Taxes

Are We More or Less Free Than We Were in 1975?

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I recently sent this link to some friends, which lists “10 Things You Could Do in 1975 That You Can’t Do Now.” The list included:

2. You could buy cough syrup without showing an ID
…
4. You could buy a gun without showing an ID
 
5. You could pull as much cash out of your bank account without the bank filing a report with the government
 
6. You could get a job without having to prove you were an American
…
9. You could open a stock brokerage account without having to explain where the money came from
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10. You could open a Swiss bank account with ease. All Swiss banks were willing and happy to open accounts for Americans

I opined: “We are FAR less free than we used to be. The “War on Drugs” is a major cause, but general government encroachment for its own sake is behind most of it.”

My friend Singapore Pundit responded:

[Lex], I have to challenge your theory that we are “FAR less” than free we use to be. Here is a short list of things from the 70’s which we are free from today: The military draft; 70% marginal tax rates on income; airline price regulation by the federal government; forced busing of school children; gas rationing by the federal government (Nixon); legalized monopoly of telecommunications; US gov. restricted travel to China, Vietnam, Russia and east Europe; banned importation of books based on ideology; tariffs on goods from Canada and Mexico; federal government price controls (Nixon); 25% of workers in unions (now it’s 7%). Here are somethings we have today versus the 70’s which I would argue make us freer: charter schools; home schooling; the internet and access by it to free information; 401K; more right-to-work states; right to vote for citizens over 18.

I had to concede these were all good things.

So, on net, are we freer or less free?

Chicago “TIFs”

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In Chicago a “TIF” stands for “Tax Increment Financing”. Here is a link to the City of Chicago web site which explains how a site qualifies as a TIF. Basically a TIF limits the amount of property tax the city can collect at the location and in effect gives the owner / developer a big tax break. There are many reasons listed by the city as to why a location might qualify but supposedly it is used to eliminate “blighting factors”.

The Chicago Reader has written a series of articles about how TIF’s are used to reward already rich developers with tax breaks. The Sun Times wrote one this week:

It’s time for another serious look at the pros and cons of Tax Increment Financing in Chicago — a tiff over TIF — the controversial economic development program that’s supposed to revitalize struggling neighborhoods by offering financial incentives to potential investors.

The “sweeteners” come from property taxes that, to a large extent, might otherwise be spent on education, housing, parks, libraries, and public safety.

That’s defensible when there’s enough tax revenue to go around, but it’s problematic in lean times, like now, when Chicago is closing schools, firing teachers, reducing library hours and trying to fight violent crime with fewer police officers.

Another concern is that many TIF “districts” are in affluent areas, especially in and around downtown, which violates the intent of the state law that created the program in 1977 to revitalize “blighted” communities.

Here is a project that is being built under a TIF; this is for a $29M park alongside the Chicago River at Canal and Lake Street. the “River Point TIF” is obviously located in an area that doesn’t appear to be tied to much blight…

While it is likely that politically connected developers and clout-heavy individuals are tied to this process, on the other hand this is one of the few ways the city actually and concretely assists businesses that generate all of the economic value for them. Businesses pay very high property taxes in Cook County / the Loop and then the tax breaks fall back to the selective few that run through this process. It is a very opaque process and there is limited information available on the TIF accounts and funding.

Cross posted at LITGM

Illinois Will End up Like Detroit if It Does Not Change Course

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Detroit was once the greatest city of the modern world. Automobiles were the cutting edge of technology in the first half of the twentieth century. Talent and genius flocked to Detroit. Innovators in engineering, technology, design, finance, marketing, and management created a concentration of economic dynamism and creativity unlike anything the world had yet seen. Detroit was the Silicon Valley of its day, except its products were made of tangible metal, rubber, and glass. The auto industry transformed America into a land of mobility and personal freedom beyond the dreams of earlier generations. Henry Ford said, “History is bunk.” He meant the old limits could be blown away, and ordinary people could have a better life than they had ever dreamed of before.

(The rest is here.)

Quote of the Day

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The solution to this scandal is not to fire the likes of Lois Lerner (though that would be a good start). The answer is to abolish the agency entirely, and to make a concerted effort to shrink the size and reach of the entire federal government apparatus.

Ace of Spades

RTWT.

Peggy Noonan is figuring it out …

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Peggy Noonan is getting there. A few days ago she was still talking about “restoring trust.”

But the IRS scandal is about facts not trust. She has apparently figured that out.

Now she says “If it isn’t forced back into its cage now, and definitively, it will prowl the land hungrily forever.”

That’s progress.

But “forced back into its cage” is a metaphor. Peggy can’t bring herself to say what it must mean.

Let’s think out loud about what it must mean.

The IRS is staffed by unionized employees who are aligned with one political party. The IRS is about to be given sweeping new powers under the ACA. This entity cannot be forced into a cage. The incentives drive the conduct, and the incentives are destructive for the liberty of anyone who opposes the Democrats on anything. That is structural, it is not a matter of individual incompetence or malice.

The only solution is too radical for most people to consider: The existing IRS has to be shut down and replaced. The only way this limitless menace can be removed is if the existing IRS, the existing tax code, the existing storehouse of personal data on all Americans, and the capacity to destroy people’s lives at discretion are ended. A new simplified type of tax code and a new taxing authority to enforce it, staffed with a new workforce, is a massive proposal, but anything less won’t work.

The monster can’t be caged, it has to be eliminated.

BTW, this is Cook County on a galactic scale. We have seen the Black & White version of this movie in Chicago, the color version in Springfield and now this is the 3D IMAX version of the same horror story. Government power for partisan oppression is too normal to talk about here in Chicago. Fifty Democrat alderman and zero Republicans is too normal to mention. Democrat super-majorities in Springfield at the same time they are reducing the state to an international dunce is somehow the way things inevitably go.

We know where this is going. America is next.

But America is a big place, and the Chicago Way may not play well in the other 49 states.

I hope the rest of the country figures out what is happening.

Soon.

(We discuss eliminating the IRS in America 3.0.)