by | BLOG, LAW, NEWS, POLITICS
The government interference in the Hunter Biden tax case is simply astounding. Looking beyond the “sweetheart” (misdemeanor) deal that Hunter Biden received is something just as egregious; namely, the actions of the Justice Department in the entire ordeal. Here’s a sampling of their odious behavior:
1) Probable cause had been established by prosecutors to search a) Hunter Biden’s guest house in Delaware at President Biden’s home; and b) the Hunter Biden’s storage unit in Virginia, where it was likely important records had been kept. Instead, the Justice Department denied permission for the search warrants.
2) Whereas the Justice Department traditionally declines to investigate or indict serious matters within 60 days of an election, they did so for six months.
3) They warned Hunter’s attorneys about an forthcoming search warrant that was intended to gather evidence
4) They declined the ability to have key witnesses interviewed on important issues involving potentially Hunter and his father.
Indeed, it seems rational to conclude if the Justice Department had made different choices than the ones above, those might have led to unearthing tangible connections with Hunter and Joe Biden. Furthermore, the Special Agent report recommended six felonies and five misdemeanors for Hunter’s tax problems. And yet, the federal government allowed the statute of limitations for 2014 and 2015 charges to expire, something that is practically unheard of. Moreover, allowing the misdemeanor charges to proceed in lieu of felony charges violates the Tax Division Manual.
The irregular actions of the Justice Department have tipped the scales in favor of Hunter Biden for reasons that are specifically unclear, but easy to speculate about (i.e. Joe). It’s incredible how brazen the government has been able to be.
by | BLOG, ECONOMY, POLITICS, POTUS
The Committee to Unleash Prosperity recently reminded folks that the prospect of inflation was raised and rejected by a plethora of Nobel prize winning economists as early as last September. As Congress was debating Biden’s $5 Trillion Build Back Better plan, 17 economists signed an open letter urging passage of this atrocious spending bill (coming on top of an extra $3 trillion in spending, mind you).
The letter opened and closed with these two absurd statements: “The American economy appears set for a robust recovery in part due to active government interventions over the past year and a half” and “[the agenda] will ease longer-term inflationary pressures.” At the time of their writing, inflation was at (only) 6% and now we are past 8%. How much more egregious would things be had Congress actually passed this spending behemoth? And even more critically, how is it that 17 prize-winning economists managed to get their economic forecast so wrong?
Readers would be wise to steer clear of the following economists:
- George A. Akerlof, Professor, Georgetown University
- Sir Angus Deaton, Professor, Princeton University
- Peter Diamond, Professor, Massachusetts Institute of Technology
- Robert Engle, Professor Emeritus and Co-Director of the Volatility and Risk Institute, New York University
- Oliver Hart, Professor, Harvard University
- Daniel Kahneman, Professor, Princeton University
- Eric S. Maskin, Professor, Harvard University
- Daniel McFadden, Professor, University of California, Berkley
- Paul Milgrom, Professor, Stanford University
- Roger Myerson, Professor, University of Chicago
- Edmund S. Phelps, Professor and Director of the Center on Capitalism and Society, Columbia University
- Paul Romer, Professor, New York University
- William Sharpe, Professor Emeritus, Stanford University
- Robert Shiller, Professor, Yale University
- Christopher Sims, Professor, Princeton University
- Robert Solow, Professor Emeritus, Massachusetts Institute of Technology
- Joseph Stiglitz, Professor, Columbia University
It must also be noted that Paul Krugman, another Nobel winner, did not sign the letter but did actively discuss it in his NYTimes column.
These economists had exactly one job: to tell the truth about spending and inflationary policies, namely that increased government spending as a means of intervention will typically result in higher inflation. But they didn’t do that. They would rather tell Congress what it wants to hear, instead of what it needs to hear, and they ought to be ashamed.
by | BLOG, ECONOMY, FED, GOVERNMENT, POLITICS, TAXES
It’s kind of disgusting that when Congress talks about raising tax revenue, all the CBO thinks about and includes in their analyses is gross revenue. They don’t think about the costs of what the IRS, agencies, businesses, and taxpayers need to do to implement the policies that were created in order to raise that revenue. Those costs should always be factored in the computation and subsequently deducted to arrive at net revenue raised..
