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Posts Tagged ‘Taxes’

Inflation is a quiet but effective way for the government to transfer resources from the people to itself, without raising taxes.

Posted by M. C. on September 23, 2021

Thomas Sowell

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Doug Casey on Why Almost Nothing is Cheap – International Man

Posted by M. C. on August 11, 2021

Let’s dismiss the foolish and anachronistic idea of saving dollars in a bank as well. So what can you save with in today’s monetarily distorted world? The answer is “useful things,” mainly household commodities. I’m not sure exactly how bad the Greater Depression will be or how long it will last, but it makes all the sense in the world to stockpile usable things in lieu of monetary savings.

Above all, this isn’t the time for business as usual. You’ll notice that “Working in a conventional job” didn’t occur on the list above. And I pity the poor fools working for some corporation and hoping things get better.

https://internationalman.com/articles/doug-casey-on-why-almost-nothing-is-cheap/

by Doug Casey

Stocks, bonds, and urban property—conventional investments—aren’t cheap in today’s investment world.

Because of the trillions of currency units that governments all over the world have created since the start of the crisis in 2007, financial assets are grossly overpriced. Meanwhile, real wages are slipping rapidly among those who are working, and—regardless of what official figures say—a large portion of the population is unemployed or underemployed. The next chapter in this sad drama will include a rapid rise in consumer prices.

We are in a financial no-man’s land. That said, what you should do with your time and money presents some tough alternatives. “Saving” is compromised because of depreciating currency and artificially low interest rates. “Investing” is problematical because of a deteriorating economy, unpredictable and increasing regulation, and rising taxes. “Speculation” is the best answer, of course, and I cover what that means elsewhere. But it may not suit everyone as a methodology.

There are, however, several other alternatives to dealing with the question, “What should I do with my time and money now?” They include active business, entrepreneurialism, innovation, “hoarding,” and agriculture. There’s obviously some degree of overlap with these things, but they are essentially different in nature.

Active Business

Warren Buffet’s success notwithstanding, relatively few large fortunes have been made by investing. Most are made by creating, building, and running a business. But the same things that make investing hard today are going to make active business even harder. Sure, there will be plenty of people out there to hire—but in today’s litigious and regulated environment, an employee is a large potential liability as much as a current asset.

Business itself is seen as a convenient milk cow by bankrupt governments—and it’s much easier to tap small businesses than taxpayers at large. Big business (which I’ll arbitrarily define as companies with at least several thousand employees) actually encourages regulation and taxes because their main competition is from small businesses: namely, you. Big business is much more able to absorb the cost of new regulation and can hire lobbyists to influence its direction. Businesses that are “too big to fail” can count on government help.

You certainly don’t want to be an employee, but running an active business is increasingly problematical. Unless it’s a special situation, I’d be inclined to sell a business, take the money, and run. It’s Atlas Shrugged time.

Entrepreneurialism

An entrepreneur is “one who takes between,” looking at the French roots of the word. Buy here for a dollar, sell there for two—a good business if you can do it with a million widgets, hopefully, all at once and on credit. An entrepreneur ideally needs few employees and little fixed overhead.

Just as a speculator capitalizes on distortions in the financial markets, an entrepreneur does so in the business world. The more distortions in the market, the more bankruptcies and distress sales, the more variation in prosperity and attitudes between countries, and the more opportunities for the entrepreneur.

The years to come are going to be tough on investors and businessmen but full of opportunity for speculators and entrepreneurs. Keep your passport current, your powder dry, and your eyes open. I suggest you reform your thinking along those lines.

Innovation

The two mainsprings of human progress are saving (producing more than you consume and setting aside the difference) and new technology (improved ways of doing things).

Innovation takes a certain kind of mind and skill set. Not everyone can be an Edison, a Watt, a Wright, or a Ford. However, with more scientists and engineers alive today than have lived in all history put together, you can plan on lots more in the way of innovation.

What you want to do is put yourself in front of innovation; even if you aren’t the innovator, you can be a facilitator—something like Steve Ballmer was to Bill Gates—which will give you an excuse to hang out with the younger generation and play amateur venture capitalist.

This argues for two things. One is reading very broadly (but especially in science) so that you can more easily make the correct decision as to which innovations will be profitable. The other is building enough capital to liberate your time to try something new and perhaps put money into start-ups.

Hoarding

In the days when gold and silver were day-to-day money, “saving” was actually identical to “hoarding.” The only difference was the connotation of the words.

Today you can no longer even hoard copper coins because (unbeknownst to Boobus americanus) there’s very little copper left in the penny. It’s now 97.5% zinc. It will soon disappear from circulation anyway.

Let’s dismiss the foolish and anachronistic idea of saving dollars in a bank as well. So what can you save with in today’s monetarily distorted world? The answer is “useful things,” mainly household commodities. I’m not sure exactly how bad the Greater Depression will be or how long it will last, but it makes all the sense in the world to stockpile usable things in lieu of monetary savings.

