Filed under Taxes …

Jan 07 2012
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Government, Politics, Rational Thinking, Taxes, USA, Voting

Misdirected Arrows

Having just seen last year all of the occupy demonstrations, my wish for the new year is that more people worldwide, and especially in the USA, will realize that the economic problems we are seeing in the world stem not from Capitalism but from Government and government intervention in what should be free markets.

While I get the beef the occupiers have, I have it too (anger at crony business for example), but so many people have their anger focused on the wrong place.  It is ignorance in the most caring sense of the word.

The occupy crowd (and the population in general) should not be upset at Capitalism or at the too easily contrived “fat cats”, they should go to the source of the problem which is Government.

Markets naturally self-regulate.  Why?  Because Buyers and Suppliers of anything have to both agree before any product or service can be bought or sold.  If one or the other cheats, lies, or otherwise doesn’t offer value they will naturally be eliminated or otherwise ignored.   The good and the bad word gets out.

The minute an outside party to the transaction gets involved and alters the relationship (screws with the free market) it is no longer a free market but a manipulated market.  Look around – do you not see Government intervention and manipulation in markets almost everywhere?  Housing, Health Care, Food, Labor, Stocks, Banking and on and on.

Look at the United States – we have a Constitution, a founding document of the nation that sets forth not what the Federal Government can do but rather what it cannot do.  This is somewhat unique to the USA and what has up until now set the USA apart from the rest of the world by levels of degrees when it comes to economic productivity.  The first job of the government is to protect your liberty, life, and property rights, and the first job of the President is to defend the Constitution.  We have a Congress that passes laws that regularly interfere  with your liberty and property rights and a current President that routinely tramples on the Constitution.

The problems we’re seeing in the USA and in many parts of the world are not stemming from Capitalism – on the contrary – its the lack of Capitalism that is pushing everything down.  When Capitalism flows freely the markets would take care of themselves.  If Government would get out of the way of interfering in markets so many of the nations economic issues would naturally resolve themselves.  Resolving economic issues leads to resolving many social issues.

Do you really need a far-away Federal bureaucrat deciding for you what you should buy, when, and for how much?  If you support this sort of a world, maybe there are a few countries for you where you could relocate, but the Constitution in the United States lays out the terms and conditions of the country.  It is clear that many people also confuse the role of the Federal government with the role of the States (ex. Dept of Education).  So many people lose their minds when you say we should get rid of the Federal Dept of Education – but think about it, what business does the government have being in the business of educating children?  That is not a role of the Federal government.  (As a side note, if you think about it again, you’ll realize why the Federal government like to have a hand in education.)

So while nobody like crony capitalism (hardly a free marketplace either), the occupy Wall Street Crowd and most Liberal Democrat voters have their arrows and frustrations pointed in the wrong place.  They should really take a clearer look at from where these problems stem and if they want to occupy something they ought to direct their energy at voting out people in the Federal government that are creating the policies.   The Federal government is the entity creating the problems then coming forth with “solutions” for the problems they create.  Enough – just vote out the wrong people and do your best to vote in the right people.  When you elect people like Barney Frank, Chris Dodd, Chuck Schumer, Harry Reid, Dick Durbin, Barack Obama, and the like, you get what we have now.  I’ll even throw in George W. Bush because he too abandoned free market principle as she said “to save the free market“.

So in this theme, spend 15 minutes checking out the above insightful video from Peter Schiff who went down to one of the occupy protests to see if he could have a dialogue with the people there.  You can see in the video that the crowd wants to just spout out quick slogans or blame zillionaires for making too much money, but Schiff sympathizes with them, calmly shoots straight with them, and shows them that their anger really needs to be put squarely on Washington DC and the politicians who create policies that do not let markets self regulate.  He is fair in his analysis and I hope here in 2012, in what is easily the most critical election year of your lifetime, more people everywhere understand that free Capitalism is the solution, not more Government.

Remember that at least in the USA the government governs at the consent of the governed.  How many Americans no longer consent to the current state of the Federal government and will vote out the wrong people this year?

Video from Reason.tv

Sep 25 2011
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Current Affairs, Government, Liberty, Politics, Rational Thinking, Taxes, Voting

The Social Contract

 

There is this myth out there that Conservatives are only for “the rich” and Liberal Democrats are always fighting for the “working class”.   Even though Liberals claim to be for the poor, or as they say the “less priviledged” and the “less fortunate”, it seems to me that Liberal Democrats don’t give a damn about the poor.  If they did, they wouldn’t continue to push policies that keep people down.

The policies that Liberals have put in place – and continue to push for do nothing but keep the poor poor.  When it comes to economics, Liberal policies and ideas do absolutely nothing to help the poor because all these policies do is maintain the poor.  Liberals are extraordinarily hypocritical – If anyone is for the “rich”  and priviledge it’s Liberals – just as long as they’re one of them.  Barack Obama is a perfect example – he’ll deride fat cats all day long then go meet them for dinner to collect cash.

