NJ Governor Christie Ups the Ante Against IL Gov Quinn: Releases Ad Compelling Business to Come to Jersey

A couple of weeks ago, New Jersey Governor Chris Christie (R) announced that he would be taking trips to Illinois, meet with business leaders who might want to flee the huge tax hikes that Illinois Governor Quinn (D) had just signed into law, and persuade them to move to New Jersey. In response, Gov. Quinn, basically, told him: Good luck with that.

Now, Gov. Christie seems to be upping the ante with a new ad that is set to hit Illinois airwaves soon:



You have to hand it to the NJ Governor. He has big brass ones.

H/T to Stephen Gutowski aka @collegepolitico

Could Illinois' Loss Be NJ's Gain? On IL Trip Gov. Christie to Lure IL Businesses to NJ After Tax Hike

Following the news of a 66% temporary tax hike that the heavily Democratic Illinois Legislature passed and was quickly signed into law by Gov. Pat Quinn (D), it didn't take long for the Governor of New Jersey Chris Christie to plan a trip to Illinois. Why is he going to the Land of Lincoln? He is going there with one goal in mind, and that goal is to convince businesses who may want to avoid the tax hikes and the hostile political climate for business there to migrate to New Jersey:

Watch out, Illinois: New Jersey wants your businesses.

It is a time-honored tradition for mayors and governors of neighboring cities and states to compete for large corporations with tax breaks and other incentives. And so it was no surprise that the steep new tax increases approved this week by the governor of Illinois inspired the kind of trash talking heard more often from athletes than from state chief executives.

"Escape to Wisconsin," chortled Scott Walker, the state's Republican governor. Mitch Daniels, the Republican who runs Indiana, compared Illinois to the Simpsons - "you know, the dysfunctional family down the block?"

But New Jersey? Trenton is about 900 miles from Springfield, Ill. Jersey City is a 13-hour drive from Chicago. None of that deterred Gov. Chris Christie, a New Jersey Republican who spent much of last fall stumping around the country, from speaking up even before Gov. Patrick J. Quinn of Illinois, a Democrat, had signed the legislation.

"I'm going to Illinois," Mr. Christie said in an interview on Wednesday. "I mean soon. I'm going to Illinois, personally, and going to start talking to businesses in Illinois and get them to come to New Jersey."

In response to this story, Governor Quinn basically said: Good luck with that, and for good reason.

This will be a harder task than Christie would like it to be. Even if you taking into account the new higher tax rates in Illinois, the taxes in New Jersey still won't be lower than the taxes in Illinois, overall.

Also, the tax climate in New Jersey is so bad that it was ranked #48 in a list of the best states for businesses, when it comes to taxes. In this list that was put together by the Tax Foundation, Illinois would have dropped from #23 to #36, if the list was published today with the new tax rates. This is a huge drop, but it is still better than New Jersey.

Governor Christie knows that it will very much be an uphill climb, but he said that he has something that Gov. Quinn can't replicate:

Mr. Christie acknowledged that over all, taxes remain higher in New Jersey, but he said he could offer something more valuable, certainty.

“The pitch I’m going to make to businesses in Illinois is, ‘With Pat Quinn as your governor and this Democratic Legislature, you can guarantee this is just the beginning,’ ” Mr. Christie said. “As long as I’m governor, you’re not going to see that happen.”

I don't know how much "certainty" that Christie can give them. It is not a "certainty" that he'll be re-elected in the next election, and the next governor could be very different. Plus, the tax hikes in Illinois are "temporary" and are set to expire in four years. So, some CEOs may be worried that, if they make the move, all of the promises that Christie may make now may be broken by the next governor at the same time that the taxes are set to go back down in Illinois.

However, he is a very smart, charismatic man, and if anyone can entice companies to move there, it's him. It'll be interesting to see what companies that he will go after and if he is able convince them to make the move. The economy in New Jersey needs him to convince at least some new businesses to come to the Garden State, so that their economy will have a better chance to recover and grow.

Rep. Ellison (D-MN): We Must Create "Real Crisis" to Force Change in Obama's Tax Compromise

On an interview with Minnesota Public Radio, Democratic Representative Keith Ellison from Minnesota called for fellow Democrats to cause a “real crisis”, in order to force Republicans to drop the tax rate extension for those in the $250.000 and above tax bracket:

Minnesota 5th District Congressman Keith Ellison said Thursday that Democratic lawmakers "need to create a real crisis" to force Republicans to renegotiate the tax cut compromise.

House Democrats voted Thursday to reject the tax cut deal between the White House and Congressional Republicans.

The compromise would extend Bush-era tax cuts for all Americans, including the wealthy. It also would renew benefits for the long-term unemployed, a measure President Obama had pushed for to prevent about 2 million Americans from losing benefits in the coming weeks. Republicans had opposed extending unemployment benefits.

Ellison, who was recently elected co-chair of the Progressive caucus in the House, voted against the compromise.

"I think that we need to create a real crisis here so that the Republicans will have to answer for denying Americans unemployment benefits on the eve of the Christmas holiday," Ellison said. "We let them off the hook, in my opinion."

Ellison is hoping to play a game of chicken with everyone’s taxes and the health of our economy. He is betting on that the Republicans would rather raise taxes on those who create jobs for this economy and cost us job growth than to let them expire for everyone and have everyone’s taxes go up in a few weeks.

However, a few Republicans, like Jim DeMint, have indicated that they are not totally opposed to letting the cuts expire in January. They would do this looking to get an even better deal, when they have a greater majority.

