Taking $540 billion out of the private sector and turning it over to the government? That’s not a wealth tax. It’s a tax on all of us. It may hit the wealthy more directly than it hits the rest of us, but that’s small comfort.
WSJ item:
House Health Bill Relies on Wealth Tax
House Democrats plan to pay for their health-care legislation with a big tax increase on wealthy households, aiming to raise $540 billion over the next decade.
I’m glad Star Parker said tax benefits instead of tax cuts:
His economic stimulus plan has large government expenditures to please Democrats and tax benefits to please Republicans.
Because if there is a single tax cut in Obama’s proposals, I haven’t yet heard about it. (And why any of it would please Republicans is a mystery to me.)
For years — maybe even decades — I’ve been talking up the idea of a net-zero gas tax. Except I didn’t know it should be called “net-zero” until I read Charles Krauthammer’s article in the January 5 issue of The Weekly Standard. And it hasn’t been until recently that I’ve decided in my own mind that the countervailing tax reduction should definitely be in the FICA tax.
For most of these years it has been like talking to a brick wall. LeftLiberals don’t like the idea, because for the most part they don’t really care about the environment. What they care about is growing the government and increasing the opportunities for power and corruption, all of which can be accomplished much better with CAFE standards and carbon-trading schemes (and more recently, with big bailouts). Conservatives until very recently haven’t liked the idea because their heads have been stuck firmly in the sand. Libertarians don’t like the idea because of the word tax and because it requires government action. They can’t get it through their heads that you can’t have free markets without government action. (LeftLiberals also sneer at the idea using the same words: “What? I thought you people were against all government regulation.” But that of course is not the reason they oppose it.)
It has been in just the past few weeks that I’ve been reading a few articles here and there in which conservatives have been talking up the idea. And now Krauthammer has explained the case in full.
I would add just one point to Krauthammer’s suggestion of reducing the FICA tax to pay for it: I would take Barak Obama up on his idea to expand the FICA tax to include all income; however, it too should be a net-zero increase. This would really give lower income people the tax cut that he talked in favor of during his campaign, and it would remove a regressive tax from our system. Obama probably didn’t mean to keep his campaign promise, but let’s pretend that he really did and let’s hold him to it.
One additional reason is that the Social Security system is underfunded, much like the Madden Madoff system was. There will be a temptation to enact a big gas tax with countervailing reductions in FICA, and then to increase FICA to pay for Congress’s fraudulent promises on Social Security. Maybe that will have to happen to some degree, but I want all the wealthy, influential people to have a stake in that decision, and not to be sitting out the issue because it doesn’t concern their own pocketbooks.
Is this a “mine is bigger than yours” contest?
Anxious to jolt the economy back to life, President-elect Barack Obama appears to be zeroing in on a stimulus package of about $850 billion, dwarfing last spring’s tax rebates and rivaling drastic government actions to fight the Great Depression.
If they want to play games, how about instead making it a “mine lasts longer than yours” contest? The way to do that is with permanent tax relief. Nobody is going to make long-term plans based on a short-term stimulus. In fact, this kind of wild stimulus behavior only adds to the uncertainty that is killing the economy now.
Don Boudreaux of Cafe Hayek makes the case for layoffs on NPR’s Planet Money. More specifically, he explains how restrictive labor laws that make it harder to fire employees or lay them off also make it too expensive and too risky to hire employees in the first place. If there is anyone unfamiliar with that argument, now there is no excuse not to get familiar with it.
I certainly buy it, but there is also the matter of making it politically palatible. Too many libertarians make the argument, which is fine as far as it goes. But they don’t go the next step, which is to argue that we need to make an economy in which job loss is not so devastating, in which people can pick up and carry on.
The left of course has its own ideas on how to do that, mainly through social-welfare programs. There is a place for their safety nets — I for one would not advocate abolishing them — but the way they’re usually implemented makes them more like a trawler net than a safety net. And of course the motives of the left are less than pure when it comes to these things. Leftish minds concentrate wonderfully when it comes to designing programs to grow the government and make people dependent on their tender mercies. They go blank when it comes to ways to allow people to maintain their dignity and make their own choices.
Here are a few areas in which conservatives, libertarians, and non-leftish liberals could make a society in which job loss would not be so terrible:
There are others that might come under the category of “A more equal capitalism” but I’ll stop here for now.