But something Liberals tend to bring up over and over is this concept of the “Social Contract”.  Liberals want to engage in a system where people that have earned something are somehow obliged under some nebulous “social contract” to give up a portion of their wealth to others that don’t have wealth.

Look at Elizabeth Warren talking about this.  She’s just outraged that people that have produced something of value for their fellow men have not given a hunk of their wealth to the people.

She claims that “you built a factory out there?  good for you!“

But then she says she “wants to be clear” talking to the presumed factory owner:

“You moved your good to market on the roads that the “rest of us” built.”

“You hired workers the “rest of us” paid to educate.”

“You were safe in your factory because of police forces and fire forces that the “rest of us” paid for.”

Then she goes on to say..

“Now look, you built a factory and it turned into something terrific or a great idea, God bless…keep a big hunk of it, but part of the underlying “social contract” is you take a hunk of that an pay forward for the next kid that comes along.”

Are you kidding me?  First of all who is Elizabeth Warren to decide on behalf of anyone what “hunk” of their business they can keep?

Second of all, just what “social contract” is in place anyway?  A contract implies two or more parties coming together and AGREEING to terms of which all parties CHOOSE to participate.  Forcing one party to hand over some “hunk” of their efforts, brains, ingenuity, or otherwise when they have not agreed to do so is confiscation and there is no “social contract”.

Third of all she keeps saying “that the rest of us paid for“.  Really?  Has she seen who is paying Federal taxes in the USA?

Liberals love to tell you all about the rich and how much money they make, that it’s “disproportionate” and not “fairly distributed“. The somehow always forget to include the part of how much in Federal income tax is paid by the people that produce the wealth.

According to the IRS a few years ago the Top 50% of income earners pay 96.54% of all income taxes.  Last reviewed in 2010 it went up to 97.41%.  Here is the data (click the matrix for full view):

So if we are going to discuss income earned then we also need to discussed taxes paid.

With that in mind, let’s come back to this concept of a “social contract”.  Liberals always want to come at this this from only one direction.

  • What about the social contract where people who can’t afford health insurance rearrange their priorities to not purchase cool toys before taking care of the basics?  Sure it’s expensive but these are choices in life.  Part of the social contract is not obliging your fellow citizen to cover your butt because you chose not to.
    • What about people getting off this idea that someone else is going to pay for their mortgage and gasoline:
  • What about the idea of all American citizens paying something in taxes even if only a little.  When 50% of the country’s population pay absolutely nothing in Federal income taxes, they , as Ms. Elizabeth Warren likes to say so much are living in a society that the “rest of us paid for“.

The “Social Contract” is a two way street. If people of means would agree to “hand over” a hunk of their earned wealth, would it be too much to ask that those on the receiving end not abuse it and do everything possible to stand on their own two feet as best as possible?

The person that started his or her factory and did well did so because he or she delivered something of value to their fellow man who chose to purchase it in the free market – and yes Ms. Warren, the roads those product were delivered on were paid for in a much larger part by the same people that had the ideas, built the factories, and even employed others.

In short, the productive people of this world not only provide value to their fellow citizens, not only provide jobs to their local communities (and sometimes long distance communities), not only indirectly create whole new economies in the towns where they place their factories and offices, but they also paid almost all of the costs of putting the roads there, educating the workforce, and paying the taxes that provide local police and fire protection.

I have watch Elizabeth Warren’s announcement video and in all sincerity it’s pretty good, and she’s welcome to do what she thinks is right fighting for “working families” and fighting big lobby interests, but to attack productive people saying their goods were delivered on roads paid for “by the rest of us” is just factually incorrect.  The people setting up factories and other business are just as much a part of the working class as anyone – maybe even more so as there is no 9 to 5 in the world of the entrepreneur.

For Elizabeth Warren to come at this any other way is only to stir up false rage in some attempt keep class warfare alive.  Good luck up there in Massachusetts.

Jun 30 2011
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Business, Current Affairs, Economics, Government, Taxes

The Consequences of Being Irrational

This week California Governor Jerry Brown signed into law a tax on Internet sales in California.  His thinking (and the “Board of Equalization”) was that if they would just mandate that taxes be paid on internet sales in California then the state could collect a $200 million it doesn’t currently collect.

Immediately thereafter Amazon.com email 25,000 of it’s affiliates a termination notice.  Good for Amazon and shame on the Governor’s office and the “Board of Equalization” (a faceless government name seemingly straight out of an Ayn Rand novel) for getting in the way of the free enterprise system.

Why do governments operate as if they live in a vacuum?  What did California government people think was going to happen?  It’s 2011, why do governments think that all they have to do is raise taxes to raise state revenue.  If they want to raise state revenue, they would lower taxes and generate more velocity of money (lots of repetitive economic activity) in their own backyard economy, which would in turn generate more tax revenue.

California seems to be doing everything it can do drive business and businesses out of California. This is just the most recent example of failed centralized economic planning from people not in the private market but who think they should have some all powerful dominion over the individuals in the private market that actually work productively and truly support families.

No entity is more irrational and nothing destroys like government.

