Found this in the letters section of the WSJ this week. Great stuff. We often call this the law of unintended consequences.
F.A. Hayek in his “The Constitution of Liberty” cites the Harvard Business Review 1958: “Consider for a moment that any one person can only know a fraction of what is going on around him. Much of what that person believes will be false rather than true . . . At any given time, vastly more is not known than is known . . . It seems possible, then, in organizing into a hierarchy of authority for the purpose of increasing efficiency, we may really be institutionalizing ignorance.” Hayek seems clearer, with less gobbledygook on page 29, “the case for individual freedom rests chiefly on the recognition of the inevitable ignorance of all of us concerning a great many of the factors on which the achievement of our ends and welfare depends. . . . Liberty is essential in order to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realizing many of our aims. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.”
There’s a clear demarkation economically between the Republican and Democrat parties right now. That’s a good thing if it holds, because it means the Republicans can begin to truly eradicate its image problem brought on by poor fiscal decisions in the second half of the Bush years, when Republicans foolishly thought that the key to winning elections was to adopt Democrat-Lite spending policies.
Realize too that the spending cuts only amount to a few grains of sand on a beach, but principles matter, and so does momentum.
Better still, while trying to play a page from the Clinton triangulation playbook by proposing his own cuts, Obama nonetheless sounds like every Jimmy Carter and Walter Mondale “soak the rich” Democrat. That’s not so smart in a poor economy.
In his speech Thursday night, Obama portrayed Paul Ryan’s (R, WI) detailed and published fiscal plan as just “tax cuts for millionaires and billionaires,” while in the very next breath the president promised to remove the Bush-era tax cuts for families making $250,000. (Link to full report and summary).
Now, I realize that Mr. Obama is Columbia and Harvard educated and far smarter than us simple folk, but last time I did the math couples making $250,000 in income aren’t billionaires, and aren’t even millionaires. In fact, they’re a lot closer to being middle class, or flat broke, then they are to being millionaires. So the president’s empty rhetoric is nothing more than class warfare at its ugliest and most extreme.
These are, instead, the entrepreneurs, investors, and small business owners. And our tax code disencentivizes innovation, hiring and investing. It’s the exact opposite of what Democrats claim they want.
The saddest part of this is that even if the Democrats do get their tax increase — and even if they went far further with it by including those making far less than $250,000 — it wouldn’t make the slightest dent in our economic woes.
[Wall Street Journal] According to the Internal Revenue Service data, the entire taxable income of everyone earning over $100,000 in 2008 was about $1.582 trillion. Even if all of these Americans — most of whom are far from wealthy — were taxed at 100%, it wouldn’t cover Mr. Obama’s deficit for this year.
It’s been proven over and again that the Democrat’s static thought process only makes the country poorer because they believe that tax cuts “cost” us something when they really increase the size of the economic pie and maximizing that same low tax rate through volume. It’s the same principle that Wal Mart uses to make a fortune even though they have very low mark up on the goods they sell. But Democrats don’t think dynamically. They don’t realize — or perhaps they do and choose to engage in class warfare regardless — that they could have the best of both worlds by finding that perfect point between tax rate and revenue on the Laffer Curve.
For Democrats, it is the ultimate inconvienent truth: under Presidents Coolidge, Kennedy, Reagan and Bush tax revenues increased even though they lowered marginal tax rates — volume! We can even throw in Bill Clinton. The Taxpayer Relief Act of 1997 dropped capital gains tax rates from 28% to 20% and increased revenue from $54bn in 1996 to $84bn in 1998 (CBO). But even if you choose not to believe — to use their terminology, even if you’re a “denier” — even the most liberal of economists know you don’t attempt to raise tax rates in a bad economy.
But if that’s the hand Mr. Obama wants to play, good luck. We’ll see how that whole hopey-changey you vote for me after I raise your taxes when you were already suffering works out for ya.
Today is “Tax Freedom Day,” established by the Tax Foundation and defined by that group as the calendar day of the year where Americans actually keep the first dollar they earn, rather than giving it to the government.
“Tax Freedom Day® will arrive on April 12 this year, the 102nd day of 2011. That means Americans will work well over three months of the year, from January 1 to April 12, before they have earned enough money to pay this year’s tax obligations at the federal, state and local levels.” … If the federal government were planning to collect enough in taxes during 2011 to finance all of its spending, it would have to collect about $1.48 trillion more, and Tax Freedom Day would arrive on May 23 instead of April 12—adding an additional 41 days to the nation’s work for government. This date for a deficit-inclusive measure is the latest since World War II.”
Keep that in mind for the remainder of this post. Too many Americans, while bothered by their tax bill (often even as they criticize others as “greedy” for wanting to keep their earnings) don’t truly comprehend the country’s financial peril.
