"Restore(s) a little sanity into current political debate" - Kenneth Minogue, TLS "Projects a more expansive and optimistic future for Americans than (the analysis of) Huntington" - James R. Kurth, National Interest "One of (the) most important books I have read in recent years" - Lexington Green
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And so it begins; at first a trickle of rocks falling down a steep mountainside; then more and bigger rocks, and then half the mountainside comes away and falls away in a mighty roar, the earth trembles, and White House spokes-minion Jay Carney is probably looking around desperately trying to figure out what hit him. Read the rest of this entry »
(Originally posted in January 2010–now an April perennial)
Chevy Chase, MD, is an affluent suburb of Washington DC. Median household income is over $200K, and a significant percentage of households have incomes that are much, much higher. Stores located in Chevy Chase include Tiffany & Co, Ralph Lauren, Christian Dior, Versace, Jimmy Choo, Nieman Marcus, Saks Fifth Avenue, and Saks-Jandel.
PowerLine observed that during the 2008 election season, yards in Chevy Chase were thick with Obama signs–and wonders how these people are now feeling about the prospect of sharp tax increases for people in their income brackets.
The PowerLine guys are very astute, but I think they’re missing a key point on this one. There are substantial groups of people who stand to benefit financially from the policies of the Obama/Pelosi/Reid triumvirate, and these benefits can greatly outweigh the costs of any additional taxes that these policies require them to pay. Many of the residents of Chevy Chase–a very high percentage of whom get their income directly or indirectly from government activities–fall into this category.
Consider, for starters, direct employment by the government. Most Americans still probably think of government work as low-paid, but this is much less true than it used to be. According to this, 19% of civil servants now make $100K or more. A significant number of federal employees are now making more than $170,000. And, of course, the more the role of government is expanded, the more such jobs will be created, and the better will be the prospects for further pay increases.
If one member of a couple is a federal employee making $100K and the other is making $150K, that would be sufficient to allow them to live in Chevy Chase and occasionally partake of the shopping and restaurants. But to make the serious money required to really enjoy the Chevy Chase lifestyle, it’s best to look beyond direct government employment and pursue careers which indirectly but closely benefit from government activity…which are part of the “extended government,” to coin a phrase.
Very closely are noble issues bound up with material ones. Nothing could be more grossly material than the refusal to pay taxes, and the honest historian who comes to examine these occasional epic refusals will find often that the tax was reasonable and the refusal, on material grounds, absurd. Yet the refusal to pay taxes is one of the sacraments of history, the outward and visible sign of the inward and spiritual grace, the symbol of a resurgent spirit among an oppressed people, the assertion of the rights of man, the voice of liberty defying the dictates of authority.
As we count down to March 1, we are hearing more and more about the dreaded sequester. The left is confused about its history.
How did this become Obama’s fault? It started with Mitt Romney, a once-influential Republican Party politician and its 2012 nominee for president. In the third debate with President Obama, Romney fretted that “a trillion dollars in cuts through sequestration and budget cuts to the military” would weaken America’s defenses. The president literally dismissed this with a wave of his hand. “The sequester is not something that I proposed,” he said. “It’s something that Congress has proposed. It will not happen.”
How did this get to be the story ?
The accidental Bible of Sequestration is The Price of Politics, Bob Woodward’s history of the debt-limit wars, and one of the least flattering portrayals of the president this side of Breitbart.com. In it, Woodward recounts a July 27, 2011, afternoon meeting between Senate Majority Leader Harry Reid and White House negotiators. Reid wanted a “trigger” as part of a debt deal, some way to force more cuts in the future without defaulting on the debt that summer. Chief of Staff Jack Lew and adviser Rob Nabors proposed sequestration, as a threat that could be averted if/when Congress passed a better deal.
OK. The White House staff suggested it. Why ? Because they assumed that Republicans would cave in rather than accept cuts in the defense budget.
Taxes are very complex in that there are many different types of taxes designed to raise revenue and modify behavior that the government wants to incentivize or dis-incentivize. At the highest and most simplified level you have:
Sales Taxes – generally taxes paid by the buyer to the seller at the point of purchase (tax on food at the grocery store) Income Taxes – taxes on money people earn paid to the Federal, State or Local governments. Often this money is “withheld” from your paycheck. Typically there are myriad deductions applied to determine the amount owed Property Taxes – taxes levied on property owned based on valuation and paid to the local government annually Excise or “Sin” Taxes – taxes on specific items that the government wants to dis-incentivize such as cigarettes and alcohol, collected at the point of purchase Payroll Tax – tax on wages used to “fund” social security and medicare and are levied on the employer and employee alike, to a certain amount, with few or no deductions Capital Gains Tax – tax on the profits of securities, properties or businesses sold when the amount received is greater than the cost Estate Tax – tax on the accumulated assets of someone who died, paid to the government.
There has been talk in the media about wealthy individuals who advocate “higher taxes” for various reasons, and they receive disproportionate press coverage for their “selfless” actions. Warren Buffett in particular has called for higher taxes on the rich, specifically INCOME taxes, as you can note below:
As fiscal cliff talk buzzes around Washington and Wall Street, Buffett on Monday published a New York Times editorial calling on Congress to impose a 30% tax on people making $1 million to $10 million a year and 35% percent above that.
