Showing posts with label tax policy. Show all posts
Showing posts with label tax policy. Show all posts
Saturday, November 18, 2017
Tuesday, March 19, 2013
No, Elizabeth Warren, we can't go back in time....
Following up on the minimum wage fraud being pushed by the Left, we have Senators like Elizabeth Warren, who epitomizes the Demunist mentality at its most Commiecratic, making claims like this:
It is amusing to see dingbats like Elizabeth "Affirmative Action Paleface" Warren make these sort of claims. This is a common canard with the economically illiterate Left, that high wages and high corporate taxes can work just fine: "Back in the 1950's, we had 90% top earner tax rates, and everything worked well!"
It is amusing to see pipedreamers on the Left, who chide people on the right for “wanting to go back to the 1950′s” (culturally), instead want to go back to the 1950′s economically, when THAT world clearly no longer exists.
Let’s see now, in the 1950′s, the Cold War was a raging, there were no investment opportunities in Maoist China or Soviet Russia, the “emerging markets” were post-colonial battlefields, and Europe and Japan were rebuilding from the rubble. High corporate tax rates in the USA were feasible because there wasn’t anywhere else for them to go…..
As for wages, in a globalized economy, American workers can't pull down the wages today that they could in the 1950's, especially with the sort of immigration policies that Elizabeth Warren and her ilk are condoning.
Today, capital can move with the click of a mouse, so it really isn’t a surprise that Warren Buffett’s investments are taxed at a lower marginal rate than his secretary’s wages.
Moreover, what was the *real* tax rate in those glory days?
Many things were deductible back then that are no longer today, from “Meals And Entertainment” expenses at 100%, to Credit Card Interest, to Medical Expenses, which were not subject to an Adjusted Gross Income “floor” of 7.5%, which this Obama Administration has hiked up to 10%.
So the top marginal rate of 90 percent never actually happened to anyone.
And by the 1960's, after Kennedy's tax cut, no one ever paid 70% of their income in taxes either. When those rates were in effect they were offset by a wide variety of tax deductions that don’t exist now. For instance, we make a big deal out of the home mortgage interest deduction, but back then all interest was deductible — mortgage, auto loan, credit card! Detroit was making money hand over fist manufacturing shoddy cars with expensive union labor because a new car was a valuable tax shelter for the upper class, and even the middle class.
When you take out a loan, the initial payments are nearly 100% interest. So if you had a lot of money and wanted to pay less taxes, you would simply buy a new car every year and trade in the old one. Then your car payments became essentially fully tax deductible. The tax code was swimming with other tax deductions and there was a big industry in exercising them.
In other words, no one paid at a 70% tax rate. The 70% tax rate was what you paid on the small amount of money that you were unable to shelter.
Implementing the 1960s tax rates without the corresponding tax shelters would be a disaster for the economy. The high marginal tax rates had a side effect of encouraging economic activity that avoided the tax rates. Without the tax shelters, the high tax rates would hoover money out of the economy.
Real estate was also then a much bigger tax dodge than it is now. Depreciation – paper losses — could be deducted at a double declining balance rate (rather than today's more modest MACRS formula) from ordinary income until none was left. It was this reality that originally gave rise to the Alternative Minimum Tax in 1969, once intended only for a few thousand wealthy individuals, which now a pain in so many middle class backsides. Highly leveraged deals often produced tax losses to investments in ratios like ten to one.
"Mad Men" is just a TV show. To the extent that world ever existed, it *no longer exists*.
Anyone who tries to tell you the tax rates of the ’50s- ’70′s can be directly compared to today’s rates either doesn’t really know what s/he is talking about or is trying to mislead you.
Sen. Elizabeth Warren (D-Mass.) made a case for increasing the minimum wage last week during a Senate Committee on Health, Education, Labor and Pensions hearing, in which she cited a study that suggested the federal minimum wage would have stood at nearly $22 an hour today if it had kept up with increased rates in worker productivity.
"If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour," she said, speaking to Dr. Arindrajit Dube, a University of Massachusetts Amherst professor who has studied the economic impacts of minimum wage. "So my question is Mr. Dube, with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn't go to the worker."
It is amusing to see dingbats like Elizabeth "Affirmative Action Paleface" Warren make these sort of claims. This is a common canard with the economically illiterate Left, that high wages and high corporate taxes can work just fine: "Back in the 1950's, we had 90% top earner tax rates, and everything worked well!"
It is amusing to see pipedreamers on the Left, who chide people on the right for “wanting to go back to the 1950′s” (culturally), instead want to go back to the 1950′s economically, when THAT world clearly no longer exists.
Let’s see now, in the 1950′s, the Cold War was a raging, there were no investment opportunities in Maoist China or Soviet Russia, the “emerging markets” were post-colonial battlefields, and Europe and Japan were rebuilding from the rubble. High corporate tax rates in the USA were feasible because there wasn’t anywhere else for them to go…..
As for wages, in a globalized economy, American workers can't pull down the wages today that they could in the 1950's, especially with the sort of immigration policies that Elizabeth Warren and her ilk are condoning.
Today, capital can move with the click of a mouse, so it really isn’t a surprise that Warren Buffett’s investments are taxed at a lower marginal rate than his secretary’s wages.
Moreover, what was the *real* tax rate in those glory days?
Many things were deductible back then that are no longer today, from “Meals And Entertainment” expenses at 100%, to Credit Card Interest, to Medical Expenses, which were not subject to an Adjusted Gross Income “floor” of 7.5%, which this Obama Administration has hiked up to 10%.
So the top marginal rate of 90 percent never actually happened to anyone.
And by the 1960's, after Kennedy's tax cut, no one ever paid 70% of their income in taxes either. When those rates were in effect they were offset by a wide variety of tax deductions that don’t exist now. For instance, we make a big deal out of the home mortgage interest deduction, but back then all interest was deductible — mortgage, auto loan, credit card! Detroit was making money hand over fist manufacturing shoddy cars with expensive union labor because a new car was a valuable tax shelter for the upper class, and even the middle class.
When you take out a loan, the initial payments are nearly 100% interest. So if you had a lot of money and wanted to pay less taxes, you would simply buy a new car every year and trade in the old one. Then your car payments became essentially fully tax deductible. The tax code was swimming with other tax deductions and there was a big industry in exercising them.
In other words, no one paid at a 70% tax rate. The 70% tax rate was what you paid on the small amount of money that you were unable to shelter.
Implementing the 1960s tax rates without the corresponding tax shelters would be a disaster for the economy. The high marginal tax rates had a side effect of encouraging economic activity that avoided the tax rates. Without the tax shelters, the high tax rates would hoover money out of the economy.
Real estate was also then a much bigger tax dodge than it is now. Depreciation – paper losses — could be deducted at a double declining balance rate (rather than today's more modest MACRS formula) from ordinary income until none was left. It was this reality that originally gave rise to the Alternative Minimum Tax in 1969, once intended only for a few thousand wealthy individuals, which now a pain in so many middle class backsides. Highly leveraged deals often produced tax losses to investments in ratios like ten to one.
"Mad Men" is just a TV show. To the extent that world ever existed, it *no longer exists*.
Anyone who tries to tell you the tax rates of the ’50s- ’70′s can be directly compared to today’s rates either doesn’t really know what s/he is talking about or is trying to mislead you.
Thursday, May 24, 2012
Obama Spending: The Big Leftist Lie
The apparatchik media just can't tell the truth, can it?
To say nothing of all the Obamunist spending programs that are set to kick in Fiscal Year 2013, but were passed and approved in 2009 and 2010.
To say nothing of all the Obamunist spending programs that are set to kick in Fiscal Year 2013, but were passed and approved in 2009 and 2010.
Saturday, January 14, 2012
Santorum: 'Supply-Sider' for the Working Man???
An interesting point. It is not enough to pitch the goodness of capitalism and the badness of the welfare state to the receptive "one percent" (sic--it's almost 50 times larger than that); we must also appeal to the "99 percent" (sic--again, it is less than half of that, but still a large percentage).
"I'm someone who believes that making things creates wealth," says Rick Santorum. It is primary day in New Hampshire, and the former Pennsylvania senator and current presidential candidate is describing his plan to slash corporate tax rates. To encourage companies to make things, he would completely eliminate the federal income tax on manufacturers. For all other businesses, the rate would be cut in half, to 17.5% from 35%.In other words, point out how Leftist tax policies have *driven* the manufacturing jobs of Joe Sixpack overseas.
Mr. Santorum also believes that making babies creates wealth. It's very difficult to grow an economy with a shrinking population, he says, pointing to the "demographic winter in Europe" as a cause of that region's troubles. To help avoid that fate in the U.S., he wants to triple the per-child tax credit and also cut individual tax rates.The Leftist eco-fiends still harbor fears of a "Population Bomb" but the reality is that the modern industrial world--whether "post-capitalist" like the USA, Europe, Japan, and the little Asian Tigers, or "post-communist" like the former Warsaw Pact and Red China, are having too few babies, not too many:
Mr. Santorum argues that the cost of Europe's massive welfare states made it too expensive for young people to have families. He notes that with plummeting birth rates, many European countries have resorted to "baby bonuses" to try to reverse the tide, but the demographic picture remains bleak, while the costs of entitlement programs have exploded.
