Early Morning Clarity

Everything is clearer in the early hours. My brain is always humming with ideas in the pre-dawn hours.

Dear reader, you will notice that in all of my criticism of the Federal Government a la taxation, you don't hear me talking about State taxes. That's because I don't mind those. I find Utah taxes to be reasonable and well-managed. And the governor lives close by!

The closer government is to the people, the more responsive it will be. The individual will have more say over how things are run.

As a business owner, I see the tax money going out. I am forced quite literally under threat of life and property to collect taxes from my workers (I am not paid for this) and pass it along. Proportionately, the Feds want $20.00. The State wants $3.00. The County wants $0.20. And the city wants like a nickel.

To my mind the Feds should be doing the job for $4.00 and the State (talking about Utah here) should be running up around $4.00. I would like to pay less to the feds and more to the state.

Even better than that, people should just run their own lives and rely on charity and family in the case of emergency. Yes, this actually works. How much did US citizens give in charity last year? Over 300 billion. How much more would that be if the tax burden were less? How much charity was un-recorded just from handing out cash to strangers? How much was un-recorded as family helping out family? I'll bet all told it exceeds federal entitlements.

I am always surprised at how trusting people are of government. I think that's really neat. Not helpful, but very chipper. I think the average Joe on the street, if he found out that half his life had been sucked out by the banks and the feds would just shrug and get on with his day. Heaven knows I was skipping through the tulips for twenty-five years.

Another thing to consider is that the US is big. Federal solutions are pressed down on fifty individual states. What I mean to say that the United States should really be thought of more as fifty little countries. Denmark has a population of 6.5 million (give or take, work with me here people) and Utah less than 3.0 million. Imposing federal mandate on Utah would be like the EU imposing far-reaching strictures on Lithuania. Imagine a poor Lithuanian sending 95% of his tax burden off to London hoping and wringing his hat that he'll get some back.

Population of California: 26 million
Population of Germany: 82 million

That's why you're seeing a swell of State's Rights movements in the US. That's a hot topic in Utah right now. And in case you missed it: the population of Utah is less than the population of Lithuania.

As a side note, I read on the Federal Reserve website that if you write a letter to an un-elected local chairman you have to address him as "Your Honorable". I would sooner kneel before a decrepit old vampire. It's like taking off my shoes at an airport. Only one other being has demanded such a thing to my knowledge and that is the Almighty GOD. The Feds sure got a lot of balls asking such a thing.

This is really getting scattershot.

Here's another insight that hit me like a thunderbolt about two weeks back: there's no such thing as taxing the wealthy or corporations. You just can't do it. Let's say the feds taxed and regulated the toilet paper factory 10%. Guess what? The cost of toilet paper just went up 10% Or the wages at the TP factory will go down. Or a combination of the two.

The end result is the ratio of wages:prices is adjusted as an invisible headwind against the workers. Unless government gets serious and imposes strict price and wage controls, all taxation and regulation is passed on to the very bottom of the pyramid where the common man groans and shoulders his burden.

Even corporate taxes are wedged into the cost of every loaf of bread. I wonder how much it is.

Yay! I got a tax refund! No you didn't. That was just an illusion.

Now imagine the opposite of this. By abolishing the income tax completely and replacing it with nothing the reverse of this happens. By removing the immense pressure from the top of the pyramid, you will see wages rise and prices go down. I know for an absolute fact that would be the case with my business. My workers have a standing promise that if the income tax is repealed and replaced with nothing that they will see 100% of the benefits from that. I don't want the money for myself. Though I am irritated at all the paperwork Sarah and I have to keep on hand (40-80 man-hours a year) just for the off chance that the Inquisitors might drop by.

In the end, individual freedom is the only way to go. It's efficient. And it's right.

I believe in the goodness of people. If left to their own devices, on the net, they will do the right thing. There should only be a minimum of government to keep it all together. Government is the fence around the house, not the house itself.

On another topic, take a look at this vid.



I am all for grace and kindness, even when someone has made poor choices. I rely every day on the goodness and graciousness of God who gives me breath and has blessed me in spite of my flawed character. And not only that, but humans need to keep hefty reserves of mercy on tap for their fellowman, and put that mercy into money form where needed.

I just think that it should be voluntary. And it should be personal. This young woman should be helped by voluntary donations (through organized charity), and by her family, neighbors and friends. And these would have the resources to do it more effectively if they weren't taxed to oblivion.