However, Warren Buffett is taking significant steps to actually avoid paying the ONE tax specifically designed for him – the estate tax. Here he joins with other billionaires on their “pledge” to give away their fortunes (to trusts that they would designate how the money gets spent).
Warren Buffett got 11 more billionaires to agree to give away half of their wealth to charity.
It is hypocritical for those billionaires like Buffett to set aside their money in charities to be directed for purposes that they “believe in” while everyone else’s money is funneled to Federal, State or Local governments to fund whatever that governmental body decides to do with it. You and I can’t control where our payroll, income, sales or property taxes go – and we have to accept that. Then Buffett, too, should accept that when he calls on higher taxes for everyone (but income taxes hardly dent him since his wealth would be taxed through capital gains if he chooses to sell or most likely the estate tax on all of his unrealized gains through his lifetime) he should dismantle his “estate tax” protections and just show up and give his billions directly into the US Treasury when he dies, to be used for whatever purpose the government chooses, likely to pay interest on debt that we issue to the Chinese or to pay for some sort of poorly run entitlement or wealth transfer scheme.
Warren – if you believe in the call for higher taxes, then just die without an estate plan, and let the Federal government get their 40% of your billions. It is the right thing for you to do, since you believe (apparently) that they will spend this money wisely.
“The idea behind the estate tax is to prevent the very wealthy among us from accumulating vast fortunes that they can pass along to the next generation,” said Patrick Lester, director of Federal Fiscal Policy with the progressive think tank — OMB Watch. “The poster child for the estate tax is Paris Hilton — the celebrity and hotel heiress. That’s who this is targeted at, not ordinary Americans.”[emp added]
Conrad Nicholson Hilton (December 25, 1887 – January 3, 1979) was an American hotelier. He is well known for being the founder of the Hilton Hotels chain.
…
In 1979, Hilton died of natural causes at the age of 91. He is interred at Calvary Hill Cemetery, a Catholic cemetery in Dallas, Texas. He left $500,000to each of his two surviving siblings and $10,000 to each of his nieces, nephews and to his daughter Francesca. The bulk of his estate was left to the Conrad N. Hilton Foundation,[6] which he established in 1944. His son, Barron Hilton, who spent much of his career helping build the Hilton Hotels Corporation, contested the will, despite being left the company as acting President, Chief Executive Officer, and Chairman of the Board of Directors. A settlement was reached and, as a result, Barron Hilton received 4 million shares of the hotel enterprise, the Conrad N. Hilton Foundation received 3.5 million shares, and the remaining 6 million shares were placed in the W. Barron Hilton Charitable Remainder Unitrust.[6] Upon Barron Hilton’s death, Unitrust assets will be transferred to the Hilton Foundation[citation needed], of which Barron sits on the Board of Directors as Chairman.[7]
On December 25, 2007, Barron Hilton announced that he would leave about 97% of his fortune (estimated at $2.3 billion),[7] to a charitable unitrust which would eventually be merged with the Conrad N. Hilton Foundation.[8] By leaving his estate to the Foundation, Barron not only donated the fortune he had amassed on his own, but also returned to the Conrad N. Hilton Foundation the Hilton family fortune amassed by his father, which otherwise would have been gone to the Conrad N. Hilton Foundation 30 years previously had Barron not contested his father’s will.[emp added]
So, not only has Paris Hilton not inherited anything yet, because her grandfather is still alive, she won’t inherit anything major ever. It all goes to charity. Paris Hilton is a sleazoid, but she is a largely a self-made sleazoid. Her personal financial assets are almost entirely the result of her leveraging her, uh, other assets via secret sex tape into a bizarre celebrity career. She’s worth several hundred million now, noneof it inherited.
Paris Hilton has been trotted out by Leftists for years as an example of the need for the death tax and yet apparently none of them bothered to actually check if she was actually an heiress. The elite Democrats who carefully construct the party’s talking points, don’t seem to even bother to check Wikipedia. (Or they do and just assume that the average Leftist voter won’t.)
The real point of interest here is not the inanity of the death tax, but rather the studied indifference of the Democrats and Leftists in general to actually studying the wealthy and telling the truth about them.
Blondie and I went to bed Tuesday night around 9:30, already fearing that things were not going well as regards Mitt Romney’s chances of taking up residence in that big official governmental residence on Pennsylvania Avenue in Washington … so it was not a totally incapacitating shock to the system on Wednesday morning to wake up (to the tune of our next door neighbor’s Basset hound incessantly barking –G*d, are we beginning to hate that dog!) in the wee hours, turn on the computer and discover that Michelle will have another four years of lavish vacations on the government dime. Read the rest of this entry »
Pity the UK government. Like most, they have had a great deal of trouble closing the gap between money spent and tax revenue. And, like most, they have scrambled to raise taxes in order to increase the amount of money coming in.
One of the items hardest hit with rising tax rates in Great Britain is beer.
The powers-that-be have enacted a “beer duty escalator“, which automatically raises the tax on beer by 2% over inflation every single year. According to the article behind the last link, the average beer drinker in the UK now pays £177 every year just in taxes alone. The average pub owner must shell out £66,000 per year in beer taxes, above and beyond the overhead costs that come from running any small business. And, thanks to the automatic increases, every year is going to be worse than the last.
As any economist who hasn’t drunk deep of the Liberal kool-aide will tell you in a heartbeat, adding frivolous costs to any commodity will result in limiting demand. Beer sales in the UK have plummeted, while close to a score of pubs across the island nation have been going out of business every week.