The things I’m talking about could be generally described as “consumer perishables.” Instead of putting $10,000 extra in the bank to be inflated away, go out and buy things like motor oil, ammunition, light bulbs, toilet paper, cigarettes, liquor, soap, sugar, and dried beans. There are many advantages to doing this.

Taxes – As these things go up in price and you consume them, you won’t have any resulting taxes, as you would for a successful investment.

Volume Savings – When you buy a whole bunch at once, especially when Walmart or Costco has them on sale, you’ll greatly reduce your cost.

Convenience – You’ll have them all now and won’t have to waste time getting them later, especially if they’re no longer readily available. Expect shortages in the years ahead.

There are hundreds of items to put on the list and much more to be said about the whole approach. The idea is basically that of my old friend John Pugsley, which he explained fully in his book The Alpha Strategy. Take this point very seriously. It’s something absolutely everybody can and should do.

Agriculture

During the last generation, mothers wanted their kids to grow up and be investment bankers. That thought will be totally banished soon and for a long time. I suspect farmers and ranchers will become the next paradigm of success after being viewed as backward hayseeds for generations.

Agriculture isn’t an easy business, and it has plenty of risks. But there’s always going to be a demand for its products. Margins are low or non-existent at the moment. Corn, soy, coffee, cotton, and other agricultural commodities are currently selling for only a bit more than their cost of production, which is unsustainable. This means bargains are available now. Eventually, margins will go way up. There’s still plenty of potential farmland around the world that’s wild or fallow, but politics is likely to keep it that way. The population won’t be growing that much (and will be falling in the developed world), but some people will be wealthier and want to eat better. You want the kind of food that people with money prefer.

I’m not crazy about commodity-type foods, like wheat, soy, and corn; these are high-volume, industrial-style foods, subject to political interference. And they’re not important as foods for wealthy people, which is the profitable part of the market. Niche markets with niche products are the way to fly.

I suggest upmarket specialty products like exotic fruits and vegetables, fish, dairy, and beef. The problem is that in “advanced” countries like the US, national, state, and local governments often make small commercial producers’ lives absolutely miserable. Maybe you can grow stuff, but it’s extremely costly in terms of paperwork and legal fees to sell it, especially if the product is animal-based—meat, milk, cheese, and such. Niche foods are, however, potentially a very good business. Eternal optimist that I am, I see one of the many benefits of the impending bankruptcy of most governments as again making it feasible to grow and sell food locally.

Above all, this isn’t the time for business as usual. You’ll notice that “Working in a conventional job” didn’t occur on the list above. And I pity the poor fools working for some corporation and hoping things get better.

Editor’s Note: A severe financial hurricane far greater than what we’ve seen in 2007 is on the horizon. And most investors won’t be prepared for what’s coming. That’s why Doug Casey and his team have prepared a timely video that addresses the coming crisis and what you could do to protect yourself.

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No One Has a “Fair Share” of Taxes – by Brian McGlinchey – Stark Realities with Brian McGlinchey

Posted by M. C. on July 19, 2021

There’s nothing fair about the coerced funding of unlawful, wasteful and morally repugnant pursuits

https://starkrealities.substack.com/p/no-one-has-a-fair-share-of-taxes

Brian McGlinchey

A recurring theme in national tax debates is the idea that everyone should pay their “fair share” of taxes.

While that aspiration’s validity is widely taken for granted, the stark reality is there’s no such thing as a “fair share” of federal taxes.

To understand why, let’s first scrutinize what’s meant by “fair.” When paired with “share,” the most fitting definition is “reasonable, right and just.”

If the United States government were limited to its only morally sound function—protecting rights, liberties and lives—perhaps one could entertain the theoretical notion of a “reasonable, right and just” share of the cost.

However, that ideal is far from today’s grim reality, as tax revenue is used to assault rights, liberties and lives of Americans and people around the world—to say nothing of the sprawling waste and cronyism associated with a 2021 budget of $6.8 trillion.

So tell me:

