Tariffs “protect” us from lower prices

Here are 5 articles that might diminish your enthusiasm for tariffs:

Tariffs and Industrial Policy Fail

High tariffs distorted resource allocation, favoring inefficient industries over more competitive sectors. This misallocation led to higher consumer prices and suppressed overall economic welfare.

Their study highlights how tariffs weakened competition in manufacturing by protecting inefficient firms, which inevitably inhibited productivity.

His analysis reveals that trade liberalization—not protectionism—is consistently associated with higher economic growth. By reducing barriers to trade, economies can reallocate resources to more productive sectors, enhance competition, and promote innovation. The evidence strongly suggests that countries embracing open trade policies experience faster and more sustainable economic progress than those that rely on tariffs to shield domestic industries.

The failures of tariffs and industrial policies in the United States, Japan, and China underscore the broader limitations of anti-market economic strategies. These policies often stem from the belief that governments can outmaneuver markets in allocating resources and driving innovation. Yet, as history repeatedly demonstrates, markets are better suited to these tasks.

Our History of Protectionist Tariff Train Wrecks

Protectionist tariffs are associated with a long history of economic and social calamities in America.

The only real difference between a lobbyist for protectionist tariffs and an armed robber is that the robber is armed. 

Tariffs Are an Attack on Natural Rights

“Free Trade” means perfect freedom for every kind of industry; and it includes liberty to every man to employ his money or his labour in the way that he himself thinks most advantageous, and to buy and sell wherever he can do so with the greatest profit.

Bright asserted that the freedom to exchange the produce of one’s labor for that of his fellows anywhere in the world was the most fundamental of rights. Bright argued that there was no liberty without this liberty, which was simply the liberty to live. 

Tariffs Are Taxes on Americans

Protectionism remains popular. But, as Henry Hazlitt put it, voter support for raising tariffs is ”the result of looking only at the immediate effects of a single tariff rate on one group of producers, and forgetting the long-run effects both on consumers as a whole and on all other producers.” Those who are incapable or unwilling to examine policies beyond their most short-term effects are easy targets for protectionist rhetoric.

Tariffs have inspired a profusion of economic speculation and argument. The arguments for tariffs have one thing in common: they all attempt to prove that the consumers of the protected area are not exploited by the tariff. These attempts are all in vain.

The Immorality of Protectionism

Politicians who support these taxes and regulations like to frame it all like it’s some kind of public service to the community. These arguments generally employ some sort of feel-good language like “tariffs level the playing field for Americans workers.” 

In reality, of course, calls to raise or maintain tariffs are nothing more than a call to raise taxes on Americans. Describing these taxes as a burden only for foreign workers or foreign importers requires either dishonesty or impressive levels of ignorance about how trade barriers work. 

Protectionism  means Americans who are already taxed and regulated to the skies via income, sales, and property taxes must endure additional levels of taxation and regulation to get their hands on foreign goods. All these additional costs and taxes imposed at the import stage naturally filter down to the entrepreneurs, small business owners, and ordinary people  who benefit from access to less expensive foreign goods. 

There’s no moral high ground here for the protectionists, just unfounded self-righteousness. Of course, if protectionists don’t want foreign goods in their country, they are welcome to avoid purchasing such goods. Protectionists are also welcome to try to convince other people to not purchase those goods. One could also advocate against domestic regulations that drive up the cost of domestic production.

Happy New Year 2019!

My New Year's Resolutions for 2019:

I will not hesitate to say those 3 little words that everyone longs to hear: Taxation is theft!

I will never surrender to Cultural Marxists.

I will spread this message: Silence during the advance of tyranny is collaboration.
I will never apologize for my advocacy of liberty.

I will read “Man, Economy, and State” by Murray Rothbard.

I will encourage all to read these 4 short essays:

• I Pencil
• The Tale of the Slave
• The Broken Window
• Candlestick Maker's Petition

Andrew Cuomo's socialist delima

It appears that Gov. Andrew Cuomo has acknowledged that his socialist policies may run out of “other people’s money” if the federal tax code does not subsidize the taxpayers of New York State.