Just think of all those people who were dependent on the family business, now out of work and on the dole. I don’t have the numbers to tell for sure, but it wouldn’t surprise me in the least to find out that any jump in revenues realized by the beer duty have been more than offset by the increased number of people who now rely on public assistance.
A clownish Joe Biden mugged, groaned and interrupted Paul Ryan for 90 minutes last night. It was an odd spectacle but, apparently, just what the Democrats wanted. He lied about the Libya story and now Bill and Hillary Clinton may be thinking rebellion. Biden strongly suggested that the State Department was to blame for the murders because they did not ask for more security, in spite of the testimony before Congress the day before. If Hillary thinks she sees the bus coming, she may jump ship and it won’t be pretty.
With tensions between President Obama and the Clintons at a new high, former President Bill Clinton is moving fast to develop a contingency plan for how his wife, Secretary of State Hillary Clinton, should react if Obama attempts to tie the Benghazi fiasco around her neck, according to author Ed Klein.
Biden also lied about Iran and their nuclear ambitions. He dismissed the danger of doing nothing. He said they do not have a “delivery system.” They have a delivery system named Hezbollah. Iran may not have an intercontinental ballistic missile that can reach the US, yet. If Iran were to choose to attack the US, a container ship and a US port are much more likely to be involved than a new missile. Certainly, Israel is within reach as are the countries of Europe. Saudi Arabia is within reach. The Sunni-Shia rivalry is sufficient motive but the other reasons should not be ignored. Iran is ruled by a sect of suicidal maniacs.
Ryan capably described the Romney-Ryan tax proposals and his Medicare plan. I expected the abortion question and I thought it was well handled. Biden, of course, lied about the administration’s rules for health insurance coverage of contraception and abortion. That is not a big issue for me as I am pro-choice but the dishonesty is annoying. The “47% issue” and Ryan’s mention of a “30% who are takers” will not bother many people who agree and the offended are likely Obama voters no matter what happens.
On their $5 trillion tax cut, Romney/Ryan really need to either start naming the loopholes they’d close to pay for it or just admit they can’t make it revenue neutral without whacking the middle class. The VP was appropriately relentless on this point. Even I’m starting to feel sorry for them every time someone brings up this little flaw in their plan. I suspect I’m not alone in realizing that this country simply can’t afford to elect people promising a tax cut of this magnitude who, when it comes to paying for it, essentially say “trust us, we’ll find a bipartisan solution.”
The “$Five trillion tax cut” has been thoroughly debunked, including Stephanie Cutter’s retreat from the claim.
But, as I pointed out, Gov. Romney has already taken capital gains and dividends-for example-off the table. Now, here’s the revealing part: Larry said, and I know many in the investment community, including Mitt, feel exactly the same way, “I don’t consider those loopholes.”
So, here is a lefty who wants to raise taxes on investment income and capital gains. I don’t see enough responses pointing out that this income has already been taxed as ordinary income. Mitt Romney and most investors had salary income, taxed at the rates of the time, which they saved and invested. The capital gains and dividend income is income that was already taxed once. The left simply does not understand this.
Ryan kept his cool and Biden played the fool. Ann Althouse was impressed as I believe many women were impressed.
As I said, I’m tired of the yelling. I found the debate really hard to watch, but I kept watching because I was committed to live-blogging. Even still, I got catatonic. There was a point when I didn’t write anything for 20 minutes and then I said:
Biden has been yelling at Martha Raddatz for the last 15 minutes (as the subject is war). It’s so inappropriate!
The previous post had been:
The stress level is rising. Biden is so angry. Why is he yelling? Ryan needs nerves of steel not to lose his cool. I’m impressed that Ryan, when he gets his turn, is able to speak in an even, natural voice. It’s hard to concentrate on the policy itself, because the emotional static is so strong.
That shows how I felt: pain. So here’s my question. Ratings were down, I see, but when were the ratings taken? In the beginning? How did the ratings drop off over the course of the 90 minutes?
I have seen many comments about people, especially women, turning off the debate because of Biden’s rudeness and blustering. The ratings were down and the question is when were the ratings surveyed ? Of course, last night was also a big sports night. I think Ryan did better than the initial impressions suggest.
If Obama uses the Biden debate tactic as a model for next Tuesday, the election may well be over.
Today, the Sunday morning TV shows on politics demonstrated the response of the Obama campaign to Romney’s debate win last week. Paul Krugman, who looks more and more like a political cheerleader and less like an economist, led the charge. The topic was the “five trillion dollar tax cut.”
This “five trillion dollar tax cut” figure is arrived at by taking his statement that he will cut rates by 20% and limit deductions. Multiple the total tax revenue per year by 20% and you get five trillion. This same reform was done in 1986 and the result was a 15 year economic boom. The results are discussed here.
Twenty years ago today (2006), President Ronald Reagan signed into law the broadest revision of the federal income tax in history. The Tax Reform Act of 1986 — the biggest and most controversial legislative story of its time — had lawmakers, lobbyists and journalists in Washington in an uproar for two years. Despite nearly dying several times, the measure eventually passed, producing a simpler code with fewer tax breaks and significantly lower rates. The changes affected every family and business in the nation.
