Taxes and the Total State

Biden has proposed a rather draconian tax initiative: you can read some of the details and an analysis here.  It will be justified, of course, by claims about “asking the rich to pay their fair share”, and “equity”…and I’ve already seen arguments that no one should be concerned about this unless they are very high income or soon expect to be, and that there aren’t many people in that category.

Some responses are obvious: Taxes originally targeted at high income levels have a way of migrating downward through the income levels–the income tax itself is an example.  The capital gains rates are in reality much higher than they look, because of the effect of inflation on asset prices.  Corporate income tax increases can affect everybody, regardless of income levels, in their roles as workers, consumers, and/or investors. And there is the matter of fairness–true fairness, not faux fairness:  it is not truly fair, democratic, or even civilized to assume that because there is only a small number of people in a given group, the rest of the society is entitled to do anything to them that they feel like doing.

But there is also, I think, an even more important point to be made.  A tax structure like this Biden plan–with its likely extensions and increases over time–acts to prevent the establishment and sustainment of individuals and families wealthy enough to act as a countervailing force to the government–media–academic complex.  I think the kind of people who inhabit the Biden administration, and who dominate today’s Democratic Party, do not like to see power & influence centers outside of this complex.  They really, really don’t like it, for example, that someone like Elon Musk can bypass their censorship efforts by buying and running a social media company.

Woodrow Wilson disliked the whole idea of separation of powers within government, which seemed to him to violate some kind of organic principle.  Totalitarians of all kinds have striven to eliminate alternative centers of loyalty and influence within their overall societies.  As Benito Mussolini put it:  “Everything in the State, nothing outside the State, nothing against the State.”

Whatever your current and expected income and wealth levels–if you value the continuation of America as a free society, then you have a dog in this fight.

24 thoughts on “Taxes and the Total State”

  1. For some reason the first things that came to mind when I saw the article posted were the Stamp Tax of 1765 and the Tea Tax of 1773.

    Subotai Bahadur

  2. “… if you value the continuation of America as a free society …”

    Continuation? I fear that ship has sailed. We now have a Fascist society — private ownership allowed, as long as those private owners kiss the ring of the Political Class. As a side note, “Communist” China has converged on the same Fascist model, just as much as the “democratic” West. The only difference is that the Chinese version works a bit better for ordinary citizens.

    It is obvious today that “elected” “representatives” pay very little attention to the interests and wishes of their citizens. And there is only a UniParty in the DC Swamp, with no meaningful organized opposition to whatever the Deep State wants. Therefore, there is very little any of us can do about “Joe Biden’s” dumb & destructive tax plan.

    But let’s not be downcast! The Swamp has so mismanaged the once-thriving US economy that an economic catastrophe is unavoidable … if the Political Class does not trigger a global thermonuclear war first. Either way, the future will be painful — but the survivors will then get to rebuild, and hopefully this time Build Back Better.

  3. Gavin–in the US at present, you can post or say just about anything you want without police hauling you off to a concentration camp. Can’t do that in China. Yes, there are bad trends here, but there is still a big gap between US 2024 and full-on Fascism or Communism.

    An economic collapse, and the likely ensuing social and political collapse, would not be something recovered from in a few years, probably not in anyone’s lifetime, their children’s lifetimes, or their grandchildren’s lifetimes. Think starvation, epidemic diseases, and civil war–not like the US civil war, but more like the Spanish civil war.

    Politicians are not undifferentiable. Ted Cruz is not the same as Charles Schumer. Ron DeSantis is not Kathy Hochul.

  4. DavidF: “An economic collapse, and the likely ensuing social and political collapse, would not be something recovered from in a few years, probably not in anyone’s lifetime …”

    Absolutely! Japan & Germany recovering from the destruction of WWII took at least a quarter of a century of hard work (a generation), and that was with generous help from a wealthy US. China recovering from the Century of Humiliation and Mao’s Cultural Revolution took more than a quarter of a century, and that was with the assistance of investment & job-transfers from a then-not-quite-so-wealthy US Political Class. Recovery from the forthcoming inevitable collapse will take at least a generation, more likely 2 or 3 generations, given the expected lack of external assistance. Hard times create strong men, etc. This is really going to hurt for decades — no doubt about it.

    Yes, there are some politicians today who recognize what is coming and are doing what little — what very little — they can. But they effectively have no significant effect on the direction of the country.

    Bottom line — China is not threatening world peace and regressing to a Third World country; the US (or our Political Class) is. And there is nothing effective than we US citizens can do to stop the madness.

  5. Taxing the uber rich fails every time. The uber rich have armies of layers and accountants and are able to move their wealth to wealth friendly countries. This scheme was a massive failure in France, causing the uber rich to move their money and domiciles to Brussels, while “renting” (presumably from themselves) in Paris. Thus the pressure to lower the triggering wealth limit to the professional class, lawyers, corporate executives, physicians, etc.

  6. If this “tax adjustment” is intended to eliminate the accumulation of generational wealth, it will work about as well as every other government program. Which is to say, not at all. Were there some chance of it working, the Democrats would see the immediate exodus of people like Bezos, Jobs and Brin from their donor lists. You’ll know when billionaires start attending Trump rallies.

