Tag: Tax policy and economic inequality in the United States

This is working out well…

In case you don’t live in the US, today is tax day. If you are like me, you set it up so Uncle Sam takes the least amount possible during the year from your paycheck, and after you do your taxes, sent these parasites a check for whatever you owe them. Unlike most of the people that tell you our system is unfair because others are doing better than them, I can actually control my spending and even do a bit of saving. I know how to make my money work better for me and don’t need to use government as a savings plan to make sure I don’t blow my cash on blow, booze, and bitchez. That whole thing about if we magically managed to redistribute the world’s wealth equally today, by the end of the month, with so few exceptions we can drop them as statistical noise, we would be back exactly where we started, with the same people complaining about how the system is rigged against them and looking for a handout. But that’s not what this piece is about.

I actually wanted to point out a major flaw in our system. When you have almost half of the people in your country not paying federal taxes or ending up with an effective marginal rate of zero or lower, and they get to vote, these people will never have a problem with the rest of us getting soaked by the crooks in DC, which continue to collect record amounts of money, despite most people predicting that things are heading south. Yeah, I know we have been told by a complicit and completely owned subsidiary of the DNC that masquerades as the media that we have been in an economic recovery, for 8 years now since Obama took over, but those of us actually working don’t see any of that recovery, and actually see things getting worse.

The thing is that we have 2 candidates, both in the same party, telling us DC should be taking even more money from the productive so they can increase the number of people sucking at the government teat. Shit, one of them has dropped any pretense of reality, and is promising $18 trillion in new entitlements and government handouts. My favorite one is free college. We get told that college has now become a necessity for people to qualify for better jobs, and thus, college should now be treated like so many other things the left wants us to now take as obligations of the productive to pay for the masses to have. I have yet to get any of the “free college” morons to explain to me why I should expect this to not result in college educations turning into even bigger wastes of money and time than they have become today. After all, we already have a government run free K-12 education system, and nobody that has a modicum of honesty and scruples, believes this system has been anything but an abysmal failure. It used to suffice to finish high school to actually be qualified for good employment. Then government took that over and dumbed it down so the failure of the unionized but well connected education establishment could avoid owning the miasma they created, and we all know how many people now leave high school without having met even the lowest of standards to show they actually worked on getting educated. Anyone else find hilarity in the fact that it is the same people that fucked over the K-12 system that now want to take over and make college free as well? That’s gonna end so well…

Anyway, back to talking taxes. Don’t get me wrong. I understand that we should pay some taxes. My disagreement is with a system that allows people that don’t pay anything to elect politicians that then tell the rest of us we need to pony up even more of our money for them to expand the abuse and corruption already rampant in the system. The best change to save our system of government right now, the one that would do the most to curb government abuses across the board, would be a flat tax and the abolishment of the IRS. If everyone has to pay an equal percentage, we will all have the same skin in the game, and with people that vote for a living suddenly out of that job, DC might finally be forced into fiscal responsibility. Even more important, the current corrupt system that allows the political aristocracy to abrogate itself unlimited wealth and power by forcing the rest of us to buy favors from them, especially taxation mitigation related favors, would implode overnight. No wonder that neither the collectivist & crony economy party nor the less collectivist and crony economy party want to do that.

As you send more of your hard earned pay to DC to be squandered by the vote buying aristocracy and their schemes and scams, remember that the answer to quite a few of this great country’s problems is actually quit simple. A flat tax would do away with so many of the special mechanisms that have propped up this dysfunctional bloated government we have today and in a single move force DC into dealing both with the economic reality they have created as well as return some sanity to the political class. It is therefore that it is anathema to the current political aristocracy whom would lose drastically should the status quo be upset. A man raped every year by the big government state – so people that pretend they mean well ca keep buying votes from close to half of the country that has no skin in the tax paying game – can dream.

So I am not the only one that saw through the bullshit?

