Archive for the ‘taxation’ Tag

Taxation without Consent   Leave a comment

I’m enjoying the larger number of dollars deposited into my bank account every 15 days under the recent Congressional tax reform, but it’s best to remember that taxes are not voluntary and that Uncle Sam acts a great deal like a highwayman robber in insisting that these “contributions” are his by right, as if we consented to such thievery. I didn’t. Do you remember when you did?

But this is nothing new. Check out what the great libertarian writer Lysander Spooner had to say about it more than a century ago.

 

The payment of taxes, being compulsory, of course furnishes no evidence that any one voluntarily supports the Constitution.

Image result for image of lysander spoonerIt is true that the theory of our Constitution is, that all taxes are paid voluntarily; that our government is a mutual insurance company, voluntarily entered into by the people with each other; that each man makes a free and purely voluntary contract with all others who are parties to the Constitution, to pay so much money for so much protection, the same as he does with any other insurance company; and that he is just as free not to be protected, and not to pay any tax, as he is to pay a tax, and be protected.

But this theory of our government is wholly different from the practical fact. The fact is that the government, like a highwayman, says to a man: Your money, or your life. And many, if not most, taxes are paid under the compulsion of that threat.

The government does not, indeed, waylay a man in a lonely place, spring upon him from the road side, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful.

The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a “protector,” and that he takes men’s money against their will, merely to enable him to “protect” those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will; assuming to be your rightful “sovereign,” on account of the “protection” he affords you. He does not keep “protecting” you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villanies as these. In short, he does not, in addition to robbing you, attempt to make you either his dupe or his slave.

Image result for image of uncle sam as a highway robberThe proceedings of those robbers and murderers, who call themselves “the government,” are directly the opposite of these of the single highwayman.

In the first place, they do not, like him, make themselves individually known; or, consequently, take upon themselves personally the responsibility of their acts. On the contrary, they secretly (by secret ballot) designate some one of their number to commit the robbery in their behalf, while they keep themselves practically concealed. They say to the person thus designated:

Go to A— B—, and say to him that “the government” has need of money to meet the expenses of protecting him and his property. If he presumes to say that he has never contracted with us to protect him, and that he wants none of our protection, say to him that that is our business, and not his; that we choose to protect him, whether he desires us to do so or not; and that we demand pay, too, for protecting him. If he dares to inquire who the individuals are, who have thus taken upon themselves the title of “the government,” and who assume to protect him, and demand payment of him, without his having ever made any contract with them, say to him that that, too, is our business, and not his; that we do not choose to make ourselves individually known to him; that we have secretly (by secret ballot) appointed you our agent to give him notice of our demands, and, if he complies with them, to give him, in our name, a receipt that will protect him against any similar demand for the present year. If he refuses to comply, seize and sell enough of his property to pay not only our demands, but all your own expenses and trouble beside. If he resists the seizure of his property, call upon the bystanders to help you (doubtless some of them will prove to be members of our band). If, in defending his property, he should kill any of our band who are assisting you, capture him at all hazards; charge him (in one of our courts) with murder, convict him, and hang him. If he should call upon his neighbors, or any others who, like him, may be disposed to resist our demands, and they should come in large numbers to his assistance, cry out that they are all rebels and traitors; that “our country” is in danger; call upon the commander of our hired murderers; tell him to quell the rebellion and “save the country,” cost what it may. Tell him to kill all who resist, though they should be hundreds of thousands; and thus strike terror into all others similarly disposed. See that the work of murder is thoroughly done, that we may have no further trouble of this kind hereafter. When these traitors shall have thus been taught our strength and our determination, they will be good loyal citizens for many years, and pay their taxes without a why or a wherefore.

It is under such compulsion as this that taxes, so called, are paid. And how much proof the payment of taxes affords, that the people consent to support “the government,” it needs no further argument to show.

