The cover story for this week’s Economist deals with America’s fiscal hole. For the most part The Economist is dead right about this issue. Americans seem unwilling to pay higher taxes or cut down the size of government.
Cold arithmetic suggests that spending cuts alone cannot deliver enough. Changes to entitlements take effect only gradually. And the scope for slashing non-defence discretionary spending is limited, since it makes up merely one-sixth of total outlays. So Americans are stuck with a budgetary conundrum: they seem to be opting for more government, at least in health care, yet they do not seem prepared to pay for it. Their leaders have indulged this fantasy. Mr Obama has foolishly sworn off higher taxes on 95% of households, and Republicans will not countenance them for anybody. This newspaper strongly prefers small government and low taxes, but if Americans are to have bigger government and a sustainable budget, tax revenues will have to rise.
This is the defining issue of our time. Both parties seem unwilling to reduce entitlements. Democrats wish to raise taxes and Republicans are adamantly opposed. Republicans talk about reducing the size of government, but lack the willpower to actually do anything. Simply raising taxes on the rich won’t pay for everything. The Economist makes a great point about tax options. The United States taxes income too much and consumption too little. Everyone seems to agree there’s a savings problem in the United States. I’ve written before about the many inefficiencies of income taxes. A national sales tax is a much better solution. Unfortunately, we can’t trust the federal government not to abuse a sales tax while still levying an income tax. Plus, given America’s growing appetite for larger government taxes would continue to rise to pay for any new “rights” progressives dream up (the right to clothing, the right to food and shelter, the right to own a smart phone, and so on till we can’t get any of that stuff).
The fickle independent voters… They’re courted by politicians every election. Independent voters are growing in number. Much has been said about the number of self identified Republicans and Democrats. For whatever reason people are proud to be Democrats. This isn’t new phenomenon, and I’m sure a whole book could be dedicated to party loyalty. The number of independent voters is growing because people are disillusioned with the Republican party. Who can blame them? I had always been a registered Independent until last year’s presidential primary. Florida isn’t an open primary state, so I registered as a Republican to vote.
What is a disillusioned voter to do? This answer isn’t as simple as switching parties. Many voters are fed up with the size and power of the federal government. Ever since the New Deal the government has been spending more and more money. By 1980, the tax burden to pay for everything was killing the economy. Reagan wisely cut taxes to reinvigorate the economy, but Washington has lacked the political will to reduce spending. It’s easy to cut taxes, but it’s nearly impossible to rein in spending. That’s where we are today: twenty years of low taxes and high deficits. Liberals simply want to raise taxes, but doing so would cripple our economy.
The Washington Post has an article today on the value-added tax (VAT). Some Democrats are considering the sales tax as a way to pay for the expanding costs of social programs. Everyone realizes we’re currently on a course to bankruptcy; however, it’s going to be a difficult to create a national sales tax without taking a beating at the polls.
The fascinating part of the article is that it’s not even a consideration that perhaps the government shouldn’t be in the health care business. No state has been able to create a long-term viable health care system. European states are already taxing their citizens to death and the health care is expensive, slow, and poor. It should also be noted that much of Europe has had the benefit of not having to pay for defense. In many ways Europe has had perfect conditions for fantastic health care and it’s still a failure. Despite these facts, Ezekiel Emanuel, the brother of White House chief of staff Rahm Emanuel, has written a book titled “Health Care, Guaranteed.” Emanuel argues that we can pay for this utopian dream by taxing the crap out of people.
What would it cost? Emanuel argues in his book that a 10 percent VAT would pay for every American not entitled to Medicare or Medicaid to enroll in a health plan with no deductibles and minimal copayments. In his 2008 book, “100 Million Unnecessary Returns,” Yale law professor Michael J. Graetz estimates that a VAT of 10 to 14 percent would raise enough money to exempt families earning less than $100,000 — about 90 percent of households — from the income tax and would lower rates for everyone else.