These paragraphs are from an Associated Press article dated 1/3/18:

https://www.msn.com/en-us/news/us/gov-cuomo-state-will-sue-to-block-federal-tax-overhaul/ar-BBHNI49?li=BBnbcA1

New York state will take Washington to court to challenge the new Republican tax overhaul, Democratic Gov. Andrew Cuomo said Wednesday, calling the new law an unconstitutional assault on states' rights and New York in particular.

The new tax law caps a deduction for state and local taxes at $10,000, a move that will increase federal tax liabilities for many homeowners in high-tax states like New York. Cuomo says the change could increase tax liabilities for some New Yorkers by as much as 25 percent, potentially prompting some to leave for cheaper states and making the state less competitive economically.

Many of the governor's new proposals are aimed squarely at Washington, and a federal government that he says is seeking to set back progress in New York when it comes to the economy, equality, health care and the environment. Cuomo cited recent accomplishments such as a higher minimum wage, free college tuition and paid family leave as an alternative to the policies emerging on the national level.

Andrew Cuomo is correct that socialism is only possible if the state prevents productive citizens from leaving and then expropriates their property.

Happy New Year!

Labor Day

The Income Tax Implies that Government Owns You

The following article is by Jeffrey A. Tucker and was published by The Foundation for Economic Education.

The income tax is enshrined into law but it is an idea that stands in total contradiction to the driving force behind the American Revolution and the idea of freedom itself. We desperately need a serious national movement to get rid of it – not reform it, not replace it, not flatten it or refocus its sting from this group to that. It just needs to go.

The great essayist Frank Chodorov once described the income tax as the root of all evil. His target was not the tax itself, but the principle behind it. Since its implementation in 1913, he wrote, "The government says to the citizen: 'Your earnings are not exclusively your own; we have a claim on them, and our claim precedes yours; we will allow you to keep some of it, because we recognize your need, not your right; but whatever we grant you for yourself is for us to decide.”
He really does have a point. That's evil. When Congress ratified the 16th Amendment on Feb. 3, 1913, there was a sense in which all private income in the U.S. was nationalized. What was not taxed from then on was a favor granted unto us, and continues to be so.

This is implied in the text of the amendment itself: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

No Limits
Where are the limits? There weren't any. There was some discussion about putting a limit on the tax, but it seemed unnecessary. Only 1% of the income earners would end up paying about 1% to the government. Everyone else was initially untouched. Who really cares that the rich have to pay a bit more, right? They can afford it.

Today, the ruling elite no longer bothers with things like amendments. This perspective totally misunderstands the true nature of government, which always wants more money and more power and will stop at nothing to get both. The 16th Amendment was more than a modern additive to an antique document. It was a new philosophy of the fiscal life of the entire country.

Today, the ruling elite no longer bothers with things like amendments. But back in the day, it was different. The amendment was made necessary because of previous court decisions that stated what was once considered a bottom-line presumption of the free society: Government cannot tax personal property. What you make is your own. You get to keep the product of your labors. Government can tax sales, perhaps, or raise money through tariffs on goods coming in and out of the country. But your bank account is off-limits.

The amendment changed that idea. In the beginning, it applied to very few people. This was one reason it passed. It was pitched as a replacement tax, not a new money raiser. After all the havoc caused by the divisive tariffs of the 19th century, this sounded like a great deal to many people, particularly Southerners and Westerners fed up with paying such high prices for manufactured goods while seeing their trading relations with foreign consumers disrupted.

People who supported it – and they were not so much the left but the right-wing populists of the time – imagined that the tax would hit the robber baron class of industrialists in the North. And that it did. Their fortunes began to dwindle, and their confidence in their ability to amass and retain intergenerational fortunes began to wane.

Limit to Accumulation

We all know the stories of how the grandchildren of the Gilded Age tycoons squandered their family heritage in the 1920s and failed to carry on the tradition. Well, it is hardly surprising. The government put a timetable and limit on accumulation. Private families and individuals would no longer be permitted to exist except in subjugation to the taxing state. The kids left their private estates to live in the cities, put off marriage, stopped bothering with all that hearth and home stuff. Time horizons shortened, and the Jazz Age began.