Lysander Spooner

Party of Big Government   Leave a comment

In October, the Republican-majority Congress passed the first $4 trillion federal budget in U.S. history. At $4.1 trillion, the budget represents an approximately 5% increase in spending over the last fiscal year of the Obama administration and sets the stage for President Trump to do what every GOP president has done since WWII — increase spending far more than did his Democratic predecessor.

Remember, I’m a non-partisan fiscal conservative, not a Republican.

Image result for image of donald trump and mitch mcconnellMath was never my favorite subject in school, but it doesn’t take much more than elementary math to figure out that, if spending increases, either taxes or deficits must also increase. Historically, the GOP has been happy to allow deficits to explode, but that’s going to be a hard hand to play after eight-years of attacking Obama’s deficits, which increased the federal government’s debt from $10 trillion to $20 trillion.

So, what are Republicans likely to do? Raise taxes, of course. Their move in the tax reform bill shows this. By eliminating the deduction for state and local taxes (which doesn’t affect me at all being as I live in Alaska), the Republicans had taxes to traditionally “blue” areas at the benefit to traditionally “red” areas. It is likely that those people who hate paying taxes the most will leave those states with higher taxes to move to states with lower taxes. So you’re going to see quite a few Republicans moving to Republican strongholds.

The GOP will then use this as evidence that people want smaller, low tax government with more freedom and prosperity.

Which we probably do, but the reality is that when Republicans occupy the White House, government grows exponentially, because  Republicans think tariffs aren’t taxes and “infrastructure,” the military, and other boondoggles conservatives like don’t constitute government spending. The two-term presidencies of George W. Bush, Reagan, and Ford/Nixon all approximately doubled federal spending, while Clinton’s and Obama’s raised them a mere 25% and 28%, respectively.

Yes, some of those Republican presidents had Democratic Congresses, but Reagan never  asked for a 25% cut which Congress overrode with increases. Reagan consistently proposed huge increases in spending and Congress largely gave him what he asked for, merely shifting a little spending around at the margins. And, yes, I am a fan of Ronald Reagan. I’m also a realist. George W. Bush did the same thing – paid lip service to fiscal conservancy while consistently proposing spending increases which Congress willingly gave to him.

Spending is not the only issue. The federal government suffers from serious mission creep and most of it can be traced back to Republican presidents creating the Department of Health, Education, and Welfare (today HHS and the Department of Education), the EPA, and the spectacularly destructive (and ultimately failed) War on Drugs.

Yes, the wealthiest people in America live in the coastal elite “blue” zones, which tend to impose egregious taxes on their residents. They will be taxed the most because they would no longer be able to write off those taxes. And, yes, that might possibly result in some blue states being forced to lower taxes in order to avoid the penalty. But, be honest, when your income is in the tens of millions, income tax increases are small potatoes. It’s those earners with incomes between $100,000 and $200,000 who will be hurt the most by extra taxes. In that income bracket, those extra taxes represent saving for your children’s college tuition, which now means borrowing for it. It could mean the difference between hiring one extra employee for a small business, further protecting the very richest from competition by the upwardly mobile class.

I honestly believe there are a few Republicans who sincerely want to cut the size and scope of the federal government. Senator Rand Paul tried to convince his party to cut a measly $43 billion (a mere 4%) from Washington’s gargantuan military budget. Senator Paul believes he is trying to hold the Republican Party to its core principles, but I think he needs to look at history here. The party was born in the mid-19th century on a platform of raising taxes, increasing the size and scope of the federal government and, for the first few years, abolishing slavery. It has never really changed, though it adopted the rap of small-government, low-taxes and freedom and prosperity after Goldwater introduced it to them.

It’s time those Republican voters attracted by the GOP’s rhetoric of free markets, smaller government, and more personal liberty face the reality that Harding, Coolidge, Taft, and Rand Paul are the “RINOs.” The Republican Party has always been about big government, authoritarianism, and empire. Those looking to truly “drain the swamp” should consider placing their support elsewhere — and, no, I don’t mean the Democratic Party because they are just as much for big government, just in support of different pet projects.