Of course the Congress undid it over the ensuing years. We all expected that. What about Romney’s plan ? Read the rest of this entry »
Ibn Khaldun, the great Muslim historian, in his Introduction to History:
Taxation and the reason for low and high tax revenues
It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.
The same reason for this is that when the dynasty follows the way of Islam, it imposes only such taxes as are stipulated by the religious law, such as charity taxes, the land tax, and the poll tax. Theses have fixed limits that cannot be exceeded.
When the dynasty follows the ways of group feeling and (political) superiority, it necessary has at first a desert attitude, as has been mentioned before. The desert attitude requires kindness, reverence, humility, respect for the property of other people, and disinclination to appropriate it, except in rare instances. Therefore, the individual, the individual imposts and assessments, which together constitute the tax revenue, are low. When tax assessment and imposts upon the subjects are low, the latter have the energy and desire to do things. Cultural enterprises grow and increase, because the low taxes bring satisfaction. When cultural enterprises grow, the number of individual imposts and assessments mounts. In consequence, the tax revenue, which is in sum total of (the individual assessment), increase.
When the dynasty continues in power and their rulers follow each other in succession, they become sophisticated. The Bedouin attitude and simplicity lose their significance, and the Bedouin qualities of moderation and restraint disappear. Royal authority with its tyranny and sedentary culture that stimulates sophistication, make their appearance. The people of the dynasty then acquire qualities of character related to cleverness. Their customs and needs become more varied because of the prosperity and luxury in which they are immersed. As a result, the individual imposts and assessments upon the subjects, agricultural labourers, farmers and all the other tax payers, increase. Every individual impost and assessment is greatly increased, in order to obtain a higher tax revenue. Customs duties are placed upon articles of commerce and (levied) at the city gates. Then, gradual increases in the amount of the assessments succeed each other regularly, in correspondence with the gradual increase in the luxury customs and many needs of the dynasty and the spending required in connection with them. Eventually, the taxes will weigh heavily upon the subjects and overburden them. Heavy taxes become an obligation and tradition, because the increase took place gradually, and no one knows specifically who increase them or levied them. They lie upon the subjects like an obligation and tradition.
The assessments increase beyond the limits of equity. The result is that the interest of the subjects in cultural enterprise disappears, since they compare expenditure and taxes with their income and gain and see little profit they make, they loose all hope. Therefore, many of them refrain from all cultural activity. The result is that the total tax revenue goes down, as individual assessment go down. Often when decrease is noticed, the amounts of individual imposts are increased. This is considered a means of compensating for the decrease. Finally, individual imposts and assessments reach their limit. It would be of no avail to increase them further. The costs of all cultural enterprise are now too high, the taxes are too heavy, and the profits anticipated fail to materialize. Finally, civilization is destroyed, because the incentive for cultural activity is gone. It is the dynasty that suffers from the situation, because its profits from cultural activity.
If one understands this, he will realize that the strongest incentive for cultural activity is to lower as much as possible the amounts of individual imposts levied upon persons capable of undertaking cultural enterprises. In this manner, such persons will be psychologically disposed to undertake them, because they can be confident of making a profit from them.
Last week, in my Sunday School class, the substitute teacher argued that those who linked “liberation theology” with communism were wealthy landowners hoping to tar legitimate complaints of the poor with that brush. The sermon quoted Fr. Martin: “Congressman Ryan – or any of us – can say of a budget plan that slashes supplemental funding for basic economic needs to those in poverty, that it’s a Democrat plan or Republican plan, but no one can ever say that a plan with such likely repercussions is consistent with Church teaching or is a plan Jesus would endorse or approve.” Clearly, that church voice agrees with the letter from some of the Georgetown faculty.
To my mind, Ryan has the better argument. For one thing, he is more descriptive than self-righteous. In both speech and questions, Ryan respects human dignity & human nature – why subsidiarity works. More importantly, he is honest: productivity of all helps all, free lunches aren’t really free, and we have taken from our children to make our lives easy. Implicit is a sense few acts have more questionable ethics than forcing charitable contributions from others or infantilizing those we help. Read the rest of this entry »
(I originally posted this in early 2010–today seems like an appropriate day for a re-post)
Chevy Chase, MD, is an affluent suburb of Washington DC. Median household income is over $200K, and a significant percentage of households have incomes that are much, much higher. Stores located in Chevy Chase include Tiffany & Co, Ralph Lauren, Christian Dior, Versace, Jimmy Choo, Nieman Marcus, Saks Fifth Avenue, and Saks-Jandel.
PowerLine observed that during the 2008 election season, yards in Chevy Chase were thick with Obama signs–and wonders how these people are now feeling about the prospect of sharp tax increases for people in their income brackets.
The PowerLine guys are very astute, but I think they’re missing a key point on this one. There are substantial groups of people who stand to benefit financially from the policies of the Obama/Pelosi/Reid triumvirate, and these benefits can greatly outweigh the costs of any additional taxes that these policies require them to pay. Many of the residents of Chevy Chase–a very high percentage of whom get their income directly or indirectly from government activities–fall into this category.
Contact: Eric Kohn
Communications Director, Chicago Tea Party
eric@chicagoteaparty.org
773-209-3435
TAX DAY TEA PARTY PLANNED FOR CHICAGO
CHICAGO – Concerned citizens are set to gather at noon on Monday, April 16 at Daley Plaza at 50 W. Washington to protest out of control spending, unsustainable deficits and the unprecedented growth of government. People will come together in downtown Chicago, where the tea party movement began, to hold politicians of both parties accountable, stop runaway spending and defend individual liberty and free markets.
