Grassroot Perspective – April 8, 2003-Bring It On; Taxing Dividends: Once is Not Enough?

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”Shoots (News, Views and Quotes)”


Simplecare allows doctors to eliminate health insurance paperwork and
offer their health care services at a discount for cash. “There are more
than two million uninsured Floridians, and many small businesses can no
longer find affordable health coverage for their employees. We look
forward to hearing how SimpleCare might stem the rising costs of health
care in Florida,” commented JMI president Jim McDowell, discussing Dr.
David MacDonald’s SimpleCare program 2/10/03.

Above article is quoted from James Madison Institute, Madison Policy
Digest Feb. 10, 2003.

Bring It On. Deficit hawks in both parties will no doubt squeal that
[President Bush’s] tax plan is unaffordable and will run up the national
debt. They are wrong. What Kennedy and Reagan now Bush [came to]
understand clearly is that it is the absence of economic growth that
causes runaway budget deficits. So let the class-warfare Democrats
embrace small and impotent policy changes-changes that increasingly
sophisticated investor-class voters will immediately identify as
fraudulent. The obstructionist Democrats have announced that they intent
to fight against the President’s genuine Republican growth package and
to wage all-out class-envy warfare. Bush has 90 million investor-class
Americans on his side who realize that tax-rate cuts mean higher stock
values and greater retirement security. Republicans must not shrink from
the battle. Bring on the fight. — Stephen Moore, President, Club for
Growth, Newsday

“At a faculty meeting with union representatives at my school this week,
the strong suggestion was made that all staff should follow the
‘rule,’ arriving at precisely 8 a.m. and departing at precisely 3:15 p.m.
When asked whether there wasn’t a more logical way for us to show our
solidarity that did not punish students, union representatives gave the
example of a longshoremen strike in which working to the rule brought
management to its knees. First, I’m not a longshoreman. Not that that
isn’t a valued career choice, it just wasn’t mine. Second, the issues
that are worth holding out for in negotiations should be ones that
directly affect our ability to educate – not insurance, transfer
policies or salary increases. Just as we enter this critical time of the
shortened year, we are being asked to limit our contact with students as
a way of sending a message of solidarity on contract issues. Can’t union
officials see the irony in that?” — Mimi Alkire, a 28-year teacher in
the Portland Public Schools, in the February 6 issue of The Oregonian.
Above article is quoted from The Education Intelligence Agency, EIA
Communique 2/10/2003

”Roots (Food for Thought)”

Taxing Dividends: Once is Not Enough?

By Sheldon Richman, Feb. 14, 2003

Why is it controversial to propose an end to double taxation?

The centerpiece of President Bush’s economic package is elimination of
the tax on dividends. No one disputes that this is a double tax. A
corporation pays taxes on its profits. Then if it distributes the
after-tax profits to its shareholders, they pay taxes on that income.
Corporate profits are taxed twice merely because they change locations.

The outcry against repeal of this outrage is deafening. Why? Because
low-income people won’t pay less tax as a result. Never mind that many
low-income people already pay no income tax; in fact, they get cash
handouts through the dishonestly named earned income tax credit. (How
does one get a credit on taxes not paid?)

So, somehow, it’s unfair to eliminate a tax if less-productive people
don’t directly benefit, but it’s not unfair to tax something twice. A
strange notion of fairness, indeed.

Such a notion can be based only on the view that all wealth belongs to
the government, whose job it is to distribute it “equitably.” Maybe
that’s why Sen. Lincoln Chafee (R-R.I.), objecting to Bush’s plan, said,
“I can’t see us giving away any more of our revenues.” They certainly
aren’t Senator Chafee’s revenues. So what’s he talking about?

That’s the typical attitude in Washington. To enact a spending measure,
you need merely claim that someone is in need. No proof is required;
certainly it does not have to be shown that need justifies confiscation.
But to enact a tax cut to let productive people keep their own money,
politically you shoulder an impossible burden of proof.

Senate Minority Leader Tom Daschle reacted to the tax cut by saying it
would help the “wrong people.” No doubt he’d be appalled if it were
pointed out that his statement reflects a thuggish collectivism unworthy
of an earlier America. A tax cut lets people keep their own money. How
can they be the wrong people?

If Daschle wants to say that the tax cuts should be deeper and include
other taxes, then bravo! But that’s not what he wants. He wants tax cuts
for people who don’t pay taxes and tax hikes for people who do. That’s
the logic of one who believes that all belongs to the state. Daschle
should move to Europe where his ideas are more appropriate.

Some of the class warriors claim that low-income people do indeed pay
taxes — not the income tax, but the payroll tax for Social Security and
Medicare. Don’t those people, they ask, deserve a tax cut?

Now this is progress. There was a time not long ago when the
socialist-minded among us denied that Social Security and Medicare were
supported by taxes. Those payments were called “contributions.” The “C”
in FICA is for “contribution.” The defenders of Social Security and
Medicare had a reason for this artful use of language: they wanted us to
believe that those programs were insurance plans, not the welfare
programs they really are.

But of course if you don’t remit those “contributions” to the IRS you go
to jail. If it waddles like a tax and quacks like a tax, it’s a tax.

These days it serves the tax-the-productive crowd’s interests to call
those contributions taxes. It’s the best shot those folks have at
parrying the sensible argument that tax cuts should be restricted to
taxpayers. I’m all for cutting — make that “repealing” — the payroll tax
and the programs they finance. But that’s not what the class warriors
have in mind. They would cut low-income people’s payroll taxes, but
continue to provide Social Security and Medicare benefits at the old
level — which means wealthier people would be forced to subsidize them
to an even greater extent than today. That would make the welfare nature
of those programs even clearer. And that’s why few people in power are
calling for a cut in the payroll tax.

There has also been the usual handwringing about the “cost” of cutting
taxes. So let’s say this one more time: cutting taxes doesn’t cost
people money. Government programs do. Is that really so difficult?

Sheldon Richman is senior fellow at The Future of Freedom Foundation in
Fairfax, Va., and editor of Ideas on Liberty magazine.

Above article is quoted from The Future of Freedom Foundation

”Evergreen (Today’s Quotes)”

Did you know that Members of Congress — the people we’re counting on to
save the system (Social Security) — can already invest in an individual
retirement account that has a higher rate of return than Social
Security? The average yearly rate of return for the federal employer
plan’s stock fund over the past 14 years was 15 percent! When Reps.
Robert Walker (R-Pa) and Patricia Schroeder (D-Colo.) retired in 1997,
they each had accumulated $4.1 million in benefits. — Pete du Pont

JMI President Jim McDowell commented, “This situation is further
evidence that Florida is headed for a real health care crisis unless the
legislature acts to curb out of control noneconomic damage awards in
medical malpractice lawsuits. The choice for emergency room patients-and
legislature-may be, ‘you can have a doctor to see or a doctor to sue,
but you can’t have both’.” — Quoted from James Madison Institute,
Madison Policy Digest, Feb. 10, 2003.

”’See Web site”’ ”’for further information. Join its efforts at “Nurturing the rights and responsibilities of the individual in a civil society. …” or email or call Grassroot of Hawaii Institute President Richard O. Rowland at or (808) 487-4959.”’