How are you going to get The Rich to pay their Fair Share?

The top 10% of wage earners pay 50% of taxes.  Almost half of the population doesn't pay any income tax.  What should be troubling is Hillary's sliding definition of "rich."  Ten years ago, $250k was rich.  Now, $150k is rich.  What's worse is that deficit spending is driving inflation, making it harder to make ends meet.  How much should we pay in taxes?  The politicians will always say "more."  It isn't enough that politicians decide how 1 in every 3 dollars is spent in this country.  They trust us enough to elect them, but they don't trust us enough to spend our own paychecks.  The real question isn't who pays for who, rather who spends for who?

Surplus Population

Catholic.org had an interesting article pointing out that Obamacare will pay for sterilizations of teens as young as 15 without parental consent (probably due to an unintentional combination of laws which simply proves the Law of Unintended Consequences).  Combine that with a Secretary of HHS who looks at abortion as a source of tax savings and you've got a pretty chilling worldview shaping up on the left: a worldview that simply doesn't value human life.

Taxation With Representation

“No Taxation without Representation!” is one of the commonly referred to causes of the War for Independence.  This cry was largely rooted in John Locke’s assertion that a government forfeited its legitimacy when “any one shall claim a power to lay and levy taxes on the people, by his own authority, and without such consent of the people, he thereby invades the fundamental law of property, and subverts the end of government."

The issue of taxes and spending remained central to the political discussion after the war.  The Articles of Confederacy were purposefully weak in their ability to raise funds, to the point where it was difficult to discharge the debts incurred by the war itself.  Even so, the Constitution originally stated that "No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census" and even then the funds could only be spent "to pay the Debts and provide for the... general Welfare of the United States."

It stands that the best kind of government spending is that which is approved by the majority of the people, with the costs equally shouldered across the people, and the benefits borne by the general people as a whole.

Any time one of those three criteria is compromised, the authority to tax and spend becomes perverted.

Less preferred, but still acceptable is when the benefits are reaped by a few, but those few bear the lion’s share of the costs.  User pays.  This is rare, however, because why would someone who had the ability and desire to pay for something decide to launder their money through the bureaucracy to do so?

No, in most cases special interests want to reap the benefit while forcing others to shoulder the costs.  When the tax-and-spend power of government is no longer paid by the People on behalf of the People, it becomes tantamount to theft by majority (in the case of popular support) or theft by the powerful (in the case of a small but politically influential group).  If history is any indicator, abusing the power of taxation eventually stirs the ire of the populace and undermines the very legitimacy of the government.

Faust's Bargain: Charity and Government

The latest edition of Columbia includes an article by Alton J. Pelowski entitled "In Defense of Life, Love and Freedom" describing the problems when a private charity becomes dependent on public funding.  Similarly, Catholic Charities in Illinois are closing their adoption services because of new requirements to change their screening criteria to accept gay couples in order to receive government funding.

Although I empathize with their distress, American Catholics who have traditionally supported government-sponsored social programs have only themselves to blame.  Non-profit organizations who have been happy to trade arduous fund-raising for siphoning tax revenues are likewise guilty.

"Free money" is always hard to resist, but there's always a catch.  Once you've accepted the money you lose the freedom to run your organization as you like (which is why some organizations like Hillsdale College eschew public funding).

Indeed, the Catholic charities are faced with a dilemma of their own making.  If they refuse to  compromise their principles for money, they must either close their doors or return to the days when they relied on their own voluntary fund-raising efforts.  The latter option is obviously more difficult; a consequence of diverting funds from private donations to publicly mandated tax revenue.

Instead it looks like they're taking the easy option: quitting.

Successful Subsidized Energy? Not so fast...

The news coming out of the German energy market is a fascinating case study but it follows the typical pattern. Central planners decide they want to influence the supply and demand by manipulating producers and consumers. They are successful in that they get more of what they subsidize and less of what they penalize. However, they also have unintended consequences. In this case it is surpluses and shortages, reminiscent of the gas shortages of the 70s in the US and numerous other examples in the USSR. Laws are in place preventing the individuals from making adjustments to address the imbalance, in this case compulsory preference for the intermittent energy sources (solar and wind). Consumers still need a reliable source of energy that can pick up the slack when solar and wind are unavailable, but government interference is discouraging investing in conventional plants. Since the people are bound by law from fixing the problem it falls to the central planners to develop a solution. Their answer is as typical as it is ironic; subsidize coal plants.

But wait! Consumers are getting paid to use energy! They're getting it for free, right? Well not exactly. The subsidies aren't free; they are simply obfuscated by the tax code. Furthermore they represent a compulsory cost; what people pay to subsidize the energy industry is disassociated from their purchasing choices or their actual energy use.

