taxes

The Hydra Monster

The Hydra Monster (4/13/2011)

On Friday Americans will repeat the annual ritual of paying taxes. Local television stations will provide live coverage from postal offices near closing time; editorializing what we “must” do to pay our taxes. Obediently most all of her citizens will have complied and the monster of government will continue living, and regardless of attack she cannot be killed through starvation or even radical cuts. Valiantly some men are trying like Congressmen Ron Paul and Paul Ryan, but attempts to shut down the government and truly kill the monster to save future generations are met with mockery from the press and she continues to live.

Sadly, the Hydra Monster lives at all levels of our lives. We start with our paychecks by enslaving ourselves for the first three to four months of the year to pay Federal income tax (20%) and FICA (7.65%). Sadly, most people ignore the 7.65% raise they would receive if employers did not have to pay taxes “on their behalf.” In Georgia I have a state tax of approximately 3% and there are the other taxes my employer pays instead of paying me: SUTA and FUTA. Adding it all together nearly 40% of our paycheck is gone. In November most local municipalities seek property taxes on those who own real estate, amounts of $5-$15k are averages in Volusia County (let’s assume 10% of income). With every purchase comes sales tax: 6.5%. Adding everything together comes to 55% of earnings. Of course, there are countless fees and taxes on phones, internet, licenses, and registrations further driving up costs.

Taxes anger me because the Hydra Monster called government relentlessly feeds itself on the backs of all men and abusively spends the collected monies. At the national level the monster is so large the President readily acknowledged during his promotion of healthcare fraud and waste in Medicare comes to $1 billion, but the monster lives on. Locally governments build multi-million dollar firehouses on prime commercial property and create pension plans to allow productive citizens to withdraw from the workforce at early ages. In Nassau County, NY policeman earn $100k after five years and are entitled to hundreds of thousands in annual retirement benefits!

Our country is dying, consumed by the Hydra Monster. No matter how hard our heroes try to cut a head she will live on, breathing fire against her people, growing meaninglessly, and adding more heads to become ever more pervasive and invasive in our lives. Radical change is required to defeat the Hydra Monster, only banded together can she be killed. Paying taxes this week is a sad offering to the misery befalls man but will make the Monster stronger.

April 17, 2011 by Big Government Capitalism Depression Great Recession taxes

Death and Taxes

Death and Taxes Redux (4/13/2011)

Attending funerals I reflect on death, and although inevitable we deny our mortality one statement that intrigues me is the saying, “Only two things are known; death and taxes.” I know with certainty I will die and everyone around me will die, someday. Of course cause of death cannot be predicted but risks associated with death can be minimized and each of us tries to live with a goal of prolonging life and we fight death with all of our might but cannot stop its inevitability. Taxes, however, are not an absolute, but we evolved to accept taxes part of our being, just like death. Instead of continually working toward ending this other ‘absolute’ in our lives our society seems willing to perpetuate this self-destructive mechanism upon ourselves.

Taking a step back, maybe a better word for tax would be “privilege payment”. We pay for the privilege of living in a civilized society, and this argument could be made throughout human history. Most of us are willing to contribute a nominal amount of our individual efforts to support the purported common good of the society in which we live. I accept there is a cost to civilization as I expect infrastructure for safe water, sewage disposal, defense, and transportation.

Regardless of the specifics of the individual line items that we agree to tax ourselves for, we should constantly examine the necessity. I choose to minimize the risks I take in my daily life, exercise, eat well and therefore am hopefully prolonging my life and cheating death. I argue that we no longer do the same regarding taxes and instead readily acquiesce to taxing our individual efforts and allowing the state to control and disburse them. I assert we have voluntarily enslaved ourselves to an entity that we may not be able to escape.

Death is inevitable; the process of self-destruction through taxation is not. Taxes are acceptable when presented with a true cost and benefit analysis, a clear exit strategy from the tax, and a method to provide for checks and balances against a tax. If you were taking an inventory of your personal health in an effort to ensure you were prolonging your life you would question every risk, every activity, and eliminate those that are harming you. This same analysis must be performed frequently and regularly regarding taxes. We must question every dollar that is spent and be willing to take tough measures to eliminate waste, just as you would do personally.

