Taxing Corporations Largely Equals Taxing Ourselves

(this is a slightly edited copy of a second recent BLOG comment I made in response to someone at Bilerico.com, a web site that primarily geared towards the LGBT community that was started in Indianapolis. Bil Browning, the founder, and I probably don't agree on lots of things politically, but he is a good guy and has had great success with his site which covers an eclectic range of topics.)

Before I start, it is important that everyone set aside their political bias and the rhetoric that gets thrown about as the two incumbent parties attempt to plunder on behalf of their own constituencies. Let's just logically look at things.

The United States has the 2nd highest corporate tax rate in the developed world (Japan's is higher). When we think about taxes being a "price" that is paid for government services, setting aside whether or not government SHOULD be doing everything it does, if the price moves beyond a certain threshold (overcoming the frictional barriers of moving) then those activities will be conducted in a place where the price is lower. While people will be quick to demonize this behavior, everybody benefits from lower prices which means they can expend dollars on other economic activity that they might otherwise not.

Also, we must consider where the taxes paid by corporations come from and what they do with their profits. The price of each item we buy contains a portion of the taxes that corporation will pay. When we talk about increasing taxes on corporations we are saying increase the cost of the things we buy OR decrease their profits (many don't have profits [GM, FORD, Chrysler, most airlines it seems .. why can't our own companies make any money in America? Another long discussion to have.])

Leftover profits, if the company is public, go to their shareholders or to grow the business. For most publicly traded companies those shareholders include institutional holders like mutual funds, pension plans and other retirement vehicles. So, when these companies make money and they distribute dividends, A LOT of those dividends end up in people's retirement accounts (including police and school teacher pension funds). The value of those holdings also rises and falls based on earnings.

The next fact we must examine is that the total value of our government debt (current and future existing obligations) now surpasses (a) the value of EVERYTHING our country owns and (b) the earnings ALL OF US will make for the next 8 to 10 years. You can jack tax rates all you want, our elected officials have already bankrupted us and will now attempt to "inflate" their way out of the mess. Inflation of course hurts the poor the most as those at the top of the food chain get the benefit of the inflation (increase in the money supply without a commensurate increase in wealth or production) before the economy adjusts price levels upward to compensate for the devalued currency.

Besides, "The latest data from the Internal Revenue Service show that more than half of all federal individual income taxes—50.8 percent—are paid by the five percent of taxpayers who earn the most." (Tax Foundation)

Considering that infrastructure is not a very big tax item, these people (arguably) utilize the big budget line items of government the least which means we are basically transferring (plundering) from one group to another and we must remind ourselves that the Law is primarily purposed with avoiding plunder (Bastiat), not being a tool for such purpose as it largely is today.

I would argue that without the tax reductions of JFK and Reagan we might not have made it as far as we have. Unfortunately, under Reagan the necessary reduction in government bloat and expense didn't occur and our deficit exploded and has continued to (especially when intellectually honest and removing any current Social Security surplus from the numbers that politicians like to spin).

It is important that people not just parrot the rhetoric of the political class. Keep in mind that most of them are just parroting and haven't really thought for themselves.

Houses of Cards, Bailouts and $53 Trillion Amongst Friends

(below is the first of two comments I made on another BLOG regarding the status of our economy)

Ever since the creation of the Federal Reserve, a private central banking system, our economy has been entirely based on a house of cards.

Our government, regardless of the party in power, has refused to acknowledge that our IOU based economy can't go on forever. Artificial manipulation of interest rates, inflation of the money supply, massive deficit spending (by both parties but Bush has been particularly bad) and manipulation of people and businesses via tax policy (taxing savings, investment and production instead of consumption) have created the mess we're in, but this is really just a continuation of the stock market bubble. The bubble was just moved from the stock market to real estate.

Then the government makes things worse by mandating that banks not use as much discretion against people who are less likely to pay (Community Reinvestment Act 1977, 1995) and via Government Sponsored Entities (Fannie Mae and Freddie Mac) who, because of their state sponsored status, were able to grow well beyond what a true free market competitive system would have allowed (the risk they held would have been spread amongst hundreds or more companies with varying levels of risk tolerance).

"Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac, the two government sponsored enterprises that purchase and securitize mortgages, to devote a percentage of their lending to support affordable housing."

We've proven over the past 100 years that Keynesian Economics doesn't work (Krugman is basically a Keynesian) and that the Austrians were probably correct. If anyone is really interested in this but doesn't want to get bored to tears by it, pick up a copy of Economics in One Lesson and Road to Serfdom. Especially important since schools have mostly taught Keynesianism and the "echo chamber" effect is so great.

