Senator Hatch Doesn’t Understand Income Taxes

Utah’s own Senator Orrin Hatch took to the Senate floor today to invoke the memory of Thurston Howell III. Howell was included on Forbes Magazine’s 2006 list of the 15 richest fictional characters.

Breaking out an image of the character Thurston Howell III from Gilligan’s Island, Hatch said those with incomes of over $200,000 shouldn’t be lumped in with “Warren Buffet or Gilligan’s Island’s resident millionaire.”

And you know what, Senator Hatch is right. We need more income tax brackets to keep all the members of the top 2 percent of rich people from being lumped together. The millionaires and billionaires totally deserve their own marginal rates! It would be a mark of distinction, with bragging rights. If we restored progressivity to the income tax, then it would really mean something to be able to say you were in the top bracket. You know Thurston Howell III would hate being mistaken for somebody just scraping by on $200 K a year.

Of course, Senator Hatch wasn’t saying that. He was trying to explain his remarks from last week about how the poor and middle class have too much money.

Senator Hatch

Related:
GRAPH: As Wages Stagnate, The Typical American Family Is Working 26 Percent Longer Than In 1975

UPDATE:
This just in from Senator Hatch:

You are invited to participate in the Salt Lake County Tele-Town Hall Meeting this evening, July 12, 2011 from 6 pm-7pm. You can do so by calling in at 1-888-886-6603 Ext.16885# and staying on the line to ask me a question. I will also be calling out to thousands of residents.

The meeting only lasts for one hour, so a limited number of questions may be asked on the air. However, if I cannot get to your question, I invite you to stay on the line after the meeting ends so that you can leave a message for me. I will make sure to respond to each message within the next few weeks. I appreciate your input and hope you will participate.

UPDATE: Poll: Could A Democrat Get Elected To The Senate From Utah?

  1. #1 by Larry Bergan on July 11, 2011 - 10:01 pm

    I wish Jim Backus was still with us. I don’t think he or Mr. Magoo would be pleased to be brought into this debate.

    Mr. Hatch is also a blind cartoon character.

  2. #2 by brewski on July 11, 2011 - 10:54 pm

    Or, we could increase taxes 50% on the wealthy by using the brewski plan, as has been already demonstrated conclusively.

  3. #3 by Ronald D. Hunt on July 11, 2011 - 11:53 pm

    Yes, Yes, Yes Brewski and all of the anti tax trolls lived happily ever after, What a nice fairy tale “Lowering the margin rate to increase revenues” you like to tell.

    Shale we counter me with witty remarks or perhaps AHIP funded studies today? Maybe you can respond with something from CATO been awhile sense I ripped one of their studies a new one!

  4. #4 by burn barrel on July 12, 2011 - 5:25 am

    The US gov’t now makes over 50% of its revenue from investments in Wall Street, bonds and equities, and dividends, revenue penalties on us are simple confiscation, it is this other Ponzi scheme that takes a bit of understanding. The government needs its representatives to understand nothing, so it can continue its ways of stealing from the people.

  5. #5 by brewski on July 12, 2011 - 7:39 am

    RDH,
    Please tell Denmark that their low tax rate and high revenues are all a fantasy.

  6. #6 by cav on July 12, 2011 - 8:49 am

    I kind of agree with Orrin about expanding the tax base. How about inviting GE to the party for example?

  7. #7 by James Farmer on July 12, 2011 - 9:07 am

    The orrin is pandering to the teabaggers in a desperate attempt to save himself from the fate experienced by Bob Bennett who, unlike the orrin, is an honorable man, although I disagree with most of his political positions.

  8. #8 by Richard Warnick on July 12, 2011 - 9:14 am

    Senator Hatch has not been involved in the “negotiations” over the fake debt limit crisis. According to Sen. Dick Durbin (D-IL) who was in the room, the Republican position can be described as follows:

    1) GOP refuses to consider any revenue increases at all
    2) They demand more than $2 trillion in budget cuts
    3) But they can’t identify $2 trillion in budget cuts that they would vote for

  9. #9 by cav on July 12, 2011 - 9:52 am

    When it gets right down to it, and the executive has to start selecting what to cut, I question the seeming forgone conclusion that Social Security be at the top of the list. I’d be cutting salary and perks for senators and congresscritters, and then move directly to giving the MIC major haircuttage.