“We are concerned with the direction of our country and our state,” said Chicago Tea Party Communications Director Eric Kohn. “The only solutions being offered from politicians in Washington and Springfield are higher taxes, more spending and massive debt. We will continue to fight for less government, more freedom and fiscal responsibility on tax day and every day through the November election.”
EVENT DETAILS
What: Chicago Tax Day Tea Party
Where: Daley Plaza, 50 W. Washington St., Chicago
When: Noon – 2PM, Monday, April 16
FEATURED SPEAKERS:
U.S. Conressman, Joe Walsh, IL-8th District
Wisconsin Lieutenant Governor Rebecca Kleefisch
Dana Loesch, CNN Contributor, Co-Founder St. Louis Tea Party
Denise Cattoni, State Director, Illinois Tea Party
Joel Pollak, Editor-in-Chief, Breitbart.com
Dan Proft, WLS-AM 890 Host
David From, State Director, Americans for Prosperity Illinois
Contact Eric Kohn at 773-209-3435 for press availability with the speakers.
There will be shirts for sale at the 4th annual Tax Day Tea Party Rally, including the above design from Bob Black.
Yes, the world is abuzz with the fuss that Irish homeowners are making over the Household Tax. To recap, the Household Tax is a precursor to a property tax, which hasn’t been charged until now. Homeowners are asked to pay EUR100 this year, with an eye towards bringing in a proper tax in 2013. The idea is to get homeowners to self-identify themselves to the government to create the database. (Many government (and indeed health and education) records still are very much on paper.) The deadline for paying this tax was this past Saturday – however, at last count less than half of the suspected 1.6 million households have ponied up.
In fact, there was a protest at the current ruling party’s annual planning conference (called an “Ard Fheis”). An estimated 5,000-plus people turned out to air their rancor against this tax. Indeed, a number of TDs (members of the Irish parliament) have taken to the airwaves to condemn this tax and at least in a couple of cases, hint broadly that people not should pay it. From an American conservative/libertarian point of view, this all looks promising…
…until you hear what the complaints are all about. Almost no one is calling for a cut in spending. A goodly number are piqued that they can’t pay for this bill at the post office. And other voters and government folk are calling for the property tax to be means-tested. Sinn Fein wants to scrap this tax altogether for a flat-out income tax rate hike (which is what a property tax based on income level would effectively become) . In other words, this is really a broad-based call for more soaking the rich. But let’s see where this tax is going to.
It’s being sent to the District Councils – local-based government at the city or county level. And what it’s paying for are parks. Swimming pools. Libraries. And streets (remind me what the Road Tax was supposed to be for?) Meanwhile, still no talk of councillors taking a pay cut. Just asking the homeowners to dig deep to pay for “leisure amenities”. Feh, “leisure amenities”. Let’s get this straight. This isn’t a principled fight over taxation. It’s a squabble over who pays for little Sinead’s swim lessons. As King James II exclaimed at the Battle of the Boyne, GMAFB.
The IRS has a proposed new regulation which would prohibit charter-school teachers from participating in state retirement plans. (At present, all of the states which authorize charter schools permit, and in some cases require, the charter-school teachers to participate in these plans.) Furthermore, the new regulation would apparently apply retroactively and would cause the teachers to lose the state contributions to their accounts which have been accrued, and on which they were no doubt relying, unless they give up their employment. More here.
Today, February 6, is the last day for public comments on this issue under IRS procedures.
Both our current administration and the New York Times appeared to have little or no understanding how the “real” economy worked or the impact of incentives on tax policy. In more recent years they grasped that changing tax policy can impact economic incentives, which in turn, can increase their chances of being re-elected.
Their first major foray was “cash for clunkers” which gave a tax deduction for turning in your old car for a new one. Like most one-time incentives, it accelerated purchases into the current period, giving a boost to auto manufacturers and car dealerships (and sticking the tax credit to the deficit). Lately the administration has gotten bolder, offering 100% deduction for capital purchases in the current year for tax purposes (which has the same effect as “cash for clunkers”, except on a wider scale as tax incentives for corporations and private companies), and then giving a 2% “payroll tax cut” which finally eliminates even the concept that social security is anything more than a “pay as you go” system and that there is nothing there waiting for you when you retire.
My view of tax policy is that the goal of a sound policy is to:
1) raise the revenue that you set out to achieve
2) minimize negative effects or dis-incentives of the policy
Examples abound of a failure of #1, including raising marginal taxes on the wealthy (they change their behavior or move to another jurisdiction) and the distortive effects of #2 are legendary, including over-investment in non-productive housing stock (due to the mortgage interest deduction) and the massive numbers of lawyers and accountants that make a living on the entrails of our bewildering and counter-productive tax system.
In recent years the NYT, as the sounding arm for the administration, has started to realize that the haphazard and counter-productive effects of our current tax system are legion, and that better core policies could improve revenues while minimizing negative behavior. This article called “A Better Tax System” (Instructions Included) laid our four principles that seem reasonable overall:
1) Broaden the base and lower rates
2) Tax consumption rather than income
3) Tax “bads” rather than “goods”
4) Keep it simple, stupid
I would say that their item 1 corresponds to my number 1, above, because a wider base with a less sloped marginal top is the core to a sustainable base of revenues that won’t fluctuate as much over time. Items 2-4 are under the negative minimization principle.
