Actions Matter

Socialists running for President are having a tough time this week with this whole wealth redistribution thing.

Bernie Sanders was asked why he hasn’t paid “his fair share” in taxes.  He noted in the town hall his 2016 campaign advocated for a 52% tax rate on the wealthy (which includes him).  When pressed by Martha MacCallum on why he hasn’t paid that (he’s taken advantage of all the tax breaks afforded under the changes passed by Congress and signed by President Trump), his response was purely reactionary, essentially -- well why don’t you?  It seems to be a standard for socialist politicians – you all should pay more, but I won’t unless forced to.

Don’t get me wrong, I’m all for Bernie keeping his money as long as he complies with the tax requirements, but then I’m not suggesting the rich pay more either.  If you advocate for a high tax rate to pay for government spending, and are not willing to voluntarily pay that much yourself then all you are doing is advocating for less freedom for others.

The exchange:

Marth MacCallum: “So would you be willing to pay 52% on the money that you made? You can volunteer, you can send it back”

Bernie: “You can volunteer too…why don’t you give? You make more money than I do”

MacCallum: “I didn’t suggest a wealth tax”

Bret Baier: “And she’s not running for POTUS”

Then, to deflect the questioning, he launched into the "let's see Trump's tax returns" defense.

Beto O’Rourke was asked by a student at the University of Virginia why his charitable donations are so low when compared to others (averaging about .7% compared to 3-4% as a national average).  His response was: "There are charities that we've donated to that we've recorded and itemized, others that we've donated to that we have not," O'Rourke said. "I'll tell you, I'm doing everything I can right now, spending this time with you, not with our kiddos, not back home in El Paso, because I want to sacrifice everything to make sure that we meet this moment of truth with everything we've got."[1]

Essentially, O’Rourke’s answer is he is so important his time running for office is his donation.

There are a number of studies that highlight the different views of liberals and conservatives regarding charitable donations, but I find nothing that suggests one group is more or less charitable than the other.  The one thing I do find is one group thinks it’s the government's job to provide for the basic needs of the people, while the other group thinks the government’s job is to set the framework for success and let the people succeed or fail under that framework.  The charities the two groups contribute to reflect that philosophical difference.

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[1] https://www.dallasnews.com/news/politics/2019/04/15/beto-orourke-releases-10-years-tax-returns-shows-366000-income-2017

Congratulations New York

In a span measured in months, New York was able to attract a HUGE commercial enterprise that by its own reckoning would employ up to 25,000 employees, and then convince them to bugger off since the people really didn’t want them after all.

I’m guessing these were not 25,000 minimum wage jobs, but rather competitive pay for skills jobs with salaries matching the corporate standards for those skills.  

Don’t get me wrong, there was a downside to the deal.  It was akin to what every NFL team demands when they threaten to move from their current city or offer to come to yours.  They want the taxpayer to help foot the bill.

In the case of Amazon coming to NY, the announced move included something like $1.525 billion in tax incentives, spread over a number of years.  It would have also included the costs for infrastructure upgrades in the transportation system (both roads and rail).

But there was clearly a huge plus side as a new industry rolls into town.  There would be a boom in the housing market as well as local retail sales for products the employees couldn’t get through Amazon.  Those same employees would then become part of the tax base to pay for all the social programs New York politicians are so fond of.  It was just the other day the Governor of NY was complaining about Florida “stealing” all the residents of NY, so 25,000 good paying jobs might have eased the sting of a state that just announced a $2.3 billion budget shortfall.  Of course, that shortfall has nothing to do with the policies of state government, it is all Washington’s (probably President Trump’s) fault.

Fortunately, for Amazon, the visionary politicians of the state convinced them their corporate greed wasn’t welcome in Long Island City and they should just not unpack their bags and leave.  So, they have.

Fortunately for New York the Green New Deal will be there for them.

It Seems Kind of Ironic

I was thinking about our history as I took the trash out to a chilly morning.  It was a chilly December night in 1773 when the radical group “The Sons of Liberty” went to the Boston harbor to protest the imposition of tax on tea imports.  This was the last of the duties (taxes) imposed by the Townshend Acts of 1767.  The intent of Charles Townshend’s duties was to help defray cost to the crown for maintaining and defending the colonies.  Those affected by this burden saw it as governmental overreach.