In other words, make "supply side economics" work for the working class. This working class, once called "Reagan Democrats", then "Perot-nistas", then "bitter clingers" by President Obama and his minions, is an important, perhaps THE important, piece of the GOP winning coalition. In general, though, the tale of years since has been the refusal of the Republican establishment to seal the deal. As Ross Douthat and Reihan Salam pointed out in their book "Grand New Party":
"Who are benefits promised to, overwhelmingly? Well, they're promised to older people. And if you have a society like Europe that is upside down where there are a lot more older people than younger people, you have economic calamity," he says. Asked if giving generous per-child credits will result in an even larger number of households exempt from the income tax and therefore amenable to more spending, he says his plan will drive growth and that, in turn, will bring more people on to the tax rolls. Elimination of deductions might also keep some people paying income taxes. He aims to balance overall taxes and spending at 18% of GDP. Spending has soared to 24% in the Obama era.
Over the forty years since, this problem – that the working class wants, and needs, more from public policy than simply to be left alone – has prevented the Republican Party from consolidating an enduring majority, despite all the right-wing intellectual victories and all the conservative electoral gains. It defeated Goldwater, it ruined Gingrich, and it crippled the domestic policy of George W. Bush. It was at the heart of a marginal conservatism’s 1964 defeat, and it lies at the heart of conservatism’s present crisis....In a still-crowded field of non-Romneys trying to compete for the Republican nomination, Mr. Santorum could emerge in the Jan. 21 South Carolina primary as the man who can bring together the old Reagan coalition. A champion of cultural conservatives with a blue-collar background, he is also making the case for deep cuts in federal spending. His credibility on this last issue derives from the political price he paid for being an early promoter of Social Security reform, which caused him to lose his Senate seat once.
Nor does he give ground in our discussion. I ask if his corporate tax plan opens him up to criticism that he and President Obama are both favoring particular sectors of the economy, with Mr. Santorum picking manufacturing while Mr. Obama anoints green energy. "Oh, green energy is not a sector, I mean, come on. It's like a half-dozen companies," says Mr. Santorum.We could do worse than that. If Rick Santorum is not the anti-Romney, perhaps he *is* the Working Man's Capitalist.
Does this mean the Obama policy would be more legitimate if the president were favoring a larger group of Solyndras?
"He's talking about handing out tax-free grants and loans," says Mr. Santorum, who adds that his own plan "is a conservative approach. It's supply-side. It's cutting rates. Why are we cutting the corporate rate to 17.5% and making it simple? . . . Because we think it's what's necessary to grow the economy. . . . So if what's necessary to grow the economy in one sector of the economy is different from another, then why should we have the same tax rate?" He argues that manufacturing has been hit particularly hard by the costs of regulation and litigation.
To avoid a lobbying festival, Mr. Santorum says, the existing IRS definition of manufacturing, which includes companies that make and process goods, will remain in place.
"No, we're not going to have a free-for-all over who is a manufacturer. It's pretty clear if you're making products you're making products and if you're processing products like if you're an oil refiner, you're a processor. . . . You're making things, as opposed to a lawyer who is not a manufacturer." And while only a small percentage of Americans still work in manufacturing, Mr. Santorum says that such businesses have a powerful "multiplier effect" as they support various other enterprises.
Sunday, October 23, 2011
The hidden Obama inflation tax
It has been suggested in some quarters that The Tea Party Movement and their Republican allies have nothing to complain about because neither the Obama administration, nor Nancy Pelosi in her heyday of 2009-2010, raised tax rates. In fact, it is claimed through credits that the Democrats in Congress actually lowered taxes "for 95% of the population!"
Leaving aside the absurdity of cutting income taxes for that 47 percent of the population who pay no income taxes, this utterly ignores the hidden tax of inflation that is simmering away. The Fed has printed more money to pay for Barry and Nancy and Harry's "stimulus". This means more money is going after the same goods and services in our economy. This means the money you or I hold is worth *that much less*. In effect, our money *was* taxed away by Barry and Harry and Nancy, through the mechanism of currency devaluation and corresponding price inflation. You may have noticed prices creeping up in the stores already.
When Pelosi's Congress spent more money than they collected in taxes, and with nearly a *trillion* dollars of "stimulus" they certainly did that, they authorized the Treasury Department to borrow from the public by selling Treasury bills, bonds, and notes. The Treasury offers these securities for sale at public auction, and they are bid for and purchased by banks, pension funds, trusts, corporations, individuals, and above all foreign interests. These are widely considered to be the safest IOUs around. After all, they are guaranteed by the U.S. government.
Inasmuch as Treasury securities are offered at auction, there is no chance they will not be purchased. The Treasury can offer as high a rate of interest as is necessary to attract buyers. Thus, investors, including individuals, pension funds, banks, and life insurance companies needing safety of principal are induced to sell other private debt securities such as bonds, savings accounts, and certificates of deposit, and buy the government IOUs.
Sale of government securities thus absorbs the savings of individuals and corporations. The more that government borrows, the less money that is left over for other borrowers. As a consequence, other borrowers must offer higher and higher rates of interest in order to attract funds. Thus, when the federal government runs deficits, it tends to raise interest rates, and this in turn causes the cost of doing business to rise. As a result, business activity slows down, and both businesses and consumers curtail spending and the economy moves toward recession. Which also explains why Pelosi's and Reid's and Obama's "stimulus" was utterly ineffective.
However, all of the last paragraph assumes a money supply that is kept the same. Enter the "quantitative easing" (printing more money) of Ben Bernacke and the Federal Reserve.
It is widely believed that the Fed is sympathetic with the problems recessions create for politicians, and lowers interest rates in order to keep those politicians in favor with the public. That is not the case at all. The Fed is not a federal agency. It is owned and run by the banking industry. In fact, it is relatively insulated from political pressure, Democrat or Republican, but it has other reasons to act.
What are they? A recession means bad times for the banks. People stop borrowing, corporations lose business, and bank profits drop. When borrowers get into trouble, banks get into trouble. If the recession turns into a full-scale depression, widespread bank failures may result, as they did in the 1920s. Since the Fed is an organization made up of banks, it is clearly in the best interests of those running it to ward off the recession by lowering interest rates. And it does so by expanding the money supply.
When the Fed determines that interest rates should be lowered, or at least prevented from rising any further, it contacts private dealers who make the market in (i.e., who buy and sell) U.S. government securities. The Federal Open Market Committee of the Federal Reserve meets and issues orders to purchase Treasury securities. (Remember, these are the same T-bills and bonds that created the rising interest rates in the first place by absorbing the savings of individuals and corporations.)
The Fed pays the dealers for the securities with Federal Reserve checks, which the dealers then deposit in their banks. The bond dealers' banks then forward those checks to the Fed (where the banks have their reserves on deposit), and the Fed credits the reserve accounts of the banks.
Now the bank has new reserves against which it can make loans. These fresh reserves are just like new deposits from customers, and can be expanded by the same process that all bank deposits are expanded. Under reserve requirements in effect at any point in time (the Fed can change them at will), these reserves can be expanded by five, six, or seven times through what is calls "fractional reserve banking." Thus, when the Federal Reserve buys $1 billion in U.S. Treasury securities, the banks can loan out $5, $6, or $7 billion to borrowers.
Where did the Fed get the money to buy the Treasury securities? It created it out of thin air. It credits the reserve account of a bank by a simple bookkeeping entry. What does the Fed have to back up its IOUs? It has the IOUs of the U.S. Treasury, that is, the Treasury's bills and bonds.
The Federal Reserve accounts thus balance: They show a liability of the bank reserves and the offsetting asset of Treasury securities. The Federal Reserve Notes in your pocket or checking account mean that the Fed owes you money, and these are in turn backed up by the T-bills they hold - which means that the government owes the Fed money. The U.S. government continues to issue more and more IOUs to cover its ever-growing deficits, and the Fed continues to buy these up and issue its own notes in their place.
This whole process is known as "monetizing" debt, which means that the debt of the federal government is turned into money. The government borrows money to meet its deficits, and the IOUs it issues eventually are converted into Federal Reserve Notes. Those greenbacks in your wallet that you think of as money are only government IOUs broken up and reissued by the Fed. And as a result of what the Fed did, your hard earned money is worth that much less...
Thus, in the long run, there is no difference between Nancy and Harry and Barry and the other liberals in the government fighting a recession by taxing money from you and giving it to "green jobs" or "the needy", and the Fed doing much the same by buying up Nancy and Harry and Barry's Treasury bills and giving the banks new reserves. The only difference is in the timing. The effects of government borrowing are almost instantly offset by the effects of government spending. But when the Fed monetizes the government debt, it takes months, or even years, for people to offset the influx of new money by raising their prices. The Fed action just postpones the inevitable a bit longer than the government action does.
Federal deficits, then, are the primary cause of continued inflation of the money supply. Once banks have loaned out their depositors' money to the maximum limit set by reserve requirements, the only source of new dollars is the Federal Reserve.
Leaving aside the absurdity of cutting income taxes for that 47 percent of the population who pay no income taxes, this utterly ignores the hidden tax of inflation that is simmering away. The Fed has printed more money to pay for Barry and Nancy and Harry's "stimulus". This means more money is going after the same goods and services in our economy. This means the money you or I hold is worth *that much less*. In effect, our money *was* taxed away by Barry and Harry and Nancy, through the mechanism of currency devaluation and corresponding price inflation. You may have noticed prices creeping up in the stores already.