Does this sound too good to be true? Of course it does; this is complete nonsense. An argument could be made that some of the more conservative states with lower taxes could absorb the new sales taxes, but what about all those states in the North? People are already leaving in droves, and a national sales tax would make the economic climate in those states even worse.
I don’t see how anyone could sell the VAT tax without getting rid of the income tax. It seems as if this the author of this particular article is more worried about all the people who aren’t paying (income) taxes. Soaking the rich and burdening corporations with higher taxes (oh, btw, corporate taxes are passed on to consumers) isn’t going to be good for the economy. I’m all for a simpler tax system, but we can’t continue to penalize people for being successful. Democrats are slowly morphing from the party of the have-nots to the party of hand-outs.
Back in January I wrote about how people in blue states are fleeing the liberal bastions of the North to live in the free states of the South. I don’t get it. I thought Southerns were stupid hicks who cling to religion, guns, and racism. I guess some people from the North can put differences aside to move to the warmer climate. There’s an article in the New York Post about this very subject.
Last week I spent 90 minutes doing a couple of simple things — registering to vote, changing my driver’s license, filling out a domicile certificate and signing a homestead certificate — in Florida. Combined with spending 184 days a year outside New York, these simple procedures will save me over $5 million in New York taxes annually.
By moving to Florida, I can spend that $5 million on worthy causes, like better hospitals, improving education or the Clinton Global Initiative. Or maybe I’ll continue to invest it in fighting the status quo in Albany. One thing’s certain: That money won’t continue to fund Albany’s bloated bureaucracy, corrupt politicians and regular special-interest handouts.
Yes I jest, but how do you keep people in your state when they’ll save a bundle living somewhere else? Before I get too carried away I should mention that it’s not like the governments in the South are much better. North Carolina and Louisiana have been run by complete morons for decades. But the problem for states like New York and California is that it’s impossible to pay for all their programs. The citizens clamor for more and more handouts, but ultimately someone has to pay for them. Liberals care so much that they’re willing to make someone else pay for their mistakes.
Having one’s donkey cake and eating it too…
Yesterday’s vote in California is a prime example of our nation’s lust for social programs. The citizens don’t want to pay more in taxes, but they can’t elect leaders that will cut government spending. Instead, Governor Terminator (who has no business running California) has proposed a bunch of anemic cuts that won’t solve the problem. Until the citizens of this country are willing to elect leaders who can make the tough choices, fiscal chaos in inevitable.
Once again, my family and I saddled up Old Blue and headed for Colorado’s state capitol for an old-fashioned protest. Last time, as you may recall, we joined a hastily assembled and relatively small crowd (maybe 500 or so) to protest the so-called Stimulus Bill, which President Obama was signing down the road at the Denver Museum of Nature and Science.
This time, we joined a much larger crowd estimated at around 3,000-4,000 as part of a larger grassroots movement and nationwide gathering on Tax Day to protest government spending and the tax policy necessitated by that spending.
They called it a Tea Party, in honor of the original American patriots who protested the British taxation of tea (without representation, which was their main beef) by tossing a bunch of it into Boston Harbor (a.k.a., Bastan Hawbaw). I’m not sure the analogy holds up very well to close scrutiny, but I suppose it’s a brand of sorts that people can identify with.
So, what’s our beef? Why bother? Isn’t the government trying its best to “stimulate” the economy? My reasons for supporting the movement are best encapsulated by James Madison, who wrote in Federalist #62:
“The internal effects of a mutable policy are still more calamitous. It poisons the blessings of liberty itself. It will be of little avail to the people that the laws are made by men of their own choice if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood…”
This is exactly the situation we find ourselves in today. These mammoth spending bills, which spend money we don’t have, are both voluminous and incoherent to the point that even those words fail to accurately describe their monstrosity. What we’re seeing is a massive transfer of wealth from the average person to the bottomless pit of political favoritism and cronyism, paid for in part by the current generation, but certain to multiply to future generations.