George Will informs us that Congress is casting a greedy eye on tax-free university endowments. (“Washington’s Willie Sutton Moment“) It wants more money to control, so it wants to control how these endowments are spent.
I agree with Will to some extent. We should never miss an opportunity to point out that corporate greed is mainly a problem of government greed (governments being our largest corporations).
But instead of just complaining, I wish Will would suggest something positive, like removing the tax-exempt status of university endowments. It would be a positive step toward creating a society in which there are no privileged classes – where we’re all in it together. When it comes time to discuss whether taxes should be raised, then all of those articulate people who are running our nation’s universities would have a stake in the issue, too. As it now stands, they always want more taxes to pay for more student loan programs, for research grants, for this program and for that. They are oblivious to the downside, of how their demands for money can destroy the tax base needed to support the institutions they run. Removing their tax-exempt status would motivate them to think harder about sustainability — about how we can sustain the economic engine that is needed to support our universities and make them even greater.
From a book I’m reading:
It was a “voluntary” tax in the sense that people controlled how much they paid by how much they consumed.”
No, I’m not reading a Neil Boortz book about the Fair Tax. I’m reading “The Whiskey Rebellion : Frontier Epilogue to the American Revolution,” by Thomas P. Slaughter (1986). The statement above is in Chapter one, in a description of the much-hated British consumption taxes of the 18th century, usually known as interior taxes or excise taxes. The British government was arguing the same way Neil Boortz does.
I haven’t heard much about Neil Boortz and his Fair Tax lately. But I was reminded of it when reading Chapter One of “The Whiskey Rebellion : Frontier epilogue to the American Revolution” by Thomas Slaughter (1986). I’m reading it in preparation for a bicycle tour later this summer.
Fair Tax proponents think a sales tax would be unobtrusive. But here is how one writer described the enforcement of a sales tax (known then as an excise tax) in 18th century Britain.
Excise, a monster worse than e’er before
Frighted the midwife, and the mother tore.
A thousand hands she has, a thousand eyes.
Breaks into shops, and into cellars pries;
With hundred rows of teeth the shark exceeds,
And on all trades, like Casawar, she feeds. . . .
She stalks all day in streets, conceal’d from sight,
And flies like bats with leathern wings by night;
She wastes the country, and on cities preys.
Neil Boortz is a useful idiot of the welfare-police state, and it’s sad to see that the normally sensible Mike Adams is buying his book and buying what he says.
These Fair Tax people ought to think about about how this country’s first consumption tax at the federal level brought about a huge expansion of governmental power in order to enforce it, and almost brought about civil war. (I’m referring to the Whiskey Rebellion.) Introducing an excise tax on the scale that these Fair Tax people are proposing will result in huge motivations for people to use the black market to get the things they need, which will result in a huge new regulatory and enforcement mechanism.
This will be in addition to the IRS, which, contrary to what they claim, will not go away. The Fair Tax people will tell you that their tax is not regressive, because there will be rebates for those of low income. But in order to determine who has a low income, you need an organization and mechanism to do what the IRS does now.
And even with rebates, the tax will still be regressive among those who don’t qualify for the rebates, so there will be pressure to re-institute an income tax for the very, very rich. That will be extra easy to do, because a handy enforcement mechanism will already be in place, ready to resume all the rest of its old work, too.
The Fair Tax is a recipe for growing the government. But Neil Boortz opposes one reform that could actually control the size of government and perhaps cut it down to a reasonable size: term limits.
The WSJ editorializes on the “stimulus”.
President Bush and Congress are marching arm in arm to pass their economic “stimulus,” but it’s clear that at least one group of observers isn’t impressed: investors. They blew right through all the Beltway happy talk yesterday, selling off the major stock indexes by some 3% or so on an ugly day.
I suppose an alternative possibility is that investors are spooked by the prospect of a Clinton, Obama, or McCain becoming president and are bailing out while they can still cut their losses.
But more likely they’re spooked by the results of bipartisanship.
I’m guessing the reason the Congress and President are acting so quickly on this package is that they need to do it quickly before people learn that it won’t do any good. The important point for them is to expand the size and scope of government while they have a chance.
Yes, the rebates are mostly temporary, but the expansion of government will be permanent. The new spending will have to be paid for, which will create pressure for higher taxes, which will create pressure for more spending.