If they go that route, they have, also, indicated that any new tax bill would be retroactive to the beginning of the year to ensure that no one will pay higher taxes in the end. This would still cause more money to be taken out of people’s checks at the beginning of the year, until it gets passed. However, people would get their money back in the form of a refund, when they file their 2011 this is the best way to go, though, because a dip in people’s take home pay, no matter how if it is only for a few weeks, will have a negative effect on our economy and cause a lull that would be felt for longer than just a few weeks.

But Democrats have much more to lose than the Republicans do by balking at passing the Obama Tax Compromise. They will be negotiating at a much bigger disadvantage next year than the Republicans would, if the deal fell through in Congress. Plus, the White House and the Republicans are positioning the Democrats as the obstructionists, if it fails. They would become the new “Party of No”. The Democrats will talk big over the next week maybe two, but in the end, I believe that they will reluctantly pass it. They are just making sure that the American people know where they stand on the issue. They are grandstanding in the highest order.

I find it amusing that progressive, liberal Democrats have suddenly started to care about huge creating deficits, if there are only a few jobs that are created by this bill. This is what Ellison said about that point, “You need to understand me. I' m not saying that there won't be any jobs created from this bill, but how much per dollar will the jobs cost?” Where was this concern, when the Democrats were passing a about a trillion dollar bill that would in the end create zero jobs net:

A study by Daniel J. Wilson of the San Francisco Federal Reserve Bank suggests that the net job creation from the $814 billion stimulus bill passed in February 2009 was zero by August 2010. In the first year, the stimulus "saved or created" 2 million jobs (not 4 million as repeatedly claimed by the administration), but this number proved to be short-lived, paying for temporary jobs, at a very high cost of $400,000 per job "saved or created."

By August, 2010, the impact of the stimulus on net job creation had disappeared. This is an astounding result, which destroys the Paul Krugman argument that the economy would be so much better right now if only Congress had approved much more spending in February 2009. Double the initial spending, double the number of temporary jobs, with likely the same net result by this point in time, or a trivial number of "permanent jobs created . In fact, the unemployment rate is at a substantially higher percentage rate today at 9.8% than when the stimulus bill was passed.

That $400,000 per job figure based on the assumumption that 2 million jobs would have been created. It was no where near that, and what jobs were created are now gone. He is being a bit of a hypocrite if he didn’t care then but cares now.

Using class warefare rhetoric, he goes onto complain that letting people keep their own money is somehow not fair. They want to keep taxes low for everyone not just the rich. So, how is that not fair? Liberals believe that your money is really the government’s money, and they are only being gracious in letting you keep as much money as they do. Only in the minds of liberals, do they believe that letting people keep the money that they make is unfair.

Keeping it Classy: Democrat Calls Obama's Tax Compromise "Republican Wet Dream Act"

A congressman from New York took a shot at Obama's Tax Compromise using crude language:

Rep. Gary Ackerman (D-N.Y.) used a crude play on words Wednesday, when he described what he saw as Obama's gift to the GOP in the recent tax cut deal as the "Republican Wet Dream Act" -- apparently no relation to the actual Dream Act.

"Members of the Democratic caucus are saying 'why should we take this vote, we're gonna get blamed for adding to the deficit,'" Ackerman told MSNBC's Dylan Ratigan in his analysis of the potential political consequences of passing Obama's tax plan. "This isn't the Dream Act, this is the Republican Wet Dream Act. They get the Democrats to add to the deficit, they get all the benefits for their wealthiest friends in America to pay them off for their huge contributions that they made during the campaign and got an exemption from the U.S. Supreme Court. The whole thing is an absolute absurdity."

Can we please refrain from using any sort of juvenile sexual innuendos please?

Pelosi, House Democrats Re-Take All Americans Hostage, Deny Vote on Obama's Tax Compromise

The Democrats in the House won't even entertain the idea of passing Obama's tax compromise. It was strongly rejected by the Democrats in a House vote, today:

Defying President Obama, House Democrats voted Thursday not to bring up the tax package that he negotiated with Republicans in its current form.

"This message today is very simple: That in the form that it was negotiated, it is not acceptable to the House Democratic caucus. It's as simple as that," said Democratic Congressman Chris Van Hollen.

"We will continue to try and work with the White House and our Republican colleagues to try and make sure we do something right for the economy and right for jobs, and a balanced package as we go forward," he said.

The vote comes a day after Vice President Biden made clear to House Democrats behind closed doors that the deal would unravel if any changes were made.

"Wow did the [White House] mishandle this," a senior House Democratic Source told CNN. "Breathtaking. Members have major substantive concerns and they should have gently guided people to the finish line."

This has been mishandled very badly by the president. Why in the world did Obama not get the Democrats in a room and explain to them why this is a good deal for them and the country? Could he not set aside sometime to sit Pelosi and Reid down and convince them to back this deal? This whole left-wing revolt could have been avoided, if he would have made a little effort to do that.

It is also interesting that, after years of labeling the Republicans as the party of no and uncompromising their ideals to appease their base, it is now the Democrats that are taking this hardline stance to appease their hard-left base.

This will be a disaster for all, if some sort-of compromise isn't reached in time and everyone's taxes go up in January.

Six "Gems" From Deficit Commission Including: ObamaCare Savings a Myth, Millions Government Workers Have Privatized Social Security, ETC

The deficit commission that was just released has quite a few goodies in it. AOL’s John Merline wrote about his six favorites in his op-ed, today:

1) The federal government is horribly managed. (I hope that this doesn’t come as a shock to anyone.)