  10. #10 by cav on July 12, 2011 - 11:10 am

    I frequently regret not choosing Banker as a career option in high school.

  11. #11 by brewski on July 12, 2011 - 11:24 am

    I wish I could have been a member of Congress or the President. I still get paid even when I fail on every goal and measure.

  12. #12 by Ronald D. Hunt on July 12, 2011 - 12:10 pm

    “Please tell Denmark that their low tax rate and high revenues are all a fantasy.”

    You mean where they collect 46% of the GDP as taxes on individual income, excise, VAT, and corporate taxes(including foreign profits)? I am not seeing anything about not taxing foreign profits(stupidest tax loophole ever), also seems that they have the political system necessary to sustain such a system. The political system being setup to sustain such a system is the first requirement to having such a system otherwise it will turn into corrupt mess(ours would if we ever did that).

  13. #13 by Ronald D. Hunt on July 12, 2011 - 12:11 pm

    60% individual rate their fyi

  14. #14 by brewski on July 12, 2011 - 2:45 pm

    Yes,
    Since the Danish corporate tax rate is 25%, then when a Danish company (Vestas for example), earns profits in other countries (the US for example), it then repatriates those foreign profits which carry with them foreign tax credits at the rate of 35%. So when Vestas repatriates $100 from the US, the Danish tax authority imposes a $25 Danish tax, and then grants Vestas a $35 tax credit, so the net tax is $0 with a $10 remaining surplus of foreign tax credits to be used on other foreign-sourced income from countries with a tax rate less than 25%. The net net is that Vestas is not punished for repatriating profits home from the US. But a US company doing business in Denmark would be punished for repatriating profits from there. So Denmark’s 25% corporate tax rate results in more profits repatriated and more taxes collected than US’s 35% rate.

    It sounds as though your point is that no good ideas are possible given our political system regarless of the merits of any idea. As long as we have a system where people believe a president is going to change how things are done in Washington and not have it run by a bunch of insiders and lobbysists, and then makes his first appointment be the devil-incarnate of James Johnson, then I agree.

  15. #15 by brewski on July 12, 2011 - 3:07 pm

    Richard,
    You ask for evidence and I give you evidence:

    “Historically, the statutory corporate tax rate has been relatively high; up to the 1990s, it was 50 per cent.

    The increased globalisation has however put a downward pressure on the rate, which has resulted in a series of reductions of the formal tax rate combined with a broadening of the tax base.

    In 1990, the corporate tax rate was lowered from 50 to 40 per cent and in 1991, the rate was lowered with an additional 2 percentage points.

    These reductions were followed by a reduction of certain indirect investments subsidies, which broadened the tax base.

    During the 1990s the tax rate was reduced several times and the tax base was broadened, for instance by abolishing the existing tax relief for foreign income. Until this change in 1994, half of a company’s foreign income was exempted from corporate taxation in Denmark.

    In 2001, the corporate tax rate was lowered to 30 per cent in order to approximate the level in the other Nordic counties. In addition, the declining-balance depreciation rate of machinery and plants was reduced from 30 per cent to 25 per cent. This was done primarily in order to align the economic and fiscal depreciation.

    The latest tax reform reduced the corporate tax rate to 28 per cent as from 1 January 2005. [now 25%].

    The development over time of the statutory corporate tax rate and of the tax base measured as a proportion of GDP shows a large increase the tax base (as measured implicitly by
    tax revenue) from 3 per cent to 10 per cent of GDP from 1970 to 2001.

    The increase in the tax revenue as a
    share of GDP shows that the effect of the base broadening has had a larger impact than the rate reduction.”

    Please try to refute that objective factual evidence.

    RDH,
    It seems as though in Denmark companies can choose either a territorial or global taxation system:

    “As of 2005, the joint taxation rules are amended, and the resulting revenue gain was used to lower the corporate income tax rate from 30 per cent to 28 per cent. The new legislation still gives a possibility for joint taxation of Danish and foreign companies, but it is no longer voluntary. The global pooling principle means that all entities of the group will be jointly taxed if the company wishes to use the possibility of joint taxation with foreign subsidiaries. The definition of affiliated companies corresponds to the definition in the international accounting standards (i.e. votes and influence).
    But it remains possible for the corporation to exclude income from foreign subsidiaries from Danish corporate income tax. In that case, foreign income will be taxed in Denmark by the territorial principle.”

    http://www.oecd.org/dataoecd/49/28/37154664.pdf

  16. #16 by Richard Warnick on July 12, 2011 - 3:37 pm

    Did the Danish boost revenues by lowering their corporate tax rates? IMO you only get that outcome when the starting point is confiscatory taxation.