The best line in this article on the story tells it in plain English – “Board of Equalization Member George Runner blasted Brown for signing the law. “Even as Governor Jerry Brown lifted his pen to sign this legislation, thousands of affiliates across California were losing their jobs. The so-called ‘Amazon tax’ is truly a lose-lose proposition for California. Not only won’t we see the promised revenues, we’ll actually lose income tax revenue as affiliates move to other states.”

Think about that.

Bureaucrats seem to have a very hard time understanding the unintended consequences of their “actions”.

May 16 2011
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Current Affairs, Economics, Government, Liberty, Politics, Taxes, USA, Voting

Half the Country

This week Gallup.com reported that Obama’s approval rating is 48%.  Oddly enough Business Insider reported that 47% of American don’t pay any Federal income tax and think the tax system is just fine.  Who are we kidding in this country?  We have about half the country funding the Federal government and the other half of the country hanging on.  That wouldn’t be so much of a problem if it were not for the fact that those not paying any Federal Taxes have equally as much voting power as those that do pay taxes.

Imagine for a moment company of 300 owners where only 150 of them invested in the company but the other 150 have just as much voting power when it comes to electing the Officers of the company.  You can bet the 150 that are actual investors (paying the bill) would be a bit outraged that the other 150 have as much voting power, with no risk and all the benefit.

Now just take this example from 300 people to 300 million people and instead of calling it a company we call it the USA.  I think you can see why those paying Federal Income tax get mad that when they go to vote for a President their vote counts exactly as much as the person that doesn’t pay Federal Income Tax.

A solution to this could very well be to either make voting harder by having all voters pass a basic civics test, and even better would be to give everyone a vote, but for every say $20,000 in Federal Income Tax one pays he gets an additional vote.

Some solution needs to be found otherwise every year we’re going to run in to this problem and we’re going to keep seeing socialists like Barack Obama magically find themselves in the White House pushing ever more utopian fantasies while sapping the life-blood out of the country.  

The world is more global than ever and if we keep going down the path we’re going we’re going to look like Venezuela where today many of the capable, intelligent, and job producing Venezuelans have simply left the country and are waiting for Chavez to be gone before even considering going back.   There is no good reason for the USA to go down that path when it can be avoided.

Think about the stats in those links again.  Is it really surprising that 48% of Americans approve of Obama and 47% of American do not pay Federal Income Taxes.  Do you really think this is not the exact same group?  When half the country supports the other half and the supported half has the votes to keep it that way, we’re in trouble.

Gallup Poll 48% Approve of Obama

Business Insider 47% do not pay Federal Income Tax

Mar 26 2011
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Current Affairs, Ridiculous, Taxes, USA, Voting

Could you use an extra $9 million?

Let’s say you’re 25 years old and make $75,000 a year.

What if I now told you that your share of future Federal spending was $1,900,000 and that your estimated future Federal taxes would amount to $1,300,00 – and that if you were to instead NOT have to pay these taxes and you could get a 6% return on this money (money that YOU earned) it would be worth $9,200,000 when you were older if you lived to 79 years of age.

I have found a cool (and depressing) online tool that can calculate your share of either the entire Federal budget or even break it down into one of 19 diferent Federal programs such as Welfare, Foreign Aid, Social Security etc…

You simply enter your education level, your age, your annual income and it calculates the 3 figures – your share of spending, your future taxes, and what the taxes COULD have earned you at 6%.

Read it and weep.

Read it and vote : The 2012 elections are coming

 

 

 

Dec 07 2010
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Current Affairs, Government, Rational Thinking, Taxes, USA

Is wealth acquired or distributed?

I was watching TV today when somebody on the show talking about the current debate on taxes said that there is an “unfair” distribution of wealth in America and that there is no good reason we should not be taxing the super wealthy more.

First of all, wealth by its very nature is acquired.  Start at the begining when there was no wealth.  What would have been distributable?  It took men to make wealth, build wealth, and from there others too were able to work for, and acquire wealth.

The concept of distributing wealth is essentially the concept of stealing.  You can certainly distribute your own wealth if you choose (and many do through charity) but the act of others distributing your wealth would be, and is stealing regardless if it is done directly or through a proxy.

So when liberals say that we should tax the wealthy (or the wealthier among us) simply because the wealthy have wealth is only legalized theft.  That wealth is private property regardless of how big or small the wealth is.

When your neighbor steals $100 from you and gives it to your other neighbor it’s called theft.  When the government taxes you a $100 and gives it to your other neighbor it’s somehow called compassion.

Everybody gets the concept that country needs a tax base with which to operate  But the problem is when one group of people “decides” that another group of people should be taxed more and more and more simply because they have it.  It’s not up to elected officials to “decide” which group of people should have more of someone else’s private property to support re-distributionist programs.

When discussing wealth and the wealthy, we hear some people say things like “but there’s no way they can spend that much money“.  They may be right, but the only acceptable answer is that it’s none of anyone’s business how much or how little someone spends of his own money.

The solution to this whole situation would be to simply get off a tax system based on income and move completely to one based on consumption.

* image credit http://thepeoplescube.com 

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