What’s happening now is that the compliance costs are not being considered. Congress says, for instance, that something will raise “$50 billion dollars” but then ignores that the complications, regulation issuance costs, compliance and other implementation expenses that will arise may cost $30 billion. So only $20 billion is actually raised. These hidden but true costs have to be included and come out of the CBO revenue forecast if we are to craft realistic, equitable, and efficient tax policy
by | BLOG, BUSINESS, ECONOMY, GOVERNMENT, POLITICS, TAXES
Have you ever heard any progressive who claims that the wealthy are not paying their “fair share” actually say what fair share is? Neither have I. It is probably because the wealthy in the US already pay a far higher percentage of income taxes than in any other developed country. Therefore, anyone who says the wealthy are not paying their fair share is either being a hypocrite or lying.
However, there is a group that is absolutely not paying their fair share. These are the vast number of the taxpayers who actually pay nothing. The Tax Policy Center’s newest report released in August 2021 found that in 2020, about 60.6 percent of households did not pay income tax, up from 43.6 percent of households in 2019; This closely mirrors the IRS preliminary estimate of 61.1 percent of households not paying income tax in 2020. It should be noted that much of the 2020 increase was due to pandemic-related factors, but the growing share of households paying no income tax should be kept in mind when evaluating the progressivity of the federal income tax system and proposed tax hikes on higher earners. There is virtually no other developed country in the world where this is the case.
This scenario reminds me of a true story from many years ago. When I was getting divorced, I was making about 75% of the money that my ex and I earned together. As part of our agreement, I asked her to pay 10% of the costs when our two kids went to college. At first she agreed; later on, however, she began to protest on the premise that if she got remarried and stopped working, she didn’t want to have to be responsible for having to pay the 10%! The fact that my ex had a responsibility to contribute toward college costs for her own children was totally lost on her. That’s what’s going on here. If the lower income earners don’t have any skin in the game, how can they be a responsible member of society? When they vote for new programs are they assuming that they have no obligation to pay any part of it?
The wealthy already pay a disproportionately high proportion of taxes. And yet Congress wants to fleece them more. They just assume that gullible taxpayers (I mean constituents) will just continue to vote for free stuff that others will pay for.
by | BLOG, CONSTITUTION, ELECTIONS, GOVERNMENT, POLITICS
There were several dozen proposed amendments to the huge stimulus bill that recently passed Congress. Many of them failed by a slim margin, but the votes were absolutely outrageous. It is worthwhile to remember these votes for 2022, as many of the Senators voted against their own constituents.
Here are some of the most notable ones:
The Cassidy Amendment, 1161: This would have “given some emergency assistance to non-public schools”, but it failed, so all of the $135 billion will go to public school and teachers unions.
The Fischer Amendment: This would have ensured that the “current laws and formulas for funding mass transit remained in place”, but instead it means that $5 billion in earmarked funds will go to New York’s system.
The Cruz Amendment 969: This would have provided “children with an option for in-classroom education instruction if the child’s local public school does not commit to re-opening to 5-day-a-week, in-classroom instruction for the remainder of the current school year and the 2021-2022 school year” but instead it means that the Democrats are still wedded to teachers unions than they are to education.
The Cassidy Amendment, 1162: This would have ensured that “the 2021 Recovery Rebates are not provided to prisoners” but instead the Democrats are giving taxpayer funds to felons.
The Cruz Amendment 968: This would have ensured that “ the 2021 Recovery Rebates are not provided to illegal immigrants” but this also failed.
The Daines Motion to Commit: This action would have supported building the Keystone XL Pipeline but instead means the irrevocable loss of jobs with Biden’s earlier Executive Action halting the project.
When political allegiance to the party line means that you vote against the very people who elected you, you deserve to be thrown out.
by | BLOG, CONSTITUTION, ECONOMY, FREEDOM, GOVERNMENT, HYPOCRISY, POLITICS, TAXES
On February 2nd Senator Elizabeth Warren announced that she will join the Senate Finance Committee, the committee tasked with writing this country’s tax laws. She stated, “I’m very pleased to join the Finance Committee, where I’ll continue to fight on behalf of working families and press giant corporations, the wealthy, and the well-connected to finally pay their fair share in taxes.”