Think about this. The total value of bail out money and loan guarantees is now over $46,000 per U.S. Household. $46,000?!! China now holds 10% of our country's debt obligations (they just surpassed Japan). This is nuts but shows how much of our supposed prosperity of the past 30 years was borrowed.

And the real debt number right is over $53 trillion. Google "IOUSA" or look for the 30-minute bit on YouTube to learn just how screwed we all are.

Regards to all.

Great Series About The Constitution of These United States

A friend of mine on Facebook posted a link to installment one of Michael Badnarik's class on the Constitution of These (not "The") United States of America. Michael is a former Libertarian candidate for President and is a long-time student of the Constitution. After watching the first one I had to watch the others as these are excellent and kind of fun to watch.

I know you're expecting the Libertarian guy to be some anti-religion Atheist or something, despite the fact that is kind of like saying all Republicans want to amend the Constitution with the Bible or all Democrats are jealous of and hate rich people, but he correctly points out that there is no "separation of Church and State" in the Constitution, merely the protection of the free exercise of religion and that the Second Amendment had nothing to do with the national guard (not created until the early 1900s) but the right of "the people" [I think that's in Installment 5]. He reminds us that the Constitution and The Bill of Rights do not grant us our rights, which are unalienable, but instead is just a reminder of what exists naturally and restricts government from overextending it's authority in violation of those rights.

He explores a few areas that I had never really considered and so I'm listing links to each of the installments here:

Installment 1: http://video.google.com/videoplay?docid=-8577731528746978991

Installment 2: http://video.google.com/videoplay?docid=1338165539518441611

Installment 3: http://video.google.com/videoplay?docid=1188997773661725985

Installment 4: http://video.google.com/videoplay?docid=5743392260531647132

Installment 5: http://video.google.com/videoplay?docid=-5876221484028664477

Installment 6: http://video.google.com/videoplay?docid=5747171386852909946

Installment 7: http://video.google.com/videoplay?docid=4730862921455924966


And, of course, the Schoolhouse Rock version:

No More Kings: http://www.youtube.com/watch?v=ofYmhlclqr4

The Preamble: http://www.youtube.com/watch?v=Q_TXJRZ4CF

And who can forget Bill: http://www.youtube.com/watch?v=mEJL2Uuv-oQ

Enjoy!

Lessons in Liberty: Your rights and Eliminating or Sharing the Plunder?

Annotated quotes from Bastiat's "The Law".

Thus, since an individual cannot lawfully use force against the person, liberty or property of another individual, then the common force - for the same reason - cannot lawfully be used to destroy the person, liberty or property of individuals or groups.

If one person has no right to murder, enslave or steal from any other person than no organization of individuals or other group has the right to murder, enslave or steal from other individuals or groups.

Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter - by peaceful or revolutionary means - into the making of the laws. According to their degree of enlightenment, these plundered classes may propose one of the two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it.

When you hear Libertarians speak, do they intend to "share" the plunder or eliminate it? Are libertarians power hungry political cronies attempting to partake in the great profitable endeavor that is elected office or are they running for office to fight for the restoration of personal freedoms and end the plunder by the political classes?

And when you think of "plunder" think not just of your tax bills and special favors doled out to interest groups and contributors, but things like the $46,000 per American Household in bailouts and loan guarantees that have been doled out thus far. That's right. $46,000 per family in more debt hoisted upon the shoulders of our children and children's children in order to try and fix an economy that government largely broke to begin with.

End the plunder.

UPDATE: Some measures say the number is now $65,000 per American household.  Regardless, it's a big number.

The electoral college is not "archaic".

Every presidential election cycle bunches of people (almost always Democrats but oddly much more quiet this election cycle... it's all good when the system works for them) rail against the electoral college and call for direct election of the President. Now, of course, if you want the top five states to decide your president every four years this is probably a great idea. But, then look at the most populous state, California, which is generally far more to the left than the rest of the country. Or, to use a much more accurate model, far more to the bottom of the diamond [statist] than the terrible left-right one dimensional model taught in schools. which has FIVE times as many Electoral College votes than my state of Indiana.

Do you really want the people of California who have voted their way into near state bankruptcy and are now asking the Federal Government (their not alone, 43 states are now doing this) to take more tax money from the rest of the country or place the entire rest of the country further in debt to "bail them out". Of course, this continues to beg the question as to who is going to bail out the United States government and taxpayers? Massive inflation coming soon to a store near you!?

The point everyone misses though is that the States created the Federal Government. The states are supposed to be sovereign and voluntarily organized into the "United States" for which the Federal Government had very little authority and not much to do. The Federal Government was supposed to be states' agent in helping organize national defense and ensuring free trade amongst the states not to be the direct agent of the people.