  • What exactly is my “fair share” of the Office of Foreign Assets Control (OFAC), which enforces economic sanctions that purposefully inflict suffering on innocent civilians in foreign lands?
  • What’s my fair share of the tyrannical practice of civil asset forfeiture, in which cash and other property is seized from citizens without any requirement to file charges?
  • What’s my fair share of the $1.2 trillion allocated in 2021 for the unconstitutional Departments of Housing and Urban Development, Labor, Education and Transportation, and Small Business Administration?
  • What’s my fair share of the cages in which the government confines people for choosing to intoxicate themselves with a plant or a powder rather than a bottle?
  • What’s my fair share of the several trillion dollars spent on the overwhelmingly pointless war in Afghanistan or the even more catastrophic invasion and occupation of Iraq?
  • What’s my fair share of so-called “Covid relief” money used to bail out fiscally irresponsible state and local governments and pay unemployed people more than they were making on the job?
  • What’s my fair share of the jaw-dropping $81 million the CIA paid to two depraved psychologists who crafted the agency’s immoral and ineffective post-9/11 torture program?
  • What’s my fair share of the unjust prosecution of journalist Julian Assange for publishing documents that revealed wrongdoing and embarrassed powerful politicians?
  • What’s my fair share of the $3.8 billion handed over to the Israeli government this year—with every one of those dollars violating a U.S. law?
  • What’s my fair share of the $1.6 trillion cost of the snakebit, contractor-enriching F-35 fighter jet program—which the Pentagon already wants to replace with something else?
  • What’s my fair share of the ongoing salary of the U.S. Central Command’s General Kenneth F. McKenzie, who betrayed his oath to the Constitution by carrying out President Biden’s unlawful orders to bomb Syria?
  • What’s my fair share of $1.5 million spent encouraging eastern Mediterranean youth to stop smoking hookah?

Anticipating objections, please note that the moral standing of federal income taxation isn’t buttressed by whatever few authorized, proper, efficient and beneficial undertakings it finances.

Let’s say your homeowners association does a fine job providing basic services and maintaining common facilities, and you contentedly pay your annual “fair share” of $2,500.

However, the HOA then announces it will:

  • Spend $80,000 to impose unemployment, malnutrition and the degradation of medical services in a neighborhood across town
  • Give a contractor friend of the HOA president $200,000 to do $50,000 worth of sidewalk work
  • Pay two men $90,000 a year to torture suspected car burglars and vandals

Shrugging off your objections that the proposed new undertakings are immoral, corrupt, wasteful and unauthorized by the HOA bylaws, the board informs you that—using the same allocation method as before—your dues have doubled to $5,000.

“You may not like everything we’re doing now,” they say, “but don’t forget—some of the money goes to plow snow and maintain the swimming pool. You benefit from that.”

Given how half the money will be used, do you think one can rationally insist it’s only “fair” that you pay the $5,000?

For the record—and the benefit of our government monitors—I pay every dollar demanded by the federal tax code. I pay not because it’s the right thing to do, but because it’s the coerced thing to do. And if the lawless, immoral HOA threatened to lock you in the clubhouse basement if you didn’t fork over the $5,000, I’m sure you’d pay them too.

But, like me, you’d thoroughly reject the idea that there can be anything “fair”—that is, reasonable, right and just—about your share of the coerced funding of unlawful, wasteful and morally repugnant pursuits.

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The Feds Collect Most of the Taxes in America—So They Have Most of the Power | Mises Wire

Posted by M. C. on June 25, 2021

As the old saying goes, he who pays the piper calls the tune, and with states playing the part of junior partner in the taxation game, we should expect them to be junior partners in every other sense as well.

https://mises.org/wire/feds-collect-most-taxes-america-so-they-have-most-power

Ryan McMaken

In 2021, it’s clear Americans now have thrown off any notions of subsidiarity and instead embraced the idea that the federal government should be called upon to fund pretty much anything and everything. From “stimulus checks” to “paycheck protection,” it’s assumed an entire national workforce can be propped up by federal spending. Moreover, in the wake of 2020’s covid recession, every pressure group, from local governments to weapons manufacturers, looks to the federal government to offer ever larger amounts of federal spending, ladled out from the federal pot of more than $6 trillion of annual spending. Need some “infrastructure”? The federal government will pay for it. Need a bailout? You know where to go. 

And how is all this spending possible? Naturally, it can only happen when governments tax or borrow. And the federal government does a lot of that. Moreover, the federal government can borrow in increasingly stunning amounts thanks to the monetization of debt going on at the central bank. 

The Feds Tax Us a Lot More Than the States

But even if we ignore all the ways the federal government can spend at astronomical levels thanks to huge deficits and monetary tricks, we find the feds are still very much in the game of collecting good old-fashioned taxes. And lots of them. Moreover, the feds are collecting a lot more in taxes than even all states and cities combined. When it comes to taxes, the federal government is the biggest game in town, and it should surprise no one that everyone is looking to DC for some easy cash. We might hear a lot about how “blue states” are levying crippling taxes on their residents. But not even the governments of California or New York have anything on the federal government when it comes to extracting wealth from the taxpayers in America. 

According to a 2018 study from the Tax Policy Center, for example, “Federal, state, and local government receipts totaled $5.3 trillion in 2016. Federal receipts were 65 percent of the total, while state and local receipts (excluding inter-governmental transfers) were 20 percent and 15 percent, respectively.”

State and local governments may certainly be taking their pound of flesh from the taxpayers, but the fact is the federal government is taking a whole lot more.