2) Health reform's cost savings apparently were bogus.-(Imagine that.)

3) Millions of workers don't pay into Social Security.-(Apparently, certain government workers can opt-out of the federal social security and privatize it, but the rest of America can’t. What’s wrong with that picture?)

4) The tax code is a hopeless, loophole-riddled mess. (That is why the rich don’t pay as much into the system as they’re supposed to pay. If you can afford a legion of lawyers and accountants, you can pay very little taxes, too. The loopholes should be filled before we should even entertain the idea of raising the tax rate.)

5) Obama is a big spender.(Again, I hope that this doesn’t come as a shock to anyone.)

6) It's actually not that hard to cut the deficit.(Not hard, unless you consider getting the left admit that they were wrong all along and go with what’s ultimately necessary hard.)

Here’s what he had to say about those six “gems”:

1) The federal government is horribly managed. The commission report cites just a few examples, but they are doozies. Did you know, for example, that there are 44 separate federal job-training programs across nine federal agencies? Or that there are 20 different programs all studying invasive species? And 105 programs meant to encourage participation in science, technology and math? Or that few of them can show they are achieving their goals? There are thousands of examples like this, according to the report.

2) Health reform's cost savings apparently were bogus. Remember how Democrats boasted that health reform would cut the budget deficit by $170 billion over the next decade and far more after that? The deficit commission must not have gotten that memo. It says health spending projections under the new law "count on large phantom savings" and the reform law's new long-term care program that the report calls "unsustainable." As a result, Congress will still need to enact "a number of other reforms to reduce federal health spending and slow the growth of health care costs more broadly."

3) Millions of workers don't pay into Social Security. One of the reform ideas is to require newly hired state and local workers to start paying into Social Security. Wait? Isn't Social Security mandatory? Turns out, almost 10 percent of workers don't pay in, since "a small share of states and localities exclude their employees from Social Security" and instead operate their own retirement systems. (Given Social Security's dire financial forecast, one wonders how those workers would feel about that reform.)

4) The tax code is a hopeless, loophole-riddled mess. How else can you explain the fact that, according to the report, you can lower the top marginal rate by 20 percent and still collect an additional $112,533 from the richest 1 percent of taxpayers, simply by closing loopholes?

5) Obama is a big spender. Although President Barack Obama has talked about fiscal discipline -- and set up this deficit commission -- his own budget plan would spend $350 billion more on so-called discretionary programs over the next decade than if the government were just left on autopilot, according to the report.

6) It's actually not that hard to cut the deficit. The report talks loudly about the "painful" choices ahead and how there's "no easy way out." But what the report really shows is that a comprehensive package of relatively modest and reasonable policy changes can bring deficits under control.

This was an all-too rare moment from a government commission. Too bad that it confirms and brings to light all of the conservatives assertions about Obama and the Democrats’ ill-advised policies.

I, also, loved what Nick Gillespie had to say regarding the tax issue. He had some good insight into the debate:

It's a simple, plain, and nearly universally unacknowledged fact that the feds haven't been able to raise revenue much past the 19 percent of GDP bar for any period of time since World War II. Doesn't matter the the top marginal rate is, or the bottom, or nothing. The government is going to pull in just under 19 percent maximum. Some years it might be a bit higher and some a bit lower, but it ain't budging over the long haul (defined as the last 60 or so years). That is the limit of what we can spend if we want to have a balanced budget. Obama's own budget projections have the feds spending more than 22 percent of GDP each year over the next decade. You do the math….

We are in debt because we spend too much, not because we make too little as a country. Let's say it again, this time in bold (I have to unbold): We are in debt because we spend too much, not because we make too little as a country.

Fareed Zakaria, who surely makes well north of $250,000 a year, is welcome to give all his income to a government that has only managed a nominally balanced budget a handful of times since we beat the Axis powers.

But can he have the generosity not to include the rest of us who make far south of a quarter-mil a year in his delusion that higher taxes will mean smaller deficits?

Like Paul Ryan said, “We don’t have a revenue problem. We have a spending problem.” Our government has to learn to live within its means just like their constituents.



H/T to Ed Morrissey.

Clyburn: We Don't Really Need to Extend Bush Tax Cuts During Lame Duck

The assistant minority leader, or is it the assistant TO the minority leader, of the US House has recently stated his doubts about whether the Bush tax cuts are "essential" or not:

Rep. James Clyburn of South Carolina, the new No. 3 leader of House Democrats in the 112th Congress, said it's not "essential" for Congress to extend the Bush tax cuts because if all income taxes go up as scheduled on January 1, "you've got a big deficit reduction taking place, which is also a good thing."

Clyburn is the first Democratic leader to suggest any benefit from a failure to extend the Bush-era tax cuts. The White House and every Democratic leader to date has described extension of the middle-class portion of the Bush tax cuts as a top economic and political priority.

He's missing the forest for the trees. If they fail to extend the tax cuts, there will be much uncertainty in the market because ALL Americans will be uncertain about what their budget will be and how much money they will have during this upcoming year. So, they will hold onto their money and not buy/invest until they are sure what their taxes will be. This won't be a small raise in our taxes. It'll be significant enough that people will have to make huge changes to their financial plans either way it goes. We need to get this over with, so they can go ahead and plan for next year.