Class warfare was part of the deal from the beginning. The income tax turned the social fabric of the country into a giant lifetime boat, with everyone arguing about who had to be thrown overboard so that others might live.

The demon in the beginning was the rich. That remained true until the 1930s, when FDR changed the deal. Suddenly, the income would be collected, but taxed in a different way. It would be taken from everyone, but a portion would be given back late in life as a permanent income stream. Thus was the payroll tax born. This tax today is far more significant than the income tax.

The class warfare unleashed all those years ago continues today. One side wants to tax the rich. The other side finds it appalling that the percentage of people who pay no income tax has risen from 30% to nearly 50%. Now we see the appalling spectacle of Republicans regarding this as a disgrace that must change. They have joined the political classes that seek advancement by hurting people.

The Payroll Tax

It's extremely strange that the payroll tax is rarely considered in this debate. The poor, the middle class and the rich are all being hammered by payroll taxes that fund failed programs that provide no security and few benefits at all.

It's impossible to take seriously the claims that the income tax doesn't harm wealth creationIt's impossible to take seriously the claims that the income tax doesn't harm wealth creation. When Congress wants to discourage something – smoking, imports, selling stocks or whatever – they know what to do: Tax it. Tax income, and on the margin, you discourage people from earning it.

Tax debates are always about "reform" – which always means a slight shift in who pays what, with an eye to raising ever more money for the government. A far better solution would be to forget the whole thing and return to the original idea of a free society: You get to keep what you earn or inherit. That means nothing short of abolishing the great mistake of 1913.

Forget the flat tax. The only just solution is no tax on incomes ever.

But let's say that one day we actually become safe from the income tax collectors and something like blessed peace arrives. There is still another problem that emerged in 1913. Congress created the Federal Reserve, which eventually developed the power to create all the money that government would ever need, even without taxing.

For the practical running of the affairs of the state, the Fed is far worse than the income tax. It creates the more-insidious tax because it is so sneaky. In a strange way, it has made all the debates about taxation superfluous. Denying the government revenue does nothing to curb its appetites for our liberties and property. The Fed has managed to make it impossible to starve the beast.

Chodorov was correct about the evil of the income tax. Its passage signaled the beginning of a century of despotism. Our property is no longer safe. Our income is not our own. We are legally obligated to turn over whatever our masters say we owe them. You can fudge this point: None of this is compatible with the old liberal idea of freedom.

You doubt it? Listen to Thomas Jefferson from his inaugural address of 1801. What he said then remains true today:"…what more is necessary to make us a happy and a prosperous people? Still one more thing, fellow citizens a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement and shall not take from the mouth of labor the bread it has earned."

The Tale of the Slave

The following passage is from the book "Anarchy, State, and Utopia", pages 290-292 (1974), by Robert Nozick.

Consider the following sequence of cases... and imagine it is about you.

1. There is a slave completely at the mercy of his brutal master's whims. He often is cruelly beaten, called out in the middle of the night, and so on.

2. The master is kindlier and beats the slave only for stated infractions of his rules (not fulfilling the work quota, and so on). He gives the slave some free time.

3. The master has a group of slaves, and he decides how things are to be allocated among them on nice grounds, taking into account their needs, merit, and so on.

4. The master allows his slaves four days on their own and requires them to work only three days a week on his land. The rest of the time is their own.

5. The master allows his slaves to go off and work in the city (or anywhere they wish) for wages. He requires only that they send back to him three-sevenths of their wages. He also retains the power to recall them to the plantation if some emergency threatens his land; and to raise or lower the three-sevenths amount required to be turned over to him. He further retains the right to restrict the slaves from participating in certain dangerous activities that threaten his financial return, for example, mountain climbing, cigarette smoking.

6. The master allows all of his 10,000 slaves, except you, to vote, and the joint decision is made by all of them. There is open discussion, and so forth, among them, and they have the power to determine to what uses to put whatever percentage of your (and their) earnings they decide to take; what activities legitimately may be forbidden to you, and so on.