Anyone who says that this is not reliable (that people are not to be trusted to be generous and that government force is needed) is overly cynical in my view.

The other thing forgotten here is the small businessman who had to pay for all of this by threat of force.

And the bureaucrat who got his cut along the way.

The other person forgotten here is you. Yes you. The person that helped out of the goodness of his heart. You were robbed of that human connection. Instead, you got to sign your 1040EZ.


And here Pete Schiff talks a lick of sense about income taxes:



I also saw a speech by the President in Buffalo where he said that the government's plan for small business was to make sure that they got loans. Yeah, more debt. That's just what small business like mine need. No thanks. But that's all that government can do. They create nothing. They cannot run your life better than you.

And for the record, I have this same criticism more or less of every administration of the last sixty years. I do not like people who insult the president. It detracts from a more substantive argument that could be made.

Listen to the whole thing and you'll see echoes of what I'm talking about (eg prices went up and wages flatlined-- this is a result of printing money! check 3:30).



Here's an article that argues the other side of income tax. My only beef here is that I think he's vastly under-estimating the effects of real inflation. Inflation (thanks to the Federal Reserve) is going to completely wipe out the curve.

Now it's your turn. Email your response to bluetablepainting@gmail.com Am I wrong? Did I miss some facts? Is there something more to be said?

Here's the first one:
Dear Sean,

I just wanted to say that while I tend to vote Democrat, I can’t help to sometimes agree with your opinions on our government. I live in California and see what kind of mess government mismanagement of money can do to a state.

My sister-in-law used to own her own beauty shop. She had to buy supplies for this shop like nail polish, hair spray, and all those other items that men have little concept of that women use to make themselves look pretty. While buying those things she had to pay a state sales tax and a local city sales tax. At the end of the year, the state required her to inventory her store and estimate a value of stock on hand so she could pay another sales tax on items she didn’t sell!. How crazy is that? I hope that this is not the state level tax control that you propose.

The city that I live in is primarily an agricultural based community. After the housing market collapse a neighboring city is now known as the most unemployed city in the United States and the one I live in isn’t far behind. This happened by giving federal housing loans to people who never should have been given money to buy a house. I can’t blame the current Federal Administration for this, since it happened before the change. Throwing money at the situation is not the solution either. Giving people jobs is.

In an agricultural society, water produces jobs. California moves the bulk of its water to cities that have no water. Sure, people can now water their lawns, but farmers can’t grow their crops. I drive in certain areas of this state and literally see a dust bowl. Miles of dead orchards because of a lack of water that are right next to an aqueduct that is moving that water so people can water their lawns. Those dead trees equal a loss of jobs. All because of a state level mandate.

The biggest point that I don’t agree with you is having family help out a person that is down on their luck. Doesn’t work if that family is dependent on Social Security to begin with. I have seen too many families in my city grow in size beyond the ability to support themselves. These social security families more often than not have a history of substance abuse. For me to get a job, I had to take a drug test. Why can these people use my tax money and not have to do the same? Instead of getting rid of work programs, get rid of food stamps. When people can’t eat it’s a great motivator to get a job.

Thanks for all the wonderful work that you do. I don’t have much faith in my State’s ability to run itself though. Too many actors trying to be politicians.

Yours truly,

A.Y.

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Yay another one!

Shaun,

Here is some rambling. Hope it is coherent. Feel free to post it if
you want. I'd be happy to hear your response as well.

-Michael

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That California came up in your recent post made me want to reply.

California's budgetary problems stem from a combination of factors,
but one huge one and some other big ones. The most fundamental problem
has a lot to do with an issue you discuss a lot, letting people do
things for themselves. California has a very simple process for
introducing ballot measures that basically allows the people to vote
directly on laws instead of relying on those dirty legislators. The
idea is that if we just make everything a directly democratic removing
the politicians, then of course the people will be better served.
However, that is not at all what has happened.

Instead of people wisely deciding actions that would benefit the
citizens of a state that is rich in agricultural, technological,
cultural, educational, and trade industries, people have again and
again voted for ballot measure that make it impossible for the state
to function. In many cases, private groups end up spending massive
amounts of money campaigning on ballot measures that suit them, and
their money ends up speaking much louder than any broad interest.