    How do you propose to reconcile your idea with Grover Norquist’s requirement that any tax changes must be revenue-neutral?

  17. #17 by Richard Warnick on July 12, 2011 - 4:57 pm

    None of the Republican leaders have the political courage to come up with a list of more than $2 trillion in specific spending cuts. So now they are running away. David Kurtz on TPM:

    DC is full of GOP think tanks that have spent years coming up with myriad ways of cutting spending. You name any conceivable combination of spending cuts and someone somewhere in the Republican brain trust has mapped it out. But now at what might have been their moment of maximum leverage, they lose their resolve. Let Obama come up with the cuts. Let him pay the political price.

  18. #18 by Larry Bergan on July 12, 2011 - 9:15 pm

    Alan Grayson always has a great way of putting things:

    Ed Schultz: Let’s bring in former congressman Alan Grayson, who has been a fighter for the left since he got on the national scene. Congressman, good to have you with us tonight. Alan Grayson, you have been a man known for unvarnished opinion. If you were in the Congress today, what would be your advice, how would you handle this?

    Alan Grayson: I would not vote for any cuts in Medicare, I would not vote for any cuts in Social Security, and I’d be grabbing everybody else by the collar telling them to do the same. Look, you know the Republicans have been saying now for months that we need to cut $2 trillion out of the budget over the next 10 years, without ever saying what they would cut. They got a free ride for the past two months or three months, talking about all these wonder cuts that are going to reduce the deficit, reduce the debt, without ever saying what they are. Now I know a way to cut $2 trillion out of the deficit in the next 10 years. You could end the wars. You could end the war in Afghanistan. You could end the war in Iraq and Libya. Those wars cost us $157 billion last year, and the cost is going up, not down. If you want to save $2 trillion, how about peace? Why don’t we give that a try?

    Schultz: Social Security is even a bigger deal, it seems like. Although Harry Reed was on “Meet the Press” I think a couple of months ago, said we didn’t have a problem. But I guess now the president wants to put it on the table. The president has acknowledged it’s not part of the deficit problem and I think that’s starting to sink in with Americans. So if it is not the source of the problem, why the hell do we have to address it now? What do you think?

    Grayson: Because Washington is now divided between the “Meanies” and the “Weenies.” That’s the real two-party system today in Washington, the Meanies and the Weenies. The Meanies want to take Social Security and Medicare away from Grandma and Grandpa, and the Weenies are quite willing to go along with it and “compromise.” Well, people need Social Security and Medicare to live. And there is no compromise between life and death. There is no middle ground. The average person who retires in America today has less than $50,000 in savings. That’s good for one, maybe two years. And those people live for close to 20. There is no way anybody in America can get by without Social Security and Medicare, and that’s what the right wing in America wants to take away. I say, “No. No compromise.” We need to strengthen Social Security and Medicare. I want to see Medicare cover dental work. I want to see Medicare cover hearing aids. I want to see Medicare cover actual medical needs.

    Schultz: Is this President weak? Why isn’t he saying what you’re saying? Why does he throw $4 trillion out on the table, when he knows that’s an unrealistic number? He’s just trying to prove a point that the Republicans are never going to deal with him. Hell, anybody could have told him that last week.

    Grayson: He’s my President. He’s the leader of my party. So I don’t know exactly what to say. But I do know this. All of this compromise hasn’t accomplished anything useful for anybody on our side. It hasn’t done any good at all. The President should be saying to people: “The Republican Party is cruel.”

    Schultz: Yeah.

    Grayson: “The Republican Party is bigoted. The Republican Party cares only about tax breaks for the rich.” If that were the case…

    Schultz: Congressman, there are a lot of people that need your voice. Are you ever going to get back into this race, back into this political arena?

