package. Here’s a readily available source.

    Apparently you include “pay raises for politicians” as part of the “hateful legacy.” What pay raises for what politicians? The President’s salary hasn’t been changed since Jan 2001. Members of Congress got a 2.8% automatic cost of living adjustment in 2009, just like they got automatic cost of living adjustments every year of the Bush Administration.

    While it’s generally true that taxes on businesses are passed on to consumers, it’s hard to see how the bank tax plan (just a plan so far) would hurt consumers. It only applies to financial companies with assets over $50 billion, which applies to about 50 institutions. Normal banks, like the ones you and almost everyone else does business with, aren’t affected. Here’s another source.

    How is Obama “courting contributors” by proposing a relatively small tax on 50 giant institutions? “…the taxpayers get used to preserve big contributors’ profit margins.” What are you talking about?

    You say that Obama used the Haiti tragedy to “slip something past,” and then you link to a NYT story that immediately reported it. Numerous other media sources also reported it. How did it get slipped past us?

    I understand that you have nothing but disdain for the President — that’s almost always your point. But to twist things around so that you can link the Haiti disaster to something evil that Obama’s doing is going way too far. Next thing we’ll hear, no doubt, is that Obama somehow made it happen so he could do sneaky things and get away with it.

    Extremist attacks on President Obama based on erroneous information and bordering on paranoia don’t work. In fact, those kinds of attacks probably get him a few sympathy votes. I’m sure that even nutcases like Glenn Beck understand that.

  2. larry |

    My comments are based on my own appraisel of the situation plus a check for accuracy when ever possible.
    Your desire to critque everything I submit is of course your prerogative. However, because my fondness for this President doesn’t match yours don’t mean that I’m a nut case or under the influence of Glenn Beck.
    I’m comfortable with my assertion that this so called bank tax will in the end be passed on to the taxpayers. Whether Obamas used the Haiti news to overshadow his announcement is open to debate.
    The legacy of of his Adminstrarion will be debt and taxes for all our future generations.
    Tom, I really think Obama was a modern day Trojan Horse. You may as well face it, this man won’t even hold a press conference. Why do you think that’s the case?
    How will we repay our debt if not by more taxes?

  3. Brianna |

    Larry – I disagree that Obama is using Haiti to slip this past; this plan has been in the works since before the earthquake, for starters. For another, this is the sort of thing all the liberal outlets tout as “Wall Street getting theirs,” which makes it harder to slip things through unreported.

    Tom – are you telling me you don’t know anyone who banks with Citigroup or Bank of America? At least some of these taxes are going to be passed on as fees to customers. Also, I doubt this is so much a serious way to raise revenue as it is simply a political move designed to make the administration look good to their constituencies as the 2010 elections approach. He may not be courting big financial contributors, but he’s certainly courting small contributors and voters by sticking it to the “evil Wall Street fat cats.” And utterly unjustly, I might add. For starters, the bonuses they’re taxing are in many cases people who work for banks that have already repaid TARP funds with interest; if we were simply recouping the cost of those bailouts, repaying the TARP funds should have done it just fine. For another, it is well known that there were banks who were forced to take TARP money they didn’t need so that people would be unable to tell which banks were the ones that were failing; if the only banks that had taken TARP funds were the ones that were actually in financial trouble, then people would have known where NOT to put their money and those banks might have done even worse. For those banks, such a tax would be doubly unfair; they already lost money once when they paid interest on loan money they didn’t need, and now they’re being taxed again under the pretense that the American people bailed them out of a hole they weren’t in and they should pay for that “assistance”. Finally, these taxes aren’t going to be applied to companies that are still struggling, such as AIG or the automakers. Taxing bonuses on the idea that people who are working with government funds don’t deserve bonuses taken from taxpayer money is one thing; taxing bonuses given to people who have repaid said government funds (especially as one could argue that they’ve actually done good work by finding ways to repay the money and get their institutions out of trouble) is quite another.

    Of course, I am still of the opinion that these banks should never have received a dime in the first place, but it’s a little too late for that.

  4. Tom |

    Brianna, what we’re talking about is a 0.15% tax on the liabilities of very large financial institutions. I suppose it’s possible for these huge institutions to try to pass on some of that tax in fees to consumers who do business with their branch in Podunk, but that seems unlikely. That would make their fees higher than those of all the rest of the banks who aren’t affected by the tax, and they would lose customers. Like with all kinds of prices charged consumers, they have to remain competitive. There may also be an issue of the corporate structure of the huge banks that would make passing on that tax to normal consumers less likely.