Posted December 14, 2017 by aurorawatcherak in Government

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How Middle-Class Europeans Fare Under the Welfare State | Daniel J. Mitchell   Leave a comment

According to progressives like Bernie Sanders, European nations have wonderfully generous welfare states financed by high tax rates on the rich.

 

Source: How Middle-Class Europeans Fare Under the Welfare State | Daniel J. Mitchell

 

They’re partly right. There are very large welfare states in Europe (though I wouldn’t use “wonderfully” and “generous” to describe systems that have caused economic stagnation and high levels of unemployment).

But they’re wrong about how those welfare states are financed. Yes, tax rates on the rich are onerous, but not that much higher than in the United States. Instead, the big difference between America and Europe is that ordinary people pay much higher taxes on the other side of the Atlantic.

The US Has the Most “Progressive” Tax System

Indeed, I’ve previously cited Tax Foundation data showing that the United States arguably has the most “progressive” tax system in the developed world. Not because we tax the rich more, but simply because we impose comparatively modest burdens on everyone else.

And now we have some new evidence making the same point. Joseph Sternberg of the Wall Street Journal has some very sobering data on how the German tax system imposes a heavy weight on poor and middle-income taxpayers.

Europeans believe their tax codes are highly progressive, giving lower earners a break while levying significant proportions of the income of higher earners and corporations to fund generous social benefits. But that progressivity holds true only for direct taxes on personal and corporate income. Indirect taxes, such as the value-added tax on consumption and social-security taxes (disguised as “contributions”), are a different matter. The VAT disproportionately affects lower earners, who spend a higher proportion of their incomes. And social taxes tend to kick in at lower income levels than income taxes, and extract a higher and more uniform proportion of income. …if you look at the proportion of gross household income paid in all forms of tax, the rate varies by only 25 points. The lowest-earning 5% of households pay roughly 27% of their income in various taxes—mainly VAT—while a household in the 85th income percentile pays total taxes of around 52%, mostly in social-security taxes that amount to nearly double the income-tax bill.

Here’s a chart the WSJ included with the editorial.

As you can see, high payroll taxes and the value-added tax are a very costly combination.

And the rest of Europe is similar to Germany.

…Germany is not unique. The way German total revenues are split among income taxes, social taxes and the consumption tax is in line with the rest of Western Europe, as are its tax rates, according to OECD data. If other countries are more progressive than Germany, it’s only because Germany applies its second-highest marginal income-tax rate of 42% at a lower level of income than most.

Percent of Economic Output

Speaking of the OECD, here’s the bureaucracy’s data on the burden of government spending.

Germany is in the middle of the pack, with the public sector consuming 44 percent of economic output (Finland edges out France and Greece for the dubious honor of having the most expensive government).

The overall burden of the public sector is far too high in the United States, but we’re actually on the “low” side by OECD standards.

According to the data, total government spending “only” consumes 37.7 percent of America’s GDP. Only Ireland, Switzerland, and Latvia have better numbers (though my friend Constantin Gurdgiev explains we should be cautious about Irish economic data).

But I’m digressing. The point I want to emphasize is that punitive taxes on poor and middle-income taxpayers are unavoidable once politicians decide to impose a large welfare state.

Which is why I’m so inflexibly hostile to any tax increase, especially a value-added tax(or anything close to a VAT, such as the BAT) that would vacuum up huge amounts of money from the general population. Simply stated, politicians in Washington will have a hard time financing a bigger burden of government if they can only target the rich.

Sternberg makes the same point in his column.