When Pelosi's Congress spent more money than they collected in taxes, and with nearly a *trillion* dollars of "stimulus" they certainly did that, they authorized the Treasury Department to borrow from the public by selling Treasury bills, bonds, and notes. The Treasury offers these securities for sale at public auction, and they are bid for and purchased by banks, pension funds, trusts, corporations, individuals, and above all foreign interests. These are widely considered to be the safest IOUs around. After all, they are guaranteed by the U.S. government.
Inasmuch as Treasury securities are offered at auction, there is no chance they will not be purchased. The Treasury can offer as high a rate of interest as is necessary to attract buyers. Thus, investors, including individuals, pension funds, banks, and life insurance companies needing safety of principal are induced to sell other private debt securities such as bonds, savings accounts, and certificates of deposit, and buy the government IOUs.
Sale of government securities thus absorbs the savings of individuals and corporations. The more that government borrows, the less money that is left over for other borrowers. As a consequence, other borrowers must offer higher and higher rates of interest in order to attract funds. Thus, when the federal government runs deficits, it tends to raise interest rates, and this in turn causes the cost of doing business to rise. As a result, business activity slows down, and both businesses and consumers curtail spending and the economy moves toward recession. Which also explains why Pelosi's and Reid's and Obama's "stimulus" was utterly ineffective.
However, all of the last paragraph assumes a money supply that is kept the same. Enter the "quantitative easing" (printing more money) of Ben Bernacke and the Federal Reserve.
It is widely believed that the Fed is sympathetic with the problems recessions create for politicians, and lowers interest rates in order to keep those politicians in favor with the public. That is not the case at all. The Fed is not a federal agency. It is owned and run by the banking industry. In fact, it is relatively insulated from political pressure, Democrat or Republican, but it has other reasons to act.
What are they? A recession means bad times for the banks. People stop borrowing, corporations lose business, and bank profits drop. When borrowers get into trouble, banks get into trouble. If the recession turns into a full-scale depression, widespread bank failures may result, as they did in the 1920s. Since the Fed is an organization made up of banks, it is clearly in the best interests of those running it to ward off the recession by lowering interest rates. And it does so by expanding the money supply.
When the Fed determines that interest rates should be lowered, or at least prevented from rising any further, it contacts private dealers who make the market in (i.e., who buy and sell) U.S. government securities. The Federal Open Market Committee of the Federal Reserve meets and issues orders to purchase Treasury securities. (Remember, these are the same T-bills and bonds that created the rising interest rates in the first place by absorbing the savings of individuals and corporations.)
The Fed pays the dealers for the securities with Federal Reserve checks, which the dealers then deposit in their banks. The bond dealers' banks then forward those checks to the Fed (where the banks have their reserves on deposit), and the Fed credits the reserve accounts of the banks.
Now the bank has new reserves against which it can make loans. These fresh reserves are just like new deposits from customers, and can be expanded by the same process that all bank deposits are expanded. Under reserve requirements in effect at any point in time (the Fed can change them at will), these reserves can be expanded by five, six, or seven times through what is calls "fractional reserve banking." Thus, when the Federal Reserve buys $1 billion in U.S. Treasury securities, the banks can loan out $5, $6, or $7 billion to borrowers.
Where did the Fed get the money to buy the Treasury securities? It created it out of thin air. It credits the reserve account of a bank by a simple bookkeeping entry. What does the Fed have to back up its IOUs? It has the IOUs of the U.S. Treasury, that is, the Treasury's bills and bonds.
The Federal Reserve accounts thus balance: They show a liability of the bank reserves and the offsetting asset of Treasury securities. The Federal Reserve Notes in your pocket or checking account mean that the Fed owes you money, and these are in turn backed up by the T-bills they hold - which means that the government owes the Fed money. The U.S. government continues to issue more and more IOUs to cover its ever-growing deficits, and the Fed continues to buy these up and issue its own notes in their place.
This whole process is known as "monetizing" debt, which means that the debt of the federal government is turned into money. The government borrows money to meet its deficits, and the IOUs it issues eventually are converted into Federal Reserve Notes. Those greenbacks in your wallet that you think of as money are only government IOUs broken up and reissued by the Fed. And as a result of what the Fed did, your hard earned money is worth that much less...
Thus, in the long run, there is no difference between Nancy and Harry and Barry and the other liberals in the government fighting a recession by taxing money from you and giving it to "green jobs" or "the needy", and the Fed doing much the same by buying up Nancy and Harry and Barry's Treasury bills and giving the banks new reserves. The only difference is in the timing. The effects of government borrowing are almost instantly offset by the effects of government spending. But when the Fed monetizes the government debt, it takes months, or even years, for people to offset the influx of new money by raising their prices. The Fed action just postpones the inevitable a bit longer than the government action does.
Federal deficits, then, are the primary cause of continued inflation of the money supply. Once banks have loaned out their depositors' money to the maximum limit set by reserve requirements, the only source of new dollars is the Federal Reserve.
Tuesday, November 02, 2010
California Propositions
Prop 19: Legalizing Pot -- Symbolic YES.
I say symbolic because even if this initiative passes, it will not happen. It will immediately get tied up in litigation, both state and federal, that will go on for years. So as a result, both the nightmare scenarios outlined by opponents and the alleged increased revenues and decreased Mexican drug cartel activity outlined by proponents simply are not going to happen, at least not anytime soon.
I actually have respect for those who vote NO. My nephew told me that he thinks society has enough problems with alcohol, and do we really want to have a larger pot problem? From someone who has had a drinking problem, and who watched his pothead father graduate to methamphetamine, this is not a frivolous point.
The proposed law also provides that "no person shall be discriminated against or denied any right or privilege" for pot use, inviting a lawsuit every time an employer tries to require a drug test, for example.
There is also the obvious question: Do we really want a legally dumbed down society to the point where "the munchies" are the topic of discussion? I rather regret most of the times I spent getting stoned, they being in adolescent angst and all that.
Nevertheless, I am of the mind to vote YES, simply because with "medicinal" marijuana, we already have a fairly large exception by which thousands of people in this state are toking away, and probably passing it on to the non-afflicted. Our current anti-marijuana enforcement efforts are tantamount to telling Katie to bar the door after all the horses have already left the stables. To have such an unenforceable law is to invite contempt for the law in general.
As for the concerns that marijuana leads its users on to harder drugs, here there is an undeniable element of the self-fulfilling prophecy. Those who seek out marijuana tend to get it from those involved with the manufacture or sale of other illegal substances, such as methamphetamine. If it were legally grown and sold, as tobacco is, that would not be the case.
Finally, I am increasingly of the mind that we should "Legalize It, Then Demonize It", much as has been done with tobacco. And smoking tobacco has declined among the American population, relative to previous generations. Youth are still more likely to smoke than older adults, but that was true with prior generations as well. There is a very simple reason for this. Cigarettes and alcohol, for teenagers who wish to seem more grown up, are easy and false outward symbols of maturity, whereas genuine adult recognition and earned achievement are much harder to come by. (Nope, "Joe Camel" had nothing to do with youth smoking, "The Marlboro Man", however, probably did.)
I am reminded of the Wickersham Commission of 1929-1931, which, while acknowledging that Prohibition was very problematic and ineffective, would not urge its repeal.
Franklin P. Adams, a columnist for the now defunct New York World newspaper (from which the term "World Series" comes, as the newspaper was the original sponsor of the American Baseball Championship Game) wrote a ditty that mocked the government's report:
Prop 20: Congressional Redistricting. (Symbolic?) YES.
Prop 20 extends the redistricting reform applied to State Senate and Assembly districts by previously passed Prop 11 to Congressional districts. Congressional districts are currently drawn by politicians in the Legislature. This measure would take control of Congressional redistricting away from the Legislature, giving it instead to a citizens commission.
Prop. 20 would end political gerrymandering. It’s widely agreed by good government advocates that politicians draw districts for political advantage, creating safe seats for incumbent politicians and protecting the majority party’s position of dominance.
This finishes the work we began in 2008 to get redistricting decisions away from self-interested state legislators and into the hands of a bi-partisan commission, to reduce the gerrymandering rampant in California politics. The original initiative was just for California state districts - this simply adds the Congressional ones.
I suspect this might face legal challenges, so it *might* be symbolic.
I really would like to see districts that respected municipal and county boundaries, trying to keep first counties, then cities, then neighborhood districts, together as much as possible, and were not bizarrely drawn. Obviously, a mega county like LA will have many representatives in it, but let us try to have districts that don't carve up established municipalities, established neighborhoods, or ZIP Codes.
Have you ever used Wikipedia to see what your Congressional District looks like on a map? You might be surprised, infuriated, or amused. My own district looks like this, and it is actually one of the less bizarre ones.
Most other California districts, like this, and this, and this, and this, have no respect for city or county boundaries whatsoever. But the real champ of gerrymandering is this one. To "represent" certain liberal coastal enclaves, it is 200 miles long and in some places only 200 yards wide!
And what do those districts have in Common, except for mine? DEMOCRATS. Suppose the districts were drawn more with realistic city and county boundaries in mind. Might California be a little more balanced? I think so.
Meanwhile, it is time to boycott "The League Of Women Voters", who claim this:
Prop 21: Robbing Drivers To Pay Parks - NO.
Right now, state park users pay a nominal fee that helps pay for upkeep, assuring that those who use our state parks help pay for them. This measure ends shifts the cost to the rest of us by imposing an $18 per car tax increase whether we use the parks or not. Stealing money from highway travelers used to be called "highway robbery." Now it's called "Proposition 21."