Of course part of the reason that this article seems to make sense is that it was written by a non NYT staffer who works for an opposition candidate. But I do think that the NYT and the administration are starting to realize that our current tax system is an unholy mess with huge dis-incentives (the highest corporate taxes in the world drive jobs overseas), that doesn’t raise revenue broadly, and has huge dis-incentives in terms of ability for companies and individuals to plan ahead.
Too bad it is too late in the game for them to do much more than talk about it. Also shame on the prior administration for never spending the political capital to attempt to change the system and reform it. They neglected to wield their power to make America more competitive.
When I was in Norway at the tiny (and picturesque) town of Mundal, I noted what appeared to be an abandoned highway toll booth near the edge of town. Since the meticulous Norwegians would never leave behind something like this without good reason, I started looking more closely at this find.
Surely enough, the meticulous Norwegians had a sign on the booth (in English, no less) describing why this toll booth was historic in their eyes.
Per the sign:
This toll station was situated on rv5 (close to Nork Bremuseum) from November 1994 to November 2010. The toll financed the road between Fjaerland and Sogndal. For most of the period, this was the road with the highest toll in Norway. The Norwegian Booktown and Fjaerland’s Historical Society will use the house to document the history of Fjaerland’s struggle for road-connection with the outside world. Until 1986 you could only travel to Fjaerland by boat / ferry.
As they noted on the sign the toll was very expensive. From what I have been able to find the toll cost 180 kroner each way (approximately $20 USD) but cut a substantial amount of time out of the drive to Mundal. However, once the road was paid for, the Norwegians dismantled this toll booth and stopped charging drivers, which is why they now have plans to use it as part of the historical site.
On the other hand, you have the State of Illinois, whose toll authority plans to dramatically increase tolls starting January 1, 2012. Per this article – Illinois toll road increase:
The cost of a trip on the Tollway system for the average I-Pass driver would increase to $1.18, up from today’s average of 63 cents per trip
James C. Bennett, author of The Anglosphere Challenge (Rowman & Littlefield, 2004), and Michael J. Lotus (who blogs at Chicagoboyz.net as “Lexington Green”), are proud to announce the signing of a contract with Encounter Books of New York to publish their forthcoming book America 3.0.
America 3.0 gives readers the real historical foundations of our liberty, free enterprise, and family life. Based on a new understanding of our past, and on little known modern scholarship, America 3.0 offers long-term strategies to restore and strengthen American liberty, prosperity and security in the years ahead.
America 3.0 shows that our country was founded as a decentralized federation of communities, dominated by landowner-farmers, and based on a unique type of Anglo-American nuclear family. This was America 1.0, as the Founders established it. The Industrial Revolution brought progress, opportunity and undreamed-of mobility. But, it also pushed the majority of American families into a new, urban, industrial life along with millions of unassimilated immigrants. After the Civil War, new problems of public health, crime, public order, and labor unrest, on top of the issues of Reconstruction, taxed the old Constitution. Americans looked for new solutions to new problems, giving rise to Progressivism, the ancestor of modern liberalism.
America 3.0 shows that liberal-progressive solutions to the challenges of America 2.0 relieved some problems, and kicked others down the road. But they also led to an overly powerful state and to an overly intrusive bureaucracy. This was the beginning of America 2.0, the America we grew up with, which dominated the Twentieth Century.
America 3.0 argues that the liberal-progressive or “Blue State” social model has reached its natural limits. Even as it continues to try to expand, it is now dying out before our eyes. We are now living in the closing years of the 20th Century “legacy state.” Even so, it has taken the shock of the current Great Recession to make people see the need for change. As a result, more and more Americans are calling for a return to our founding principles. Freedom and individualism are on the rise after a century-long detour.
America 3.0 shows that our current problems can be and must be transcended with a transition to a new America 3.0, based on modern technology, decentralized communities, and self-reliant families, and a reassertion of fiscal responsibility, Constitutionally limited government and free market economics. Ironically the future America 3.0 will in many ways be closer to the original vision of the Founders than the fading America 2.0.
America 3.0 gives readers an accurate, and hopeful, assessment of our current crisis. It also spotlights the powerful forces arrayed in opposition to the needed reform. These groups include ideological leftists in media and the academy, politically connected businesses, and the public employees unions. However, as powerful as these groups are, they have become vulnerable as the external conditions change. A correct understanding of our history and culture, which America 3.0 provides, shows their opposition will be futile. The new, pro-freedom, mass political movement, which is aligned with the true needs and desires of Americans, is going to succeed.
America 3.0 provides readers a program of specific “maximalist” proposals to reform our government and liberate our economy. America 3.0 shows readers that these reforms are consistent with our fundamental culture, and with our Constitution, and will make Americans freer and more prosperous in the years ahead.
America 3.0 provides a “software upgrade” for the Tea Party and for all activists on the Conservative and Libertarian Right. It provides readers with historical evidence and intellectual coherence, to channel the energy and enthusiasm of the rising mass political movement to renew America.
America 3.0 shows that our capacity for regeneration is greater than most people realize. Predictions of our doom are deeply mistaken. We are now living just before the dawn of America’s greatest days. Within a generation, positive changes beyond what we can currently imagine will have taken place. That is the America 3.0 we are going to build together.