Also, his assertion that the increased taxes will help with the deficit is untrue, if you consider what will likely happen at the beginning of the 112th Congress. As Paul Ryan stated last night, if the cuts are not passed during the lame duck, it will likely be passed at the beginning of next year, when the Republicans will get a huge majority in the House, and if it is passed, it will most likely be made retroactive to the beginning of 2011. So, there will be no benefit on that end at all. The Democrats would have put America through alot of anxiety and uncertainty for nothing.

Line Drawn in Sand Over Making ALL Bush Tax Cuts Permanent

All that we've heard about over the last couple days is about whether or not Washington will let the Bush tax cuts expire at the end of the year.

President Obama said a Republican proposal to preserve the full array of Bush administration tax cuts for two more years presents a "basis for conversation" that could lead to a compromise as lawmakers prepare to meet next week for a high-stakes showdown over taxes.

However, a senior House Republican on Sunday flatly rejected the option most favored by the White House: decoupling the Bush tax cuts that benefit the wealthy from the cuts that benefit the vast majority of Americans by extending each set of provisions for a different period of time.

"No, I am not for decoupling the rates," Rep. Eric Cantor (R-Va.), the No.2 Republican in the House, said on "Fox News Sunday." He echoed the GOP argument that such a move virtually would guarantee the eventual expiration of tax breaks in the upper brackets, where some of the most successful small businesses pay taxes.

"I am not for raising taxes in a recession, especially when it comes to the job creators that we need so desperately to start creating jobs again," Cantor said. "I am not for sending any signal to small businesses in this country that they're going to have their tax rates go up."

The narrative has definitely moved to the GOP's advantage after the election. There is no longer any serious debate about letting them all expire permanently. It's now just about making the tax cuts for those that make over $250K p/yr permanent or just extending it for another couple years or so.

These "tax cuts" have been in place for a decade. So, we are really talking about tax hikes not cuts.

Of course, if Obama gets his way and the taxes for those making over $250K are only extended but the rest are made permanent, then, the Dems are hoping that it'll hurt the Republicans, when they'll presumably argue for making them permanent a few years from now.

All of the tax cuts need to be made permanent. That way there will be no more uncertainty in the economy. Businesses will stay apprehensive about expanding their business and hiring more people, if they don't know what the tax rates will be from year to year.

It would be like me buying an expensive car that will have me paying a car note for a few years, when I have no idea if I'll have even a job in six months. People would rather hold off on purchasing the care until they were SURE that they'll still have a job at the beginning of the year. Businesses are doing the same, now, and will continue to do so, until they know for sure what the tax rate will be from year to year.

Sen Baucus (D): Taxing Health Benefits Might Wait Until After Obama is Elected in 2012

The Democratic senator from Montana suggested that enacting new taxes on health benefits could wait until 2013:

Legislation to be outlined next week in the Senate Finance Committee will likely include a new tax on workers with the costliest employer-provided health coverage, officials said Friday, but with implementation delayed until 2013 to minimize any political fallout.

The date is an obvious attempt to keep it out of the minds of voters until they get the Savior-in-Chief locked in the White House until 2017. This shows me that they know that people don't want this and will voice their displeasure at the polls come election.

Officials familiar with internal deliberations said the leading option under consideration by Sen. Max Baucus, D-Mont., the committee chairman, would mean higher taxes for workers whose family coverage costs $15,000 a year or more in premiums paid by employer and employee combined.

The provision could generate hundreds of billions of dollars over the next decade to help pay the $1 trillion or more the Obama administration has estimated is necessary under its plan to extend health care to millions of Americans who lack it. Cuts in projected Medicare and Medicaid spending are expected to make up much of the rest.

Overall, what does this mean? It could mean that Obamacare isn't going to happen without further borrowing more money from China to pay for it. If that is the case, it could effectively put Obamacare on ice for a few years.

The question that plagues my mind about this is this: if they know that people don't want this, why are they so persistant in their push to cram it down our thoats? Don't they know that think that most Americans resent the government telling them what to do and abhor nanny states?

Hide Your Wallets: Democrats Want $600 B Tax Increases to Pay For $1 T Obamacare Plan

Democrats are once again looking to raise everyone's taxes in order to pay for their spending spree:

Health-care overhaul legislation being drafted by House Democrats will include $600 billion in tax increases and $400 billion in cuts to Medicare and Medicaid, Ways and Means Committee Chairman Charles Rangel said.

Democrats will work on the bill’s details next week as they struggle through “what kind of heartburn” it will cause to agree on how to pay for revamping the health-care system, Rangel, a New York Democrat, said today. The measure’s cost is reaching well beyond the $634 billion President Barack Obama proposed in his budget request to Congress as a 10-year down payment for the policy changes.

Asked whether the cost of a health-care overhaul would be more than $1 trillion over a decade, Rangel said, “the answer is yes.”

One trillion dollars is too much for us to spend on anything right now. Obama is breaking spending and deficit records left and right. Oh, and here.

Democrats have come out with many ways to raise taxes (not just on the top 5% either), but they have repeatedly put the tax cut for 95% of Americans on the back burner.

Local Democratic Government Officials Consider Implementing New, Increased Taxes, Er...Fees

Ohio’s governor has proposed a budget with more than 150 new or increased fees, including a fivefold increase in the cost to renew a livestock license, as well as larger sums to register a car, order a birth certificate or dump trash in a landfill. Other fees take aim at landlords, cigarette sellers and hospitals, to name a few.

