by | BLOG, FREEDOM, MEDIA
Whenever anyone talks about George Floyd, we are immediately reminded that he was a black man unjustly killed by a white policeman and that he is now a symbol of racial justice. The problem is that racism was not even a factor in Floyd’s death — but you won’t ever hear about it.
This past April, the Attorney General for Minnesota, Keith Ellison, declined to pursue a hate crime charge against Derek Chauvin. During a CBS News interview when Ellison was asked on the matter, he stated, “I wouldn’t call it that because hate crimes are crimes where there’s an explicit motive and of bias. We don’t have any evidence that Derek Chauvin factored in George Floyd’s race as he did what he did.” It’s worth it to note that Ellison himself is black. When pressed further by Scott Pelley, Ellison explained “we only charge those crimes that we had evidence that we could put in front of a jury to prove.”
George Floyd’s death was unnecessary and cruel. It was an act of police brutality. It’s unfortunate, therefore, that no one has bothered to take an interest in whether (or not) the Floyd killing had anything to do with racism.
by | BLOG
How is it that serious economists and lawmakers want to follow FDR’s economic policies as some sort of model to follow? People who want to revive his ideas are absolutely insane. FDR took a recession that was ending (it was already four years old when he took office in 1933) and he single-handedly created the longest depression in the history of the United States that virtually lasted ten full years! Furthermore, the only reason it ended was not anything FDR did, but it was economic growth related to WWII.
(One might argue that technically we were not in a depression for the full ten years because some parts of the economy were growing. But going from 18% unemployment to 14% unemployment is still depression in my book.
There is a real concern with Biden mimicking FDR’s playbook. After all, that’s what Obama did — and Biden was his Vice President! Obama’s policies resulted in the poorest recovery since FDR’s New Deal by doing what FDR did: raising taxes, over-regulating businesses, giving organized labor excessive power, instituted policies that discouraged people from working and hurt international trade.
What is Biden doing? Ending Trump tax cuts, raising the top federal income-rate back to 39.6%, raising the corporate income tax rate from 21% to 26.5%, increasing regulation, expanding energy policy and has even created a Civilian Climate Corp for jobs, reminiscent of the old FDR Civilian Conservation Corp. With low unemployment and many areas struggling to find enough workers to fill open positions — like the service industry and manufacturing. As the economy is well underway recovering from COVID, the last thing we need to do is to spend billions of dollars on a new big government program that provides climate-related jobs.
Choosing to model FDR is only going to cause serious economic problems for this country, yet Biden doesn’t seem to think that’s a problem. Like FDR and Obama, continued government interventions and expanding government programs -far less productive than the private sector – will stifle economic growth. Because of this, we face an unnecessarily prolonged economic recovery.
by | BLOG
We have a certain tax rate that exists today because we have to raise a certain amount of revenue. Remember, the only reason we have taxes is to pay for things that the government needs to do under the provisions of the Constitution.
The revenue from the income tax is derived from applying a certain tax rate to the net profit of what people are making. The higher the rate, the more it will stifle economic activity and disincentivize earning more in order to avoid paying a high tax rate.
It seems that Pro Publica doesn’t actually understand how the tax system works. The problem with their latest analysis is that they argue high income earners are somehow getting away with something by not paying taxes on unrealized earnings or gains, but this is something completely different and should be treated as such. If your tax is based on net profit, as discussed above, that should be one rate. But if you decide that the tax should be based on gross receipts — you must actually make the rate lower because it is taxing a broader base.
In other words, Pro Publica is looking at the situation completely backwards. If tax collection is based on a base that includes unrealized income, the rate would be confiscatory. For instance, the death tax is already a double tax; you are paying taxes on income that you already paid taxes on when you earned it. To suggest that we should tax the unrealized gain on a death tax would actually be the equivalent to a triple tax — and from an equity point of view, it completely mocks the concept of fairness.
by | BLOG
Though I try to stick with taxes, politics, and economics, the recklessness and stupidity with which Anthony Fauci is directing Covid health policy can’t be ignored. One of the most incompetent and sad actions ever taken by this country has been to put Fauci in charge of messaging during this pandemic. The person in charge should have been a public health expert, someone who weighed pros and cons of pandemic decisions and made informed recommendations.
Fauci showed himself worthless for the job when, early on, he demanded lockdowns for the safety of people — but when asked if he weighed the negative health consequences of the lockdown against the negative health consequences of the virus he acknowledged he never thought of that.