For politicians Tax Freedom Day becomes class warfare, a tried and true strategy to keep the public divided and squabbling amongst themselves rather than focusing on the epic levels of government spending and waste.
President Obama himself recently forwarded that plank by announcing that he’d agree to some more spending cuts (specifically and in amounts he would not expand upon) if only we would agree to tax “the rich” more — the “rich,” are, as Obama Democrats define it, those making $250,000 in income annually. Two-fifty large is certainly well off, and all things being relative are “rich” compared to another, but does a husband and wife, who, say, both went to graduate school and are still paying off loan debt, a mortgage, and maybe raising a slew of children, really deserve to be taxed in the same bracket as Warren Buffet or Bill Gates? That doesn’t make any sense. Even worse, because we tax many small businesses as individuals, including LLC and S-type corporations, we discourage these companies from hiring and investing more (and exactly at a time when the economy needs it most).
“the nation is much closer now to a tipping point where those who pay no income taxes will outnumber those who foot the bill. As widely reported, 10% of tax filers pay 70% of federal income taxes, but Democrats scream that those filers are not paying enough.
[And yet!] Second, polls suggest that class-warfare rhetoric has been effective in reinforcing a culture of dependency and envy. A recent WSJ/NBC poll indicated that nearly 70% of respondents prefer to see the budget deficit closed by raising taxes on families earning more than $250,000 (rather than cutting entitlement spending).”
All of this is happening, adds economist and pundit Thomas Sowell, while the government redistributes our tax dollars to those who absolutely don’t need them the most: the government’s hand-picked “winning” corporations and special-interest groups who rake in billions all because they’re “green,” or “energy efficient,” or “alternative energy,” and other empty buzzwords, or because their local rep would rather an inefficient plant continue to operate because it’s in their district. Think General Electric or Archer Daniel Midland. Think the fiasco with ethanol. Think corn, wheat, cotton or soybean subsidies — billions of dollars to corporations who donate money to Congress rather than use their own resources to attempt to streamline and compete in the global marketplace (i.e., they can’t, so they live off your tax dollars instead, even as you’re trying to save up for a new home, or car or pool or a family vacation, or perhaps your electric bill).
Instead, what do they have us peon Americans arguing with one another about — Planned Parenthood. Hey, I don’t like them at all, but we’re arguing about the smallest of scraps that have fallen off a monumental table!
“$39 billion in spending cuts for 2011 is less than the $61 billion passed by the House and shrinks the overall federal budget by only a little more than 1%,” wrote the WSJ recently. This year’s budget alone is $3.8 trillion. “Domestic discretionary spending grew by 6% in 2008, 11% in 2009 and 14% in 2010, but this year will fall by 4%. That’s no small reversal.” Okay, I understand about small victories and baby steps. I get the rationale of the WSJ economic conservatives who would rather have something than nothing.
But at the end of the day we’re still squabbling over scraps. Until the non-discretionary spending (what Congress terms in Orwellian fashion as “mandatory spending,” as though they, and we peons, have no control) is on the table, all of this is for naught. Entitlements are an anchor that will drown us all.
Until then they’ve got us arguing about one-third of a penny on a large table filled with pennies stacked five-high at a time. Since that sentence doesn’t really paint a picture for you I’ll provide the video for the picture itself (first courtesy of ABC News, which mimicked an independent YouTube video). After those two, the last video will explain how our debt is so bad we’re going to find a time soon enough where we will have difficulty just making payments on the interest of our debt, rather than the principle.
[Ship Complaint Blog] Florida is currently open to direct shipments from wineries. The state’s previous direct shipping legislation was found to be unconstitutional under Granholm and was overturned in a 2005 court ruling under Bainbridge, et al. v. Turner. For the fifth time in six years, direct shipping legislation is being considered in Florida (no bills were considered last year). As introduced, HB 837 and counterpart SB 854 would allow wineries (not retailers) to ship directly to consumers. The bill contains severely onerous restrictions that would prevent most wineries from obtaining a permit or shipping into the state, including a 250,000 gallon production volume cap (capacity cap), bond, and a mandate to give wholesalers a year’s notice that the winery plans to direct ship.
HB 837 was voted on and determined “favorable” by the Business & Consumer Affairs Subcommittee on March 22, 2011, and is now in the Government Operations Appropriations Subcommittee.
If the idea that the government should be able to prevent you as a private consumer to purchase wine from a winery via the Internet or direct marketing is repugnant, please be sure to contact your representatives. This was in Florida, but your state may be doing the same.
You can visit www.freethegrapes.com to take advantage of their form letters so you can let your local rep know that you oppose these unfree market principles.