Indeed, contrary to the US’s reputation for “local control,” the United States is not particularly decentralized when it comes to tax revenues and government spending. When it comes to taxation, the central government dominates in America. In in his study on taxation, for example, Anwar Shah categorizes the United States as “centralized,” noting—with numbers similar to those of the Tax Policy Center—that the federal government collects more than 60 percent of all tax revenue in the nation. This puts the US in the same category—according to Shah—as Brazil and Russia.

On the other hand, only 37 percent of all tax revenue is collected by the central government in Switzerland, a “decentralized” tax system according to Shah.1

In other words, the state and local governments in Switzerland collect most of the taxes, while the situation is reversed in the United States.

This becomes even more clear when we look at tax collection on a state-by-state basis.

Using 2019 data from the IRS we see that total federal tax collections coming out of California amounted to approximately $472 billion. But state tax collections totaled about $188 billion.2 Put another way, the total state tax bill in California was 39 percent the size of the federal tax bill. Or, for every dollar the federal government collects from Californians, Californians pay their state government 39 cents.

The difference is even more obvious in many other states. In Florida in 2019, the federal government collected $210 billion from the taxpayers. The State of Florida, meanwhile, collected $44 billion. In other words, for Florida residents, Florida’s tax bill was only one-fifth the size of the federal tax bill.

rev
Source: Internal Revenue Service, “Table 5: Gross Collections, by Type of Tax and State, Fiscal Year 2020″; and the US Census Bureau’s “2019 Annual Survey of State Tax Collections by Category Table.” 

Even in big states with huge tax hauls like New York, Illinois, and Pennsylvania, state tax collections don’t even begin to rival the taxes pulled in by federal payroll taxes and income taxes.

In fact, no state collects as much in taxes as the federal government collects. Hawaii comes the closest, where Hawaii residents pay 88 cents in state taxes for every dollar collected by the federal government. But nearly all states collect less than fifty cents for every dollar collected by the federal government.

rev
Source: IRS, “Table 5: Gross Collections, by Type of Tax and State, Fiscal Year 2020″; and the Census Bureau, “2019 Annual Survey of State Tax Collections by Category Table.”

Local governments tend to collect an even smaller amount than states when compared to federal spending. 

The political implications of this are large. Thanks to the Sixteenth Amendment, the federal government is able to tax Americans directly, and it does so in amounts that are usually more than double what the state governments pull in. This puts an enormous amount of power in the hands of federal officials, and it means fiscal power in the United States mostly resides in the hands of federal policymakers. (We could contrast this with Switzerland, where the federal power to tax expires without an affirmative vote extending this power every ten years or so.)

It’s a big reason why we’re now seeing state governments go to the federal government seeking bailouts—and why interest groups spend so much time and energy focusing on federal laws, taxes, and regulations. It’s only natural that they should. Washington, DC, is where most tax money goes in America, so we should expect to find most of the political power there as well. Once we consider that the federal government—with the help of the central bank—can spend far beyond even what it collects in taxes, we should not be surprised that in times of fiscal crisis, state and local governments go running to the feds. As the old saying goes, he who pays the piper calls the tune, and with states playing the part of junior partner in the taxation game, we should expect them to be junior partners in every other sense as well.

Author:

Contact Ryan McMaken

Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power&Market, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado and was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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Of Two Minds – What’s Yours Is Now Mine: America’s Era of Accelerating Expropriation

Posted by M. C. on April 27, 2021

The takeaway here is obvious: earn as little money as possible and invest your surplus labor in assets that can’t be expropriated. Develop low-overhead gigs and enterprises that are 100% yours so you can legitimately write off expenses and control how much work you decide to take on. Keep accurate records and pay whatever taxes are due, but by minimizing net income then taxes will be modest. Invest your best self, time and energy in assets that can’t be assessed, taxed or expropriated: your skills, networks, value you create and invest in your own self-sufficiency, sharing and good living of the kind that can’t be bought or sold or expropriated.

https://www.oftwominds.com/blogapr21/expropriation4-21.html

Charles Hugh Smith

The takeaway here is obvious: earn as little money as possible and invest your surplus labor in assets that can’t be expropriated.

Expropriation: dispossessing the populace of property and property rights, via the legal and financial over-reach of monetary and political authorities.

All expropriations are pernicious, but the most destructive is the expropriation of labor’s value while the excessive gains of unproductive speculation accrue to the elite that owns most of the nation’s wealth.

In a nation in which the leadership has finely honed the art and artifice of legalized looting and financial legerdemain, it’s not surprising that the expropriation of labor’s value takes many forms. For the self-employed and small business proprietor, the list is practically endless:

1. Proliferating junk fees for permits, licence renewals, applications, late fees, penalties, fines for violating obscure regulations, etc. (Never mind if you’re losing money; by definition, as a business owner you’re “rich” and deserve petty expropriations. If you’re Amazon, however, we’ll shower you with subsidies and tax breaks.)

2. Sky-high liability insurance, disability insurance and workers compensation insurance, because all the fraud and friction in these systems adds expense and you’re the one who will pay for it all.