When I originally started seeing the minimally covered LSM spin about the seriously disappointing U.S. First Quarter Gross Domestic Product numbers, and stories like this one claiming the reason we only saw a 0.1% growth instead of the projected already crappy 1.2%, was the harsh winter, my bullshit detector went off. On the one hand the LSM has been trying real hard to pretend the past winter was not one of the nastiest, coldest, and long lasting winters we have seen in a long time – the AGW narrative suffers from stuff like this, especially since people now are immediately on guard when both warming and cooling are blamed on AGW by the watermelons – so that might have been a factor. But the fact remains that we have had none of the economic growth the leftards keep telling us has been right around the corner for over 5 years now – thanks to the Keynesian bullshit that really did nothing but line the pockets of a few connected people and most democrat politicians at the expense of the productive US tax payers in the private sector – despite their efforts to convince you of the contrary.

The private sector in the US has been under assault, for over 6 years now, since the left started focusing more on their class warrior redistribution shit than actually doing things that grow the economy. If you need proof that the left knows what they are doing has drastic economy damaging consequences look at the shit they are doing around Obamacare. It’s not coincidental that the WH chose to push out the changes caused by the employer mandate until after the 2014 midterm elections, and considering how bad the individual mandate, which impacts far fewer people, has played out, that was a shrewd and well calculated political move on their part. The people affected negatively be damned.

Another example of these economy wrecking policies that the left knows will do just that being delayed to help donkeys at the polls was the EPA regulations delayed till after the 2012 elections to protect demcorats. I have read some people out there that are speculating that the EPA has been sitting on another ream of economy crushing bullshit green regulations they plan to enact into law until after the 2014 elections. Of course, the LSM has no desire to go there, it hurts their fellow ideologues, so we will not hear about it until after the fact.

Remember the XL pipeline? That’s not happened so a big democrat donor can keep making a killing. The minimum wage shit? What about the never ending cry for higher taxes on the rich, especially on estates, where that same big democratic donor stands to make a killing selling insurance to people with large estates, that is the core of the class warrior cultists? The resistance to fracking and the economic boon that has caused despite their meddling? The Dodd-Frank regulations? The hostility to wards small businesses in a slew of regulations? The list goes on and on. Those are but a few of the plethora of examples of economy crashing shit the Marxists have been up to, so anyone that sees the low numbers, yet again, would be totally justified to attribute them to the collectivist policies.

And some are actually doing just that. The 0.1% number happened, not because of an unusual winter, but because the economy is being strangled by the stupid and destructive policies of the class warrior credentialed elites. Note that these are also preliminary numbers. I bet they try hard to push them up, but I bet, based on past history, that this get revised down, and I would not be surprised to see a contraction. Queue CM and his fellow Keynesian idiots to tell us we need more government spending, because that’s how you counter policies pushed by said government that crush the economy. In the mean time, connected people and democrats make a financial windfall. But that’s just coincidental.

Killing the goose that laid the golden egg

Over at the Hoover Institution journal, they have a damning article, appropriately titled “The United States of Envy”, where they give us a clear picture of the left’s strategy for the coming election:

In advance of the 2014 election, the Obama administration has drawn the political discussion away from its unpopular and flawed healthcare plan, usually called Obamacare, to bring public attention and support for increased income redistribution. President Obama openly encouraged envy of the top one percent of income earners. Reducing the share received by the highest earners to provide revenue for larger transfers to the lowest earners has long been a main objective of his administration. We can all expect this theme to be trumpeted loudly by the mainstream press as the mid-term election approaches: Some of us can have more, the argument goes, if we force others to have less.

The left has done a bang up job of first creating a massive pool of low information voters and then appealing to their vilest and basest emotions to buy votes in return for table scraps. Oh, they will pretend they can make the case that the data supports wealth redistribution as a means to bring prosperity, but it is, as the article points out, bullshit:

Professor Piketty collected data on income distribution from approximately 20 countries over periods of different length. He concluded that raising the tax rate to 60 percent on the highest incomes and redistributing the receipts to the poor would increase spending and economic growth. The New York Times declared his book, Capital in the 21st Century, one of the great achievements of modern economics. It put it in a class with Karl Marx’s Das Kapital and John Maynard Keynes’s General Theory.