Moreover, there is no guarantee that there will not be "bait and switch". Funds raised ostensibly for parks still may not be used to fix the parks, but may instead be raided by wasteful spending politicians to squander on other unrelated pet projects.
Frankly, in a time of budgetary woes, it may be time to reconsider and sell off those parks which have very low use, which have to be plowed or grazed by Cattle periodically to prevent wildfires, and lack facilities for campers. Coe State Park, in the Diablo Ranges east of San Jose, comes to mind. Originally one ranch gifted to the State, it has annexed most neighboring ranches and grown many times its original size, but it still lacks the most basic of park facilities and is inaccessible to most Californians.
Prop 22: State Hands Off Local Government Tax Money - YES.
Prop 22 is designed to protect local funds from being borrowed by the state government. In recent years, as the state has faced massive budget shortfalls, Sacramento politicians have partially made up for these shortfalls by borrowing funds from local government treasuries. Funds borrowed included money that local governments would otherwise have been available for services including transportation and public safety.
Sacramento politicians have raided their treasuries resulting in layoffs of police officers and fire fighters and hindering plans for transit projects that were supposed to be paid for with gas tax revenue. Instead, the Sacramento political class robbed local governments, forcing others to pay for their reckless spending and misplaced priorities. Prop 22 protects local funds from further raids by the state government ensuring funds are used for those local projects they were intended for, and not to bail out state level politicians.
This takes a giant leap toward restoring local government independence and protecting our transportation taxes by prohibiting state raids on local and transportation funds. Local governments are hardly paragons of virtue, but local tax revenues should remain local.
Many people whose opinions I respect oppose this initiative, on the grounds that it will make it harder for state authorities to defund local "redevelopment agencies" who abuse their eminent domain powers. But I think that is a problem of property rights, not of local control.
Prop 23: End The Man-Made Global Warming Hoax - YES!!!!!!!!!!!!!!!
In 2006, Sacramento's rocket-scientists enacted AB 32, imposing draconian restrictions on carbon dioxide emissions (yes, that's the stuff you exhale).
They promised to save the planet from alleged "man made global warming" and open a cornucopia of new "green" jobs. Since then, California's unemployment rate has shot far beyond the national unemployment rate and the earth has continued to warm and cool as it has for billions of years.
Prop 23 merely holds the "Environmentalists" to their promise: it suspends AB 32 until unemployment stabilizes at or below its pre-AB 32 level. For this the leftist propagandists call it "anti-science".
Gee, it sure is "science" when the global warming "scientists" have been caught red-handed adjusting / fabricating data to fit the "computer models". If the data doesn't fit the models, make it fit! And when they get caught doing this for decades, they merely assert that "the science is settled!" that much louder.
It has become fashionable to re-label "global warming" as "Climate Change" to account for lower than normal temperatures and Little Ice Ages in recent decades. And that in a sense is true--over time the climate is always slowly changing. But those of us who remember the 1970's claims that industrial man, by stirring up sun-blocking particulate matter and putting more water vapor into the atmosphere, was going to cause a "New Ice Age", are skeptical.
Solar orbital cycles, sunspots, volcanic eruptions, natural ocean current shifts, and massive natural non-industrial sources of Carbon Dioxide, water vapor, and methane, all of which dwarf man's output, could not be reached for comment.
I am evenly split over whether these "scientists" and the politicians who trumpet them are sinister liars, or whether they are sincere "true believers" just looking for a "religion for the Godless." But either way, they do have motives: more research grant money at best, crypto-totalitarians looking to take away our mobility and therefore freedom at worst, and those looking for another excuse to tax us somewhere in between.
The disgusting propaganda opposing this initiative makes me ill. For starters, we have the vilification of two "Texas" oil companies, Valero and Tesoro. Gee, Valero and Tesoro between them operate four major refineries in the State of California, oilfields in the Bakersfield area, and have hundreds of service station franchises here. Outsiders? Really? Because they have their HQ's in Texas? To escape the punitive and business bashing California State Taxes, who wouldn't? Meanwhile, the aforementioned and exposed climate change hoaxers seem to come from around the world.
On a related note, it is time to boycott "The American Lung Association", who claim this initiative "causes pollution", even though this initiative doesn't lower a single standard for emissions of *real* pollutants (such as nitric oxides, sulfur dioxide, carbon monoxide, and hydrocarbons, the stuff that actually makes up "smog"). Carbon Dioxide is NOT a pollutant. Plants like it.
Shame on you, American Lung Association. From here on, any Christmas Seals, Easter Seals, or other American Lung Association fundraising letters featuring the poor asthmatic kids go right in the trash. Not one red cent to a corrupted organization. Not. One. Red. Cent.
Prop 24: The So-Called "Tax Fairness Act" - NO!!!!!!!!
Prop 24 repeals recently enacted changes in the tax code that were designed to somewhat ease the tax burden on California businesses.
Prop 24 raises taxes on California in three ways. First, Prop 24 ends a practice called “elective single sales factor” that allows businesses to choose between basing their tax burden on sales or property and payroll, giving them the ability to use whichever formula results in a lower obligation.
Second, Prop 24 ends a tax credit designed for research and development that allows companies to shift tax credits between profitable and unprofitable operations. Because research units do not usually earn profits directly, the ability to shift credits between units assists research and development units.
Finally, this proposition ends the practices of “net operating loss carryback,” a tax procedure that allows businesses to use previous tax years operating losses to reduce their liability in a current profitable year.
Various Democrats in the state are calling these "corporate tax giveaways". Giveaways? As if those revenues are theirs to give? Really, the Soviet Politboro-like arrogance of these people is something to behold. And that is why I call those various Democrats, "Commiecrats" or "Demunists".
Ultimately the reality is that for the most part the businesses don't end up paying the business taxes - we do. And when that can't happen, the businesses flee the state and are accused of "exporting jobs".
Business taxes can only be paid in three ways:
1. by us as consumers (through higher prices),
2. by us as employees (through lower wages) and
3. by us as investors (through lower earnings on our 401k's).
Proposition 24 is a jobs tax that will make unemployment worse when the ranks of the jobless are already at record highs. California’s business taxes are currently one of the highest in the nation and California has been ranked by numerous studies as one of the worst places to do business. Imposing billions in new taxes on employers would make the state an even more inhospitable environment for jobs and economic growth, increasing the exodus of jobs out of California and discouraging new investment.
Prop 25: Simple majority for new budgets - NO
Prop 25 allows a budget to be passed with a simple majority rather than the currently required 2/3 vote. The proposition also eliminates the power of referendum on the budget and budget related bills, making budgets take effect immediately upon passage with no opportunity for voters to stop implementation.
If the Legislature fails to pass a budget on time, Prop. 25 requires that legislators forfeit their salaries and living expense allowance. That is a nice gimmick to sell the proposition, but the fact is that all too many state politicians have independent fortunes beyond their salaries anyway. Governator Ah-nold served without pay for years.
Now in fairness, this initiative does not directly make it easier for the Powers That Be to raise taxes--that would still require a 2/3 vote (unless that tax is relabeled a "fee"; see Proposition 26 below). However, this initiative does make it easier for the Powers That Be to spend money--and raising taxes follows that, surely as night follows day.
Prop 25 also does not place any restrictions on what can be included in a budget related bill, so politicians could also more easily pass other legislation currently requiring a super majority simply by inserting it into budget related bills. Super majorities are currently required for the passage of taxes, placing bond proposals on the ballot, and for imposing new environmental regulations on the Delta.
So in other words, while this Proposition does not directly challenge the 2/3 rule for new taxes, it is a stalking horse for ultimately overturning that rule. Their ultimate goal is removing the ‘super majority’ vote on the budget and raising your taxes.
Prop 26: Subjecting New Fees to 2/3 vote - YES
Prop 26 requires that new state fees be passed with a 2/3 vote of the Legislature and establishes the right of citizens to approve, either by two-thirds or majority, local taxes. California currently requires new taxes to be approved with a 2/3 vote of the Legislature, but only requires a simple majority vote to pass levies defined as “fees.” This has encouraged politicians to define new taxes as “fees” to ease passage. Prop 26, with limited exceptions, imposes the same requirements now applied to taxes to fees.
Under the Sinclair Paint vs. California Board of Equalization Court decision (1997), virtually any tax may be increased by majority vote as long as it is called a "fee," gutting the 2/3 vote requirement in the state constitution to raise taxes.
Surprise, surprise, surprise, over the last decade there have been many more fees. Billions in hidden taxes may be imposed on Californians simply by redefining them as "fees".
The proliferation of fees have added to California’s high tax anti-business climate. Closing this legal loophole by making the passage of fees no easier than the passage of taxes would protect jobs and California taxpayers. Prop. 26 rescinds the Sinclair Paint decision, restores the Constitution, and calls a tax a tax--as it should be.
Prop 27: Abolishing Citizens Redistricting Panel - NO!!!!
Prop 27 rolls back the previously passed Prop 11. which took the power to draw Legislative districts away from the Legislature and gave the responsibility to a newly formed Citizens Redistricting Commission, consisting of four Democrats, four Republicans, and three independents. It hasn't even been fully implemented yet, and already the gerrymandering forces want to undo it! Prop 27 would once again allow legislators to draw their own districts, and includes a “poison pill” provision that would kill Prop 20 if Prop 27 passes with more votes.