    Grayson: Ed, I announced today that I am running for Congress again. And already at our website “congressmanwithguts.com,” hundreds of people have made a contribution. So yes, I’m back.

    The problem is that I don’t know if he lost or won his last race. I tend to thing he won.

  19. #19 by brewski on July 12, 2011 - 9:23 pm

    As the OECD report stated above, the Danish increased their corporate tax revenue/GDP ratio by broadening the tax base and lowering the rate.

    Dynamic analysis is very tricky, but static analysis is surely wrong. So trying to figure out how much tax reform will produce in revenues given a set of broadening and rate reductions. The levels of dynamic analysis are many. First, at 25%, what amount of taxable income would be shifted into Denmark that may have been allocated elsewhere at a higher rate? Second, at 25%, what amount of profits were repatriated to Denmark that would have otherwise been kept outside of Denmark at a higher rate? Third, at 25%, what marginal projects or new investment was made in Denmark that would not have been made at a higher rate? Etc.

    Also, if you have a top corporate rate of 25%, and a top personal rate of 59%, then in Denmark there is a huge incentive to incorporate (as the equivalent of a C-corp) while in the US most small businesses are LLCs or S-Corps.

    The Norquist pledge is tricky to reconcile with these dynamic issues since the tax/GDP ratio changes even when there is no change in the tax law. So fixing some percent and holding it there is not possible even with no changes in the law.

  20. #20 by brewski on July 12, 2011 - 9:37 pm

    ED SCHULTZ LIED ON TONIGHT’S SHOW:
    He claimed that New Corp paid no taxes and received a large refund, but News Corp’s actual net taxes paid in the US were as follows:

    2010
    Federal $141MM
    State and Local $189MM

    2009
    Federal $127MM
    State and Local $303MM

    2008
    Federal $102MM
    State and Local $480MM

    Does he just assume I won’t look it up?

    http://www.sec.gov/Archives/edgar/data/1308161/000119312510181329/d10k.htm

    Why do Schultz and Maddow make it so easy for me? They constantly throw up verifiable softballs which can be indepently shown to be lies.

  21. #21 by Larry Bergan on July 12, 2011 - 10:32 pm

    brewski:

    I’m not usually a defender of Ed Shultz because he got his start on the right and there are many who could do his job better, but I’m delighted that I’ve got you defending Rupert Murdoch anyway.

    Which is it, by the way:

    New Corp
    New’s Corp
    or News Corporation?

    Don’t people who tell the truth usually try to brand themselves in a manner that can easily identify them?

    It’s possible that Murdoch’s horrible “news” empire tapped into THOUSANDS of private conversations overseas. Gee – do you think the same thing might have happened here?

    Although it was nice to see you are able to speak English well enough to to say that Shultz lied.

    I was beginning to think you only spoke Money.

  22. #22 by Larry Bergan on July 12, 2011 - 10:37 pm

    I think Jay Rockefeller is one of the “Weenies” Grayson is talking about above because he never follows through on anything, but I can hope!

    Note: For some reason the link in this comment redirects you to a story about Mordoch’s UK problems, but here is a paragraph or two from Jay Rockefeller’s story:

    A prominent US senator has called for an inquiry into News Corp, the first indication that the scandal that hit the media organisation’s UK newspapers could spread to the US.

    Jay Rockefeller, head of the powerful Senate commerce committee, on Tuesday said the US should investigate whether News Corp papers had broken US laws following reports that victims of the September 11 attacks may have had their phones hacked by detectives working for the News of the World.

    Wow.

    Try this:

    http://www.ft.com/cms/s/0/2bf3147e-ad00-11e0-9623-00144feabdc0.html#axzz1RxZWsTNl

    Nope – can’t seem to direct you to the story even if you copy the http into you address line. Just another case of the liberal media skipping like a scratched record. :(

  23. #23 by brewski on July 12, 2011 - 10:40 pm

    Larry,
    I speak evidence.

  24. #24 by Larry Bergan on July 12, 2011 - 10:49 pm

    A variation of Moneyspeak?

    I just updated my last comment. Check it out, brew.

  25. #25 by brewski on July 12, 2011 - 10:58 pm

    I didn’t defend Murdoch at all. I just want to live in world of actual facts and not the Truthiness as fabricated by Ed Schultz and his ilk. There are plenty of other bad things to say about Murdoch which are true, so there is no reason to make up false ones.