This lavish praise seems both wrong and extreme. I agree that in the past there was a notable positive association between economic growth and the spread between the shares of income going to the top 1, 5, or 10 percent of the earners and the share going to the remainder. The mistake is to conclude that narrowing the distribution contributes to growth. The far more plausible explanation is that economic growth in capitalist countries over the past two centuries contributed to a steep decline in the share of the top earners.

Simply put, Piketty, President Obama, and the IMF have the causality running the wrong way. Taxing the rich to redistribute did not produce growth. On the contrary, growth reduced the share earned by the highest earners.

I have never, ever bought the left’s pretense that their laser focus on splitting the pie, instead of growing it, is what has what caused prosperity. This is a ludicrous notion on the face of it and defies common sense. In fact the article points out how wrong this assumption is:

The data show a remarkable degree of uniformity. The share of income received by the top 1 percent declined persistently from about 1910 to 1980. The share fell from an initial 20 to 25 percent of total income to about 5 to 8 percent. Then the share rose in several of the countries, notably the US, the UK, Canada, and Sweden. By the end of the sample data, about 2005, the share in several of these countries was back to about 10 percent. The share of the top 1 percent in the US reached 15 percent, more than half way back to where it was early in the twentieth century. It is this rise that initiated the loud outcries about the failure of modern capitalism to benefit the middle class.

It is impossible for anyone to show that the decline in all seven countries resulted from higher taxes on the highest incomes and redistribution to the poor. The reason is that the welfare state did not exist in several of the countries and was relatively small in the others. In the United States, federal government spending was rarely more 3 or 4 percent of total spending in non-war years until after 1930. Old age pensions didn’t start until the late 1930s, and healthcare spending did not expand until the late 1960s.

What is blatantly obvious to anyone paying attention how this class warfare shit the left banks on always plays out, is that all that excessive taxation that basically amounts to penalizing the successful has accomplished however is to destroy the economic growth that allowed the left to pretend it was what they where doing that helped. Wasteful government spending and crippling crony capitalism that helps the entrenched oligarchy retain their power – that’s what this class warfare is totally about – has left the economy in shambles. And the left has talked a mean talk about doing things to fix this problem of their making while piling on the shit that causes damage. The stake through the heart of the American economy is Obamacare. It will crush our economy.

President Obama’s program works against this process. It doesn’t reward work. It gives the unemployed and underemployed food stamps, healthcare, housing allowances, and income. Instead of working, many learn to live on the government benefits, supplementing them occasionally by working in the underground economy. Instead of acquiring productive skills, they learn how to live without working at regular jobs. That’s one way that the welfare state worked to increase the share of the highest paid 1 percent after 1980. The welfare state contributes also by weakening and even destroying family structure. Single family women are often on the bottom rung of the income distribution.

A system that punishes success and making good choices while rewarding bad behavior and poor choices will encourage more of the later. The welfare state grows precisely because it is rigged to cause more of that. It’s the age old issue that people making a good living solving a problem really have no incentive in doing that, because it means it is the end of their livelihood. The American war against poverty, now more than 6 decades old, has sucked up over $20 trillion, and yet, all we have to show for that is that we have reached a point where the takers outnumber the producers. And the only change we are looking at is for the scales to tip even further, and sadly, I have to admit doing so faster, in the direction it has been going.

The old axiom that collectivism can only give shared misery to all, because that’s the easy solution to the inequality problem, is, yet again, being proven true. But the gangster oligarchy on the left doesn’t care and the sheep that follow them are too stupid to see the writing on the wall. We either turn this thing around and end the class warfare bullshit, or we are looking at another one of those times Heinlein pointed out would come when the few exceptional people that cause prosperity have again be driven into hiding. Collectivism sucks ass.

Winter is coming…

April 15th, tax day, draws nigh!

Did you buy your jar of Vaseline yet? Yeah, that was a reference to the whole “Game of Thrones” thing, but it is apt. “An evil monster, undead and wanting to draw the very life out of you, the IRS is”, as Yoda would say.