3. Sky-high rent. Now that the Federal Reserve jacked up the “market value” of a $1 million commercial building to $10 million via asset inflation, rents have soared even though no improvements have been made to the tenants’ spaces. Thanks to the Fed, rents are many multiples of what they would be if the Fed hadn’t jacked up real estate to absurd overvaluations.

4. Taxes on wages. Consider the Self-Employed in a High-Tax State: let’s start with the 15.3% federal self-employment tax on wages up to $142,000, then add federal tax rates that quickly reach 32% and up and state taxes that hit 10% and higher in high-tax states, and then don’t forget the extra 3.9% Medicare tax above $125,000, and when we add all this up, the total tax rate exceeds 61%. (You want to quibble? OK, make it 55%. How much difference does this make? None.)

Now this may be acceptable in Scandinavian nations where you receive virtually free healthcare and higher education, but here in the Accelerating Expropriation USA, the Self-Employed in a High-Tax State has to pay insanely costly healthcare insurance out of the 39% that’s been oh-so-generously left to live on, as well as the insanely high student loans that were taken out to attend university.

Factor those in and the Self-Employed in a High-Tax State gets a third or less of her labor’s value. This only rises slightly in so-called lower-tax states, which tend to compensate for lower income taxes with high sales taxes and property taxes (“they get you coming and going.”)

Inflation is stealth expropriation, and like all expropriation, we’re told it’s for our own good, just like any other beating delivered by authorities. So as the Fed pushes asset inflation to Mars and whines that real-inflation isn’t high enough yet, the Self-Employed in a High-Tax State are experiencing a monthly expropriation of the purchasing power of what little labor value has been left to them.

I received an insightful email on this topic from A.C.:

“Expropriation.

Once you’ve had it done to you personally (as I did through my business) you view the world in a whole new light.

Without assets in which you can store the excess value of your labor minus the worry of debasement or theft, the incentive to create that excess goes away. That’s why the BLS ‘take this job and shove it’ JOLT measure is staying so stubbornly high.

Unfortunately, it’s that excess labor that funds what we call civilization.

People without the margins which excess labor can create tend to revert, for their own security, to community groupings based on familial bonds. They’re a store of value that’s stable and can’t be inflated away.

Those without such bonds are SOL. Hunger goes a long way in mitigating the personality disorders which impair the creation of such bonds.”


Here’s the takeaway: Any “wealth” denominated in financial instruments will be expropriated by one means or another, so “wealth” has to be denominated in some other “currency”, social, cultural, skills / intellectual, that is beyond the grasp of monetary and political authorities. This is the primary reason why crazy risky speculation is being pursued with such intensity: there is no way to escape the grinding impoverishment of expropriation for most wage-earners except to make more “wealth” via crazy-risky gambles than is being expropriated.
The Only Way to Get Ahead Now Is Crazy-Risky Speculation.

There’s another dynamic few grasp: When the Empire runs out of colonies to exploit, it brings its expropriation machinery home to stripmine the domestic populace. I explained this dynamic back in 2012:

Neofeudalism and the Neocolonial-Financialization Model (4/24/12)

Welcome to Neocolonialism, Exploited Peasants! (10/21/16) October 21, 2016

Why are we not surprised that as expropriation accelerates on all fronts, the Middle Class Now Holds Less Wealth than Top 1 Percent? (brookings.edu) Thanks to the magic of pay-to-play “democracy,” the super-wealthy and corporate elites escape all the expropriation machinery stripmining wage earners. The corporate taxes collected are a tiny slice of the hundreds of billions corporations spend on stock buybacks, the only purpose of which is to enrich insiders and the super-wealthy who own most of the nation’s financial assets.

The takeaway here is obvious: earn as little money as possible and invest your surplus labor in assets that can’t be expropriated. Develop low-overhead gigs and enterprises that are 100% yours so you can legitimately write off expenses and control how much work you decide to take on. Keep accurate records and pay whatever taxes are due, but by minimizing net income then taxes will be modest. Invest your best self, time and energy in assets that can’t be assessed, taxed or expropriated: your skills, networks, value you create and invest in your own self-sufficiency, sharing and good living of the kind that can’t be bought or sold or expropriated.

I cover these topics in greater depth in my books:

Get a Job, Build a Real Career, Defy a Bewildering Economy

An Unconventional Guide to Investing in Troubled Times

Money and Work Unchained

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Old Yellen

Posted by M. C. on April 6, 2021

May be a cartoon of 2 people and text that says 'Are companies leaving because the taxes in theUS are too high? 冊 @a No, it's because the taxes in 101 other countries are too low'

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Erie Times E-Edition Article-Highways and jobs –

Posted by M. C. on April 1, 2021

Economics expert Biden expects US to believe corporations pay taxes. Yes, they write the check but corporate taxes are costs of business. They are included in your price.

https://erietimes-pa-app.newsmemory.com/?publink=3cf7250a3

President Joe Biden’s $2trillion plan Wednesday to rebuild the nation’s aging infrastructure, support electric vehicles and clean energy, and boost access to caregivers and their pay represents a massive undertaking that would be the centerpiece of his economic agenda.