I say symbolic because even if this initiative passes, it will not happen. It will immediately get tied up in litigation, both state and federal, that will go on for years. So as a result, both the nightmare scenarios outlined by opponents and the alleged increased revenues and decreased Mexican drug cartel activity outlined by proponents simply are not going to happen, at least not anytime soon.
I actually have respect for those who vote NO. My nephew told me that he thinks society has enough problems with alcohol, and do we really want to have a larger pot problem? From someone who has had a drinking problem, and who watched his pothead father graduate to methamphetamine, this is not a frivolous point.
The proposed law also provides that "no person shall be discriminated against or denied any right or privilege" for pot use, inviting a lawsuit every time an employer tries to require a drug test, for example.
There is also the obvious question: Do we really want a legally dumbed down society to the point where "the munchies" are the topic of discussion? I rather regret most of the times I spent getting stoned, they being in adolescent angst and all that.
Nevertheless, I am of the mind to vote YES, simply because with "medicinal" marijuana, we already have a fairly large exception by which thousands of people in this state are toking away, and probably passing it on to the non-afflicted. Our current anti-marijuana enforcement efforts are tantamount to telling Katie to bar the door after all the horses have already left the stables. To have such an unenforceable law is to invite contempt for the law in general.
As for the concerns that marijuana leads its users on to harder drugs, here there is an undeniable element of the self-fulfilling prophecy. Those who seek out marijuana tend to get it from those involved with the manufacture or sale of other illegal substances, such as methamphetamine. If it were legally grown and sold, as tobacco is, that would not be the case.
Finally, I am increasingly of the mind that we should "Legalize It, Then Demonize It", much as has been done with tobacco. And smoking tobacco has declined among the American population, relative to previous generations. Youth are still more likely to smoke than older adults, but that was true with prior generations as well. There is a very simple reason for this. Cigarettes and alcohol, for teenagers who wish to seem more grown up, are easy and false outward symbols of maturity, whereas genuine adult recognition and earned achievement are much harder to come by. (Nope, "Joe Camel" had nothing to do with youth smoking, "The Marlboro Man", however, probably did.)
I am reminded of the Wickersham Commission of 1929-1931, which, while acknowledging that Prohibition was very problematic and ineffective, would not urge its repeal.
Franklin P. Adams, a columnist for the now defunct New York World newspaper (from which the term "World Series" comes, as the newspaper was the original sponsor of the American Baseball Championship Game) wrote a ditty that mocked the government's report:
Prohibition is an awful flop.And this kind of ditty is as appropriate now as it was in 1931.
We like it.
It can't stop what it's meant to stop.
We like it.
It's left a trail of graft and slime,
It don't prohibit worth a dime,
It's filled our land with vice and crime.
Nevertheless, we're for it.
Prop 20: Congressional Redistricting. (Symbolic?) YES.
Prop 20 extends the redistricting reform applied to State Senate and Assembly districts by previously passed Prop 11 to Congressional districts. Congressional districts are currently drawn by politicians in the Legislature. This measure would take control of Congressional redistricting away from the Legislature, giving it instead to a citizens commission.
Prop. 20 would end political gerrymandering. It’s widely agreed by good government advocates that politicians draw districts for political advantage, creating safe seats for incumbent politicians and protecting the majority party’s position of dominance.
This finishes the work we began in 2008 to get redistricting decisions away from self-interested state legislators and into the hands of a bi-partisan commission, to reduce the gerrymandering rampant in California politics. The original initiative was just for California state districts - this simply adds the Congressional ones.
I suspect this might face legal challenges, so it *might* be symbolic.
I really would like to see districts that respected municipal and county boundaries, trying to keep first counties, then cities, then neighborhood districts, together as much as possible, and were not bizarrely drawn. Obviously, a mega county like LA will have many representatives in it, but let us try to have districts that don't carve up established municipalities, established neighborhoods, or ZIP Codes.
Have you ever used Wikipedia to see what your Congressional District looks like on a map? You might be surprised, infuriated, or amused. My own district looks like this, and it is actually one of the less bizarre ones.
Most other California districts, like this, and this, and this, and this, have no respect for city or county boundaries whatsoever. But the real champ of gerrymandering is this one. To "represent" certain liberal coastal enclaves, it is 200 miles long and in some places only 200 yards wide!
And what do those districts have in Common, except for mine? DEMOCRATS. Suppose the districts were drawn more with realistic city and county boundaries in mind. Might California be a little more balanced? I think so.
Meanwhile, it is time to boycott "The League Of Women Voters", who claim this:
"Tucked into the proposed law are problems that would make it harder to protect California's diverse neighborhoods."In other words, The League Of Women Voters favors the kinds of ethnic Bantustan districts that allow corrupt creeps like Maxine "Kill Whitey and Free OJ" Waters to continue to get re-elected time and time again. Shame on you, League of Women Voters. Non-partisan, my fanny. Not anymore anyway.
Prop 21: Robbing Drivers To Pay Parks - NO.
Right now, state park users pay a nominal fee that helps pay for upkeep, assuring that those who use our state parks help pay for them. This measure ends shifts the cost to the rest of us by imposing an $18 per car tax increase whether we use the parks or not. Stealing money from highway travelers used to be called "highway robbery." Now it's called "Proposition 21."
Moreover, there is no guarantee that there will not be "bait and switch". Funds raised ostensibly for parks still may not be used to fix the parks, but may instead be raided by wasteful spending politicians to squander on other unrelated pet projects.
Frankly, in a time of budgetary woes, it may be time to reconsider and sell off those parks which have very low use, which have to be plowed or grazed by Cattle periodically to prevent wildfires, and lack facilities for campers. Coe State Park, in the Diablo Ranges east of San Jose, comes to mind. Originally one ranch gifted to the State, it has annexed most neighboring ranches and grown many times its original size, but it still lacks the most basic of park facilities and is inaccessible to most Californians.
Prop 22: State Hands Off Local Government Tax Money - YES.
Prop 22 is designed to protect local funds from being borrowed by the state government. In recent years, as the state has faced massive budget shortfalls, Sacramento politicians have partially made up for these shortfalls by borrowing funds from local government treasuries. Funds borrowed included money that local governments would otherwise have been available for services including transportation and public safety.
Sacramento politicians have raided their treasuries resulting in layoffs of police officers and fire fighters and hindering plans for transit projects that were supposed to be paid for with gas tax revenue. Instead, the Sacramento political class robbed local governments, forcing others to pay for their reckless spending and misplaced priorities. Prop 22 protects local funds from further raids by the state government ensuring funds are used for those local projects they were intended for, and not to bail out state level politicians.
This takes a giant leap toward restoring local government independence and protecting our transportation taxes by prohibiting state raids on local and transportation funds. Local governments are hardly paragons of virtue, but local tax revenues should remain local.
Many people whose opinions I respect oppose this initiative, on the grounds that it will make it harder for state authorities to defund local "redevelopment agencies" who abuse their eminent domain powers. But I think that is a problem of property rights, not of local control.
Prop 23: End The Man-Made Global Warming Hoax - YES!!!!!!!!!!!!!!!
In 2006, Sacramento's rocket-scientists enacted AB 32, imposing draconian restrictions on carbon dioxide emissions (yes, that's the stuff you exhale).
They promised to save the planet from alleged "man made global warming" and open a cornucopia of new "green" jobs. Since then, California's unemployment rate has shot far beyond the national unemployment rate and the earth has continued to warm and cool as it has for billions of years.
Prop 23 merely holds the "Environmentalists" to their promise: it suspends AB 32 until unemployment stabilizes at or below its pre-AB 32 level. For this the leftist propagandists call it "anti-science".
Gee, it sure is "science" when the global warming "scientists" have been caught red-handed adjusting / fabricating data to fit the "computer models". If the data doesn't fit the models, make it fit! And when they get caught doing this for decades, they merely assert that "the science is settled!" that much louder.
It has become fashionable to re-label "global warming" as "Climate Change" to account for lower than normal temperatures and Little Ice Ages in recent decades. And that in a sense is true--over time the climate is always slowly changing. But those of us who remember the 1970's claims that industrial man, by stirring up sun-blocking particulate matter and putting more water vapor into the atmosphere, was going to cause a "New Ice Age", are skeptical.
Solar orbital cycles, sunspots, volcanic eruptions, natural ocean current shifts, and massive natural non-industrial sources of Carbon Dioxide, water vapor, and methane, all of which dwarf man's output, could not be reached for comment.
I am evenly split over whether these "scientists" and the politicians who trumpet them are sinister liars, or whether they are sincere "true believers" just looking for a "religion for the Godless." But either way, they do have motives: more research grant money at best, crypto-totalitarians looking to take away our mobility and therefore freedom at worst, and those looking for another excuse to tax us somewhere in between.
The disgusting propaganda opposing this initiative makes me ill. For starters, we have the vilification of two "Texas" oil companies, Valero and Tesoro. Gee, Valero and Tesoro between them operate four major refineries in the State of California, oilfields in the Bakersfield area, and have hundreds of service station franchises here. Outsiders? Really? Because they have their HQ's in Texas? To escape the punitive and business bashing California State Taxes, who wouldn't? Meanwhile, the aforementioned and exposed climate change hoaxers seem to come from around the world.