Wisconsin’s governor, James E. Doyle, has proposed a charge on slaughterhouses that would be levied on the basis of each animal slaughtered. He also wants to more than triple the application charge for an elk-hunting license to $10, an idea that has raised eyebrows because the elk population in the state is currently too small to allow an actual hunting season.

Washington’s mayor, Adrian M. Fenty, has proposed a “streetlight user fee” of $4.25 a month, to be added to electric bills, that would cover the cost of operating and maintaining the city’s streetlights. New York City recently expanded its anti-idling law to include anyone parked near a school who leaves the engine running for more than a minute. Doing that will cost you $100.

“The most dangerous places on Staten Island are the schools at drop-off and dismissal time, when parents are parked three deep in the road,” says James S. Oddo, a City Council member from Staten Island who voted for the measure. “There is a mentality here that Johnny can’t walk 100 feet, he has to be dropped off right at the front of the school — and frankly that’s why Johnny is as pudgy as he is.”

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My Thoughts

Why are these governors and mayors making the same mistakes Hoover did? These new taxes er...fees are ridiculous.

The rise on livestock fees for liscenses and slaughterhouses will drive up the cost of all meat and any food that includes meat or meat by-products further obstructing economic progress.

The “streetlight user fee” and anti-idling law are just absurd.

S-CHIP Tobacco Tax Hike Takes Effect Wednesday, Affects Many Low-Income, Middle Class People

Smoke break gets more expensive with tax boost
By RICARDO ALONSO-ZALDIVAR
Associated Press Writer
Mar 29, 2:16 PM EDT

WASHINGTON (AP) -- However they satisfy their nicotine cravings, tobacco users are facing a big hit as the single largest federal tobacco tax increase ever takes effect Wednesday. Tobacco companies and public health advocates, longtime foes in the nicotine battles, are trying to turn the situation to their advantage. The major cigarette makers raised prices a couple of weeks ago, partly to offset any drop in profits once the per-pack tax climbs from 39 cents to $1.01.

Medical groups see a tax increase right in the middle of a recession as a great incentive to help persuade smokers to quit.
Tobacco taxes are soaring to finance a major expansion of health insurance for children. President Barack Obama signed that health initiative soon after taking office.

Other tobacco products, from cigars to pipes and smokeless, will see similarly large tax increases, too. For example, the tax on chewing tobacco will go up from 19.5 cents per pound to 50 cents. The total expected to be raised over the 4 1/2 year-long health insurance expansion is nearly $33 billion.

Smokers are mulling their options.

Standing outside an office building in downtown Washington last week, 29-year-old Sam Sarkhosh puffed on a Marlboro Light. His 8-year-old daughter has been pleading with him to quit, he explained, and he has set a goal to give up smoking by his 30th birthday.

"I'm trying to quit smoking, and it could help," said Sarkhosh, an information systems specialist. "I don't think it will stop me from buying cigarettes every now and then, but definitely not as often." A friend who smokes Camels went out and bought four cartons in advance, he said.

The tax increase is only the first move in a recharged anti-smoking campaign. Congress also is considering legislation to empower the Food and Drug Administration to regulate tobacco. That could lead to reformulated cigarettes. Obama, who has agonized over his own cigarette habit, said he would sign such a bill.

Prospects for reducing the harm from smoking are better than they have been in years, said Dr. Timothy Gardner, president of the American Heart Association. The tax increase "is a terrific public health move by the federal government," he said. "Every time that the tax on tobacco goes up, the use of cigarettes goes down."

About one in five adults in the United States smokes cigarettes. That's a gradually dwindling share, though it isn't shrinking fast enough for public health advocates.

The Centers for Disease Control and Prevention says cigarette smoking results in an estimated 443,000 premature deaths each year, and costs the economy $193 billion in health care expenses and lost time from work. Smoking is a major contributor to heart disease, cancer and lung disease.

Public health officials are urging individual doctors and staff at telephone "quit lines" in every state to make the most of the tax increase by reaching out to smokers. But it's unclear how deeply the tax will cut into tobacco consumption.

Eric Lindblom, research director for the Campaign for Tobacco-Free Kids, says he expects a drop of at least 6 percent to 7 percent among young smokers.

Philip Gorham, who tracks the tobacco business for Morningstar, the investment research firm, said he expects an overall drop of 4 percent to 5 percent this year. What happens after that is less certain, especially as the economy recovers.

"I would expect a road bump this year," said Gorham. "But these companies will still be extremely profitable. I still think they will make their return on capital by wide margins in the long run."

Philip Morris USA, the largest tobacco company and maker of Marlboro, is forecasting a drop, but spokesman Bill Phelps said he cannot predict how big. Philip Morris raised Marlboro prices by 71 cents a pack early this month, and prices on smaller brands by 81 cents a pack. Other major companies followed suit.

The pricing moves raised eyebrows. "That's nothing more than greed," said Kevin Altman, an industry consultant who advises small tobacco companies. "They weren't required to charge that until April 1. They are just putting that into their pockets."

Responded Phelps: "We raised our prices in direct response to the federal excise tax increase, and people who are upset about that should find out how their member of Congress voted, and contact him or her."

Some policy analysts have questioned the wisdom of boosting tobacco taxes to finance health care for children. They argue that the fate of such a broad program should not depend on revenues derived from a minority of the adult population, many of whom have low incomes and are hooked on a habit. The tobacco industry is also warning that the steep increase will lead to tax evasion through old-fashioned smuggling or by Internet purchase from abroad.