7. Though still not having the vote, you are at liberty (and are given the right) to enter into the discussions of the 10,000, to try to persuade them to adopt various policies and to treat you and themselves in a certain way. They then go off to vote to decide upon policies covering the vast range of their powers.

8. In appreciation of your useful contributions to discussion, the 10,000 allow you to vote if they are deadlocked; they commit themselves to this procedure. After the discussion you mark your vote on a slip of paper, and they go off and vote. In the eventuality that they divide evenly on some issue, 5,000 for and 5,000 against, they look at your ballot and count it in. This has never yet happened; they have never yet had occasion to open your ballot. (A single master also might commit himself to letting his slave decide any issue concerning him about which he, the master, was absolutely indifferent.)

9. They throw your vote in with theirs. If they are exactly tied your vote carries the issue. Otherwise it makes no difference to the electoral outcome.

The question is: which transition from case 1 to case 9 made it no longer the tale of a slave?


You can watch a video of this passage at this link:

https://youtu.be/uxRSkM8C8z4

2017 Tax Burden by State

The study linked below is authored by Richie Bernardo and was recently published on the WalletHub website.  It has a very interesting table that allows you to sort the tax data by state and also by any of the 6 column headings.

https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494/

Congratulations to New York coming in 1^st place with the highest state tax burden.  I am also proud of my home state, Hawaii, finishing in second place.  I know that our state and local politicians are trying harder and someday we will make it to #1.

On Appeasing Envy

The Ludwig von Mises Institute has re-published an article written by Henry Hazlitt in 1972.  The entire article is available at this link:

http://mises.org/daily/1952/On-Appeasing-Envy

In my opinion these are the highlights:

Any attempt to equalize wealth or income by forced redistribution must only tend to destroy wealth and income. Historically the best the would-be equalizers have ever succeeded in doing is to equalize downward. This has even been caustically described as their intention. “Your levelers,” said Samuel Johnson in the mid-eighteenth century, “wish to level down as far as themselves; but they cannot bear leveling up to themselves.”

And in our own day we find even an eminent liberal like the late Mr. Justice Holmes writing: “I have no respect for the passion for equality, which seems to me merely idealizing envy.”

In the envious the thirst for social advancement is insatiable. As soon as they have risen one rung in the social or economic ladder, their eyes are fixed upon the next. They envy those who are higher up, no matter by how little. In fact, they are more likely to envy their immediate friends or neighbors, who are just a little bit better off, than celebrities or millionaires who are incomparably better off. The position of the latter seems unattainable, but of the neighbor who has just a minimal advantage they are tempted to think: “I might almost be in his place.”

Moreover, the envious are more likely to be mollified by seeing others deprived of some advantage than by gaining it for themselves. It is not what they lack that chiefly troubles them, but what others have. The envious are not satisfied with equality; they secretly yearn for superiority and revenge. In the French Revolution of 1848, a woman coal-heaver is said to have remarked to a richly dressed lady: “Yes, madam, everything’s going to be equal now; I shall go in silks and you’ll carry coal.”

Envy is implacable. Concessions merely whet its appetite for more concessions. As Schoeck writes: “Man's envy is at its most intense where all are almost equal; his calls for redistribution are loudest when there is virtually nothing to redistribute.”

Sometimes the motive of appeasing other people's envy is openly avowed. Socialists will often talk as if some form of superbly equalized destitution were preferable to “maldistributed” plenty. A national income that is rapidly growing in absolute terms for practically everyone will be deplored because it is making the rich richer. An implied and sometimes avowed principle of the British Labour Party leaders after World War II was that “Nobody should have what everybody can't have.”

But the main objective test of a social proposal is not merely whether it emphasizes equality more than abundance, but whether it goes further and attempts to promote equality at the expense of abundance. Is the proposed measure intended primarily to help the poor, or to penalize the rich? And would it in fact punish the rich at the cost of also hurting everyone else?

