Greetings to our constituents, fellow Floridians, and all Americans, it is time again for my weekly update report.
Today we received the weekly first-time jobs claims and the figure was staggering, at 439,000. The expectation was 375,000 as the previous report was 355,000. There are already those who are saying that this increase is due to Hurricane Sandy, and we have heard weather being the cause for economic indicators before. Last time it was a tsunami.
The truth is that there are workers being laid off because of the impending concerns of what could be the most massive tax hike in United States history, known as the "fiscal cliff." Of course today we found out Mr. Richard Trumka, head of AFL-CIO, believes this to be just a "myth."
All one has to do is look at the near-700 point drop in the Dow Jones Industrial Average in the last 10 days as an immediate indicator. There has been a huge sell-off of stocks due to the coming increase in the dividends taxes from 15% to 43.4%.
America is currently in debt to the tune of $16.3 trillion and has had four straight years of trillion- dollar-plus deficits. We have had our credit rating downgraded and the spending seems to be never ending.
An analysis of President Obama's Fiscal Year 2013 budget provides us insight into his vision: $1.9 trillion of new taxes, a debt increase from $16 trillion to $20 trillion in four years, and then $26 trillion in 10 years. We will have deficits that are never below $900 billion and his budget never balances -- so much for a "balanced approach." Lastly, what will result is a 53% growth of the Federal Government. Our Federal Government currently spends almost 25% of our anemic Gross Domestic Product (GDP), but under the Obama Administration's plan, that level of spending will get close to 32%.
Our GDP is sputtering along at an abysmal 1.6%, when you subtract the growth in government spending.
The President's plan is to raise taxes on the "wealthy" which he believes to be those earning $250,000 and above.
America has a progressive tax code system with six different tax brackets: 10%, 15%, 25%, 28%, 33%, and 35%. These are referred to by some as the "Bush tax cuts/rates" and if nothing is done they will expire as of December 31, 2012 and each bracket, except the 15% bracket, will increase anywhere from 4-5%. Some believe only the 33% (up to 37%) and 35% (up to 39.6%) should be allowed to expire. The "supposed" increase in revenue from this amounts to $85 billion annually, which will fund our government for less than 2 weeks.
The Obama Administration calls this protecting the "middle class," but middle-income earners ($38,000 to $110,000) have seen their median income drop 4% during the last four years.
If taxes are raised taxes on those top brackets there will be an adverse effect on small businesses that operate as Sub-chapter S-Corporations and LLC's using their personal income tax rate. This means, according to an independent Ernst and Young report, 2.1 million small businesses affected and potentially 710,000 more jobs lost.
This week, President Obama met with union and other progressive organization leaders when he also should have met with the National Federation of Independent Business (NFIB) and the United States Chamber of Commerce this is where nearly 75% of the American economy lives, not in unions.
We will have an increase in capital gains taxes from 15%-25%. The death tax will go from a 35% bracket to a 55% bracket and the minimum exemption level drops from $5 million to $1 million. There are some 20 new taxes in the healthcare law, which will affect all Americans.
The bottom line is, there could be a negative effect on 158 million Americans representing 88% of United States households who will see a tax increase, on average, of $3,500.
What is a better solution?
First of all, we could just freeze current tax rates in place. Second, we need to flatten out the tax system, with just two rates, 25% and 10%, and reduce personal tax exemptions and deductions. We should keep capital gains taxes at 15%, or even better, reduce them to 10%. We should eliminate dividends and death taxes. We should promote a repatriation of the trillions of dollars of capital that is offshore, and tax it at a the corporate tax rate of zero for the first six months and a reduced corporate tax rate of 15%, for months 6-12.
We should reduce our corporate tax rate from 39.6%, the world's highest, to 25% with no corporate exemptions. I can almost bet a declared plan such as that would inspire economic growth for America.
There were other ideas, which emanated from the Bowles-Simpson Commission that could be incorporated.
There are many promoting that tax rates should be raised for those earning $250,000 or more. I believe the more pragmatic approach is to make the amount $2 million. I believe that is a level which will inspire and incentivize economic growth and personal wealth, which is the American Dream. Now, we must realize that the real drivers of our economic woes are our mandatory spending programs: Medicare, Medicaid, and Social Security. Along with the net interest on our debt payment, this is about 62% of our budget. We must tackle this situation, and reform these programs to protect them for current users and preserve for the future.
Finally, we must get our spending under control in Washington DC. It is a spending problem, not a revenue problem. And piling 60% of the budget cuts on just 19.6% of our budget -- defense spending -- is not the answer. Our most important responsibility is to provide for the common defense. While I supported the $487 billion cut over 10 years to the defense budget, the sequestration is a dangerous venture.
Why should we not be cutting our defense to the bone? Just look at the current situation in Israel and a world that is far more volatile.
For the first time in some 20 years, enemy rockets and missiles have fallen near the Israeli city of Tel Aviv, approximately 150 just on November 15th. The government of Israel has noted that, since the beginning of 2012, more than 768 rockets have been fired into Israel from Gaza, and over 12,000 in the past 12 years. Israel, like any nation, has the right to defend itself against such vicious attacks. There is no justification for the violence that Hamas and other terrorist organizations are employing against the people of Israel. I strongly condemn the actions of a known radical Islamic terrorist organization, Hamas.
Now is a time when Israel, the world, and their enemies must know, by action that the United States of America will never abandon the State of Israel and that never again, truly means never again.
Steadfast and Loyal,
Allen B. West