April 17, 2011 by Big Government taxes

Destroying Futures

Imagine earning $30,000 (3 Trillion) per year but having bills and obligations of $42,000 (4.2 Trillion) per year. Additionally, let’s assume you have a spouse and two children with wants and desires. With your income falling short you would know radical changes in your lifestyle must be made and if you are a Dave Ramsey fan you know every expenditure would have to be considered and nearly one-fourth must be cut. However, the kids will complain if you cut their movies, food, school activities, clothes and even iTunes budget (government spending). Your spouse does not want to discuss the issue because she feels the problem will go away, as if by magic, and there is no reason to upset the kids (political debate).

However, there is an answer: debt. Of course, a loan to create a source of “income” can be created (deficit spending). For instance, a second mortgage on your home could fund the shortfall and maybe allow you to buy a new big-screen television or car, a hugely popular decision at home. But this only works for a while, quickly you discover the interest only payments add another $500 per month to your obligations, thus you are now using the debt taken on to pay for the original shortfall and the new debt (treasury auctions)! You have looked for ways to increase income, but the economy isn’t growing and no one is hiring (tax revenue). Your anxiety increases because you know this cannot keep going and bankruptcy may be the only way out.

One day however, your neighbor Fred (Federal Reserve) knocks on your door and explains his multi-level marketing business is doing well and as long as he keeps getting new people involved his success will grow and he would like to help you. Hesitantly you agree to his proposal: he will paper over your debt (purchase bonds), and you can repay him in 30-years. Thoughtfully you think his proposed near zero interest rate and 30-year offer has to work. At age 50 it is even unlikely you will be here in 30 years to deal with the repercussions. With a wink, Fred explains your children will assume the entire debt, with interest. After contemplation you feel it is better to risk your children’s future than to reign in your lifestyle today, and hurt their feelings, and since they do not get an opinion (can’t vote) they will never know. Like a deal with the devil, you know there is no way out.

March 4, 2011 by Capitalism Depression Great Recession preparedness taxes

Wisconsin

I debated whether to offer an opinion regarding Wisconsin, but knew I could not let go of this protest. I am impressed with the 65,000 plus protesters that believe in something strong enough to brave the cold. More important to see debate with such passion engaging on our own soil gives me hope toward future revolution against our government and the tyranny we face. It appears the press – from the left and right, have managed to blur the issue at hand as there only appears two possible opposing views when tapping MSNBC or Fox News. I hypothesize three parties are now at war in this country: Public Servants, the Ruling Elite (executive pay), and the Private Sector. Thus, a two pointed perspective does not work and furthermore the issue at hand is not about trimming union rights, but re-aligning public servant compensation.

Austerity measures will generate class warfare and in this Great Recession the compensation of the three parties has diverged greatly. Executive pay remained safe and increased greatly and Public Service payrolls have increased far greater than private payrolls. On the other hand, the Private Sector has suffered irreplaceable job losses, flat wages and lives in fear of a pink slip delivery tomorrow. At the same time the Private Sector is asked to pay more income tax, more sales tax, more property tax, and more fees to pay for the perpetuation of Public Service compensation programs and to bailout reckless executives who lost gambling bets against the masses during the debt fueled frenzy.

Ancient Rome succeeded through an ever expanding territorial economy fueling the wants and desires of Caesar. The masses found relief through entertainment at the Coliseum and a sense of safety, but yet traded liberty for trite compensation. Similarly, America is like Rome; rich Senators, a small ruling class, and wealth obtained for a few due to the destruction of others. Our masses are entertained by media and sports, not taking time to understand the reason behind the need for change. Like Rome our public servants are protected by a never ending spigot of tax dollars and turn against the working class and income earners for whom they supposedly serve.

It is forgotten that our children will ultimately pay the price. Something is happening in America right now, and it started with the bursting of the debt bubble three years ago. Denial has not worked and protests will become more common, maybe leading to revolution. I am concerned for my children’s future and cannot imagine the tax burden, inflation, and tyranny they will face if we do not stop opposing the protesters in Wisconsin.