This is the actual effect of steeply progressive income taxes and confiscatory inheritance taxes. These are not only counterproductive fiscally (bringing in less revenue from the higher brackets than lower rates would have brought), but they discourage or confiscate the capital accumulation and investment that would have increased national productivity and real wages. Most of the confiscated funds are then dissipated by the government in current consumption expenditures. The long-run effect of such tax rates, of course, is to leave the working poor worse off than they would otherwise have been.

There are economists who will admit all this, but will answer that it is nonetheless politically necessary to impose such near-confiscatory taxes, or to enact similar redistributive measures, in order to placate the dissatisfied and the envious — in order, in fact, to prevent actual revolution.

This argument is the reverse of the truth. The effect of trying to appease envy is to provoke more of it.

Just say no to a national internet sales tax

A national sales tax on internet transactions is a very destructive idea.  Act now to stop this legislation.  Click on the link below to send an email message expressing your opposition to your Congressional Representatives:

http://taxeswithoutborders.com/

Your Money or Your Life

“Taxation is theft, purely and simply.”
Murray N. Rothbard
The Ethics of Liberty

“Some experts have declared that it is necessary to tax the people until it hurts. I disagree with these sadists.”
Ludwig von Mises
Defense, Controls, and Inflation

“One thing is clear: The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government.”
Ron Paul

This article appears in Mises Daily: Monday, April 15, 2013 by Llewellyn H. Rockwell Jr.

April 15th is a horrible day, because it sums up all the wealth destruction called taxation that we are subjected to all year long.

As Murray Rothbard pointed out, taxation is the worst method of looting us. Inflation is destructive, of course, and it might make a loaf of bread cost $10. But at least you get a loaf of bread. With taxation, you get nothing—except theft and other violations of our civil liberties.

Society, as Mises noted, is divided into two competing classes by interventionist government: the taxpayers and the tax consumers. If you are a payer, you are automatically demonized as greedy. On the other hand, those who want the fruits of your labor involuntarily transferred to themselves and their favored pressure groups are the compassionate.

At the Mises Institute, we have a different view. You have a right to what you earn, and those who use the threat and reality of government violence to take it from you are muggers in expensive suits. As Murray said, the State is just a gang of thieves writ large.

The politicians blab about spending cuts, but it is all lying propaganda. They plan to increase spending, but use the specter of alleged spending cuts as another excuse to pick your pocket with more taxes. (Spending cuts? Please throw us in that briar patch, Br’er Government.)

Then there are the attacks on tax “loopholes,” when you are allowed to keep some of your own money. As Mises said, it is through these loopholes that capitalism breathes.

But centuries of pro-tax indoctrination has had its effect. Eighty percent of people, according to a Pew study, think it’s immoral to “underreport” one’s income. It’s as if the politicians own us, but generously let us keep some of our own earnings.

That Pew survey does provide one ray of hope: more and more young people dissent from the morality of coercive taxation. We saw the anti-tax passion of the Ron Paul movement, and we see it at the Mises Institute.

It’s true, more and more young people reject the notion of taxation. They want lower taxes. Most of all, they want no taxes. They think they should be able to keep their own earnings.

With our publications, classes, website, and conferences, we are reaching these young people about taxes and the rest of government.

The young don’t want to be sheared. And they are looking for the freedom answers, for example that private property should be inviolate, for moral and economic reasons. They understand, as did 16th-century economist Juan de Mariana, that the only free country is one where no one is afraid of the tax collector.

Death spiral states

Forbes magazine published the following article on 11/25/12:

http://www.forbes.com/sites/baldwin/2012/11/25/do-you-live-in-a-death-spiral-state/

The highlights of this article are as follows:

Don’t buy a house in a state where private sector workers are outnumbered by folks dependent on government.  Thinking about buying a house? Or a municipal bond? Be careful where you put your capital. Don’t put it in a state at high risk of a fiscal tailspin.

Two factors determine whether a state makes this elite list of fiscal hellholes. The first is whether it has more takers than makers. A taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector.

The taker count is the number of state and local government workers plus the number of people on Medicaid plus 1 for each $100,000 of unfunded pension liabilities.

The second element in the death spiral list is a scorecard of state credit-worthiness done by Conning & Co., a money manager known for its measures of risk in insurance company portfolios.