Tax cuts have emerged as an issue ahead of Germany’s national election next month, with both major parties promising various timid tinkers… Not gonna happen. The VAT and social taxes are too important to the modern welfare state. The great lie is that there are a) enough “rich people,” b) who are rich enough, that c) taxing their incomes heavily enough can pay for generous health benefits and an old-age pension at 65. None of those propositions are true, and the third is especially wrong in an era of globally mobile capital and labor. That leaves the lower and middle classes, and taxes concealed in price tags or dolled up as “insurance contributions” to obscure exactly how much voters are paying for the privilege of their welfare states. …reform of the indirect taxes that impose such a drag on European economies awaits a more serious discussion about the proper role of the state overall.

Exactly.

There’s no feasible way to ease the burden on ordinary German taxpayers (or regular people in other European nations) unless there are sweeping reforms to reduce the welfare state.

And the moral of the story for Americans is that we better enact genuine entitlement reform if we don’t want to suffer the same fate.

P.S. If you don’t like German data, for whatever reason, I wrote last year about Belgium and made the same point about how a big welfare state necessarily means a bad tax system.

P.P.S. By the way, even the OECD admitted that European nations would grow faster if the burden of government was reduced.

Reprinted from International Liberty.

Posted September 5, 2017 by aurorawatcherak in economics, Uncategorized

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Arguing with the Indoctrinated 6 (Thief and the Taxman)   Leave a comment

I talked my crazy daughter into testing this theory at large shopping centers at various locations in the Lower 48. She and her band carried clipboards and asked a series of “survey” questions. The five of them had six months to gather approximately 1000 responses. In the end, they surveyed 1004 people on this subject.

“Is it okay to rob people at gunpoint?” 100% said “no”, though Bri noted one guy who seemed to struggle with his reply (she describes him as “sketchy”).

“Is it okay to pickpocket people and take their wallets?” 100% said “no”, 80% of the men checked their back pocket at that point.

“What would you do?” 95% said they’d call a cop; other responses varied from “beat the crap out of you” to “I don’t know.”

“So, let’s say you have $100 in your wallet and I only take $50 and give you back the rest? Would that be okay? Would you still call the cops? (or resort to violence?)” Yes, they would.

“Well, what if I only took $40? (Yes) $30? (Yes) $20? (Yes) $10? (Yes) What if I was hungry?” Pretty much — 99% of people surveyed by gypsy bluegrass musicians would still call the cops (or resort to violence) if you took $10 from their wallet and left $90. “Why?” my survey crew asked. “Because you’re a thief,” every last one of the shoppers replied.

“Well, what if I asked you for the money instead?”

Now the tenor of the answers changed (although they did have to assure the participants that they weren’t asking for money — being gypsy bluegrass musicians comes with a reputation, I guess).

“Yeah, okay, I might give you what I could afford if I thought you needed it” is the summarized answer of 84% of participants, who mostly said they could “afford” to give between $10 – 20 in that circumstance, although there were 21 who said they’d give more if they thought someone needed more.

“If I’m going to get the money anyway, what’s the difference?””

“The first way you’re stealing from me and the second way, I’m voluntarily giving you what I think you need.” (summarized response)

“So what if I wanted to pay my college tuition with that money? Would stealing it be acceptable then?” (No). “What if I wanted to buy health insurance?” (No).

At this point, pretty much all respondents wanted to know where the camera was hidden. In keeping with a recent Gallup poll, 39% engaged the gypsy bluegrass musicians in a discussion of taxes and welfare around this point. According to Gallup, 38% of Americans self-identify as “conservative”.

Bri summed up their findings.

“Mom, pretty much, people are willing to give a little bit or give you money for working a little, but they don’t like you stealing from them.”

The interesting part of the survey was the unscientific ending because the band members were working off script at that point. The 39% recognized taxation as thievery or recognized the questions as intimating it is thievery. Some respondents wanted to know which conservative “tea party” group paid for them to conduct this survey. All five band members said they got that response from some participants, but Malachi was the only one who kept track (19%, which interestingly coincides with the 18% of Americans who self-describe as liberals). Bri noted that about five of those who engaged her in this way ranted about the Koch brothers and references that gypsy bluegrass musicians are not generally conversant in.

