Investment Contrarians

Could These Sneaky Taxes Bring Down the U.S. Debt?

By for Investment Contrarians |

Taxes Bring Down the U.S. DebtNothing motivates like fear. Barack Obama won the U.S. presidential election on November 4, 2008, and gun sales surged. For the week of November 3, 2008, the Federal Bureau of Investigation (FBI) received more than 374,000 requests for background checks on gun purchasers, a 49.0% increase over the same period in 2007. (Source: “Gun sales surge after Obama’s election,” CNN, November 11, 2008.)

The surge was attributed to fears that a Democratic president and Democratic-controlled Congress would restrict firearm ownership. Similar surges accompanied the election of Bill Clinton, the last Democratic president.

Fast-forward to 2012 and it’s déjà vu. In August, firearm sales checks were up 27.8% year-over-year to 1.04 million. (Source: “August sees 27.8% increase in firearms sales checks,” Buckeye Firearms Association, September 6, 2012.) In September, they were up 14.7% to 1.07 million. This marks the 28th straight month that the National Instant Criminal Background Check System (NICS) figures have increased year-over-year. (Source: “September 2012 NSSF-Adjusted NICS Background Checks Up 14.7 Percent,” National Shooting Sports Foundation, last accessed October 26, 2012.)

In fact, gun ownership is near a 20-year high, generating $4.0 billion in commercial gun and ammunition sales. With an estimated 300 million guns, America is the most heavily armed nation in the world. (Source: “Behind America’s Gun Boom: Inside the Comeback At Sturm, Ruger,” Forbes October 17, 2012.)

Is there any truth to support a Second-Amendment crisis under Obama?

Since 2008, the few times Obama has done anything related to guns, it has been to expand the rights of gun owners. He signed a law that allows people to bring their guns into national parks (source: “New law allows loaded guns in national parks, MSNBC, February 19, 2010) and on Amtrak trains (source: “Passengers can bring guns on Amtrak starting in December, USA Today November 30, 2010).

President Obama may be the best thing to ever happen to firearms, whether by design or by fault.

In fact, President Obama may have done more for the gun industry than he has for the U.S. economy. When President Obama was elected, the unemployment rate was 6.8%. When he took office, it was 7.8%. The following month (January 2009), it cracked eight percent, and it stayed there until October 2012. (Source: Bureau of Labor Statistics, last accessed October 26, 2012.)

In October, the Labor Department reported that the unemployment rate dropped to 7.8%. Unfortunately, the single indicator does not provide a clear outlook on job creation. The underemployment rate, which includes people who have given up looking for work and people who have part-time jobs but want full-time jobs, sits at 14.7%—unchanged from the previous month.

But it’s worse in Europe. Spain’s unemployment rate is hovering near 25%, and its banks are failing. While Spain’s government doesn’t want to accept austerity measures, it’s certainly heading that way.

Spain’s debt is expected to hit 85.3% of gross domestic product (GDP) by the end of 2012. By the end of 2013, it’s predicted to reach 90.5% of GDP. (Source:  “Spain’s debt-to-GDP ratio to rise to 90.5 percent in 2013 versus 85.3 percent in 2012,” Yahoo! News from Reuters, September 29, 2012.)

Those are rosy numbers compared to the U.S. with its debt being equal to 105% of GDP.

Will U.S. creditors echo the eurozone and ask for deep austerity measures, or will the government take a different, more subtle tact?

For example, Cook County, which includes Chicago, said recently that it is considering a tax on guns and bullets. If passed, it would be the first gun and ammunition levy in America. The Board proposed a $0.05 tax on bullets and $25.00 tax on firearms. Thirteen of the 17 voting members are Democrat and would form an easy majority.

By enhancing Second Amendment rights, the government can also get you to help pay down the U.S. debt at the same time.

In 2011, the FBI reviewed 16 million background checks. According to the FBI, just 1.3% of those checks will result in a denial of a weapon. That could have meant an additional $395 million in the government’s coffers. There is no statistic for rounds of ammunition sold, but if each new gun owner in 2011 purchased 1,000 rounds, that’s 15.8 billion bullets. At a nickel a shot, that’s an additional $790 million. And that doesn’t take into account ammunition purchased by those who already have guns. (Source: “2011 Smashes Sales Record for Guns,” Opposing Views, December 27, 2011.)

In 2011 alone, the government could have taken in $1.2 billion.

Now granted, this is only one county, but the idea could easily grow and encompass any number of products and services.

The government already imposes so-called sin taxes on alcohol and cigarettes. Tanning beds were recently added to the mix. A 10.0% tanning tax went into effect in July 2010. Impacting America’s 200,000 indoor tanning salons, the new tax is projected to raise $2.7 billion over 10 years. (Source: “If Soda Tax Can Make It In NY It Can Make It Anywhere,” Forbes September 15, 2012.)

Taxes are big business. And it doesn’t matter if it’s a Republican or a Democrat, this is exactly how the government reduces debt. And we’re used to them. Your income tax and property taxes may not increase, but other non-taxable items could come into the mix. First it’s tanning beds, then guns and ammunition—next it could be coffee, tea, milk, or butter.

VN:F [1.9.22_1171]
Rating: 10.0/10 (2 votes cast)
VN:F [1.9.22_1171]
Rating: -1 (from 1 vote)
Could These Sneaky Taxes Bring Down the U.S. Debt?, 10.0 out of 10 based on 2 ratings

Tags: , , , ,

  • Larry Moniz

    I just love glaring errors such as the claim Chicago will be the first state to tax firearms and ammunition. Buyers already pay sales taxes in many states including New Jersey and Pennsylvania. How the writer failed to know that is amazing. Obviusly a failure to properly research. What else was inaccurate?

  • 312

    Let's have a stupidity tax. Illinois politicians could payoff the national debt by the end of the month with their contributions alone.

  • Michigan_REB

    A standard sales tax is not what they are refering to they are talking about a tax strictly on guns and ammunition. Above and beyond the excise tax that is paid to support federal parks, forests, and wildlife funds. I vote for a politician tax of 80% of their pay for holding office.