A state qualifies for the Forbes death spiral list if its taker/maker ratio exceeds 1.0 and it resides in the bottom half of Conning’s ranking.

The list of states in a death spiral:

New Mexico

Mississippi

California

Alabama

Maine

New York

South Carolina

Kentucky

Illinois

Hawaii

Ohio

Don't Fence Me In

As you may remember Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship (see an earlier post in this blog The wretched refuse of our teeming shore).  This has caused a reaction in Washington D.C.  Senator Charles Schumer and Senator Bob Casey have decided that more penalties are in order and have proposed  the "Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act (Ex-PATRIOT Act).  The following letter was posted on the Cafe Hayek blog:

Dear Sen. Casey and Sen. Schumer:

Irked that Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship, you propose, with your “Ex-Patriot Act,” to punitively tax and to permanently bar from ever again entering America men and women who, to reduce their tax liabilities, renounce their citizenship in the U.S.

The very fact that sitting U.S. senators issue such a proposal – the sick reality that representatives of an allegedly free people act as if individuals are serfs bound to a master – the noxious yet proudly paraded assumption by American government officials that a peaceful man’s or woman’s freedom of movement can properly be restricted by a government jealous that it misses the opportunity to seize a huge chunk of that man’s or woman’s earnings – does nothing other than to confirm the wisdom and justice of Mr. Saverin’s decision.

Sincerely,

Donald J. Boudreaux

Professor of Economics

George Mason University

A summary of the  Ex-Patriot Act is at this link:

Ex-PATRIOT Act

Ron Paul was correct in his answer to a question about border security during a televised debate.  He said that someday a border fence would be used to keep us in.  It seems that his prediction came true sooner than even he expected.  Watch the video at this link:

Ron Paul debate 9-7-2011

The wretched refuse of our teeming shore

The following link is to a Bloomberg news article published on 5/11/12:

Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO

This is a very troubling story.  Here are some of the details:

Eduardo Saverin, the billionaire co- founder of Facebook Inc. (FB), renounced his U.S. citizenship before an initial public offering that values the social network at as much as $96 billion, a move that may reduce his tax bill.
Saverin, 30, joins a growing number of people giving up U.S. citizenship ahead of a possible increase in tax rates for top earners.
“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” said Tom Goodman, a spokesman for Saverin, in an e-mailed statement.
Besides helping cut tax bills stemming from the Facebook IPO, the move may also help him avoid capital gains taxes on future investments since Singapore doesn’t have a capital gains tax.
Saverin won’t escape all U.S. taxes. Americans who give up their citizenship owe what is effectively an exit tax on the capital gains from their stock holdings, even if they don’t sell the shares, said Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school. For tax purposes, the IRS treats the stock as if it has been sold.
Renouncing your citizenship well in advance of an IPO is “a very smart idea,” from a tax standpoint, Avi-Yonah said. “Once it’s public you can’t fool around with the value.”

It is demoralizing to contemplate how far we have strayed from the original intentions of our founders. This country was the beacon of liberty that attracted talented, creative, hardworking entrepreneurs from around the world. Today our most successful entrepreneurs are being advised that it is "a very smart idea" to renounce their citizenship prior to leading their company to an IPO.

The following poem is engraved on a bronze plaque, mounted inside the lower level of the pedestal of the Statue of Liberty:

The New Colossus

Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
"Keep, ancient lands, your storied pomp!" cries she
With silent lips. "Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

Emma Lazarus, 1883

Today the poem and plaque needs to be updated.  I suggest we add the following lines:

"Get out, you who have reaped the rewards of this great land,
you are no longer welcome on these shores, as you have committed the sin of success."

Of taxes and feathers

Now that you have had a few days to recover from the noble duty of paying your taxes, please contemplate the poetic motto of a famous tax collector.