POINT?

There is no essential difference between a thief and the taxman. Most people know that instinctively, we just prefer not to think of it that way.

Constitutional Tax Reform   Leave a comment

In November 2013, Congressman Jim Bridenstine introduced HJ Resolution 104 to repeal the 16th amendment. Bridenstine and his cosponsors, Ron DeSantis and Thomas Massie contend that the 4th amendment was negated by the 16th amendment. The 4th amendment acknowledges “the right of people to be secure in their persons, houses, paper, and effects, against unreasonable searches and seizures.”

Repealing the infamous amendment that created the national personal income tax is kind of a holy grail among conservatives. Even if you think repeal is unlikely, it still makes sense on principle. We can argue what should replace it … if anything … but the fact is that the 16th amendment shattered the Constitution, which required proportional taxation through the states, not an individual income tax that makes every income earning American a direct slave of the federal government.

The trio of Congressmen do not believe that abolishing the 16th Amendment would be a complicated process if their plan attracts the full support of the American people. House Joint Resolution 104 would eliminate the gift and estate taxes, taxes on investment earnings, and both personal and corporate income taxes. After the legislation gains approval there would be a two-year time period in which a new revenue system might be crafted.

The authors and supporters of House Joint Resolution 104 do not feel that knowing exactly how the 16th Amendment will be replaced has to be accomplished before repealing the amendment and abolishing the IRS. According to the Repeal 16 website, taking care of the “root problem” is the most important part of the equation. The website noted that before the 18th Amendment was repealed, ending the Volstead Act (prohibition), the federal government had not yet decided how to regulate alcohol.

“The 16th Amendment should be repealed, and the IRS should be eliminated. Viable alternative plans for raising revenue fairly to support constitutionally enumerated functions of the federal government have been proposed. As long as the 16th Amendment is in place and lobbyists dominate Washington, these alternatives will never be considered. The income tax code has become too complex for citizens to understand, and the annual time and expense required to comply with the income tax code has become intolerably burdensome.” Jim Bridenstine

According to the site “Repeal 16), The repeal and replace the Sixteenth Amendment approach is fairly simple, straightforward, and contains just three primary steps:

  • · Demand that every member of the House and Senate agree to co-sponsor the Repeal the 16th Amendment bill.
  • · Deliver that demand by writing, and emailing legislators, rallying friends, attending town-hall meetings.
  • · Engage in primary election activities against incumbents who choose to stand with the IRS and against we the people.

And, my own suggestion is, of course, for this to be a primary subject at an Article V convention of the states.

The immediate result of the repeal of the 16th amendment would be a return of the right of states to gather taxes in the way that they choose and to submit proportional payments to the federal government. How that would look would vary from state to state. If you’re okay with paying a state income tax, move to a state with an income tax. If you’re okay with paying a state sales tax, move to a state with a sales tax. If you would rather not pay taxes directly, you can advocate for your state to institute some other system. Alaska might just sell its natural gas to Japan and live off those proceeds, for example.

A secondary result would be to end revenue-sharing. That’s where the opposition would come in. But think about it! If the citizens of Alaska are no longer sending more than 1/3 of their income to the federal government, they might be willing to pay an income tax (or something else) to the state to receive tailored benefits that the citizens of individual states desire … or not, as the case may be. We do have the 13th largest oil reserve in the world, after all.

The federal government would still be funded, though likely at a substantially lower level. The jobs the federal government does now that are necessary (I’m willing to accept that there may be a few) can be done as effectively by state governments or … well, really, there’s a lot of stuff that can done by private industry and, if it is something people cannot live without, it will still exist, because people find a way to do what they cannot live without.

The major difference would be that the federal government would be beholden to the states for its funding, which would keep it in check … theoretically … if we remember what happens when we don’t keep our eye on it.

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