    In my opinion, it’s a bad idea, and I hope it never happens. But I think these financial institutions are going to be hit with higher taxes one way or another. Congress may prefer to do such things as tax exceptionally high executive bonuses. In any case, this is all part of the swamp we jumped into when we started bailing out financial institutions.

    From what I’ve read, AIG would be one of the companies taxed.

    Larry, you say that “Obama was a modern day Trojan Horse” and somehow you say that is linked to his not holding press conferences. Fact is, Obama has had one more press conference during his first year in office than Bush 43 did (5 to 4). The press are the main ones complaining that there hasn’t been one since July, but in general the Obama White House communicates much more than the Bush White House did — so much so that they have been criticized for doing too much of it. Aside from that error, the Trojan Horse business can mean only one thing — there is some organized force or group of people who inserted him into the presidency with evil intent. Can you explain that in any more detail, or is it just another vague, absurd conspiracy theory?

  5. Tom |

    On the issue of taxes in general — taxes, particularly federal income taxes, should be increased to the point necessary to pay for federal spending (in conjunction with other taxes). Specific other taxes should be raised for specific purposes, e.g., gas taxes to encourage reduced consumption and fund highway infrastructure costs; Social Security payroll taxes and caps to the point necessary to fund the system (particularly annuity obligations); Medicare premiums to the point necessary to help make it solvent over the long term; etc. The logic also applies to state and local taxes.

    The point is this: There ain’t no free lunch. We have to fund our spending. If we don’t want to pay higher taxes, we have to reduce spending. I have enough of a Keynesian twitch to realize that reasonable deficits are acceptable, particularly under certain economic conditions, but the key word is reasonable.

    The most stimulating of liberal dreams is to spend and give away taxpayers’ money like crazy, then tax the rich to pay for it. Problem is, that golden goose is going to expire before long. Here’s a chart showing shares of federal income tax paid by taxpayers at various income levels. (The additional charts, showing the same data from previous years, is here.) The highest income earners are already paying a hugely disproportionate share of all federal income taxes, while about one-third (or more) of “taxpayers” pay no federal income tax at all, while some actually receive forms of rebates and returns of taxes they never paid in the first place. My preferred option is to spend less and tax as necessary to support that spending. However, all those folks paying little or no taxes have the same vote I have, so I’m not optimistic.

  6. Brianna |

    “Democracy is two wolves and a lamb voting over what to have for lunch.” Right now the banks and the top earners are losing.

  7. Brianna |

    Well, we can theorize all day on how the banks will pay for it. The fact remains however that this is move is stupid, unjust, and really nothing more than a political gambit designed to take some of the heat off the government and shift the blame onto the evil capitalist pigs.

  8. larry |

    Your last comments vindicate my complaints about this president and his administration. Having been fortunate enough to have earned an above average income, I know about taxes. I constantly was in the forty five percent bracket. Neither rich or poor but penalized for trying to realize the American dream. This president more than any I can remember, is setting the stage to tax us into oblivion.
    Obama is a vehicle of the far left, the unions, special interest and the socialist among us. Much like the fabled Trojan Horse, once inside we discovered to late his true intent.
    If we can gauge this bank tax against other Obama ideas its safe to figure that a political advantage is lurking about somewhere. My theory is that he will beat the drum about how he struck a blow for us all against big business but neglect to hint that the cost of this tax will most likely be past on to the tax payers in the form of higher interest or other service charges. A fact that will surely gain contributions in days to come.
    Tom, I feel that this president and his advisers will damage this nation and hurt its people all in the name of politics. I doubt they will take into account the long term effects of their actions. Something we are letting happen? Is our legacy to future generations our failure to prevent them from being used by this administration?

  9. d |

    Larry,you thought all this stuff about Obama,even before he did one thing.So far he hasn’t done much more.His trying to fix the mess he inherited,can’t possibly be reason for your hatred.

  10. Brianna |

    “He’s trying to fix the mess he inherited”

    It’s possible. However, if this is his idea of what should be done to fix the mess we inherited, then quite frankly I find that both incredible and incredibly frightening.

  11. d |

    I assume[ass/you/me],it is a very hard thing to fix,I guess you’d need all the details,only privy to the administration.Glad they didn’t ask me to help.

  12. Brianna |

    Social security and medicare are black hole fiscal liabilities that will be bankrupt within 20 years… so lets undertake a tremendous expansion of the welfare program by creating a national health care plan? I’d really like to see the details I’m not privy to that would somehow be able to justify that. They must be a doozy.

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