Jean-Baptiste Colbert

Minister of Finances of France from 1665 to 1683 under the rule of King Louis XIV

"The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing"

The race to the top

Illinois is poised to capture the title of "highest combined national-local corporate income tax in the industrialized world".  Congratulations!  The details can be found in this article:

http://taxfoundation.org/publications/show/26954.html

It is not over yet.  The lame duck session of the Illinois legislature has only one day left and the tax increase does not yet have the votes to pass.  If you live in Illinois call your State Representative and State Senator and tell them you oppose the tax increase.  Use this link to find the contact information:

http://www.elections.il.gov/DistrictLocator/DistrictOfficialSearchByDistrict.aspx

Increased tax revenue leads to increased spending

Recently there has been much discussion about enacting a Value Added Tax in the USA. Experience in the real world shows us that this new tax will solve nothing. The following article from Investor’s Business Daily examines this subject:

http://www.investors.com/NewsAndAnalysis/Article/545596/201008311833/If-VAT-Is-Rx-For-Deficits-And-Debt-Why-Are-VAT-Users-On-The-Brink-.htm

The moral of this story is summed up in this paragraph:

The Organization for Economic Co-Operation and Development reported that since the 1960s, when the VAT began to be widely adopted, government spending by OECD member countries with a VAT soared from 30% of their GDP to 50%. Governments tend to spend all available revenue, and then some.

Just say no to raising taxes.

Tax exemptions for any cause

New York City will soon consider tax-free financing for the Ground Zero Muslim center:

http://www.reuters.com/article/idUSTRE67Q5BW20100827?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Feedfetcher

The Muslim center planned near the site of the World Trade Center attack could qualify for tax-free financing, a spokesman for City Comptroller John Liu said on Friday, and Liu is willing to consider approving the public subsidy.

The mosque's backers hope to raise a total of $70 million in tax-exempt debt to build the center, according to the New York Times. Tax laws allow such funding for religiously affiliated non-profits if they can prove the facility will benefit the general public and their religious activities are funded separately.

Whether you support or oppose the building of this project the fact that it may be financed by tax exempt bonds is outrageous. This is what happens when someone else is allowed to spend your money. Just say no to government spending! (Please note that handing out tax exemptions has the same effect as increasing government spending).

Tax Day Tea Parties

Thursday 4/15/10 is a milestone on the road to the midterm elections. It is important that those of us who wish to reduce the size and scope of government make our voices heard. The midterm elections are 203 day away. The current administration and their supporters will use all of their influence in the media to try and tamp down the anger prevalent in the voter base between now and the election.

You can fight back by attending a Tax Day Tea Party. There will be a Tea Party in every major city across America. Find your local Tea Party at this link:

http://www.teapartypatriots.org/Today.aspx?date=4/15/2010

The Hawaii Tea Party is scheduled to begin at 4:00 pm at the State Capital:
http://www.overtaxedhawaii.com/

In Chicago the Tea Party will be held at the Daley Plaza, 50 W. Washington at 12:00 pm:
http://teapartychicago.org/

Difficult sheep to shear

Alan Reynolds of the Cato Institute had the following article published in the Wall Street Journal on 3/30/10:


http://www.cato.org/pub_display.php?pub_id=11631

This article lists all of the health care tax increases that will affect individuals in the highest tax brackets. Alan has it exactly correct when he makes the following statements:

Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes.

It won't work. It never works.

Punitive tax rates on high-income individuals do not increase revenue. Successful people are not docile sheep just waiting to be shorn.

In short, the belief that higher tax rates on the rich could eventually raise significant sums over the next decade is a dangerous delusion, because it means the already horrific estimates of long-term deficits are seriously understated. The cost of new health-insurance subsidies and Medicaid enrollees are projected to grow by at least 7% a year, which means the cost doubles every decade — to $432 billion a year by 2029, $864 billion by 2039, and more than $1.72 trillion by 2049. If anyone thinks taxing the rich will cover any significant portion of such expenses, think again.

The federal government has embarked on an unprecedented spending spree, granting new entitlements in the guise of refundable tax credits while drawing false comfort from phantom revenue projections that will never materialize.

The basic economic principle of lower tax revenue generated by higher tax rates was explained by Economist Arthur Laffer. For a brief explanation of the “Laffer Curve” see the following:

http://www.conservapedia.com/Laffer_curve