But smoking control advocates such as Lindblom say tobacco taxes should be even higher. "There's a lot of room to go after cigars and smokeless," he said. "We are certainly hopeful that health care reform will include some more increases."

Standing outside a Washington department store, attorney Margaret Webster, 42, puffed on a Marlboro Ultra Light and lamented the fact that the government is reaching deeper into her pocketbook.

"I don't think we (smokers) like it," she said. "But I've heard so many people say they were going to quit when the price went up ... and they're still smoking."


New tobacco tax rates: http://tinyurl.com/bt9c32

© 2009 The Associated Press.

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My Thoughts

"Some policy analysts have questioned the wisdom of boosting tobacco taxes to finance health care for children. They argue that the fate of such a broad program should not depend on revenues derived from a minority of the adult population, many of whom have low incomes and are hooked on a habit."

That was I was saying back when the tax hike was being voted on.

Now, I agree that cigarettes are bad, and people should quit. However, should the Democrats or anyone else for than matter be using the tax codes to change our behaviors or to punish smokers? No, they shouldn't.

Plus, if it is as they say: the higher the less people smoke, then they aren't going to get enough money to pay for S-CHIP, and it'll be another big buden on the American taxpayers.

Tax Hikes Spark Protests Across Country

Tax my beer and cigarettes? Not without a fight

March 24, 2009
By ROGER ALFORD
Associated Press Writer

Faced with huge budget holes, states from Connecticut to Arkansas are eyeing higher taxes on cigarettes and booze, infuriating consumers who say the goods are the last vices they've got to help cope with lost jobs, a deepening recession and overall economic misery.

In Pittsburgh, protesters dumped beer and liquor into a river after county officials approved a 10 percent tax on poured drinks. Patrons in Oregon bars downed brews while writing lawmakers to oppose a proposed beer tax increase. And in Kentucky, protesters poured bourbon on the Capitol's front steps to demonstrate their opposition to a 6 percent sales tax on all booze.

"The way things are going right now with the economy, the first thing people want to do is go get a bottle or a beer, and soak their sorrows," said Jack Weaver of Louisville, who gathered with other Teamsters in a union hall last month to rail against Kentucky lawmakers who voted to raise the taxes as of April 1.

Sin tax increases to help balance budgets are nothing new, but the economic meltdown has legislators proposing them even in states like Kentucky, where alcohol and cigarettes have long been sacred cows. After all, it is famous for its bourbon whiskey and is a leading producer of tobacco used in cigarettes.

"Sin taxes have quickly emerged — as they did in the last recession — as one of the popular tactics that states have adopted to bring in the extra revenue in an environment where raising most other taxes are still pretty politically radioactive," said Sujit Canagaretna, a senior fiscal analyst for the Council of State Governments.

Faced with an unprecedented $456 million revenue shortfall, Kentucky ignored protests and raised the taxes.

Arkansas increased its cigarette tax this month, and other states considering it include Connecticut, Florida, Michigan, Mississippi, North Carolina and Oregon. Other states — including California, New York and Hawaii — are also considering raising taxes on alcohol products.

The federal government has already increased the cigarette tax by 62 cents a pack to $1.01, and Kentucky doubled its state tax to 60 cents a pack. Together, the taxes will push average prices for name-brand cigarettes to as much as $44 a carton, a $10 increase.

"It's a little extreme," said Scott Harper, 63, a former helicopter mechanic now living on Social Security and Veteran's Administration benefits. "I'm going to quit. I'll have to."

Harper was trying to buy a carton of Swisher Sweets at Bo's Smoke Shop last week, but he had to settle for a pack because smokers have been flooding state tobacco stores to stock up before the tax increases.

Though some smokers and drinkers are angry, public health groups see it as an opportunity to convince people to give up their bad habits.

"This was an extremely popular public health initiative," said Tonya Chang, advocacy director for the American Heart Association in Kentucky. "When combined with the federal tax increase, we believe this will prevent more than 50,000 Kentucky children from becoming smokers and will help thousands of Kentucky adults who want to quit."

But opponents in both the legislature and the alcohol and tobacco industries say they're afraid the tax increases could lead to huge drops in sales, costing jobs and disappointing lawmakers with lofty revenue expectations.

"Ultimately, we all have limited budgets," said David Ozgo, chief economist for the Distilled Spirits Council of the United States. "And if government is taking a greater share, that reduces what you can spend on yourself."

Even in years when states are flush with cash, Ozgo said, alcohol is a popular target for tax increases. But he said they sometimes backfire when people facing higher taxes drink less.

Records from the U.S. Alcohol and Tobacco Tax and Trade Bureau show that a 1991 federal excise tax increase created a slight bump in revenues in 1992, followed by four years of decline, from nearly $3.9 billion to $3.6 billion.

State Rep. David Floyd, R-Bardstown, said the taxes could devastate Kentucky's alcohol and tobacco industries, which together employ some 6,000 people. Tobacco farms are seemingly everywhere in Kentucky, and bourbon distilleries dot the state's Bluegrass region.

"It's really easy for lawmakers to understand how giving tax breaks to an industry will help that industry," he said. "Why is it so difficult for them to understand that increasing taxes on an industry will hurt that industry?"

But despite the outrage in some quarters, University of Kentucky political scientist Stephen Voss said he doesn't expect much political fallout for politicians who vote to increase sin taxes, especially in the Bible belt.

"You rarely see a case where people campaign criticizing their opponents for taxing booze and cigarettes," he said. "Voters aren't going to show a lot of sympathy to the sin industry."