Warren has often advocated for a wealth tax in the past, especially during her campaign last year for the Democratic presidential nomination. But now she is actually in a position to make proposed legislation happen. In fact, she’s promised that it will be her “first order of business.” This is wrongheaded on many levels, including fairness, constitutionality, impossibility of implementation, history of failure, negative effect on the economy, and morality.
Fairness: Senator Warren has always maintained that corporations and the wealthy are not paying their “fair share”. She has never addressed the question of what that “fair share” might be. That is not surprising, since corporations and the wealthy in the US pay a far higher share of the tax burden than is paid in virtually every other country in the developed world – and by a wide margin. This results not from very high rates, but rather from the fact that our poor and middle class – almost 50% of our population – pay almost no income tax. According to the Tax Foundation’s 2021 data analysis, in 2018 (the most recent figures available),“the top 50 percent of all taxpayers paid 97.1 percent of all individual income taxes, while the bottom 50 percent paid the remaining 2.9 percent.” Additionally, “The top 1 percent paid a greater share of individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent).” To add a wealth tax on top of the already extremely progressive tax system would be anything but fair.
The grotesque unfairness of a wealth tax is even more evident when it is actually calculated. This can be seen by the following example: Assume that an investor with $100M net worth in the present low interest environment (and because not all of his wealth is appreciating assets) has an average rate of return of 4%. His income therefore is $4 million. The investor would pay an income tax rate of about 45% total combined federal/state/local taxes which would be $1.8 million in taxes. Now consider a 2% wealth tax tacked on, which would be an additional $2 million. This would mean the investor would pay a total of $3.8 in taxes and he would have an effective tax rate of 95%. What’s even more sobering is that if he earns less than 4%, or if his tax rate was more than 45% (which it will be with Biden’s plans), then the investor’s taxes would be in excess of 100%.
Constitutionality: Our Constitution provides in Article 1, Section 9, Clause 4 that: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”
Both our income tax and a wealth tax would run afoul of this provision. To make the income tax constitutional we had to add the 16th Amendment. But no such amendment exists for the wealth tax. It may be that wealth tax proponents would argue that this tax is somehow taxing income potential using wealth as a proxy. But no Supreme Court, other than an off-the-charts progressive one, would approve of such strained logic. In fact, there’s currently a case before the Ninth Circuit Court of Appeals challenging Trump’s Mandatory Deemed Repatriation Tax on the ground that it is, in fact, an unconstitutional wealth tax.
Implementation: Taxing someone’s wealth requires determining the fair market value (“fmv”) of his or her assets, and then (presumably since no details are currently available) subtracting all liabilities. For anyone of considerable wealth, this would be an extraordinarily expensive, time consuming, and complicated effort. Even for assets that might have a publicly available market for valuation, it isn’t that simple. Consider volume. If someone has a substantial amount of something, you normally would apply a discount, since selling large volumes of assets can upset the market and reduce the overall value of an item.
But not everything has a value that can be determined easily. Investment in a closely held business, or real estate, or even paintings are examples of assets that are not susceptible to easy valuation on an annual basis, making it not very economically feasible to try to do so. Additionally, valuation can be determined in any number of ways — such as appraisals, discount rates, and reductions in the lack of marketability– so that valuations may be varied.
Another factor that makes valuations difficult are contingencies. For example, many assets have contingencies backed up with guarantees, and it’s difficult to value those contingencies. Finally, there is a question of liquidity/ability to liquidate or pay. Most people who have extraordinary assets like that often don’t have sufficient income or liquid assets to pay a wealth tax on them. Since many assets are not easily marketable, there could be a liquidity crunch.
Of course, a wealth tax would add even more burdensome complexity to the already byzantine tax code. The IRS would have to substantially increase its number of agents and its budget just to have the manpower to devote to compliance and enforcement. Given the IRS’s history of being discriminatory and incompetent, this is not a good thing.