Biden wants to raise taxes on corporations to pay for the eight-year package. The proposal would increase the corporate tax rate to 28% and overhaul how the U.S. taxes multinational corporations.

Even as infrastructure generally has widespread bipartisan support, Biden faces a giant challenge. Republicans have balked at the suggestion of tax hikes and warned they would oppose a package that strays from core transportation infrastructure.

See story, Page 10A

The proposal for improving infrastructure includes fixing the 10 most ‘economically significant’ bridges in the U.S. Getty Images

President Joe Biden’s $2trillion infrastructure package would boost access to caregivers and also boost their pay. Yuki Iwamura/AP file

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If Deficits Don’t Matter, Why Bother with Taxes? | Mises Wire

Posted by M. C. on March 26, 2021

Kelton’s answer? Taxes would still be needed, because they make us poor. And because they can punish people she doesn’t like.

Specifically, Kelton likes that taxes “remove dollars from our hands, so we can’t spend them,” leaving more purchasing power for the government. So taxes make the people poor, and that’s a selling point to her, presumably because she thinks governments are really good at lifting people out of poverty. Anybody who’s spent time in America’s inner cities, where government money is pretty much the only money, might disagree.

https://mises.org/wire/if-deficits-dont-matter-why-bother-taxes

Peter St. Onge

On March 18, Joe Wiesenthal of Bloomberg Markets had MMT economist Stephanie Kelton on the show. If you’re not familiar with modern monetary theory, they think governments should print more money because deficits aren’t a big deal. At one point in the show, Wiesenthal asked, “If we don’t need to worry about deficits, why do we have taxes?” Kelton’s response was illuminating.

Now, the traditional excuse for taxes is, paraphrasing Oliver Wendell Holmes, that they are the “price of civilization.” Skeptics point out that, historically, societies with very low taxes were often far more civilized—think the Dutch Golden Age, Islamic Golden Age, Victorian England, the pejoratively named “Gilded Age” in American history—that thirty-year golden age when almost everything useful was invented. And, yet, throughout that period, federal receipts were one-fifth what they are today.

Why so much civilization? Because much of what governments do today was done by charities or businesses competing for customer dollars instead of seizing their budget in taxes. When doctors, firefighters, and schools have to satisfy customers, things get quite civilized.

Still, even if we accept a “night-watchman state” argument for, say, national defense or salaries for Supreme Court justices, it gets tricky if government can simply print up the fresh money to pay for all that civilization.

Kelton’s answer? Taxes would still be needed, because they make us poor. And because they can punish people she doesn’t like.

Specifically, Kelton likes that taxes “remove dollars from our hands, so we can’t spend them,” leaving more purchasing power for the government. So taxes make the people poor, and that’s a selling point to her, presumably because she thinks governments are really good at lifting people out of poverty. Anybody who’s spent time in America’s inner cities, where government money is pretty much the only money, might disagree.

Ah, but it’s not just about spending our money more wisely than we ever could, Kelton adds two secondary reasons she loves taxes: to punish particular people by redistributing their money, and to punish people for doing things she doesn’t like. Such as failing to buy energy-efficient appliances (no, really). In other words, social engineering with carrots for your friends, sticks for your not-so-friends.

Aside from the morality of preying on our neighbors, demanding they pay an ever-growing “fair share” that invariably exceeds what, say, a journalist or professor pays, using taxes for redistribution and punishing—“nudging,” in the fashionable parlance—carries enormous collateral damage. Because redistribution arranges society into hostile factions either trying to violently dispossess one another or defending against that dispossession. Moreover, redistribution isn’t simply innocently shuffling the chips; it is wholesale destruction. A paper coauthored by Christina Romer, former chair of Obama’s Council of Economic Advisors, found that each dollar in government spending leads to between $2 and $3 in lost economic activity. A separate study by Harvard economist Martin Feldstein came to similar deadweight estimates that “may exceed $2 per $1 of revenue.” In other words, in order to move a dollar, you have to destroy at least two to three dollars.

There is a similar mix of moral and practical costs to using predatory taxes for social engineering. It also breaks the social compact to live and let live, rendering our every decision subject to public vote, from what we eat, to where we vacation, to what kind of bag we use to carry our groceries. There is nothing outside the realm of the nudgers, no detail too small.

Moreover, by mass imposition of what are effectively judicial fines for noncrimes, such taxes can achieve a level of control that would never be constitutional if written as law. For example, today in the United States, 90 percent of students attend public schools, despite the terrible quality of education. Why do they stay? Because each voter must pay for public schools whether or not they use them, but would have to shoulder $11,200 per child per year for opting out of the public system, while continuing to pay that $12,600 per year in taxes for the “free” public system. Especially for the working class, this penalty becomes prohibitive for all but the most committed.