Associated Press Writer Joe Biesk in Frankfort, Ky., contributed to this report.

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My Thoughts
Bring on the protests. The new tax and spend philosophy that the government seems to be so fond of these days are starting to get under the skin of a lot of people. From "tea parties" to beer protests, people are demonstrating their displeasure with the government's spendapalooza.

Obama Contemplating Healthcare Tax Hike Affecting Millions

Administration Is Open to Taxing Health Benefits
By JACKIE CALMES and ROBERT PEAR
Published: March 15, 2009

WASHINGTON - The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.

The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as "the largest middle-class tax increase in history." Most Americans with insurance get it from their employers, and taxing workers for the benefit is opposed by union leaders and some businesses.

In television advertisements last fall, Mr. Obama criticized his Republican rival for the presidency, Senator John McCain of Arizona, for proposing to tax all employer-provided health benefits. The benefits have long been tax-free, regardless of how generous they are or how much an employee earns. The advertisements did not point out that Mr. McCain, in exchange, wanted to give all families a tax credit to subsidize the purchase of coverage.

At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans. Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so.

At a recent Congressional hearing, Senator Ron Wyden, an Oregon Democrat whose own health plan would make benefits taxable, asked Peter R. Orszag, the president's budget director, about the issue. Mr. Orszag replied that it "most firmly should remain on the table."

Mr. Orszag, an economist who has served as director of the Congressional Budget Office, has written favorably of taxing some employer-provided health benefits and using the revenue savings for other health-related incentives. So has another Obama adviser, Jason Furman, the deputy director of the White House National Economic Council.

They, like other proponents, cite evidence that tax-free benefits encourage what Mr. McCain called "gold-plated" policies, resulting in inefficient and costly demands for health care and pressure on employers to hold down workers' pay as insurance expenses rise. And, they say, the policy discriminates against those - many of whom are low-income workers - who do not have employer-provided coverage.

When Senator Max Baucus, Democrat of Montana, advocated taxing benefits at a recent hearing of the Finance Committee, which he leads, Treasury Secretary Timothy F. Geithner assured him that the administration was open to all ideas from Congress. Mr. Geithner did, however, allude to the position that Mr. Obama had taken as a candidate.

The administration's receptivity to the idea is owed partly to the advocacy of Mr. Baucus, whose committee has jurisdiction over tax policy and health programs, and to support from Republicans. There is less enthusiasm among Democrats in the House, though the health debate is at an early stage and no comprehensive plans are on the table.

Also, Mr. Obama's own idea for raising revenues for health care - limiting the income tax deductions that the most affluent taxpayers claim - has run into opposition not only from Mr. Baucus but also from his counterpart in the House, Representative Charles B. Rangel, Democrat of New York, who is chairman of the Ways and Means Committee.

Mr. Obama's proposed limit on deductions would raise an estimated $318 billion over 10 years, or half of his proposed "health care reserve fund." That is a fraction of the revenues that could be raised from taxing employer-provided health benefits.

In the campaign, Mr. McCain estimated that taxing all health benefits would raise $3.6 trillion over a decade - "a multitrillion-dollar tax hike," one Obama advertisement said.

The Congressional Budget Office says that including health benefits in taxable income could mean $246 billion in additional revenue for a single year. Stopping short of full taxation, as Mr. Baucus and others suggest, would mean less new revenue.

The latest government figures, for 2007, show that 70 percent of the 253 million people with health insurance received at least some of their coverage through employers. Employment-based insurance covers three-fifths of the population under 65.

Those who want to tax benefits in whole or in part make two main arguments. They say the tax exclusion is a generous subsidy that insulates employees from the true costs of health care, leading them to demand more of it and driving up overall costs. Critics also say the policy is unfair because it favors higher-income people. "It's too regressive," Mr. Baucus said. "It just skews the system."

But in a blueprint for health legislation that he issued last November, Mr. Baucus said taking the exclusion on health benefits out of the tax code would go "too far" and "cause widespread disruption in employer-based health benefits." Mr. Obama has also said he wants to preserve employer-provided coverage. Mr. Baucus, in his paper, cited other options, like taxing benefits above some value, taxing only wealthy employees or both.

However the proposal is devised, advocates will not have an easy time selling it.

Republicans, like Mr. McCain and former President George W. Bush before him, tend to favor taxing the benefits to finance other incentives for people to buy their own insurance. But given Mr. Obama's use of the issue in his campaign, Republicans are unlikely to support a change unless the president himself proposes it, a senior adviser to Senate Republicans said.

Many Democrats, especially House liberals, are opposed. "It's a dumb idea," said Representative Pete Stark of California, chairman of the Ways and Means Subcommittee on Health. "We have to maintain as much as we can of the employer payments."

Administration officials often say they will not repeat the mistakes of former President Bill Clinton, whose plan for universal health insurance collapsed in 1994. But Frank B. McArdle, a health policy expert at Hewitt Associates, a benefits consulting firm, said, "If President Obama agrees to cut back the tax break for employee health benefits, he will risk repeating one of Mr. Clinton's errors by disrupting health insurance for people who have it and like it."

Some big businesses consider nontaxable employment benefits a tool for recruiting and retaining workers. The United States Chamber of Commerce opposes eliminating the exclusion on health benefits, but James P. Gelfand, senior manager of health policy, said the group had not taken a position on limiting it.