Today, as we look at the descendants of those radicals we find the radical spirit still remains.  Only now they are in favor of higher taxes (as long as it’s not on them), and greater government control (as long as it is by people they agree with).  When others come to disagree and suggest the original Sons of Liberty had the right idea, that perhaps there is too much government and the spending of the government is really overreach -- those views are yelled down.

AppleTax

According to CNBC, Mr. Tim Cook the CEO of Apple and Democratic supporter, has just weighted in on his view of tax inequity in the US[i].  It is always refreshing to see the views of the CEO of a US based international mega-corporation who avoids paying taxes by sheltering money overseas.  In Apple’s case they avoid paying money wherever they can, and I think it works out to billions of dollars kept off the tax base.

Tim promises to keep that money where the US or Europe can’t tax it until we have a “fair rate.”  Obviously he does not like the current 35% corporate rate on the books, or perhaps he is concerned the top 1% aren’t paying their fair share? 

Interestingly, Mr. Trump has proposed lowering the corporate tax rate from 35 to 15%, and Ms. Clinton has not weighted in with specific rate proposals, only the ideas that we should look at ways to keep company profits in the US, or penalize companies that expatriate.

Ms. Clinton, who Mr. Cook supports, has proposed higher rates for the wealthy, but as mentioned, has not chosen to address how internationally diverse companies, like Apple, should pay their “fair share.”  So far she’s not even defined what “fair” looks like.

Does anyone really believe Apple will voluntarily pay corporate taxes if there was a change to the individual tax codes?  In fact, I would go so far as to say Mr. Cook would look for ways to avoid personal taxation that exceed what he, his accountants, and lawyers do today if the rates were changed.

We talk about corporate greed, and then for some reason never question the honesty of billionaires who have made their fortunes off our society.  That is unless they espouse support for anyone other than a Democrat.

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[i] http://www.cnbc.com/2016/08/14/tim-cook-addresses-apples-us-taxes-says-no-repatriation-without-fair-rate.html

It’s a Conundrum

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We have become obsessed with government regulation to keep us safe.  We impose these regulations on our producers, manufacturers and industries to the point we drive production overseas where we have absolutely no visibility on how things are done.

Then we set our priorities on paying for big programs, with managers for managers and assistants to the managers, so that when budgets are built the workers themselves are too expensive and the work force is reduced to the point where we only randomly inspect goods coming into our country.  Then we wonder how dangerous stuff gets into our products.  In our zeal to protect ourselves – have we?

We complain about how the rich get richer, while the poor stay poor.  We set up vast bureaucracies to redistribute wealth.  Unfortunately the tax code regulations, written, rewritten, modified and amended over the past 100 years, are a vast hodge-podge of rules established to fund the government while encouraging business, and perhaps protect those whose political favor is sought by the politicians.  Because of this, the wealth distribution really only happens between the middle class and the poor while the rich are able to maneuver within the labyrinth of shelters and loop holes.

We now talk about more taxing of the 1%; unfortunately 99% of the people who say that don’t have a clue as to what it means because they are the self-same ones who say their taxes are too high.  They clamor on the backs of the political operatives who’ve found someone to blame for our problems.  They are inflaming the passions of people who want everything - but want someone else to pay for it, just as they did when they argued that taxes were too high in California and pushed for Proposition 13.  We don’t like to pay taxes so let’s not!  Of course what was a jewel of a State University system back then -- isn’t anymore and the entire infrastructure of the state is questionable, but so many people know what is right let’s just do all their right things, even if we don’t have funds, heck it is only debt and that’s someone else’s problem isn’t it? 

Then we come to the protections of the Constitution.  Historically we viewed the Constitution as not only the framework for our government, but in its amendments the bedrock of protections of the individual against the transgressions of the state.  Now we seek to use those protections to bludgeon the individual when their wishes run counter to the loudest voices of the political movements, and we do so through a willing court system that carries those self-same political agendas.  It is for some - more important to get their way then to protect the concept of independence and individuality, so in the name of some cause they are willing to sacrifice their freedoms, one same step at a time.

History has shown political movements are like pendulums.  Swinging first one way; then the other with increasing movement to the extreme, until something cataclysmic forces them to reset.  It is inevitable, just a matter of time before it happens.  Then what?

It is indeed a conundrum.