Pair these facts—no detail too small for the social engineers and their ability to achieve near-universal obedience via fines and subsidies—and we risk a totalitarian “permissioned” society where we are free on paper, but using that freedom comes with ruinous fines.

If, indeed, the only remaining justification for taxes in an inflationary regime is to redistribute and punish—to erode social harmony in a fiscal war of all against all while impoverishing society and enabling a creeping totalitarianism—then it is much closer to the mark that modern taxes have become not the price of civilization, but the predator of civilization. Author:

Peter St. Onge

Peter St. Onge blogs on economics at Profits of Chaos.

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Americans Excitedly Anticipate Getting Paid With Their Own Money

Posted by M. C. on December 22, 2020

Americans from all walks of life said they couldn’t wait to receive a check with a small percentage of the money the government had already taken from them.

A small percentage of the population said they thought it would be way more efficient for the economy if the government just didn’t take the money in the first place. These people were shouted down as “libertarian conspiracy theorist wackos” and told to move to Somalia.

https://babylonbee.com/news/americans-excitedly-anticipate-getting-paid-with-their-own-money?fbclid=IwAR04Mzx4yYFbf7_CXnvSTfJwsf94eR80jJxswHIGjlUnHypdof4tMM_Jl9g

U.S.—Americans have reported they’re very optimistic about the stimulus package passed by Congress last week. In particular, people all around the country are excited to get paid with a little bit of the money that they paid the federal government already.

Americans from all walks of life said they couldn’t wait to receive a check with a small percentage of the money the government had already taken from them.

“I can’t wait to get that $1,200.00 check of my own money,” said one man in Texas, rubbing his hands together. “Surely this will get the economy back on track.”

From the rich to the poor, American citizens spent many hours dreaming of all the things they will spend their newfound riches on. “With $1200, I could save enough to pay my taxes on time this year,” said one woman in Los Angeles. “Thanks so much, Congress. You’re the real heroes here.”

A small percentage of the population said they thought it would be way more efficient for the economy if the government just didn’t take the money in the first place. These people were shouted down as “libertarian conspiracy theorist wackos” and told to move to Somalia.

Sadly, by the time all the administration costs, government pet projects, and handouts were factored in, the stimulus each American was to receive became a negative amount, forcing Congress to raise taxes to pay for a new stimulus bill.

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Don’t ‘Californicate’ The Rest Of America – Issues & Insights

Posted by M. C. on November 20, 2020

It isn’t pretty, but that’s precisely where California is now. Other states should be concerned. As Instapundit’s Glenn Reynolds observes, some tax refugees from California and other “migrants from high tax states might bring their political attitudes with them, moving to new, low-tax states for the economic opportunity but then supporting the same policies that ruined the states they left.”

Never mind that the party for his buddy, himself a lobbyist, also included a bunch of medical industry lobbyists. The photos show not only more people in attendance than allowed under state guidelines, neither the governor nor his wife were wearing masks.

Newsom called it a “bad mistake.” A better term might be rank hypocrisy, as Newsom himself admitted: “I should have stood up and … drove back to my house … the spirit of what I’m preaching all the time was contradicted,” he said. “ I need to preach and practice, not just preach.”

Nice words, but Newsom isn’t alone in his two-faced behavior. This week, a handful of California legislators are enjoying an expenses-paid five-day vacation in Hawaii, where they’re attending the annual Independent Voter Project conference at a high-end resort.

https://issuesinsights.com/2020/11/19/dont-californicate-the-rest-of-america/

By I & I Editorial Board

Photo: Gage Skidmore, Creative Commons Attribution-Share Alike 2.0 Generic license

California was once a shining exemplar of everything a state should be — inventive, creative, energetic, freewheeling, fast-growing and conservative. No more. Today, it’s a giant welfare economy run by far-left kleptocrats and union shills who can’t even keep the lights on. As hundreds of thousands of Californians flee the once-Golden State, the rest of America should ask itself: Will they bring their politics with them?

Put another way, will California’s broken model be adopted by much of the rest of the country, turning reliably red states blue and seeding the nation with high taxes, more rules, corrupt politicians, and slow growth?

We hope not, but given the 2020 election, it’s not an idle question. California’s political class is widely regarded as among the most corrupt, irresponsible, hypocritical, hard left and incompetent of any comparable group of state politicians in the country, which is saying a lot.

The troubles have been on full display this week.

A week after imposing sweeping new restaurant closures across much of the state and telling Californians not to gather in groups for Thanksgiving, California Gov. Gavin Newsom admitted on Monday that he attended a birthday party for an old friend at an ultra-swank Napa Valley restaurant, The French Laundry.

Never mind that the party for his buddy, himself a lobbyist, also included a bunch of medical industry lobbyists. The photos show not only more people in attendance than allowed under state guidelines, neither the governor nor his wife were wearing masks.