On a related note, it is time to boycott "The American Lung Association", who claim this initiative "causes pollution", even though this initiative doesn't lower a single standard for emissions of *real* pollutants (such as nitric oxides, sulfur dioxide, carbon monoxide, and hydrocarbons, the stuff that actually makes up "smog"). Carbon Dioxide is NOT a pollutant. Plants like it.
Shame on you, American Lung Association. From here on, any Christmas Seals, Easter Seals, or other American Lung Association fundraising letters featuring the poor asthmatic kids go right in the trash. Not one red cent to a corrupted organization. Not. One. Red. Cent.
Prop 24: The So-Called "Tax Fairness Act" - NO!!!!!!!!
Prop 24 repeals recently enacted changes in the tax code that were designed to somewhat ease the tax burden on California businesses.
Prop 24 raises taxes on California in three ways. First, Prop 24 ends a practice called “elective single sales factor” that allows businesses to choose between basing their tax burden on sales or property and payroll, giving them the ability to use whichever formula results in a lower obligation.
Second, Prop 24 ends a tax credit designed for research and development that allows companies to shift tax credits between profitable and unprofitable operations. Because research units do not usually earn profits directly, the ability to shift credits between units assists research and development units.
Finally, this proposition ends the practices of “net operating loss carryback,” a tax procedure that allows businesses to use previous tax years operating losses to reduce their liability in a current profitable year.
Various Democrats in the state are calling these "corporate tax giveaways". Giveaways? As if those revenues are theirs to give? Really, the Soviet Politboro-like arrogance of these people is something to behold. And that is why I call those various Democrats, "Commiecrats" or "Demunists".
Ultimately the reality is that for the most part the businesses don't end up paying the business taxes - we do. And when that can't happen, the businesses flee the state and are accused of "exporting jobs".
Business taxes can only be paid in three ways:
1. by us as consumers (through higher prices),
2. by us as employees (through lower wages) and
3. by us as investors (through lower earnings on our 401k's).
Proposition 24 is a jobs tax that will make unemployment worse when the ranks of the jobless are already at record highs. California’s business taxes are currently one of the highest in the nation and California has been ranked by numerous studies as one of the worst places to do business. Imposing billions in new taxes on employers would make the state an even more inhospitable environment for jobs and economic growth, increasing the exodus of jobs out of California and discouraging new investment.
Prop 25: Simple majority for new budgets - NO
Prop 25 allows a budget to be passed with a simple majority rather than the currently required 2/3 vote. The proposition also eliminates the power of referendum on the budget and budget related bills, making budgets take effect immediately upon passage with no opportunity for voters to stop implementation.
If the Legislature fails to pass a budget on time, Prop. 25 requires that legislators forfeit their salaries and living expense allowance. That is a nice gimmick to sell the proposition, but the fact is that all too many state politicians have independent fortunes beyond their salaries anyway. Governator Ah-nold served without pay for years.
Now in fairness, this initiative does not directly make it easier for the Powers That Be to raise taxes--that would still require a 2/3 vote (unless that tax is relabeled a "fee"; see Proposition 26 below). However, this initiative does make it easier for the Powers That Be to spend money--and raising taxes follows that, surely as night follows day.
Prop 25 also does not place any restrictions on what can be included in a budget related bill, so politicians could also more easily pass other legislation currently requiring a super majority simply by inserting it into budget related bills. Super majorities are currently required for the passage of taxes, placing bond proposals on the ballot, and for imposing new environmental regulations on the Delta.
So in other words, while this Proposition does not directly challenge the 2/3 rule for new taxes, it is a stalking horse for ultimately overturning that rule. Their ultimate goal is removing the ‘super majority’ vote on the budget and raising your taxes.
Prop 26: Subjecting New Fees to 2/3 vote - YES
Prop 26 requires that new state fees be passed with a 2/3 vote of the Legislature and establishes the right of citizens to approve, either by two-thirds or majority, local taxes. California currently requires new taxes to be approved with a 2/3 vote of the Legislature, but only requires a simple majority vote to pass levies defined as “fees.” This has encouraged politicians to define new taxes as “fees” to ease passage. Prop 26, with limited exceptions, imposes the same requirements now applied to taxes to fees.
Under the Sinclair Paint vs. California Board of Equalization Court decision (1997), virtually any tax may be increased by majority vote as long as it is called a "fee," gutting the 2/3 vote requirement in the state constitution to raise taxes.
Surprise, surprise, surprise, over the last decade there have been many more fees. Billions in hidden taxes may be imposed on Californians simply by redefining them as "fees".
The proliferation of fees have added to California’s high tax anti-business climate. Closing this legal loophole by making the passage of fees no easier than the passage of taxes would protect jobs and California taxpayers. Prop. 26 rescinds the Sinclair Paint decision, restores the Constitution, and calls a tax a tax--as it should be.
Prop 27: Abolishing Citizens Redistricting Panel - NO!!!!
Prop 27 rolls back the previously passed Prop 11. which took the power to draw Legislative districts away from the Legislature and gave the responsibility to a newly formed Citizens Redistricting Commission, consisting of four Democrats, four Republicans, and three independents. It hasn't even been fully implemented yet, and already the gerrymandering forces want to undo it! Prop 27 would once again allow legislators to draw their own districts, and includes a “poison pill” provision that would kill Prop 20 if Prop 27 passes with more votes.
Tuesday, June 08, 2010
The Estate Tax and the Liberal Mentality
The New York Times waxes indignant about how the estate tax is kaputt for 2010. Never mind that it returns with a vengeance in 2011.
Let's understand how the estate tax works. It is a tax on *assets*, not on *income*. There are literally millions of people and businesses who are asset rich, assets painfully acquired over many years nay decades, but still of modest income. Farmers, ranchers, owners of many rental properties, owners of a restaurant or a restraurant franchise, to name a few examples.
Oh, but the Leftists "don't want rich heirs sitting on their asses, and then able to pass that on to their idiot children", in the words of one such Leftist whose name escapes me.
For starters, you simply *cannot* sit on your tush when you inherit a farm or a restuarant (which in more expensive California, a single farm, family restaurant, or apartment building easily passes the proposed 2011 asset dollar limits). Or several rental homes or an apartment complex. You have to manage it. Which is a full time job.
Oh, but the guy or gal might be wealthy enough to hire someone else to run it? That's called giving someone a *management* job! Not a bad thing.
Many of these inherited businesses are family businesses which employ dozens, perhaps hundreds of people, but which throw off modest cash flow. All of a sudden the patriarch dies and the business is inherited by his children, who are now hit with a big tax bill just because daddy died. Sometimes, they can't pay that bill without selling assets, laying people off or selling the business outright. Does that seem fair?
Even if you do think it's fair, when they sell, a productive taxpaying asset is at least temporarily and often permanently taken out of action, and the acquirer usually takes the opportunity to eliminate duplicate positions and there are layoffs. Not good for the economy.
Never mind that income from the inherited asset STILL must be taxed and still is. That is, if you don't break up the productive asset. Instead, out of some communistic notion of "fairness" a productive asset is broken up, reducing its income stream. The only people getting rich from that are the real estate agents and the lawyers. The former might get rich anyway should the heirs sell it on their own.
And the same people who advocate this kind of punitive taxation THEN turn around and complain about "big corporations who gobble up family farms and family businesses"--the very assets families are forced to sell in estate tax!
Oh but some heirs are idle, like the Kennedy brats? So what? Notice how the fortune Old Joe Kennedy built is about run out. If an inheritor is productive with his or her money, it serves him or her; if not, it destroys him or her. But you look on and you cry that money corrupted them. Did it? Or did they corrupt their money?
I don't envy worthless heirs; their wealth is not mine and frankly, I am not sure I would have done any better with it. I don't think that it should have been "redistributed" to load the world with fifty little parasites instead of one big one, or worse still, larding up a parasite government that pays out thousands of ghetto people to be idle.
Meanwhile, their Demunist uberlords use legal talent to set up tax-exempt "foundations" with their estates, which turn around and hire *their* idiot children. But the liberal rank and file doesn't seem to mind that.
“The ultrawealthy in this country will still be able to pass on enormous wealth to the next generation,” said Chuck Collins, who studies income inequality and has worked with billionaires like Warren E. Buffett and Bill Gates to promote an estate tax. Mr. Collins argues that the tax is a “recycling program for economic opportunity.”Oh really? A brief history of the National Estate Tax.
Let's understand how the estate tax works. It is a tax on *assets*, not on *income*. There are literally millions of people and businesses who are asset rich, assets painfully acquired over many years nay decades, but still of modest income. Farmers, ranchers, owners of many rental properties, owners of a restaurant or a restraurant franchise, to name a few examples.
Oh, but the Leftists "don't want rich heirs sitting on their asses, and then able to pass that on to their idiot children", in the words of one such Leftist whose name escapes me.
For starters, you simply *cannot* sit on your tush when you inherit a farm or a restuarant (which in more expensive California, a single farm, family restaurant, or apartment building easily passes the proposed 2011 asset dollar limits). Or several rental homes or an apartment complex. You have to manage it. Which is a full time job.
Oh, but the guy or gal might be wealthy enough to hire someone else to run it? That's called giving someone a *management* job! Not a bad thing.
Many of these inherited businesses are family businesses which employ dozens, perhaps hundreds of people, but which throw off modest cash flow. All of a sudden the patriarch dies and the business is inherited by his children, who are now hit with a big tax bill just because daddy died. Sometimes, they can't pay that bill without selling assets, laying people off or selling the business outright. Does that seem fair?