There are several other factors that contribute to the mess. Districts
have been drawn firmly on party lines which encourages political
extremism. The teacher's union is a political juggernaut that focuses
on the sole issue of protecting senior teachers. A sprawling prison
industrial-complex grows and grows and grows. But the direct democracy
issue--letting Californian's make bad choices for themselves-- is
still the key. The Republican Gov. Schwarzenegger supported a series
of measures aimed at fixing the some of the institutional problems I
just outlined (and me on the left not thinking his ideas were bad),
but again, all of these reforms were defeated by California's direct
democracy.

California serves a really important example of how trusting people to
take care of themselves can be a flawed logic. People do all kinds of
things that hurt themselves. Sure you say, tough cookies for them,
they hurt themselves. However, in actuality they can also hurt others
... me included. California has so much healthy economic industry that
it should be flourishing, but it isn't, and I believe that the
institutional freedom of its voters has a lot to do with that.

(Also ... California's population is pushing 40 million, not 26.)

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Separately:

From your blog: "Here's another insight that hit me like a thunderbolt
about two weeks back: there's no such thing as taxing the wealthy or
corporations. You just can't do it. Let's say the feds taxed and
regulated the toilet paper factory 10%. Guess what? The cost of toilet
paper just went up 10% Or the wages at the TP factory will go down. Or
a combination of the two."

Why not a 68% (randomish number) tax on all personal income over
$250,000 a year? Why is that logically impossible?

________________________
Overspending aside the military's budget for 2010 is something like $680 billion that works out to a bit less than $2,300 per man, woman, or child in the US with it's rough population of 300 million. That's where your $20 is going. Yes, we could take a more passive stance in World politics. We've done it before it worked out pretty well, you might remember reading about World War II? Are they doing right by our Nation's citizens by spending $2300 of OUR hard earned money? Probably not, but they could a lot worse.

--JH
_________________________
Shawn sez:

This sounds like the Wolfowitz Doctrine. ie if we had an overpowering global presence, we could have prevented WW2.

My argument is that IF that is the correct approach we need to get realistic about sustaining it. How are you going to pay for it for the next fifty years? It can't be through inflation and borrowing.


___________________________
Prevented? No? But we sat out too long and used half measures like blockading Japan, the reason they attacked Pearl Harbor in fact. They had about a year before the blockade had the desired effect. This is not unlike the UN Sanctions that we use today. In World politics today North/South Korea is reaching a flashpoint and the Korean War might start up again seeing as how it never officially ended iirc. It isn't about preventing wars it is about mitigating damage. We do indeed need to scale back our military spending it is unsustainable at this rate but an 80% cut to taxes, all things being equal, would mean an 80% cut to the military budget. That would pretty much put us at a passive stance and one or more of any of these hotspots would get out of control.

________________________

Hey Shawn.


I read your “Early Morning Clarity” post and generally agree with your major points. If you find it worthwhile to do so, feel free to post my comments on your blog.

Personally, I think that the greatest accomplishment of Statists (who are mostly, though not all, lefties) was to convince otherwise rational grownups that it was possible to get something for nothing.

I really chafe at the absurd notion that the government “pays” for anything. How can any rational grownup actually say such a thing?

If I forced you to give me $100, pocketed $40 of it and spent the rest on a gift for my brother, can we *really* say that I “paid” for that gift in any meaningful sense? It looks to me like I coerced *you* into paying for that gift – and then I coerced you into paying me to (a) pick it out and (b) decide who to give it to.

How does this hypothetical meaningfully differ from how the government “pays” for something? Certainly, the conclusion doesn’t change if a majority of folks in the room voted to give me the power to coerce you. You still paid for the gift. Nor does the conclusion change if you’d agreed previously to abide by the majority vote. In each case, *you* -- not I – really paid for that gift. The supposed morality or “legitimacy” or “fairness” of the coercion does not alter this fact.

Similarly, as a business owner myself (and an attorney who works with business owners), I completely agree with your contention that businesses really pay no taxes. Since a business will die if it is unprofitable long enough, it simply has no choice but to pass the costs imposed by government (through taxes, regulation, tariffs, etc.) on to the consumer. So do its competitors. So like the government, businesses really “pay” for nothing. Consumers ultimately pay for all the costs government imposes on businesses. And worse, since the business tax regime is completely different from (and much more complex than) the individual tax regime, consumers also have to pay for the inefficiency inherent in having two complex tax regimes to collect money from the same people!