New Taxes

As a fiscal conservative I guess I am a heretic.  I am not fundamentally opposed to new taxes.  The problem with new taxes is there is nothing in our history, that I am aware of, where new taxes have solved the problem of deficit spending.  All new taxes do is allow the government to grow more, which means they borrow more, which leads to new deficits, and the call for more new taxes.

If, on the other hand, the Federal government was required to operate like 41 of our states and the President and Legislature were obligated to submit and pass a balanced budget, and could not carry over a deficit I might favor a tax or two to make ends meet.  But the federal government does not operate like most states, the President can submit any budget the executive wants and the legislature will usually inflate it for their own pet projects.

So let's say we raise taxes to close the deficit?  I think only the most naïve among us would think that money will go to help those in need.  Clearly our experience shows it will go to growing the government to make it bigger, more commanding, and more invasive. It will add regulations, oversight, bridges to nowhere, tunnels to nowhere else, and surveillance in areas where we don’t already have surveillance.  It will not fix infrastructure, unless your Senator and Congressman is in a key position, or someone needs a favor, and it will not improve the lives of the ordinary taxpayer.  But most of all it will not reduce the deficit, lower the debt, or bring fiscal realism to the realm for anything more then the briefest of times.

So I say, until we have a Constitutional amendment requiring the President and the Congress to balance the books if they want to be paid, I am not in favor of new taxes, even the sneaky ones like the affordable health care act that wasn’t a tax, but the Supreme Court seems to think is okay because it is.

What's in a Name?

“Juliet:  What’s in a name?  That which we call a rose by any other name would smell as sweet.”  ~ William Shakespeare, Romeo and Juliet

The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power. It is therefore necessary to turn to the Government's alternative argument: that the mandate may be upheld as within Congress's power to "lay and collect Taxes." Art. I, § 8, cl. 1. In pressing its taxing power argument, the Government asks the Court to view the mandate as imposing a tax on those who do not buy that product. ~ Chief Justice Roberts, Ruling, Natl. Federation of Independent Business v. Sebelius

Apparently, like Shakespeare, the SCOTUS, really doesn’t hold what the Congress says in their public statements, or what they write in the law is a true definition of Congressional intent for determining the constitutionality of its law.  As long as somewhere in the Constitution a legitimate reason can be found then the SCOTUS should uphold the law.

So for those who aren’t poor enough, or covered with company insurance, or in some other ways eligible not to be taxed I wonder what that bill will look like.  I look forward to my 2014 tax form.  It won’t affect me as I have elected to pay for insurance, and as a retired veteran have automatic coverage for life, but I think there will be a pretty sizeable pool of tax payers, mostly in the 26+ year group, with a new bill.

We probably need to unionize the Doctor’s so they can benefit from this new system by organizing to ensure they don’t have to work more than 32 hours a week, with credit for two rounds of golf to equal a 40 hour work week.  Otherwise the workload will drive them to really long days and that wouldn’t be fair now would it?

The Entitled

We have become a nation of entitled.  I think this began with the creation of social security and the belief the government had to provide a national retirement system and safety net for the elderly.  Shifting the burden of care from the family to the state.  From there it was a simple leap to create social welfare for the unemployed and the unemployment compensation for those who’ve lost their jobs and are in temporary need.  Each of these is arguably a good thing and something a socialist country does to maintain its hold on the people and legitimize its role.

When the nation is populated by young people earning a living and paying taxes the system can work, but as the workforce ages, and the ratio of those paying in to those drawing out decreases there is an inevitable tipping point where the system must fail.  Couple this with a large segment of the population that has grown up believing they need not work or pay taxes and we accelerate towards that tipping point.  

Tie in the social system that says if you don’t earn sufficient dollars you not only don’t pay taxes but the government owes you an earned income credit, how can we not believe we are entitled to whatever we want?

Finally, create a tax system that is so labyrinth in its rules and regulations that if you can afford a good accountant you need not pay any taxes.  Once you accomplish this you have a financial system that mirrors the US. 

If you made over $33,000.oo in 2008 you were in the top half of all wage earners in the US.  This half of the population paid 97.3% of all the personnel income taxes collected.  The other 50% paid the remaining 2.7% or collected from the top half, because they were entitled.

Somehow our elected representatives and senators see nothing wrong in this structure, and wonder aloud about the radical Tea Party movement.