Even if you do think it's fair, when they sell, a productive taxpaying asset is at least temporarily and often permanently taken out of action, and the acquirer usually takes the opportunity to eliminate duplicate positions and there are layoffs. Not good for the economy.
Never mind that income from the inherited asset STILL must be taxed and still is. That is, if you don't break up the productive asset. Instead, out of some communistic notion of "fairness" a productive asset is broken up, reducing its income stream. The only people getting rich from that are the real estate agents and the lawyers. The former might get rich anyway should the heirs sell it on their own.
And the same people who advocate this kind of punitive taxation THEN turn around and complain about "big corporations who gobble up family farms and family businesses"--the very assets families are forced to sell in estate tax!
Oh but some heirs are idle, like the Kennedy brats? So what? Notice how the fortune Old Joe Kennedy built is about run out. If an inheritor is productive with his or her money, it serves him or her; if not, it destroys him or her. But you look on and you cry that money corrupted them. Did it? Or did they corrupt their money?
I don't envy worthless heirs; their wealth is not mine and frankly, I am not sure I would have done any better with it. I don't think that it should have been "redistributed" to load the world with fifty little parasites instead of one big one, or worse still, larding up a parasite government that pays out thousands of ghetto people to be idle.
Meanwhile, their Demunist uberlords use legal talent to set up tax-exempt "foundations" with their estates, which turn around and hire *their* idiot children. But the liberal rank and file doesn't seem to mind that.
Monday, April 19, 2010
The Obamunist Economic Goal
Eurostagnation. Dick Morris explains:
When Obama took office, he had one paramount goal in mind — to increase the size of the federal government....
Socialism is not an epithet or even an economic philosophy. Whether a nation is socialist or not is determined by a single, simple statistic — what percent of the economy (GDP) goes to the public sector? When Obama took office, the U.S. public sector (federal, state, and local) spent about 30% of GDP. Now it is 36%. If Obamacare lives to be fully implemented, it will pass 40%.
The United Kingdom has a public sector that accounts for about 40% of its economy. Germany is at about 48%. France is at 50% and Sweden at 54%. If Obama is allowed to let the public sector expand to 40% of our GDP, we will become a European socialist democracy, to our everlasting detriment. We will thereby inherit the sclerosis that afflicts Europe — permanently high unemployment and low economic growth. (Again fully documented in our book 2010).
But after his swearing-in, President Obama couldn't say that he was going to raise taxes to move us toward socialism. So, instead, he raised spending to do it and borrowed the money to pay for it. Now, with interest rates set to rise (because the Fed is not printing money as fast as it was), our debt service burden will be so onerous that it will become obvious to everyone that the deficit Obama has created is unsupportable.
Now, we pay an average of 3.5% interest on our $12 trillion national debt. That works out to an annual debt service bill of about $400 billion. While large, it's not impossible. Defense spending, for comparison, is $550 billion, Social Security is $400 billion, Medicare is $300 billion, Medicaid about $200 billion.
But, when interest rates rise to 7-8 percent — as they must now that the Treasury cannot just borrow newly printed money but must get real loans from real lenders to finance its deficit — the burden will grow to close to $1 trillion, about a quarter of our budget. Put differently, the entire take of personal income taxes in the United States comes to about $900 billion. All of it will go to debt service.
The United States will become just like the subprime mortgage holders who borrowed at low teaser rates only to see their interest grow until they had to sign over their entire paychecks to the mortgage company.
Obama has been expecting this outcome all along. It is how he will achieve socialism in the United States. He will use the pressure his deficit creates to force higher taxes that will permanently expand the public sector.
Reagan increased the deficit to force liberals to stop spending. Obama has increased it to force conservatives to vote for higher taxes.
Once a spending increase is matched by a tax increase, it lasts forever. That is how Obama plans to move the government's share of the GDP permanently over 40% — into socialist territory.
But the Republicans can and must stop him. By refusing to vote for a tax increase and cutting back Obama's crazy spending, slicing his stimulus package and ratcheting back federal Medicaid payments (by zero funding the increases built into Obamacare), Republicans can cut the deficit without higher taxes.
Indeed, the party should commit to lowering taxes by cutting Capital Gains levies to stimulate investment, jobs, and revenues. The only tax that works economically is a tax cut!
Such a defiant stand, in the face of withering criticism from the media, economists, and the Federal Reserve, can only be made by hardy souls. Indeed, such a stance by a Republican Congress will lead to exactly the same sort of government shutdown — when Obama vetoes the budget — as discredited the GOP in 1995-1996 and led to Clinton's re-election.
Tuesday, February 16, 2010
The real purpose behind class warfare
Thomas Sowell, as he so often does, has the Left's number:
....those who are taking away our freedoms, bit by bit, on the installment plan, have been incessantly supplying us with people to resent.Unless those plans were Automaker Union or government employee plans, of course. Then the Demunists fell silent.
One of the most audacious attempts to take away our freedom to live our lives as we see fit has been the so-called "health care reform" bills that were being rushed through Congress before either the public or the members of Congress themselves had a chance to discover all that was in it.
For this, we were taught to resent doctors, insurance companies and even people with "Cadillac health insurance plans," who were to be singled out for special taxes.
Meanwhile, our freedom to make our own medical decisions — on which life and death can depend — was to be quietly taken from us and transferred to our betters in Washington. Only the recent Massachusetts election results have put that on hold.
Another dangerous power toward which we are moving, bit by bit, on the installment plan, is the power of politicians to tell people what their incomes can and cannot be. Here the resentment is being directed against "the rich."
The distracting phrases here include "obscene" wealth and "unconscionable" profits. But, if we stop and think about it — which politicians don't expect us to — what is obscene about wealth? Wouldn't we consider it great if every human being on earth had a billion dollars and lived in a place that could rival the Taj Mahal?
Poverty is obscene. It is poverty that needs to be reduced —and increasing a country's productivity has done that far more widely than redistributing income by targeting "the rich."
You can see the agenda behind the rhetoric when profits are called "unconscionable" but taxes never are, even when taxes take more than half of what someone has earned, or add much more to the prices we have to pay than profits do.
The assumption that what A pays B is any business of C is an assumption that means a dangerous power being transferred to politicians to tell us all what incomes we can and cannot receive. It will not apply to everyone all at once. Like the income tax, which at first applied only to the truly rich, and then slowly but steadily moved down the income scale to hit the rest of us, the power to say what incomes people can be allowed to make will inevitably move down the income scale to make us all dependents and supplicants of politicians.
The phrase "public servants" is increasingly misleading. They are well on their way to becoming public masters — like aptly named White House "czars." The more they can get us all to resent those they designate, the more they can distract us from their increasing control of our own lives...
Friday, February 08, 2008
Tax "Rebates" Will Not Stimulate The Economy, Tax CUTS will!
The lame-duck Bush Administration, embracing rebate gimmicks, has officially thrown in the towel.
Are rebates nice? Oh yah, you bet they are. I like getting money back (and paying less taxes as a result). Who doesn't? But let's not kid ourselves.
Tax *rebates* don't stimulate the economy. Cutting tax *rates*, so less is taken from us in the first place, does.
Given that reality, isn't it more responsible for the saver to keep that money and save for a new home or their children's education, rather than have Washington redistribute it to someone else to spend for Chinese made goods at Best Buy?
Are rebates nice? Oh yah, you bet they are. I like getting money back (and paying less taxes as a result). Who doesn't? But let's not kid ourselves.
Tax *rebates* don't stimulate the economy. Cutting tax *rates*, so less is taken from us in the first place, does.
High tax rates reduce economic growth because they make it less profitable to work, save and invest. This translates into less work, saving, investment and capital -- and that results in fewer goods and services. Reducing marginal income tax rates has been shown to motivate workers to work more. Lower corporate and investment taxes encourage the savings and investment vital to producing more plants and equipment, as well as better technology.The same critics respond that redistributing money from "savers" to "spenders" will lead to additional spending. That assumes that savers store their savings in their mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings (where it finances business investment) or deposit it in banks (which quickly lend it to others to spend). Therefore, the money *is used*, whether it is initially consumed or saved.
By contrast, tax rebates fail because they don't encourage productivity or wealth
creation. No one has to work, save, invest or create any new wealth to receive a rebate.
Critics contend that rebates "inject" new money into the economy, increasing demand and therefore production. But every dollar that government rebates "inject" into the economy must first be taxed or borrowed out of the economy (and even money borrowed from foreigners brings a reduction in net exports). No new spending power is created. It is merely redistributed from one group of people to another.
Given that reality, isn't it more responsible for the saver to keep that money and save for a new home or their children's education, rather than have Washington redistribute it to someone else to spend for Chinese made goods at Best Buy?
Simply put, low tax rates encourage new wealth creation. Tax rebates merely redistribute existing wealth.And what is worse is that the Bush Administration and the Republicans who are left in Congress did this *before*, back in 2001. What makes them think gimmicks will work now? For the 2001 tax rebates, Washington borrowed billions from the capital markets, and then mailed it to families in the form of $600 checks. Predictably, consumer spending temporarily rose, and capital/investment spending temporarily fell by a corresponding amount. This simple transfer of existing wealth did not encourage productive behavior. The economy remained stagnant through 2001 and much of 2002.