Failure: It should also be noted that the wealth tax has already been tried — and failed — repeatedly. At one point, 15 European countries had a wealth tax. To date, all but four nations have since repealed it because it was ineffective in accomplishing its goals and was extraordinarily complicated and expensive to administer. Additionally, the wealth tax induced capital flight and asset hiding. For instance, in 2017 France decided to abandon its wealth tax after it caused the loss of “10,000 people with about 35 billion euros ($41 billion) in capital abroad” over a 15 year period according to the Prime Minister. Likewise, Switzerland — one of the four remaining wealth tax countries — experienced substantial tax evasion, noting that a mere “.1% wealth tax lowers reported wealth by 3.4%” according to a study by the National Bureau of Economic Research. As Switzerland has a wealth tax rate of 1%, that amounts to 34.5% in unreported assets.
Effect on the Economy: The growth of our economy is dependent on putting capital to productive use. Every time a corporation reinvests its retained earnings, or an individual puts his wealth to work by investing in an ongoing or new venture, the economy grows. This growth results in new purchases of equipment, facilities, hiring of employees, research and development, etc. Conversely, when capital is removed from the economy, such as by requiring the payment of a wealth tax, the economy shrinks. In fact, the wealth tax is a form of double taxation. Wealthy Americans already pay taxes on their income; under a wealth tax, they would then be taxed again for keeping that income in various assets. This not only punishes success, but discourages investment and savings.
Though progressives may argue that the capital taken out of circulation will be used to redistribute income to those who will spur the economy by consuming those funds, we revert back to Economics 101 – consumption has a much smaller effect on the economy than investment.
Morality: There is no moral justification to take something from someone just because they have it, even if they have a lot of it. One is reminded of the great scholar Thomas Sowell, who understands this quite well: “Since this is an era when many people are concerned about ‘fairness’ and ‘social justice,’ what is your ‘fair share’ of what someone else has worked for?” The wealthy in this country are an extraordinarily charitable group. But it should be their choice as to how charitable they wish to be with their hard-earned assets.
Senator Warren has argued that a real benefit of this tax is that it will only affect a relatively small number of people. This reveals what this tax really is – an attempt to foment class warfare by giving a large number of people (read: voters) a benefit through confiscating substantial amounts of money from a small group.
A wealth tax will certainly not bring in the revenue expected by the progressives – who relish the thought of punishing wealthy Americans in order to throw more money at their failed policies. Wealth redistribution is inherently the antithesis of the American Dream. Bastiat was right. No matter how you spin it, explain it, try to justify it, a wealth tax is simply “legal plunder.” Perhaps Senator Warren is being disingenuous (since the wealth tax would never be passed) but she will nevertheless score political capital among her constituents who do not know any better. She is taking advantage of the lack of economic knowledge among people who don’t understand the complexity and stupidity of a wealth tax.
by | BLOG, BUSINESS, ECONOMY, POLITICS
Stakeholder capitalism is all the rage these days, with Elizabeth Warren and Bernie Sanders at the forefront of the movement. Their participation is just another example of their economic ignorance.
The concept of stakeholder capitalism is itself a contradiction in terms; it would be more correct to call it “stakeholderism.” Just like crony capitalism (it is really just “cronyism”) isn’t real, as the terms are opposites of one another, the same with stakeholder capitalism. You cannot have both. It’s like saying libertarian statists. You can put the words together but they lose their meaning.
Stakeholder capitalism is a concept that suggests corporations should balance the needs of all the “stakeholders” who comprise the business, from shareholders to executives to employees to customers to suppliers and even to more nebulous stakeholders such as the environment or community. This is in contrast to traditional capitalism, which earns profit for the company owners and investors, the ones who put forth the risk capital to get and keep the company going. It earns this profit by providing products and/or services that their customers voluntarily pay for.
Stakeholder capitalism sounds good and looks altruistic but in fact are composed of different competing interests and goals. These various factors ultimately take away from the most singular purpose of a business: create a product or service for which another person or company sees value in that product or service and exchanges money (or goods or services) for it. If the finished product is good and has value, it will be consumed by another person or business for amounts in excess of the cost of resources to create the goods (profit). If the finished product is not good, then the cost of resources exceeds the perceived value and there will be a loss. It is only by focusing on this single-minded purpose that one can tell if the product/service has merit and should be continued. A company must be able to return a profit to its investors to induce them to invest more money for the company to increase its production of other valuable products and services.
