Tag Archives: Money/Economy/Taxes

Tax the rich rebuttal

Her:

What sort of person thinks there is nothing wrong with asking the folks tasked with teaching our children to take a 20% cut on a $50,000 annual salary, but think it’s a terrible idea to ask millionaires to pay an additional 3% more in taxes?

Me:

I think taking someones property by threat of force, whether you take 3% or 20%, whether you take from a rich person or a poor person, whether an individual with a gun takes it or a government with a whole police force takes it, is stealing.

I also think the government is grossly incompetent at best, and outright evil at worst, and they don’t need to waste any more of our money.

Her:

I pay taxes willingly, grateful that I am able to band together with others to create something larger than myself. Stealing is when people accept free public education, use it to make something of themselves, and then refuse to help the their neighbors do the same. (This goes for our whole infrastructure.)

Me:

I think your logic breaks down, Carlynn. If I had the choice of not paying taxes and not accepting ANY “public” help. I’d take that deal in a second.

Just because government forces us to all steal from one another, doesn’t make everyone indebted to everybody else.

Inseparable from the idea of liberty is the idea that no one owes anything to his fellow man. The collectivist opponents of this idea often claim the mortal, intellectual, and artistic high ground, which is why I’m eager to site Mario Vargas Llosa and William Faulkner who specifically argued this point here: mises.org/daily/3674

Think of the barbaric implications of your idea. If I steal someone’s money and use a tiny portion of it to buy somebody dinner, is the recipient of that dinner then condemned to have his wealth stolen for the rest of his life?

Her:

I am very familiar with the anti-humanist rhetoric of the libertarians. Every human being begins life at the mercy of others and is sustained by them; grows to maturity and sustains others; grows old and requires care. By virtue of the fact that you have grown to adulthood, you have accepted the care of others. Whether you think this means that you are enslaved to them forever or whether you think this means you are part of an interconnected, sustaining community has to do with your attitude towards life, not with life itself.

Me:

I agree that people require care and mercy. I don’t agree that this justifies mass wealth confiscation by the state.

First of all, welfare for the suffering forms a small percent of the state’s spending. And within welfare programs 80% of the budget goes to sustaining the bureaucracy, not helping the poor.

We disagree and who should help the poor.

To quote Frederic Bastiast’s 1850 essay, The Law:

“Socialism, like the old policy from which it emanates, confounds Government and society. And so, every time we object to a think being done by Government, it concludes that we object to its being done at all. We disapprove of education by the state — then we are against education altogether. We object to a State religion – then we would have no religion at all . . . . They might as well accuse us of wishing men not to eat, because we object to the cultivation of corn by the State.”

Her:

I didn’t steal my parents’ wealth when I was eating their food and living in their house, and I won’t think that they are stealing from me when they need my help in old age. This pattern can be extrapolated out in lessening degrees across a society. Taxes are not the government stealing from the people because in a democracy the government is the embodiment of the people. Taxes are one of the contributions that each of us makes to the common good. I think we all wish they weren’t very high, but I’d rather have high taxes and a successful common sphere than low taxes and a failed common sphere.

Me:

“taxes are one of the contributions that each of us makes to the common good.”

1 – assassinating Americans, invading Iraq, Afghanistan, Pakistan, Uganda, Yemen, infecting unsuspecting Guatemalans with syphilis, spying on American, fondling people at airports, bailing out corrupt banks, giving hundreds of millions of dollars to a “green” company owned by Pelosi’s relative, Guantanamo Bay, et. al. do not consitute the “common good.”

2 – How can you call it a “contribution” when people can and do go to jail for failing to make the contribution? How can you not recognize the violence and brute force behind it?

Occupy Wall Street — a leftist movement?

I’m not sure.

I agree with this guy:

But some of them are definitely ridiculous leftists, and this mainstream criticism is partially correct:

open quoteThere is no mystery where the Occupy Wall Street movement came from: It is an offspring of the same false narrative about the causes of the financial crisis that exculpated the government and brought us the Dodd-Frank Act. According to this story, the financial crisis and ensuing deep recession was caused by a reckless private sector driven by greed and insufficiently regulated. It is no wonder that people who hear this tale repeated endlessly in the media turn on Wall Street to express their frustration with the current conditions in the economy.

Their anger should be directed at those who developed and supported the federal government’s housing policies that were responsible for the financial crisis.

Beginning in 1992, the government required Fannie Mae and Freddie Mac to direct a substantial portion of their mortgage financing to borrowers who were at or below the median income in their communities. The original legislative quota was 30%. But the Department of Housing and Urban Development was given authority to adjust it, and through the Bill Clinton and George W. Bush administrations HUD raised the quota to 50% by 2000 and 55% by 2007.