March 4, 2011 by Big Government Depression Great Recession Health care taxes

Dad’s Money

Dad’s Money (2/23/2011)

Nightly we are bombarded by incomprehensible numbers regarding Federal government spending: $14 trillion debt, $4 trillion budget, $1.5 trillion deficit and $180 billion interest payments. There are too many zeros on each number to print in this column, twelve each for the debt and deficit. Sadly, like gamblers in Las Vegas using colored poker chips we have lost sight of reality because no one touches the monies. As taxpayers our view of the government has become like a child’s view of Dad’s spending. A five-year-old watching his father has no idea where he gets money, but feels there is an endless supply. Sometimes Dad reaches in his pocket and uses green currency or coins like nickels and pennies. Other times Dad uses colorful plastic cards and swipes them in machines, and Dad has a book with checks where he illegibly scribbles names and amounts and declares the bills are paid. Of course, he also logs on his computer and banks via the web. Similarly, the government engages in a playful deception of payments, using computers, checks, and cash cards to move monies around.

Dad always seems to have money and as five-year olds we know he leaves each day and goes to work to make more. A connection between work and money seems obvious because doing chores sometimes brings allowance to children. As young children we always seem to have food, clothes, and toys. We don’t know how the lights operate or anything about mortgages and rent, insurance, gasoline, or car payments. However, we know dad takes care of us and most citizens view the government the same way with no understanding of tax income or expenditures

Right now we are enjoying historically low interest rates, easing interest payments on our $14 trillion debt. If interest rates return to historic norms of 6% the payments will increase to approximately $840 billion, nearly 23% of our current budget. Like a five -year-old trusting Dad to make money and spend money to care for the family we believe our elected trustees will do the same. However, re-election drives decision making, not the tough longevity of parenting and sadly our federal government is recklessly spending money. Congress must be held accountable for the deficit spending because they are bankrupting our country. Every parent and grandparent should know what is happening and encourage Congress to stop today’s fiscal negligence. Congress is punishing our future generations with inflation, high interest rates and more taxes. Sadly a five-year-old cannot stop Dad’s recklessness, but as a voter you can stop Congress.

February 23, 2011 by Big Government Great Recession taxes

Homework

My daughter’s homework recently piqued my interest while she was studying for an exam. Currently, she’s taking an American Government class; learning about types of government like authoritarian, dictatorship, oligarchy, and democracy. During our studying though we came to a handout that forced me to question today’s teaching as it focused on explaining the role of government. It is this question that divides left and right, Democrat and Republican. Personally I have a strong libertarian view which believes in a very limited role of government.

Reviewing her handout I learned there are seven roles taught to today’s students: defense, taxation, judiciary, education, health care, transportation, and economy. I wondered how many Thomas Jefferson would include on the list and speculated three: defense, taxation, and judicial review. Seeking a more definitive answer I found only defense and judicial protection receive consensus and without taxation the rest of the list cannot exist. Sadly, I think our country has reached a crossroads in development: we can have freedom and independence to control our lives with no government involvement but risk personal loss and failure, or we can mutually combine all of our earnings and share the bounty regardless of productivity to protect our entire society against any calamity that may befall us.

I believe the second option has been tried repeatedly throughout history and most recently by the idealist Karl Marx in a quest to end class struggles; recognizing the needs of the proletariat against the bourgeoisie. Modern communism expanded on the efforts of Marx’s writings with Lenin and then Stalin accelerating its spread; dictatorial regimes use communism to disguise their own human rights atrocities. Many would claim the U.S. has recently failed at the longest running experiment in capitalism and laissez faire economics allowing business to overrun the working class. However, a quick glance at American history confirms anyone, regardless of status, education, or connection can succeed to enormous wealth, unlike communist nations allow. Successes like Bill Gates, Larry Page, and Jeffrey Bezos abound and even Presidents Clinton and Obama come from the poorest of backgrounds and family struggles.