Organized labor, a pillar of the Democratic Party base, considers the benefits among the union movement's historic achievements for the middle class. But a split could be developing between the manufacturing unions, which have negotiated rich benefit packages, and the growing service employees unions, which include many low-wage workers without generous benefits.

Alan V. Reuther, legislative director of the United Automobile Workers, said: "These proposals would represent a tax increase on working families. They would undermine good health care coverage."

But at the Service Employees International Union, which was an early supporter of Mr. Obama, Dennis Rivera, the coordinator of the union's health care campaign, said that while his organization was "predisposed not to agree to the taxing of health benefits," he would wait to pass judgment. The union, Mr. Rivera said, wants to see how any tax changes fit into the overall effort to revamp the health care system. "We need to see the total picture," he said.

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My Thoughts

Michelle Malkin had an excellent point on this story. If he's open to taxing healthcare benefits, "What isn’t the Administration Open to Taxing?"

This tax would infuriate both sides of the aisle. The unions, middle class, and businesses all are against this idea. John McCain had a similar plan during the campaign, and Obama blasted him for it.

This would be a trojan horse that would be used to pay for universal health care. Clinton made the same mistake and paid for it in the '94 midterm elections. It would also be another break of the campaign promise of not raising taxes on "the other 95%".

Businesses Flee US to Switzerland to Avoid Obama's High Tax Plan

RPT-FEATURE-Corporate oil booms in low-tax Switzerland 09:04 AM EDT
* Companies seek Swiss domiciles despite tax row
* U.S. political climate may be helping
* Appeal as corporate location may outlast offshore dispute

By Sam Cage
ZUG, Switzerland, March 12 (Reuters) - The tidy towns and mountain vistas of Switzerland are an unlikely setting for an oil boom.

Yet a wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration.

In a country with scant crude oil production of its own, the virtual energy boom has changed the canton or state of Zug, about 30 minutes' drive from Zurich, beyond all recognition. Its economy was based on farming until it slashed tax rates to attract commerce after World War Two.

It still has a chocolate-box old town with views over a lake to the high Alps, but is now surrounded by gleaming corporate offices -- including commodity trader Glencore and oil refiner Petroplus -- shopping malls and housing developments.

Local authorities say about 13 percent of full-time jobs in Zug canton are in the raw materials sector.

Over the past six months companies including offshore drilling contractors Noble Corp and Transocean, energy-focused engineering group Foster Wheeler and oilfield services company Weatherfield International have all announced plans to shift domicile to Switzerland.

Guido Jud, head of Zug's tax office, said about 1,200 companies had set up shop there in 2008 -- in line with the long-term average, though it is difficult to assess how many of those are foreign companies until they file tax returns.

Swiss cantons are free to set their own tax rates. For example in Zug, corporate tax is about 16 percent but can fall as low as 9.5 percent for companies that do most of their business outside Switzerland. That compares with an average global corporate tax rate of 25.9 percent, according to consultancy KPMG.

"One trend that we see is that particularly Bermuda-based companies are now moving to Switzerland," said Martin Frey, a partner at law company Baker & McKenzie. "That may only partly be obviously for tax reasons, but also for security reasons and the fact that the Obama administration may go after them."

CORPORATE APPEAL
The moves come as the Alpine country is under pressure to stop providing a haven to rich individuals who have been illegally dodging taxes: the U.S. political climate could be contributing to the corporate relocations as authorities seek to crack down on tax avoidance and boost their own revenues.

A bill introduced in the U.S. Congress in March targeting "offshore tax dodges" by individuals and companies names Switzerland among tax havens for evaders.

Offshore tax abuses cost the U.S. Treasury an estimated $30-60 billion in lost revenues from corporation tax, plus $40-70 billion from individuals, according to the office of Senator Carl Levin, who is sponsoring the bill.

Switzerland holds around $2 trillion of estimated global undeclared assets, according to the Boston Consulting Group. Revenue generated from this could be squeezed as a U.S. probe of its biggest bank UBS dilutes banking secrecy.

Yet analysts say the Swiss, whose GDP in 2008 was about 530 billion Swiss francs ($460 billion) according to the International Monetary Fund, are less likely to meet opposition to the low-tax regimes that draw foreign companies: these are deemed less harmful tax avoidance, rather than evasion.

"They are still making some money by having lower taxes on companies," said Lee Sheppard, contributing editor to Tax Notes, a tax journal based in Washington DC.

"But they're not ever going to be making the amount that other governments are annoyed about losing."

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My Thoughts

This quote says it all:

"Yet a wave of energy companies has in the last few months announced plans to move to Switzerland -- mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama's tax-seeking administration".

This is just the beginning of companies fleeing the US or not coming here from overseas in order to avoid the high taxes that Obama and the Democrats want to burden businesses and corporations with to distribute the wealth.

Unfortunately, when you jack up the taxes so high that it isn't profitable to do business in the US, unemployment goes up because the "evil" rich people and corporations aren't here to hire anyone.

This is not a good time (if there is ever one) to run away companies that want to give Americans jobs. Unemployment is rising close to double digits, and we could use all the jobs we can get to turn this economy around.

We are going to keep losing jobs to countries like Switzerland or Ireland who have low taxes if the Democrats keep raising taxes to "spread the wealth around" or pay for the liberal fantasies and dreams. Obama needs to pay attention to history. Hoover raised taxes on businesses, and the depression deepened dramatically.

It's not too late. We need to keep telling those that we hired to take care of our government not to bring down the economy with tax raises not just for corporations or rich but everyone.