Stakeholder capitalism seeks to undermine the traditional measure of profit and loss by insisting that various interests all mutually derive benefit. But this is not why a company exists nor should it. It misallocates resources and value and creates competing outside interests (that will not agree on how important each one is), all in the name of being socially beneficial. No company can sustain itself with that end result in mind, which ultimately hurts the very society stakeholder that capitalism would otherwise help.
by | BLOG, BUSINESS, CONSTITUTION, COVID, ECONOMY, GOVERNMENT, POLITICS
It is undeniable that people are hurting from COVID. It is also untenable that one of the continued solutions is an ongoing moratorium on evictions. Such a policy would seem to be blatantly unconstitutional.
A national moratorium on evictions picks winners and losers by government fiat by preferring one population (renters) over another population (landlords). The moratorium continues to allow people to live in their spaces without paying what they are contractually obligated to pay, putting the landlord at a loss. Would the same people championing this policy support the government letting people take food from a grocery store without paying for the food? How about taking clothing from a store without paying for it? It is the same thing. Those who argue that there is a moral right to housing would be hard pressed not to agree that this is also a moral right to food and clothing as well. Put it another way, the moratorium allows renters to consume their rental space for free that they would otherwise be purchasing through the payment of rent. What gives the government the right, therefore, to tell people they are allowed to consume their product — be it food, clothes, or rental property — without just compensation?
Originally, the moratorium was declared as a hedge against a perceived health hazard, namely that if people are evicted, they could contribute to the spread of COVID, and from this line of thinking was the flimsiest constitutional justification for the policy. If therefore, the government wants to assume the responsibility for avoiding an even bigger health emergency, it is only just that the government should cover the cost of the loss or rent to the landlord or guarantee that the rent is paid. You can’t have it both ways. The current policy is utterly ludicrous and puts many landlords at financial risk and ruin.
by | BLOG, COVID, ECONOMY, GOVERNMENT, POLITICS
The current national moratorium on evictions (which is likely to be extended yet again) is problematic for several reasons. The CDC (of all agencies) issued its rule without any particular act of Congress granting it the power to do so under the auspices of a generic “public health and safety” threat. What’s more, the federal eviction ban essentially overtakes any and all existing laws between tenants and landlords at the state level.
Because of the moratorium, landlords are now unable to follow any due process it has with regard to removing a tenant who has not kept up his or her end of their housing contract. Furthermore, landlords have no recourse to replace or remove a tenant by legal means until the end of the moratorium, a date which keeps changing. If a landlord violates the moratorium, he faces fines and/or possible jail time.
But perhaps the most egregious aspect of the eviction moratorium is that landlords are still responsible for maintaining payments to their banks and mortgage lenders on their rental properties. In fact, in some parts of the country, lenders have the ability to foreclose on them because they are not owner-occupied residences. What if the government told grocery store owners they had to provide their food for free as a means to alleviate hunger? Or tell a doctor he has to treat people for free as a means to provide universal access to medical services. How is it that the government is allowed to tell one set of citizens that you cannot enforce your own contracts and must provide services for free, while simultaneously not providing any sort of restitution for the hardship?
This moratorium has created intense and immediate deprivation for property owners who now bear the burden of property ownership without means to carry out or modify existing rental contracts. Essentially, the government is engaging in a massive, unconstitutional wealth transfer from one constituent to another. The eviction moratorium is a blatantly unconstitutional abuse of power.
by | BLOG, ELECTIONS, HYPOCRISY, POLITICS
I was disappointed that a black socialist anti-Semite became a Senator of the United States. While it is well known that he is a progressive and socialist, it’s even more troubling that he is openly anti-Semitic.
In 2019, he signed a letter with other clergy members describing “the heavy militarization of the West Bank, reminiscent of the military occupation of Namibia by apartheid South Africa.” Likewise, during a sermon in 2018, he proclaimed, “We saw the government of Israel shoot down unarmed Palestinian sisters and brothers like birds of prey.” And yet, the very same time, Warnock has been virtually silent on Hamas.
To the extent that racial bias exists in our system today, one thing is clear: 92% of Georgia black voters supported this anti-Semitic socialist. This result would seem to be clear evidence of true racism – that voters can ignore the openly outrageous policies and positions of a candidate and support him solely based on his skin color. Otherwise, how could anyone actually support Warnock?