The definition of insanity is doing the same things and expecting different results. Central planning consistently results in shortages and excesses, increased collective costs borne by the taxpayer, disenfranchising of the consumer and empowerment of the centralized planners and their crony capitalist / special interest lackeys. This latest example from Germany is no exception.

http://www.bloomberg.com/news/2011-09-29/utilities-giving-away-power-as-wind-sun-flood-european-grid.html

Financing a $447 Billion Stimulus Injection

A recent article phrased the new stimulus plan as “injecting $447 billion into the economy,” which made me stop and think. Where exactly is this money coming from? I doubt the politicians in Washington are going to pay for it out of the vaults at Fort Knox (which would only cover about $278 billion or a little over half the bill anyway). That just leaves us with the three usual suspects; taxes, treasuries and the printing press.

Raiding private investment capital, ie: raising taxes, in order to “create jobs” is absurd. If the money was actually directed towards funding projects, it would simply mean diverting money from privately planned investment into politicians’ pet projects (a time-honored way of ensuring reelection). This plan will also use that money to extend unemployment checks, which is just as foolish. I would rather let someone buy a boat, thereby paying someone for building the boat, then tax the money away and hand it out as an unemployment check. However, this plan also includes tax cuts (without accompanying spending cuts), which leaves us with the other two options.

For the past few decades, we’ve gone to foreign investors to finance our government spending. The problem with this approach is two-fold. First, by competing for foreign investment dollars we crowd out private investment. In other words, businesses that are looking to finance expansion and real job creation are competing with the Federal government for the same scarce resource of investment capital. Secondly, those bonds incur interest payments down the road. That interest will have to be paid in the future from the same three sources (taxes, debt or inflation) which is the sort of kick-the-can politics that Washington D.C. loves.

That leaves the final source of funding; the printing press. The treasury prints the cash to cover the portion of the debt financed by the Federal Reserve. In simple terms, printing new money makes the money in savings and circulation worth less. Some people support this, since it makes our products cheaper for export. However, it makes everything we import (which is quite a lot these days) more expensive. It also hurts people living on fixed incomes and makes a joke out of long-term investment planning. In other words, it contributes to job-killing instability.

“Injecting” $447 billion really means deciding between taking domestic investment capital, competing for foreign investment capital, and pillaging our remaining savings. Instead of reactionary short-term fixes and more government controlled pork-barrel projects, we need to be thinking long-term. Stop spending taxes frivolously. Stop jerking the economic steering wheel by meddling with the currency. Return control (and money) to consumers and small businesses.  Let them drive the economy the way they’ve driven it since our national inception. They don’t need to be “stimulated” to make that work.

Marx vs. Smith

Key to Marxism is the argument that the laborer has always been forced to work for the bourgeoisie. Although true in the days of slavery and serfdom, when those in power used violence to extract labor, it is a stretch to believe this is true today. The “force” supposedly compelling today’s laborer is the threat of unemployment. However, as Adam Smith points out in Wealth of Nations, man in his natural state works only for himself. Therefore, the alternative to employment is not death by starvation as the Marxists claim, but rather that which man naturally possesses: self-employment. Ironically, those in power are willing to raise taxes on the self-employed Americans that make up 70% of the “businesses” in the United States. At least they have generously offered to return some of those tax dollars, for a small fee; in the form of small business loans.

Thomas Paine on War and Taxes

[Excerpts from Common Sense and from Rights of Man regarding war and taxes] 

Our plan is commerce, and that, well attended to, will secure us the peace and friendship of all Europe; because it is in the interest of all Europe to have America a free port.  Her trade will always be her protection...

[The government appears] to say to itself: "If nobody will be so kind as to become my foe, I shall need no more fleets or armies, and shall be forced to reduce my taxes."

...taxes were not raised to carry on wars, but that wars were raised to carry on taxes.

...if [the King] rashly declares war as a matter of right, and [Parliment] peremptorily withholds the supplies as a matter of right, the remedy becomes as bad, or worse, than the disease.  The one forces the Nation to combat, and the other ties its hands; but the more probable issue is that the contest will end in a collusion between the parties, and be made a screen to both.

[It is interesting to note that our Founding Fathers expressly vested the authority to commit the military in the Legislative to avoid this situation.

Congress shall have Power... To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

For the past sixty years, however, the President has had the ability to commit the Armies, while the Legislative simply approves funding.  Supposedly this is a "check" on the President committing us to wars that are not in the best interest of the Nation, however as Mr. Paine points out, this is rarely the case in practice, since once committed it would be a churlish man indeed who denied supplies to Troops already engaged in combat.]