The citizens of each state vote for who they desire their respective representatives (electors) to cast votes for in representing the United States. We're supposed to care more about our own Governor and State House folks than the President of the United States, but the power has flip-flopped and massively so during the 20th Century. As originally intended, however, there was never supposed to be any kind of popular election of electors (although that wasn't forbidden) and instead knowledgeable people were to be selected by state governments to recommend candidates to the Congress who would then select the President. It never really worked this way, at least not by the time we got to Jackson. Again, this would be state governments selecting the President. State representatives who would be much less likely to vote away their authority, power and sovereignty under the U.S. Constitution.

I highly recommend this Mises article on the electoral college at http://mises.org/story/545.

an excerpt:

"Over those decades, the methods that states used to select their electors had changed so that rather than having state legislatures choose them, they were chosen by the electorate directly. Furthermore, electors represented specific candidates instead of being chosen for their ability to select good candidates. Thus, in effect, there was popular voting for president despite the process specified in the Constitution, and if the president was in fact elected by popular vote, Jackson’s supporters believed that he should have been selected as president in 1824."

On-Line Polls, Drugs, Economics and Other Ramblings.

(this started out going down one path and ended up letting me get a few things out of my system - it's basically a rant and it's probably not the last).

I take a lot of on-line polls. A lot of people do I think because our opinions are so darn important after all. One of the polls I took today was about Guns in St. Louis. And this question struck me as missing at least one important answer:

Which of the following conditions do you think is the most important cause of gun violence in the US?

The availability of guns
The way children are raised
The influence of TV, movies, video games, or the Internet
Anger

Availability? Nah, even if outlawed people would own them in violation of the law. I mean, drug dealers still deal drugs, people still speed on the highway, cheat on their taxes, drive without a safety harness on, buy alcohol for underage drinkers.. all illegal. So we know that just making something illegal will not make it go away.

The way children are raised. While I'll admit this is probably a contributing factor, it's not the core reason I don't think. There will always be children that raised either improperly, or who just plain grow up to be bad seeds despite the best efforts of their loving, well educated parents.

The influence of TV, movies, video games or the Internet. Again, perhaps something else that influences people to some degree. But let's face it, watching Han Solo shoot Stormtroopers or Dirty Harry blow away bad guys did not turn me into some mass crazed killer. Congress destroying the financial soundness of our country or the Federal Tax Code might yet do it, but not popular culture.

Anger. Well, yeah, usually somebody got mad or at least had their ego bruised to shoot somebody. I love Chris Rock's skit about high priced bullets. The premise being that if you saw someone laying bleeding in the street you knew they made someone REALLY mad to make them put thousands of dollars of bullets in them.

The answer that was immediately missing to me was drug prohibition. Now I know this can be an unpopular topic, and it's not one I tend to spend much time focusing on; BUT, how many people are shot, killed, beat up, intimidated or who knows what else over territorial distribution rights for drugs. High priced, profitable drugs because the government eliminates most legal, natural competition through legislation thus creating a risk-based profit incentive to get in the drug business? Remember Al Capone? You wouldn't even know that name if not for alcohol prohibition prior to repeal.

How much more harm is done by failed war on drugs than is done by the drugs themselves? Yes, drugs destroy families, careers, savings but so do the the IRS, DEA, ATF and other organizations from time to time. What would happen to the distribution network and the price of pot for example if it was no longer an illegal plant (a plant! if you're religious that would be a plant, placed here by God) that got destroyed on sight by officials of the government? The price would fall out of the bottom if everybody could just grow their own, don't you think? I mean, really, if they want to destroy plants I have some pesky dandilions every year they can pull up and burn - bet they won't stand so close to THAT fire though.

What about those frogs that people can lick to get high? Are government officials going to purposely hunt and destroy them out of existence? I'll bet the Endangered Species folks would have something to say about that. Where are the Endangered Plantlife folks? I guess trees are too big to fail but not smaller plantlife?

And I don't have a horse in that race, it all just seems silly, wasteful and ineffective to me.

So anyway, back to the polls. I especially get miffed when asked in a poll things like:

Who did you support for president?
(o) Barack Obama
(o) John McCain

... huh ... I didn't know I only had two options (I know most people thought so). I didn't support either of the media promoted, status quo, statist candidates who (neither one) knows jack about economics.

(THE WHEELS ON THE TRAIN START WOBBLING)

What about Bob Barr, Chuck Baldwin or Ralph Nader. Or in the primaries Ron Paul, Duncan Hunter, Mike Gravel or Hillary Clinton? By the way, if you missed Mike Gravel in the debates you missed "how the hell did the rest of them get here" and "I'm ashamed at you Hillary" it was totally worth the time spent to watch.