Newsom called it a “bad mistake.” A better term might be rank hypocrisy, as Newsom himself admitted: “I should have stood up and … drove back to my house … the spirit of what I’m preaching all the time was contradicted,” he said. “ I need to preach and practice, not just preach.”

Nice words, but Newsom isn’t alone in his two-faced behavior. This week, a handful of California legislators are enjoying an expenses-paid five-day vacation in Hawaii, where they’re attending the annual Independent Voter Project conference at a high-end resort.

The Associated Press says the event “includes policy discussions and schmoozing with corporate sponsors.”

“Organizers booked about 50 rooms and have about 120 people staying at the Fairmont Kea Lani on Maui’s southwest shore,” the AP reported.

In short: One set of rules for average Californians, who have just had a new, strict lockdown imposed, and another for the state’s political elite.

These are just the most recent examples of the misrule and mismanagement of California, which has become a de facto one-party state under the Democrats, who were way ahead of the national curve in turning the state’s elections into fraudulent farces that encourage cheating which systematically benefits their party.

Faced with such poor governance, many Californians have said, “Enough!”

With taxes soaring, quality of life plunging as violent crime and homelessness surge, home prices out of reach, nonsensical government regulations spreading, an increasingly heavy-handed government and a slumping job market, California now ranks 47th out of 50 states on the widely followed Economic Freedom Index issued annually by Canada’s Fraser Institute.

As their future prospects dim, many longtime and even native Californians are leaving for better times in neighboring states such as Nevada, Arizona, Idaho, Utah and New Mexico.

More recently, the departing have moved even farther away, relocating in Texas, Tennessee, the Carolinas, Georgia and Alabama. It’s a “reverse Beverly Hillbillies” migration.

From 2007 to 2016, some 7 million Californians (gross total) left the state, most of them middle-class or upper-class in income. In 2018 alone, the number of economic and quality-of-life refugees surged by nearly 700,000, and the flood appears to be continuing today.

Here’s the problem. It’s one thing to move from a state because it’s going in the wrong direction. It’s quite another to move and not understand that you had something to do with it.

Looking at California’s surrounding states, once bright red in their political hue, there’s an increasing amount of purple and even blue. Former Californians who didn’t like what happened in their state have held on to their foolish leftist voting habits and beliefs, and repeated the pattern elsewhere.

In short, Cali, not to mention New York and other high-tax, high-regulation states that punish businesses and citizens alike, are hemorrhaging citizens to more-friendly states around the country.

The trends in California are especially ominous. As City Journal’s Steve Malanga pointed out in a piece earlier this year dubbed “Calculating the Californication,” a Berkeley Institute of Governmental Studies, found that 52% of those living in California were considering moving elsewhere.

Among those, more than 71% blamed soaring housing costs and 58% cited high taxes, while almost half pointed to the state’s increasingly radical left, toxic political environment — everything from the “cancel culture” and rampant political correctness, to a reliance on green energy, a crackdown on religion, the release of violent felons, and a decaying, union-run education system that teaches kids to hate America but not basic skills.

As evidence of the latter, one need only point to a recent headline: “Huck Finn, To Kill A Mockingbird, Other Classic Books Banned In California Schools For ‘Racism.’ ” Any wonder that a majority of confused, ignorant young people now embrace socialism and its ideas, while rejecting the greatest wealth- and freedom-creating system ever?

As for those who are leaving, numbers don’t lie.

“Conservatives and moderates are the most unhappy with the state and most anxious to leave,” says Malanga. “Liberals, by contrast, are mostly staying put, and some think life in California is just great. Only 38% of Democrats said that they were considering leaving, compared with 55% of independents and 71% of Republicans.”

As Michael Anton wrote in his recent book, The Stakes: America at the Point of No Return,” which details California’s dystopian government and dysfunctional political culture:

In barely one generation … California was … transformed into a left-liberal one-party state, the most economically unequal and socially divided in the country, ostensibly run by a cadre of would-be Solons in Sacramento and in the courts, but really by oligarchic power concentrated in a handful of industries, above all Big Tech and Big Hollywood.

The middle class — what’s left of them — continue to flee high taxes, higher costs, cratering standards of living, declining services, deteriorating infrastructure, worsening quality of life, and an elite that openly despises them and pushes policies to despoil and dispossess them.

It isn’t pretty, but that’s precisely where California is now. Other states should be concerned. As Instapundit’s Glenn Reynolds observes, some tax refugees from California and other “migrants from high tax states might bring their political attitudes with them, moving to new, low-tax states for the economic opportunity but then supporting the same policies that ruined the states they left.”

American states, beware. Take in as many Californians as you wish. But don’t accept California’s far-left, utterly broken governance and cultural model. It’s not “progressive” in any true meaning of the word. And once adopted, it will ruin your own state.

— Written by the I&I Editorial Board

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