    An effective system would be modeled after the Chinese. There the authorities show up at your doorstep at 3:00AM and “invite you to assist them in their inquiries”. Nothing more is heard or seen of you until, some months later, it’s announced that various discrepancies have been cleared by the transfer of some billions of assets to the state. You go back to your life, absent any foreign travel plans, chastened and awaiting the next round.

    I’m confident that the main purpose is to show, on paper, an increase in revenue to be used to justify increasing spending amounting to many times the, never to be realized, increase in revenue. The only permanent winners will be the elite tax accountants while the permanent losers are all of us, certain to be ensnared in all the nooks and crannies that never make the headlines.

  7. Democrat exodus…Bill Ackman (Pershing Square, about $4 billion) has said that he will not vote for Biden and is ‘open to’ voting for Trump. (He has also said he voted for Trump in 2016) One swallow does not make a summer, but a positive sign.

    However successful ultra-wealthy people may be shielding their assets from taxes, the Biden plan would certainly reduce the dynamism of the overall US economy, as well as further empowering politicians and government officials.

    Obama asserted that at some point, you’ve made enough money–he certainly does not to feel that way about power, nor does his apprentice Biden.

  8. “re China and how well it works for ordinary citizens”

    The article basically demonstrates the great similarities between the US and China — which does not show either of them in a great light.

    China’s pension scheme is going to run out of money in 2035 –the US Social Security system is in the same boat. Chinese people can’t afford houses in their cities — talk to the families living in tents in rainy Seattle. Chinese people die in jail — do we remember Mr. Epstein? Chinese local governments waste resources on prestige projects — just like city governments in the US. China is tough on political dissidents — the US keeps citizens who protested a dysfunctional election jailed for years without trial.

    China obviously has problems, even though it has been very successful in raising hundreds of millions of people out of poverty. The US has problems, and our government has fumbled around while millions of people have been pushed out of the Middle Class. Both governments are functionally Fascist. At least the Chinese government seems to recognize the importance of a productive economic base.

  9. From David Foster: “Think starvation, epidemic diseases, and civil war–not like the US civil war, but more like the Spanish civil war.

    Exactly. Our national history has spoiled us about the concept of what a civil war is. Ours began with electoral and legislative moves to separate [not riots and uprisings], and as very bloody as it was, it was not a genocidal war. It was ended without mass murders in the occupied South, and there was a strong effort in both the Union and the former Confederacy to bind us together as a nation again.

    Mention was made of the Spanish Civil War. I rather expect that to be the pattern, and the Spanish Civil War may well be something that would bear study by Americans. And I would, given our current functional governing paradigm, place special emphasis on what happened to José Calvo Sotelo and the aftermath. Human history does not repeat itself. But it rhymes like bugger-all.

    Subotai Bahadur

  10. is the only real way forward. Stops all the fighting etc. Biden is trying to usher in a Marxist state by coming through the back door, and colleges. @pointsnfigures1

  11. I found Biden’s announcement somewhat bizarre, after all he has no possibility of enacting it this year and proposing any tax increase during an election year, even one that “soaks the rich”, is politically suicidal. I can hypothesize that he is trying to placate an internal Democratic constituency, say the Elizabeth Warren wing, which would show how shaky is his grip on the nomination.

    As far as post-collapse revival, I’m with David in that it would be generations (if ever), and then questionable whether it would be in a desired form . I am wary of comparisons with Japan and Germany for the simple reason that there were both a larger power which had an interest in their revival and a larger economic system in which they could be incorporated into. The reason failed states remain failed states is that if they had the ability to revive themselves they wouldn’t have become failed states to begin with, Take that any way you want.

    There are a lot of alarming trends and examples in the U.S. regarding the abrogation of liberty and natural rights, but I find the comparison with China to be at this point wanting.

  12. I have mentioned John Marini before and the crisis we gave in American government. Here’s a pretty good summary they’re just a bit wonky, of of his argument in the form of a book review by Michael Anton of “Flight 93 Election” fame

    Note the date of the article which matches the publication date of Marino’s book- 2019 which predates COVID and the Deep State chicanery of the 2020 election

  13. China and the USA are culturally very different from each other. The Anglo countries have had fascist and communist political movements but so far none of the Anglo countries has had a totalitarian national government. I don’t think one can make inferences about the USA based on what’s happening in China.

  14. Announcing tax increases in an election year is like being soft on Iran and Hamas in an election year.

    The Biden people 1) are trying not to lose the votes of the young hard-left voters who are becoming a major Dem constituency, and 2) really believe the nonsense. This is no longer Bill Clinton’s Democratic Party.

    Most of these young lefty voters don’t know anything about history, economics or the existence of tradeoffs in human life. (Thanks, Barack! Thanks, teachers’ unions! Thanks, complacent Republicans!) It sucks but here we are.

    We may be in for a wild ride. Let’s hope for a soft landing.