Of course, I'm still waiting for the news article that points out that if we'd listened to Ron Paul's economic advice years (if not decades) ago we probably could have avoided the big mess we're in now. Make fun of him all you want, he's been right about almost everything but he does lack that certain "American Idol" popularity contest attraction that we now hire our leaders based on. Instead of loud proclamations that, "oh, sorry, yeah he was right" they just have had him on the cable news channels a few times each week whereas BEFORE the election they wouldn't promote him at all.

For me, by the way, economics is probably the most important thing these guys need to understand, mostly so they know to stay out of the market and the economy since all they can do is screw it up, misallocate resources, create bubbles, destroy the value of currency or otherwise frustrate legitimate economic progress.

(AND NOW WE LEAVE THE TRACKS COMPLETELY)

What is it going to take to get everyone mad enough? I think there is a large but silent minority of people, afraid to do much "outside the box", if you will, that are mad as hell and don't want to take it anymore. Are you tired of the nonsense, overspending, trade deficits, wrecked economies, endless warfare (not one declared since World War II I don't think?)? Are you tired of your spouse having to work just to cover your tax liability, tired of having to earn $2.00 just to put $1.00 in the bank and then having the FED devalue that remaining dollar by 3 to 5% (or more) each year or tired of bickering about same-sex marriage or other issues that shouldn't have anything to do with the government, at least not Federally, while our country goes down the tubes. Are you fed up with politicians like Barnie Frank or John McCain standing up and saying "everything is okay" when in fact, things are totally NOT okay? What is it going to take? Do we sit idly by while the promise of America evaporates away from our Children (current our future)?

I think like many, I'm searching for the answers here as well. There is no place left on the planet for those who want to live free in a capitalist, free market society to go live. Heck, even this place wasn't really ours for the taking, but something has to change. As a friend of mine recently pointed out, BLOG posts and Internet jockey activities aren't going to get it done. I would add that writing books won't do it either and apparently producing DVDs doesn't do it. Do we need a prime-time special for two hours and all the networks? Wonder what that would cost?

The problem is we all have jobs, careers and two-income families. Can't quite put the plow up for the day and venture to D.C. for a few days to give Congress a piece of our mind without asking for time off, finding baby-sitters or who knows what else. Of course, if we wouldn't endlessly centralize stuff in D.C., in complete violation of our Constitution, we could make shorter trips down to our statehouses or county government centers to make our voices heard.

For starters, I invite everyone to visit and sign up for The Campaign for Liberty or to support Atlas!Liberty. I'm not sure what passes for pitchforks and torches these days, but I'm open to suggestions on that angle as well. First, though, in the immortal words of Howard Beale, if you're not already, "You've GOT TO GET MAD." And if you aren't going to get Mad then you're probably part of the problem and need to stay out of the way (and the voting booth). Go watch the scaled down version of I.O.U.S.A at YouTube, mad yet? $53 trillion reasons to be ... and counting.

Poilitical Quotes as Fun and Food for Thought

Some random quotes I decided to share:

Thinking of the bailouts on this one, "Politicians are people who, when they see light at the end of the tunnel, go out and buy some more tunnel." - John Quinton


“The Democrats are the party of government activism, the party that says government can make you richer, smarter, taller, and get the chickweed out of your lawn. Republicans are the party that says government doesn't work, and then get elected and prove it.” - P. J. O'Rourke, Reptile Republican


"Instead of giving a politician the keys to the city, it might be better to change the locks." - Doug Larson

Carroll Quigley said: "The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can throw the rascals out at any election without leading to any profound or extensive shifts in policy. Then it should be possible to replace it, every four years if necessary, by the other party, which will be none of these things but will still pursue, with new vigor, approximately the same basic policies."


Sean Shepard said, "If even the most paranoid, tin-foil-hat people among us trust Representative Ron Paul, then maybe the rest of us can too?"

"Politics, it seems to me, for years, or all too long, has been concerned with right or left instead of right or wrong. " - Richard Armour


"Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule - and both commonly succeed, and are right." - H.L. Mencken, 1956


"How come we choose from just two people to run for president and 50 for Miss America?" - Author Unknown

"Politics is war without bloodshed, while war is politics with bloodshed." - Mao Zedong (Star Wars fans will recognize this as "aggressive negotiations".


"The alternate domination of one faction over another, sharpened by the spirit of revenge natural to party dissention, which in different ages & countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders & miseries, which result, gradually incline the minds of men to seek security & repose in the absolute power of an Individual: and sooner or later the chief of some prevailing faction more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of Public Liberty."
— George Washington, September 19, 1796