The recent edition of “Parade” magazine when I saw a list of things that you can do to help others in need. I was struck by their plea to “Feed Hungry Children in Oregon” where they said that
Oregon has the nation’s highest rate of “child food insecurity.” About 252,000 kids – or nearly 30% of the state’s youth – aren’t sure where their next meal is coming from.
This surprised me because I never thought of Oregon as a state that had this sort of poverty. The example they gave in the article was as follows:
My husband and I both work full-time, but we make minimum wage, and some months it’s either pay our bills or buy food, says his mom, Nichole (her child is featured in the photo, above).
While this is a sad and heart rending story, there is another connection as to why their parents are having a hard time finding higher wage work. Per the Tax Foundation:
Oregon’s personal income tax system consists of five separate brackets with a top rate of 11% kicking in at an income level of $250,000. That rate ranks the highest among all states levying an individual income tax.
While tax policy may seem arcane to individuals worrying about food security, it is important to realize the CRUCIAL impact that state income tax rates play in state competitiveness. Of all the components of a tax burden, the ONE element that can be most easily modified or avoided is the personal income tax levied by a particular state. For instance, if you earn $1M a year, you’d be paying about $75,000 more in tax in Oregon than you would in Texas, Florida, Nevada, or other states that don’t levy a personal income tax (it isn’t $1M times 11% because of the graduated nature of the tax up to $250,000 and the fact that state taxes are deductible on Federal returns, so the $75,000 is a rough estimate).
A high marginal personal income tax rate falls DIRECTLY on those most likely to invest in a business that would hire someone like the family in this photo. A high marginal tax is analogous to seeking out the very individuals that could bring a state jobs and economic prosperity and telling them to invest elsewhere. You could go door-to-door and punch them in the face, or just set the nation’s highest personal income tax rate, the net effect is exactly the same.
The biggest fallacy the high marginal tax crowd falls into is the “fixed pie” thinking – since businesses and high income earners are unlikely to move, if you tax them more they will just sit like sheep and take it and pay into the state to fund their myriad social programs. That may be true in the short run and for individuals that are tied to their community, but I guarantee that every wealthy person has an accountant who carefully tells them the negative impact of residing in such a high tax state and the benefits of moving elsewhere on their take-home pay. If they have a choice to invest more in Oregon or go elsewhere, other states look much more inviting. Over time, investment slows, and then there are more and more articles with the sad faced children just like this one, and pleas for the rich to pay their “fair share”.
The problem is, the rich aren’t stupid, and a high state income tax is basically pushing them to invest and live elsewhere, particularly somewhere warm with a tax friendly climate like Nevada, Florida or Texas.
The linked article is, IMO, an important read for all of us in the think tank/free market movement. I’ve often started feeble attempts to write a nearly exact commentary, and thankfully, some one wrote it for me.
It encompasses many of the things I’ve attempted to communicate in various debates/discussions with colleagues at Heartland and out on the Free Market Rubber Chicken circuit. It applies to libertarians as much as conservatives.
MODERNIZING CONSERVATISM cogently lays out exactly why the conservative movement is heading toward rough waters.
While I don’t agree with every aspect of prescribed remedies, the need for a reformation of the movement is 100% accurate, IMO.
Some titillating excerpts…
“Long-term evidence indicates that the starve-the-beast strategy not only fails, but may make the problem of unrestrained spending growth worse, suggesting that a “serve the check” strategy might be a more effective means of curbing the growth of government spending. The simple explanation for this seeming paradox is that the starve-the-beast strategy currently allows Americans to receive a dollar in government services while only having to pay 60 cents for it.”
This article was featured on Drudge today (do you really have to hat tip Drudge anymore?). It is about the library staff all mad at Mayor Rahm for cutting the budget to the libraries.
In the comments, one guy (I think smartly) said the title of this post.
I think he is partially right. The new Kindle Fire (which I have an order in for and will review when it gets to me sometime later this month) is only $199. The cheap Kindles are only $79 now. Kindles come with tens of thousands of free titles of classic books that everyone should be reading anyways. That is the most exciting part of getting a Kindle Fire for me, the ability to have this immense database at my fingertips, for free (after the initial cost).
I imagine if you took the list of “frequent flyers” who actually USE the library (not just hang out there, I mean those who really check out books and return them) and bought them ALL Kindles for $79, or even the nice new version for $199, that you would be WAY ahead of the budget it costs to run all of those brick and mortar relics, the staff, and all the rest.
This way, a library would still be partially subsidized, but part user fee as well (if you don’t like the classic titles, buy your own), so folks like me, who haven’t set foot in a real life library in decades would perhaps feel a bit better about paying for libraries.
I like writing about things I know little about, because typically I learn a lot from the commenters, and get humbled at times. I am sure that the following will be one of those types of posts.
I have had this thought rolling around in my head for quite some time, and wanted to air it out to see what type of play it will get.
Our entitlement programs steam ahead into oblivion here in the US. In particular Social Security, while not exactly a Ponzi Scheme (but close enough), is on the Highway to Hell, if something isn’t done to fix it.