Me, I will be mailing the IRS a check, as I do every year, because I refuse to let these crooks take more than the minimum I am required to allow them to deduct and it is still a big number. That way I can really see the impact these regressive policies have on my earnings. then again, I have the discipline to save, so it is something I can do.

I would not be surprised I end up audited either. The IRS, under this administration, has a documented history of going after people they have issues with. They want their pound of flesh and pint of blood, after all.

The State of Inequality

Rumors are that the President’s taxpayer-funded political speech State of the Union Address will focus on rising income and wealth inequality in the United States. As with almost everything this Administration does, I think this is misguided.

First, at least part of the problem of inequality is social. Poor people are much more likely to get divorced, much more likely to have children out of wedlock, much more likely to drop out of high school, much more likely to engage in criminal activity and more likely to have substance abuse problems. Wealthy people are far less likely to have those problems. The divorce problem is especially important because inequality is usually measured per household and having split households means split wealth. Inequality in America is as much a reflection of a social divide as it is an economic one.

Of course, it’s difficult to untangle social and economic problems: growing up in poverty can make it harder to persevere in school, for example. But I still think poverty is, to some extent, a symptom of larger social diseases. Treating those social diseases — through school choice, through ending the drug war, establishing free enterprise zones — would be a much more productive approach than throwing money at it.

But second, I think the idea of “inequality” is a fundamentally flawed way of looking at things. The problem with America is not that Bill Gates is making too much money. The problem is that millions of people are unemployed or marginally employed and that trillions of dollar of their wealth was eradicated by a government-supported real estate bubble (and trillions more will soon vanish in a government-supported education bubble). When people talk about “inequality”, that tends to devolve to the misguided idea of eating the rich. We should instead be focusing more on poverty, on unemployment and on education. Tearing down Bill Gates will help no one. We need to lift everyone else up so that they can aspire to be Bill Gates.

But how do we do that? Well, we can start by not following Democratic prescriptions. As I noted in an earlier post, Democrat-controlled California has the most massive income inequality in the nation, one so bad that pundits are calling it a “liberal apartheid”. Today, there was a report that the District of Columbia, an exclusively Democratic fiefdom, also suffers from catastrophic inequality, mostly because of the extraordinary gains in wealth for the areas in and around DC where government employees and contractors live and work.

And that’s the rub. Liberals think inequality is a result of not having a high enough minimum wage (and Obama, as Rich noted, just raised federal contract minimum wages by fiat). But we’ve had lower inequality with a lower minimum wage. California has a high minimum wage and massive inequality. They also think it’s a result of taxes being too low on the rich. But the rich are paying almost all the income taxes already. The lower classes pay payroll taxes, but almost no income tax. They think it’s because we’re not doing enough. But we’ve poured trillions into the War on Poverty (and, it should be noted, that many measures of inequality and poverty exclude this kind of federal aid. So liberals are ignoring the existing impact of anti-poverty programs in their call for more of the same).

Frankly, if you want to know why inequality is rising, look no further than the solutions Obama will propose tonight. Doubtless, we will get another “jobs bill”. This bill will shovel more money to rich connected friends of politicians while doing almost nothing to create sustainable job growth. He will doubtless push for a hike in the federal minimum wage, which will likely increase unemployment among the people who are the poorest. He will gloss over the federally-fueled housing bubble and bailout that poured billions into Wall Street while bankrupting the rest of us. He will doubtless ignore the regulatory capture that cripples small businesses while pouring wealth into those with armies of lobbyists. I am dubious that we will hear anything about the critical need to reform the tax and regulatory systems that are paralyzing our businesses.

In short, I think that Washington and the policies it has pursued for the last 15 years is the major contributor to inequality. And I think it is likely that we will hear tonight is a clarion call for more of the same. We will continue to push people down while claiming we’re helping them. We’ll continue to give money to special interests while pretending we’re fighting them. We will continue to do everything but the one thing government needs to do if it ever really wants to combat income and wealth inequality:

Stop creating it.