  15. Jonathon: “…none of the Anglo countries has had a totalitarian national government”

    That all depends on definitions, doesn’t it? Protest the DC Swamp, and go to jail — trials optional. Try to do any business, and you need permission from a government agency, maybe multiple agencies. Most media effectively controlled by the government — no opposition there. Political enemies of the Swamp pursued endlessly through the courts. No organized political opposition in Congress — notice the lack of action on the influx of illegal aliens. States are largely powerless, mere administrative arms of the DC Swamp. Honest elections are in the rear-view mirror.

    By the standards of most 1950s Americans, what we have now is distressingly close to a being a totalitarian government. I don’t like this any more than you do, but we need to start being honest with ourselves about how deep the rot is. The US is no longer the country in which we were born.

  16. Several interviews and observations over the weekend show the average inhabitant of these various “protest camps” to be the ultimate low information voter and one wonders how likely it is that someone so uninformed will actually cast a vote. The dozens of identical tents and especially the presence of cadres enforcing discipline and discouraging outside contact show that these camps are being subsidized and instigated outside forces with our old friend Soros chief among them.

    These “protesters” seem to be mostly humanities undergraduates. Remember how the earlier ruckus died down when the participants learned that calling for the extermination of their future employers and their families caused these same employers to take exception and even rescind job offers. Possibly these present campers, presumably studying such subjects as journalism, education, English and “studies”, have reached the realistic conclusion that their employment prospects rest with avoiding a criminal record and offensive tattoos, visible when wearing the uniforms popular in fast food and fast casual dinning establishments. Certainly, there will be few people willing to pay for access to what they’ve learned in those ivy covered halls. The exception being such outlets as Only Fans, where other things leaned and practiced among the ivy and in the dorms in a more informal way, seem to find remuneration. I expect that some of these campers are idling away the slow times in camp giving each other tattoos, just as if they were in prison, while the criminal consequences are being worked out. The only certainty is that no harm is being done to the intellectual development of these inmates, merely the substitution of one source of indoctrination with another.

  17. I’ve read a fair bit about the Spanish Civil War- I loved the Hugh Thomas book on the topic because he described in loving detail the slow and inexorable defeat of the communists- but mostly this was at least 25 years ago. Here’s a link and a quote from it about the murder of Jose Sotelo:

    Though the government denounced the murder and promised to investigate, it made no effort at conciliation. Censorship was immediately imposed to conceal the truth, nothing was done to apprehend those directly responsible and instead numerous Falangists and rightists were arrested (this was not unusual behavior when members of the political right were murdered by Popular Front members). A judge, Ursicino Gómez Carbajo, did take up the case independently within hours but the case was abruptly taken off his hands by the Guardia de Asalto , seemingly because he was an independent and honest judge.

    Seem familiar?

  18. The current income tax is the primary means by which politicians tells us we can get something (e.g. health care) but also get somebody else to pay for it. Even more hilarious is the fact that they say the same thing to different groups of taxpayers and only change the name of the “somebody else” group. And we keep believing it – or so it seems.

  19. @ David Foster > “Obama asserted that at some point, you’ve made enough money–he certainly does not to feel that way about power, nor does his apprentice Biden.”

    Obama didn’t ever feel that way about HIS money, only about YOURS.

  20. A few other thoughts.

    Woodrow Wilson wasn’t so much a fascist as he truly believed in tyranny. He believed in the Progressive ideal that “Science” and reason could be used as a tool to determine both the proper course of action for government and for the implementation of that course; law and the Constitution be darned. Most of the evil in our government stems from him and he embodies the great turning point in the course of the Republic.

    We still don’t give enough opprobrium to Thomas Friedman for his remark back a ways when he wished we could be China for a day. That train of thought dates back to Wilson.

    On further reflection, it’s even more amusing for Biden to be discussing a tax increase. For the past 20+ years we haven’t worried about tax increases because we just all that new spending on the credit card known as the national debt. The Democrats and the media like to crow about Biden being one of the most successful presidents ever because of all the legislation he got passed; of course it was all spending, inflationary, and was just debt financed. Money for nothing and chicks for free.

    Oh seems to be more than correlation between deficit spending and Quantitative Easing, no?

    I have been following the budget deficits in blue states like California and Maryland who went on spending sprees over the past few years and now have massive structural deficits stretching well into the future. Based on both history and common sense, these deficits were predictable as are the solutions that will eventual remedy (higher taxes). This is the old game of politics which is based on psychology and communication. Large amounts of tax money from economic good times; Music Man-style politicians promising to “invest” the money in new programs to make the world a better place, the economic cycle goes through its natural course and the slowing economy produces deficits that can only be solved by tax increases (because the Music Men know that new spending once implemented will never be cut)

    That’s why Connecticut went from no income tax in 1991 to one of the highest state rates today.

    I’ve got an idea to end deficit budgeting and partially restore the Republic. I still believe that occasional deficits are necessary for such vital emergencies, like say WW II so we wouldn’t totally ban such budgetary maneuvers. However my proposed constitutional amendment would read “When the nation shall incur a budget deficit for more than 3 consecutive fiscal years, all members of Congress and Senate will resign their offices and forfeit eligibility for future elections” If the political critters think fiscal deficits are so necessary then they can be patriotic, take one for the team, and return like a modern-day Cincinnatus to their farms (or more likely just move across town to K Street)

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