He should have been fired then and there. Someone should have weighed all the health angles. If that wasn’t bad enough, not only is he ignorant as a public health expert, he is also political. How else can you explain his singling out of the South Dakota Motorway event last year as an example of a spreader event, (despite the fact that it had been held last year with minor consequences) while he hypocritically ignored events such as Obama’s birthday party and Chicago’s Lollapalooza.
by | BLOG
In a recent article in the Wall Street Journal, “Why the GOP Has Gone Quiet Over Tax Hikes,” Rahm Emmanuel suggests that the GOP has gone quiet over tax hikes because Biden’s new tax plan is popular. For someone who is supposed to know about economics, however, his ignorance is overwhelming.
Rahm claims that nearly 60% of Americans are bothered by rich people and corporations who don’t “pay their fair share.” But this very concept of “fair share” is just the repetition of a media sound byte not grounded in any reality. The wealthy here in the United States pay more in taxes than in any other developed company in the world, no matter how measured. Rahm specifically omits that from his article. In fact, all of his numbers are misleading or disingenuous. He likewise fails to note that almost half of US households pay virtually no income tax, while in the rest of the world even the lowest earning constituents contribute. Where was that in the article?
Rahm also claims that 66% of Americans think that their tax level they pay is fair, but it bears repeating that since 47% pay zero income tax, you have to assume that 66% includes the 47% who pay nothing. So in actuality, only 19% only think that, which probably includes the next tier of taxpayers — those who pay low (not zero) taxes.
Rahm also claims that Republicans think that Reagan, Bush, and Trump tax cuts yielded little-to-no direct benefit, but in reality, the economies that followed after each of those cuts were healthy and robust. Most recently, it was precisely Trump’s 2017 Jobs Act that brought the economy finally back to life (after Obama’s anemic term), until it was upended by the pandemic and prolonged shutdowns. Moreover, Rahm says that “Trump and Bush both sent the federal government deep into the red,” yet purposely excludes Obama’s excessive deficit spending which was double that of Bush!
Rahm opens his article with the line, “sometimes what people don’t say tells you more than what they do.” Ironically, this is exactly what Rahm does throughout his piece. By selectively omitting anything that doesn’t support his Democrat talking points, he paints an economic picture far different from reality all in the name of “tax fairness.” But that’s not really fair, is it?
by | BLOG
Mark Mill’s had an excellent piece recently in the Wall Street Journal entitled, “Biden’s Not-So-Clean Energy Transition.” In it, he lays out the hidden costs and pitfalls of Biden’s energy plans, a sentiment shared by the International Energy Agency (IEA) 287 page report on clean minerals.
The green and clean energy movement is a perfect example of Bastiat’s “seen and unseen.” Everyone says that clean energy, such as wind and solar, is clean and the cost of energy is zero, so how can you have anything better than that? What is seen are windmills and solar panels but what is unseen is what it takes to get there.
When talking about fossil fuels, opponents often focus on the externalities: they are bad for the environment, they produce large amounts of carbon dioxide, etc. But the externalities of wind and solar power are much bigger. For instance, you need rare earths and critical minerals for solar power, the panels have high replacement and repair costs, you need fossil fuel backup, and so forth. All of these unavoidable costs, however, are not factored in. The lowly windmill is even worse. You need excessive amounts of plastic and cement. They kill large numbers of birds and other animals. They require large tracts of land. The noise, the marine life, the visibilities are all “unseen” factors that are not considered when touting the clean energy “zero cost. But windmill externalities are actually so important and big enough that if we were to ramp up using windmills as a power source past 10%, it would completely change the landscape and maybe even the economy.
Mill’s synopsis is a good summary of the IEA report, showing the geopolitical dangers and the current lack of industries and infrastructures required to make the change to clean energy. Biden and others on the left would do well to brush up on their Bastiat and consider the “unseen” consequences of their energy plan.
by | BLOG
The recent exposé from Pro Publica which published sensitive tax information from wealthy Americans has caused quite a stir. Their justification to disclose “the tax details of the richest Americans” was based on the belief that “the public interest in an informed debate outweighs privacy considerations.” This is simply outrageous. Keeping individual taxpayer data private is the fundamental pillar under which the IRS can even ask individual’s for their personal information. The assertion that the ethics of collectivism is more important than rights of the individual — that others can come along and decide that they have more rights to your private affairs than you do – is just nonsense.