It is certainly possible to find prime borrowers among people with incomes below the median. But when more than half of the mortgages Fannie and Freddie were required to buy were required to have that characteristic, these two government-sponsored enterprises had to significantly reduce their underwriting standards.

Fannie and Freddie were not the only government-backed or government-controlled organizations that were enlisted in this process. The Federal Housing Administration was competing with Fannie and Freddie for the same mortgages. And thanks to rules adopted in 1995 under the Community Reinvestment Act, regulated banks as well as savings and loan associations had to make a certain number of loans to borrowers who were at or below 80% of the median income in the areas they served.

Research by Edward Pinto, a former chief credit officer of Fannie Mae (now a colleague of mine at the American Enterprise Institute) has shown that 27 million loans—half of all mortgages in the U.S.—were subprime or otherwise weak by 2008. That is, the loans were made to borrowers with blemished credit, or were loans with no or low down payments, no documentation, or required only interest payments.

Of these, over 70% were held or guaranteed by Fannie and Freddie or some other government agency or government-regulated institution. Thus it is clear where the demand for these deficient mortgages came from.

The huge government investment in subprime mortgages achieved its purpose. Home ownership in the U.S. increased to 69% from 65% (where it had been for 30 years). But it also led to the biggest housing bubble in American history.close quote (Read more)

The Forgotten Depression of 1920

open quoteThe conventional wisdom holds that in the absence of government countercyclical policy, whether fiscal or monetary (or both), we cannot expect economic recovery — at least, not without an intolerably long delay. Yet the very opposite policies were followed during the depression of 1920–1921, and recovery was in fact not long in coming.

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

The Federal Reserve’s activity, moreover, was hardly noticeable. As one economic historian puts it, “Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.”[2] By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.close quote (Read more)

The Attack on Accidental Americans

open quoteWhen Julie Veilleux discovered she was American, she went to the nearest US embassy to renounce her citizenship. Having lived in Canada since she was a young child, the 48-year-old had no idea she carried the burden of dual citizenship. But the renunciation will not clear away the past ten years of penalties with the Internal Revenue Service (IRS).[1]

Born to American parents living in Canada, Kerry Knoll’s two teenaged daughters had no clue they became dual citizens at birth. (An American parent confers such status on Canadian-born children.[2] ) Now the IRS wants to grab at money they earned in Canada from summer jobs; the girls had hoped to use their RESPs (registered education savings plans) for college.[3]

The IRS is making a worldwide push to squeeze money from Americans living abroad and from anyone who holds dual citizenship, whether they know it or not. It doesn’t matter if the “duals” want US status, have never set foot on US soil, or never conducted business with an American. It doesn’t matter if those targeted owe a single cent to the IRS. Unlike almost every other nation in the world, the United States requires citizens living abroad to file tax forms on the money they do not owe as well as to report foreign bank accounts or holdings such as stocks or RSSPs. The possible penalty for not reporting is $10,000 per “disclosed asset” per year.

Thus, Americans and dual citizens living in Canada (or elsewhere) who do not disclose their local checking account — now labeled by the IRS as “an illegal offshore account” — are liable for fines that stretch back ten years and might amount to $100,000. A family, like the Knolls, in which there are two American parents and two dual-citizen children, might be collectively liable for $400,000.

Approximately 7 million Americans live abroad. According to the IRS, they received upwards of 400,000 tax returns from expatriates last year — a compliance rate of approximately 6 percent. Presumably the compliance of dual-citizen children is far lower. Customs and Immigration is now sharing information with the IRS and, should any of 94 percent expats or their accidentally American offspring set foot on US soil, they are vulnerable to arrest.

. . . .

They can renounce their American citizenship but that is an imperfect solution. For one thing, it does not immunize them from the past ten years of nonreporting. For another, following the United States’ “exit” sign takes many people directly through the Treasury Department where they may be required to pay a brutal one-time exit tax. Basically, for those with more than $2 million dollars in assets, the tax comes to $600,000.

Moreover, renunciation is a difficult process. The Globe and Mail is one of many Canadian newspapers now explaining to readers how they can renounce American citizenship. G&M states,

Renouncing your U.S. citizenship starts with a hefty fee — $450 (U.S.), just for the chance to appear in front of a consular official. Need it done in a hurry? Forget about it. It can take about two years to get an appointment.[9]

The true hope lies in a worldwide refusal to comply.close quote Read more from mises.org