  26. #26 by Larry Bergan on July 12, 2011 - 11:05 pm

    Here we go – maybe:

    Type this into Google with quotes before it’s too late!

    “US senator calls for News Corp probe”

  27. #27 by Larry Bergan on July 12, 2011 - 11:08 pm

    brewski:

    I couldn’t care less if Jesus Christ returned just to tell a lie about Murdoch and then disappeared again. Would you?

  28. #28 by Larry Bergan on July 12, 2011 - 11:12 pm

    Another part of the Rockefeller article:

    “I am concerned that the admitted phone hacking in London by the News Corp may have extended to 9/11 victims or other Americans,” Mr Rockefeller said. “If they did, the consequences will be severe.”

    I’m salivating!

  29. #29 by Larry Bergan on July 12, 2011 - 11:21 pm

    So Orrin is offering a Jim Matheson style town hall meeting for an hour.

    This is one, exciting evening!

  30. #30 by cav on July 13, 2011 - 7:31 am

    Like for Jim, keeping ones mind locked-down for an hour, shouldn’t be much of a challenge for the illustrious senator.

  31. #31 by Larry Bergan on July 13, 2011 - 8:13 am

    Screened questions, one answer, no followup. It doesn’t get any better for a public servant.

  32. #32 by brewski on July 14, 2011 - 9:10 am

    REUTERS CORRECTS OWN MISTAKE AFTER BREWSKI GETS IT RIGHT FIRST

    WORLD WAITS FOR RETRACTION FROM ED SCHULTZ

    http://www.reuters.com/article/2011/07/13/column-dcjohnston-murdoch-idUSN1E76C25320110713

  33. #33 by cav on July 14, 2011 - 9:25 am

    Good catch brewski !

    “The first suggestion I had erred came in the middle of the night when a post at taxprofblog (I teach at Syracuse University College of Law) said I had made an error. I checked the disclosures and then wrote back that the poster was in error. Still, the note troubled me and before dawn I was reviewing every document. As I was rechecking my work, Robert S. McIntyre of Citizens for Tax Justice, who is respected across the political spectrum for the care he takes with numbers, sent me a note saying I had it wrong. News Corp, he said, was using negative numbers to report outflows, rather than tax inflows, starting in 2007.”

    So THAT makes you one of two people! Which one is it?

  34. #34 by Richard Warnick on July 14, 2011 - 9:34 am

    Pulitzer Prize winner David Cay Johnston is normally a reliable source. So maybe brewski will be nice enough to let Ed Schultz off with a warning. ;-)

  35. #35 by brewski on July 14, 2011 - 10:33 am

    I heard David Cay Johnston’s apology on NPR this morning. It was appropriate and genuine.

    If Schultz also makes a prominant correction on his show then that will be appropriate. I look forward to seeing it.

  36. #36 by cav on July 14, 2011 - 10:58 pm

    New data released by the IRS reveals that, over a period of 12 years, tax rates for the richest 400 Americans were effectively cut in half. In 1995, the richest 400 Americans paid, on average, 29.93% of their income in federal taxes. In 2007, the last year for which the IRS has released data, the richest 400 Americans paid just 16.63%.
    In 1995, just 12 of the 400 richest Americans paid an effective tax rat of between zero and 15%. By 2007, that number skyrocketed to over 150. The massive reduction is due to both Bush-era tax reductions for the wealthy and the aggressive exploitation of tax dodges and shelters.

  37. #37 by Richard Warnick on July 15, 2011 - 8:39 am

    The Bushies suppressed the data on the richest 400 for eight years. At least the Obama administration is releasing it again.

  38. #38 by brewski on July 15, 2011 - 8:59 am

    ” the aggressive exploitation of tax dodges and shelters.”
    Not to mention the aggressive creation of tax dodges and shelters by Congress.

  39. #39 by cav on July 15, 2011 - 10:26 am

    And as we all know – there were no republicans in congress during the Bush years.

    This is your typical liberal outcome. Kill me now.

  40. #40 by brewski on July 15, 2011 - 3:39 pm

    There is just one party in power; the Republicrats or the Democlicans.

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