In a similar way, people need to understand just how egregious this breach of data is. Pro Publica “obtained the information from an anonymous source who provided us with large amounts of information on the ultrawealthy, everything from the taxes they paid to the income they reported to the profits from their stock trades.” Now, it is a fundamental principle of the IRS that any information given by a taxpayer to the IRS is absolutely confidential to the highest degree. Anyone who peeks at a tax return that is not under their purview typically results in being instantly fired. This is why people typically go after lawyers, accountants, banks, etc., to get copies of someone else’s return — because the IRS will never divulge taxpayer information.
It is outrageous therefore, that this trove of data was leaked, and it is even more outrageous if the source is actually from within the IRS. It is equally bad if the IRS was hacked. No one (except possibly Pro Publica) knows how this information was released. No one person working at the IRS should have had access to this volume of information. The IRS is conducting its own external and internal investigations because it takes taxpayer privacy extremely seriously. If it turns out that the anonymous sources originated within the IRS, this exposé becomes a breach of contract with all American taxpayers.
What’s even more outrageous is that some members of Congress didn’t immediately condemn this publishing of private tax data. Instead, Sen. Elizabeth Warren took the occasion to push her agenda, saying that “ Our tax system is rigged for billionaires who don’t make their fortunes through income, like working families do.″ Likewise, Sen. Ron Wyden, head of the tax-writing Senate Finance Committee, remarked that the information “reveals that the country’s wealthiest, who have profited immensely during the pandemic, have not been paying their fair share of taxes.”
These comments are not only economically and fiscally ignorant, but show an incredible misunderstanding of the basic principles that form our tax system. Elizabeth Warren’s ignorance is legendary. But Wyden, as head of Senate Finance, should be ashamed of himself. The crux of Pro Publica’s argument, that the rich aren’t paying their fair share (gullibly accepted by Warren and Wyden) factor in a statistical fallacy that somehow the calculations of an effective tax rate should factor in the fair market value (FMV) of all assets owned by an individual. This is reckless stupidity.
The fact that the initial response of these Senators was not full of outrage over the exposure of personal tax information is disgusting. They have no respect for their responsibility to protect the American taxpayer. Couple that with their economic ignorance and it is clear that they should resign immediately and disappear from the public square.
by | BLOG
The Tax Cuts and Job Act of 2017 was an important law that made some positive changes to the tax code. It reformed and reduced many regulations, thereby spurring economic growth, and got people to understand the importance of reducing marginal rates. On the corporate side, the large rate reduction (from 35% to 21%), move to territorial taxation, and expensing of equipment were terrific. However, on the individual side, Congress allowed politics to get in the way of real reform, and that is inexcusable.
Without any discussion, Congress eliminated the deduction for miscellaneous itemized deductions. This is truly the only legitimate deduction, and it is absolutely necessary to maintain the integrity of the tax code. It gives people the chance to write off expenses incurred to allow them to earn the income they are taxed on. For instance, under current tax law, a person who earns $100K in a venture but had to pay $30K for legal fees to get it, would be able to pay taxes on only the $70K net that was actually made. With the new change now removing the miscellaneous itemized deduction, the person will have to pay taxes on the full $100K!
Another deduction Congress removed summarily is the moving deduction. Similar to the miscellaneous itemized deduction, this is a real and actual expense that is incurred when moving to get a new job (in order to earn the income that will be taxed.) It was removed from the tax code without discussion, and should not have been.
The casualty loss deduction was also eliminated. This enabled you to deduct a loss that was due to a sudden, unexpected event, such as a fire, hurricane, or robbery. Now, if your house burns down, you can no longer write it off. The exception to this change is if your loss is in a federally-declared disaster area. So if your house burns down, you get no deduction. But if it burns down in a large wildfire that was declared a disaster, you can claim the deduction. This is egregious; the effect on the individual — the loss of a house — is absolutely the same. This deduction elimination is unacceptable.
Furthermore, the alimony deduction was thrown out. The alimony deduction is a mechanism that prevents an inequitable tax burden to be created when a married family unit is split into two. It is inequitable and mean-spirited to create a targeted tax burden on people who suffered a family breakup.
While eliminating these important and equitable donations, Congress left in place a number of purely political, social engineering deductions and credits. Congress left in a substantial part of the mortgage deduction, which is really nothing more than a government subsidy to the real estate industry. They left in energy credits, rehabilitation and low income housing credits, and the Alternative Minimum Tax (AMT). It’s disappointing to see Congress talk about simplicity, efficiency, and equitability, and then remove good provisions from the tax code while leaving in parts that are merely political.