The only time I remember that something was honestly tried to fix SS was when GW Bush attempted to let a tiny portion (was it 4%?) of new inputs be allowed to be managed in a private account. Not many will remember that debate, but it was ridiculous. Literally, I heard over and over that the OLD PEOPLE WERE GOING TO BE THROWN OUT INTO THE STREETS AND FREEZING COLD. The noise was incredible, and very little logical, well thought out debate was presented. I am still disgusted when I think of how that debate was framed.
Every time that I get my pay stub I look at those numbers leaving my net pay and cringe knowing that MY PROMISE will be broken. This is a system that will most likely be insolvent by the time I get to the age of collecting. I have taken it for granted, and so have many of the folks I have talked to that are my age. My age – Generation X.
Loosely, Gen X is described as the post Boomer generation, the 13th to be raised under the flag of the good ‘ol USA. The birth years (again, loosely) are said to vary from definition to definition, but center between 1961 and 1981. I fall almost smack dab in the middle of it. So does my wife. And most of my friends. We talk about things like this.
This time period saw some of the lowest birth rates in the US. We don’t have enough of us to support all of you (I’m talkin’ to you, Boomers!). We are paying into a system (Social Security) that is designed, mathematically, to fail. Of course SS is just one of our many entitlement programs that are going to be under intense pressure in the future – if nothing changes. That is a big if.
The thrust of my thinking here is that it will be up to my g-g-g-Generation to fix this mess. As I look at all the grey hairs in the Senate and House (there are exceptions, of course) my thinking is that these things aren’t about political parties, they are age and culture differences. The folks I hang around with – Democrat, Republican, Tea, whataver, want things fixed, and done right. This isn’t universal, of course, but I hear a lot more common sense out of younger people and younger CongressCritters than the Old Guard.
Paul Ryan is a Gen X’er. I think the guy is fantastic and a breath of fresh air, and I firmly believe that his message and belief system is held in check a LOT by the Old Guard (I am pointing that finger at you again, Boomers). Sarah Palin is also a Gen X’er. Have you heard anyone else in politics say things like this? Again, this isn’t a party thing, it is a generational thing. I sort of feel like in a lot of respects, we have our own old person combine in Washington DC.
If we stay on the current course there will be hell to pay for anyone who hasn’t saved their dough, as far as retirement goes. But most of us (at least the people my age that I talk to) aren’t that stupid. Some of us are.
I guess I am tired of the Old Guard who screwed up the system telling me and others like Ryan how bad it could get screwed up if attempts are made to fix it. To me, it isn’t about parties, it is about generations. Generation X might end up being the folks that have to fix…everything.
I say “I learn something new every day” all the time. Because I do.
With skyrocketing fuel costs, I have begun to do research on more fuel efficient ways to deliver product to my customers. I live in a rural area, so we are forced to reach out and get the business. I work about a sixty mile radius.
I came upon the Ford Transit Connect. This is an interesting vehicle because of the relatively low initial cost and the 27 mpg on the highway. I did a bit of cocktail napkin math and this vehicle would pay for itself in fuel savings alone in about two years when comparing it against some of my gas guzzling diesel trucks.
While doing research on this vehicle, I discovered what the Chicken Tax was. I read about it on wiki.
To circumvent the 25% tariff on imported light trucks, Ford imports all Transit Connects as passenger vehicles with rear windows, rear seats and rear seatbelts.[9] The vehicles are exported from Turkey on cargo ships owned by Wallenius Wilhelmsen Logistics, arrive in Baltimore, and are converted into commercial vehicles at WWL Vehicle Services Americas Inc. facility: rear windows are replaced with metal panels and rear seats removed (except on wagons).[9] The removed parts are then recycled.[9] The process exploits a loophole in the customs definition of a commercial vehicle. As cargo does not need seats with seat belts or rear windows, presence of those items exempts the vehicle from commercial vehicle status. The conversion process costs Ford hundreds of dollars per van, but saves thousands over having to pay the chicken tax.[9] Partly because of this, only the long-wheelbase, high roof configuration is exported to North America. In most places, the high-roof Transit Connect, like most Ford Econoline vans, is unable to access multi-story parking because of its height (6′-6″).
I understand what was written, but was baffled as to why on earth a tariff on light trucks would be called a Chicken Tax.
I got curious, so I ran the wiki on the Chicken Tax.
The Chicken tax was a 25% tariff on potato starch, dextrin, brandy, and light trucks imposed in 1963 by the United States under President Lyndon B. Johnson as a response to tariffs placed by France and West Germany on importation of U.S. chicken.[1] The period from 1961–1964[2] of tensions and negotiations surrounding the issue, which took place at the height of Cold War politics, was known as the “Chicken War”.[3]
Eventually, the tariffs on potato starch, dextrin, and brandy were lifted,[4] but over the next 48 years the light truck tax ossified, remaining in place to protect U.S. domestic automakers from foreign light truck production (e.g., from Japan and Thailand).[5] Though concern remains about its repeal,[6][7] a 2003 Cato Institute study called the tariff “a policy in search of a rationale.”[4]
As an unintended consequence, several importers of light trucks have circumvented the tariff via loopholes—including Ford (ostensibly a company the tax was designed to protect), which currently imports the Transit Connect light trucks as “passenger vehicles” to the U.S. from Turkey and immediately shreds portions of their interiors in a warehouse outside Baltimore.[1]
I guess there is no real point of this post, other than to point out that yesterday’s thing that I learned was an interesting one. I now know what the Chicken War is, and also know what the Chicken Tax is.
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