Ayn Rand concisely describes the role of government “as, the police, to protect you from criminals; the army, to protect you from foreign invaders; and the courts, to protect your property and contracts from breach or fraud by others.” I believe the role of government is to allow me freedom of choice – to succeed or fail

February 16, 2011 by Big Government Civil Rights sheep taxes

1970s versus 201Xs

The kids wearing plaid pants and striped shirts with long hair watching the “Brady Bunch”, “Adam-12” and “Emergency” are the men and women running our government today. It seems these “kids” have no recollection of the politics or monetary policy of the 1970s, instead only remembering the Bicentennial, bell bottom jeans, and Nerf footballs. A careful examination will show a decade that suffered an energy crisis causing an immediate recession. The same happened in 2008 when oil prices rose rapidly to $147/bbl driving our economy over a cliff to financial Armageddon. Nixon removed the Gold standard in 1971, and the Federal Reserve enacted new monetary policies to bring recovery. No radical method helped Nixon or Ford, and a hopeless Democrat was elected; promising prosperity and unable to deliver as we added the word “stagflation” to our vocabulary. As America entered the 1980s, after seven years of lackluster growth interest rates rose rapidly crushing the housing recovery. I remember my own parents struggling with 18% rates, job loss, and our manufacturing shift overseas as Chrysler sought a bailout and American’s learned “Made in Japan” meant quality compared to our union produced assembly lines.

For ten years inflation was high, reaching 13.5% in 1980 and unemployment soared above 10%, but like today the same policies were held: Federal spending never slowed, and tax increases for the rich were proposed. Gold prices accelerated and fueled speculation the end was near and the economy would not survive. Talk of wind mills, solar panels, energy conservation, and self-sufficiency abounded. Reviewing newspapers from the early 1980’s it is easy to spot Tip O’Neill’s 100-plus Democrat majority was adding to federal spending faster than the revenues received, not unlike the recent Pelosi dynasty. I found one article stating for every 1% increase in unemployment Federal spending deficits increased by $25-40 billion during the 1982 recession because unemployment drives down revenue and causes government to spend more.

Many argue the cornucopianism of Ronald Reagan saved the economy through supply-side tax cuts. I would argue a direct correlation should be made between recovery and oil prices as the UK’s discoveries of North Sea oil increased supply and probably fueled the recovery of the 1980’s and 1990’s. The 1970’s are remembered for Disco and parties, instead we should truly understand the damage of failed economic policies. We are three years into the current economic decline and the kids I knew now run Congress; I would offer 1970’s history provides more answers than the academic speculation used today.

February 2, 2011 by Big Government Depression Great Recession Peak Oil taxes

Welcome Back

Welcome Back
The 112th Congress began last week and last Monday night I found myself watching C-Span replaying Rep. Nancy Pelosi’s inaugural speech to the 111th Congress. In January 2008 we were on the cusp of driving over an unforeseen cliff into financial armegeddon. Therefore I wonder if Ms. Pelosi’s speech was sincere in its lofty promises regarding spending. She did manage to accomplish many of her goals including the passage of national health care. However, her single biggest failure was the blatant spending, supporting increases and propelling the national debt higher by $5.3 trillion dollars. One can easily argue it was not her fault, the financial crisis created a historic problem requiring spending unprecedented monies.

This past November Ms. Pelosi was re-elected by the constituents of the ultra-liberal California Bay Area 8th district identifying gay rights, social programs, and government intervention as the solution to America’s problems. On the other hand, also welcomed back was Rep. John Boehner, Pelosi’s outspoken critic in the House and the new House Speaker. The 112th Congress comes to Washington with great expectations to generate jobs, protect our soldiers, and provide tax relief. Influenced by the Tea Party movement Congress started its session with a historic reading of the Constitution to remind members our founding fathers had a vision for a great republic, guided by fiscal conservatism, and relief from tyranny. I applaud the efforts to require all new bills cite the Constitutional authority given to Congress to enact it. With this citation the legislature would no longer spend many nay years awaiting the judiciary’s decision to overturn unconstitutional legislation.

Sadly it appears we remain at a crossroads in American politics as even a reading of the Constitution is called pompous theater by the likes of the New York Times. Regarding the 112th’s efforts, much debate will take place regarding the “Constitutionality” of their proposed actions, and only one man knows the intent of the Constitution although many consider that intent clear. I welcome back the members of Congress and hope they will look to Jefferson’s writings to protect our future, “Our tenet ever was…that Congress had not unlimited powers to provide for the general welfare, …was never meant that they should provide for that welfare but by the exercise of the enumerated powers, so it could not have been meant they should raise money for purposes which the enumeration did not place under their action; consequently, that the specification of powers is a limitation of the purposes for which they may raise money.” – Thomas Jefferson, 1817.

January 16, 2011 by Big Government General Rant Obama taxes