The most efficient policy would simply be to eliminate all business taxes…with appropriate safeguards to keep business owners from avoiding taxes by using business assets personally. Such safeguards are already in existence and account for a relatively tiny slice of the Internal Revenue Code. Of course, the howling from lefties and non-lefty statists would be deafening. And as usual, devoid of either facts or logic to support them.

To quote Heinlein, “there ain’t no such thing as a free lunch” (TANSTAAFL). How purportedly rational adults can believe otherwise is a complete mystery.

I’d add that the only thing the government can really do is pick winners and losers by taking money from some folks and giving some of that money to others the government deems more worthy. Of course, the government has to take its cut to pay for its inefficient and bloated bureaucracies. After all, government workers aren’t *really* communists (despite their liberal posturing). They demand their cut just like everyone else.

I’d also note that having no federal government taxes is not really viable. There are a few activities – but only a very few – that a federal government is best able to handle. In my mind, they are things like: the court system; the military (mercenaries and militia have been historically ineffective, despite being romanticized in fiction); aviation traffic control; regulating trade between (but not within states)*; and suchlike.

Ty Beard, Attorney at Law

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I don't necessarily fall into the same stream of thought as you elaborate in your early morning clarity but what I will say is I'm willing to listen to your thoughts and think about where I might be able to collaborate with your view points to reach a better union. I do not believe the way to govern a community is to impose any one view point on all. I rather think that through a spirited debate where we listened to understand and not to respond people could reach workable solutions that would serve the public good. I believe government is wasted on politicians. The amount of money required to effectively campaign in the United States is obscene. Too many Politicians act in the sole interest of being elected not in the interest of the people. A two party system is also a poor way to represent a broad spectrum of ideals. One thing I will say that gives me faith in the electorate is their always seems to be a good 30% of the people who remain independents and when one party gains sway invariable the spectrum swings the other way to balance out the country. Bush felt this midterm swing and now Obama will as well. That is a pretty reliable trend and a good sign of balance.
I actual think the European style of Parliament and government formation is a more representative style of governance. It is one of the few things I think they do right there although that doesn't mean I necessarily agree with the policies they develop there either. My guess would be the best people to govern would be those who want to govern least. Remember Washington was a reluctant leader. I caution against Absolutism in ideas. Some of the things people spout on either side of the spectrum right and left are these ideas that if we don't follow this one way of doing things we are lost. In the story there was only one pied piper today their are quite a few trying to lead people off into the ocean.
I do believe in the general goodness of men and woman however I have also seen the shocking examples of the wickedness of people. The usual suspects of history Hitler, Pol Pot, and Rwanda, remember dictators are individuals extending their will on all. There is fair amount of cruelty in world, too many children take pleasure in depriving flies of the gift of flight. That said I also agree sprawling governments alienated from the citizens is not likely to produce better results. Small businesses do face a ridiculous amount of unecessary regulations. It shouldn't be this hard to help yourself and build a small business. It is virtually impossible to operate a business without outside help in the form of accountants and lawyers. We over regulate small businesses yet let multinational corporations concoct derivatives that consist of morgages no one should have received and let them turn our economy into a house of cards with these contractual bets no one can decipher especially the rating agencies who are supposed to be the check to balance the equation.
I trust your word in that if you kept more of the cash in your business you would give it to your employees. I can't say why but in just following your blog and seeing your business grow you just seem genuine. However I grew up in New York City and I have seen more then my fair share of crooked small business owners. I respect and appreciate your faith in the everyman. So I am cautious of going down the trust no one route.
We live in a complex world with a long social history and the past can't be forgotten because the present and future is built on that foundation, that's probably my strongest criticism of the libertarian point of view I do not feel it addresses the full reality of our social situation. That said I'm willing to listen to those arguments and discuss my points of views. I'd also be willing to change my mind and try to work to collaborate to some better end. I am not vain enough to think I have all the answers. That's my strongest criticism of politicians and much of the political establishment they seem vain enough to forward that answer to all ills.
Well that's my own clarity. I appreciate you sharing your thoughts and in listening to what you have said I feel like a wiser person because I heard something different then what I thought and have broadened my own frame of thinking by listening. I wouldn't say you have all the answers and I wouldn't say you were totally wrong. The truth is somewhere in the middle. It requires us to listen and talk together to reach it. Too bad more people don't do that. Thanks for sharing and thanks for inviting others to share as well. I am an academic by trade (Doctoral student in Education) so rambling comes easy hopefully something in here may give you something to think about. Here's to a better world for all of us

RP