Any serious and ideologically-blind study of the economic consequences of this type of spending policy, and the term policy is being used very loosely here, shows that it is unsustainable. At the recent G-20 Summit, even socialist Europe balked a bit at America’s latest and seemingly unending spending spree. If America goes down that road, who’s left to support Europe and defend it from the crazies who are feverishly working to develop nuclear weapons so they can spring their version of Utopia on an unsuspecting, welfare-numbed, drug-addled, and American Idolized West?
Moreover, a government that grows outside of the bounds set by the Constitution is certain to infringe on our individual liberties. The state that takes on a parental role supplants the role of the individual and the family. What has made America exceptional is not the government’s ability to provide for every need, but to empower the individual to meet his own needs without governmental interference.
Thus the Declaration of Independence declares, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” These unalienable rights are not derived as government handouts. I do not have a right to free medical care (which I’ll be on a waiting list to receive) or anything else from the public weal. Nor do I have an express right to “happiness”. But I do have the right to pursue happiness, unfettered by government dictating to me how I should pursue that happiness.
It’s important to remember that the founders did not dive headlong, willy-nilly into the creation of our unique governmental system. Instead, they wrangled over every jot and tittle. They painstakingly studied the history and form of every government since the dawn of civilization, marking their strengths and weaknesses to derive a form most suited for a free people.
It’s safe to say that the founders’ studious approach is not taken by our current leaders, either Democrat or Republican. The only studies they do are based on maintaining their power and filling the coffers of those who help them maintain their power.
So when a bill comes before Congress that’s piled three feet high in pork and partisan paybacks and sold as stimulus, thinking people begin to think that maybe we’re heading in the wrong direction. The majority of people I met at today’s protest were thinking people; average Joes, if you will, who want our government to exercise self-control and discipline in order to secure our right to pursue happiness. Happiness, as anyone knows, is not found at the DMV or any other government bureaucracy that makes you stand in line for hours and has no concept of customer service, nor does it care.
Another striking thing about the protest was how orderly and well-behaved everyone was. This was in stark contrast to your typical left-wing protest, where profanity, invective, and mean-spiritedness prevail. My hope is that the hard-working, family-oriented American wins the day and wins back our country.
Well, it looks like president Obama finally read Arthur Brooks’ book Who Really Cares. Obama realizes that limited tax donations will not really effect his voting base. Conservatives are the ones who donate more money and time. I’m not exactly sure what the White House is thinking on this one. Add this to the blind stupidity file along with the Capital Gains. There’s no reason to do this other than partisan gain. It’s not going to mean more tax revenue. What’s the point in going to war with charitable organizations? What does the president hope to gain?
President Obama’s proposal to limit the tax deductibility of charitable contributions would effectively transfer more than $7 billion a year from the nation’s charitable institutions to the federal government. But the high-income taxpayers affected by the rule change are likely to cut their charitable giving by as much as the increase in their tax bills, which would, ironically, leave their remaining income and personal consumption unchanged.
Every time something like this comes up I grow more and more convinced that the president is completely clueless. The only thing he has going for him is reading speeches on the campaign trail. Everything else so far has been a mess.
The Sarasota Herald Tribune has an article in today’s paper about landlords and the trouble they’re having in the housing market. The culprit is high taxes. Local governments spent too much money (no, really) during the economic expansion and now people who can’t afford homes are the ones paying the price.
Taxes on Rutkowski’s four-unit rental property on Eighth Street in Sarasota, for example, went up from $1,537 a year in 1998 to $13,373 in 2006 — a 770 percent increase.
That means Rutkowski now has to collect about $250 per month in rent from each of the four units on the property to pay taxes compared with $33 per month 10 years ago.
A 770% increase in property taxes! What did the local governments do with all of the money? They squandered on stupid pet projects and other various nonsense. Now the poor are paying the price for the government’s lack of foresight. How anyone believes that any kind of government intervention is going to solve the nation’s problems is beyond me.
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