It was not until the 2003 tax cuts -- which instead cut tax rates for workers and investors -- that the economy finally and immediately recovered. In the previous 18 months, businesses investment had plummeted, the stock market had dropped 18 percent, and the economy had lost 616,000 jobs. In the 18 months following the 2003 tax rate reductions, business investment surged, the stock market leaped 32 percent, and the economy created 5.3 million new jobs. Overall economic growth doubled.
Thus, both economic theory and practice show the superiority of tax rate reductions over tax rebates.
On the spending side, the same economics apply. Programs aimed at injecting money into the economy will fail because that money first must be removed from the economy. And proposals to have Washington subsidize state governments would not change the amount of total government taxing and borrowing. Such policies are based on redistribution, not productivity.
True, education, training and highway spending could theoretically increase productivity and therefore promote long-term economic growth. However, that assumes Washington won't divert highway money into worthless pork projects and bridges to nowhere, and that more education and training money are directly correlated with better performance. (Previous large budget increases had almost no effect.) There is little reason to trust Washington politicians to make the right public investments.
Instead, the 2003 tax cuts showed that proper tax policy can encourage the working, saving and investment that fuel productivity and economic growth. Combined with proposals to reduce bureaucratic red tape and support free trade, (actual) tax rate reductions (not "after the fact" tax rebates) are the best way for Washington to remove barriers to economic growth.
Saturday, February 24, 2007
Abolish the Alternative Minimum Tax
The Wall Street Journal has a good post on this.
The Cato Institute has a more pessimistic take. Their contention is that Bush wants to do something about the AMT and he will agree to a tax increase to get it.
Assuming asuch a deal could be brokered, I would still support it, the massive raise in FICA payroll taxes on the upper income notwithstanding.
The AMT was originally intended to target 155 high-income households that were taking advantage of so many tax benefits that they wound up paying little or no income tax under the tax code of the time (1970). However, with rising nominal wages and inflation, many millions of middle class taxpayers now end up having to deal with it.
Moroever, why SHOULDN'T people take advantage of the rules to pay no taxes if they wish? They are following the rules, aren't they? If some guy so badly wants to not pay taxes that he puts all his interest earning into tax free municipal bonds, that's his business. The returns on Muni Bonds are much lower than other investments even if they are tax free, mind you.
Oh but that is unfair because he is super-rich, you say? Exactly who would you prefer to own state and local government debt? Wealthy Americans or wealthy foreigners? Wealthy Americans or the Chicom government officials? (take at look at who increasingly owns our Treasury bonds some time...)
The AMT is grossly unfair, in that it penalizes people who in good faith obeyed the tax laws and went into tax shelters only to discover that at a certain level of wage income, or capital gains (which are always hard to predict, and capital losses from prior years are not allowed to offset), or even if the moon isn't quite right (just kidding, but just barely), suddenly their tax shelter is no longer valid, the previously understood tax laws no longer apply and the AMT shark comes in to take a bite.
The AMT is also utterly arcane and cumbersome. Even most people who prepare taxes FOR A LIVING don't fully understand it, or exactly where and when it kicks in.
While greatly increasing the 6.2% FICA "wage cap", which is now at $94,200 of wages for tax year 2006 and is indexed for cost of living adjustments, or even eliminating the cap and taxing FICA just like Medicare (which is taxed at 1.45% with no wage limit) would amount to a huge tax increase for high income earners, I have to admit that getting rid of the AMT in return would also amount to a huge tax cut for most of these same wage earners, and more importantly the tax code would be fairer, simpler and more easy to understand!!!
Getting rid of the FICA cap would also end the farce that "Social Security" (sic) was intended to "provide for everyone" and make people more aware that it is REALLY just income redistribution and "welfare for the old" plain and simple.
(Of course, that assumes that a fair political deal would be brokered, and given deceptive Demunists of the Evil Party and gullible Republicans of the Stupid Or Gutless Party, I'm not confident of that.)
The Cato Institute has a more pessimistic take. Their contention is that Bush wants to do something about the AMT and he will agree to a tax increase to get it.
Assuming asuch a deal could be brokered, I would still support it, the massive raise in FICA payroll taxes on the upper income notwithstanding.
The AMT was originally intended to target 155 high-income households that were taking advantage of so many tax benefits that they wound up paying little or no income tax under the tax code of the time (1970). However, with rising nominal wages and inflation, many millions of middle class taxpayers now end up having to deal with it.
Moroever, why SHOULDN'T people take advantage of the rules to pay no taxes if they wish? They are following the rules, aren't they? If some guy so badly wants to not pay taxes that he puts all his interest earning into tax free municipal bonds, that's his business. The returns on Muni Bonds are much lower than other investments even if they are tax free, mind you.
Oh but that is unfair because he is super-rich, you say? Exactly who would you prefer to own state and local government debt? Wealthy Americans or wealthy foreigners? Wealthy Americans or the Chicom government officials? (take at look at who increasingly owns our Treasury bonds some time...)
The AMT is grossly unfair, in that it penalizes people who in good faith obeyed the tax laws and went into tax shelters only to discover that at a certain level of wage income, or capital gains (which are always hard to predict, and capital losses from prior years are not allowed to offset), or even if the moon isn't quite right (just kidding, but just barely), suddenly their tax shelter is no longer valid, the previously understood tax laws no longer apply and the AMT shark comes in to take a bite.
The AMT is also utterly arcane and cumbersome. Even most people who prepare taxes FOR A LIVING don't fully understand it, or exactly where and when it kicks in.
While greatly increasing the 6.2% FICA "wage cap", which is now at $94,200 of wages for tax year 2006 and is indexed for cost of living adjustments, or even eliminating the cap and taxing FICA just like Medicare (which is taxed at 1.45% with no wage limit) would amount to a huge tax increase for high income earners, I have to admit that getting rid of the AMT in return would also amount to a huge tax cut for most of these same wage earners, and more importantly the tax code would be fairer, simpler and more easy to understand!!!
Getting rid of the FICA cap would also end the farce that "Social Security" (sic) was intended to "provide for everyone" and make people more aware that it is REALLY just income redistribution and "welfare for the old" plain and simple.
(Of course, that assumes that a fair political deal would be brokered, and given deceptive Demunists of the Evil Party and gullible Republicans of the Stupid Or Gutless Party, I'm not confident of that.)
Tuesday, January 30, 2007
Jeff Jacoby: A proposal for affordable health care
Why in the hell wasn't Bush working on things like this, when he had a Congressional majority?
Even if the Demunists would have demogagued it, the Republicans could have tied such a reform to the new Medicare prescription drug entitlement they went along with--the spoonful of entitlement sugar to make the real health care medicine go down, so to speak.
The gist of Jacoby's insighful column follows:
Even if the Demunists would have demogagued it, the Republicans could have tied such a reform to the new Medicare prescription drug entitlement they went along with--the spoonful of entitlement sugar to make the real health care medicine go down, so to speak.
The gist of Jacoby's insighful column follows:
Why does it matter whether Americans pay for medical care directly or let insurers cover their bills? Because thrift and price awareness usually go out the window when we're spending other people's money. Under the present setup, most Americans have little incentive to be economical consumers of health care. As a result, health care expenditures — and insurance premiums — have been racing ahead at three and four times the rate of inflation.
All of this is due to a quirk in tax policy dating to World War II, when employers looking for a way to enhance workers' salaries without running afoul of federal wage controls hit on the idea of providing medical benefits. When the IRS agreed not to treat such benefits as taxable income, it triggered a far-reaching change in the way Americans paid for health care.
What had been a relatively free market in medical services, with patients transacting directly with doctors and hospitals, gave way to a third-party system, in which employers paid the insurance companies, and insurance companies paid the bills. Americans increasingly used insurance to cover routine medical expenses, not just major unexpected costs like hospitalization or surgery. Imagine what automobile insurance would cost, writes Gratzer, "if people insisted on plans that had [low] deductibles . . . or policies that included not just major body work, but also oil changes and gas."
To properly disentangle this snarl, Congress ought to end the tax exclusion that causes it. Employers don't generally provide workers with homeowner's or auto insurance, or for that matter with food, clothing, or housing. Ideally, medical treatment would be handled no differently, and Americans would benefit from a far more robust and competitive healthcare market than they do now.
But after 60 years, it's probably infeasible to simply eliminate the tax deduction altogether, so the president has proposed a second-best alternative: eliminating the bias for employer-provided health insurance by giving every family with health insurance a $15,000 deduction ($7,500 for individuals) — no matter where their insurance comes from or how little it costs. Employer-sponsored insurance would become taxable income — but since most insurance policies cost less than $15,000, most employees would enjoy a significant tax break.
Thursday, March 23, 2006
Our Federal Income Tax System Explained With Beer
from a David R. Kamerschen, Professor of Economics.
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this...In fairness, it should be noted that even the lowest income workers among us are getting hit with FICA payroll taxes, which for much of the population are more than their income taxes, but the analogy still stands with respect to income taxes. Bashing the wealthy *does not* help the poor in America, although it may help the poor in India....
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the Macroeconomic bar owner threw them a curve ball. "Since my brewing technology has improved and you are such good customers," he said, "I'm able to reduce the cost of the daily beer by $20." Drinks for the ten men would now cost just $80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the $20 windfall?
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the Macroeconomic bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
"I only got a dollar out of the $20 saving," declared the sixth man. He pointed to the tenth man,"but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get $10 back, when I got only $2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"
The nine men surrounded the tenth and beat him up. And the tenth man promptly decided to move out of town.
When next time the tenth man didn't show up for drinks, the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.
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