Category Archives: Taxation

A Vote for Revenue

Politicians are usually most revealing when speaking off-the-cuff, and so it was with Karen Bass:

Q: How do you think conservative talk radio has affected the Legislature’s work?

A: The Republicans were essentially threatened and terrorized against voting for revenue. Now [some] are facing recalls. They operate under a terrorist threat: “You vote for revenue and your career is over.” I don’t know why we allow that kind of terrorism to exist. I guess it’s about free speech, but it’s extremely unfair.

The California Assembly Speaker was talking about California’s budget crisis. There is a simple problem here. Decades of runaway spending by both the democratically-controlled legislature and voters during the boom years has the state government scrambling to meet its commitments now.

The solution, however, is more complex. Democrats have been the majority party in the legislature for decades, and this budget mess falls squarely on their backs. The solution, deep cuts to wasteful and often useless state bureaucracy, is simply not an option to them. Cutting the bureaucracy would be a loss of political capital for the Democrats, making the entire enterprise of state government less profitable. Instead, we have people like Karen Bass pulling stupid politician tricks:

The Golden State is one of only three in the nation which requires a two-thirds majority vote to raise taxes. This is forcing Democrats in Sacramento to try to recruit a handful of Republicans to pass their current plan to close the state’s gap with a combination of cuts and taxes. So far, no GOP legislator has broken ranks.

Then came Plan B. This week, the Democratic leadership mustered enough support to pass a series of budget bills with a simple majority, hoping to send them onto Governor Schwarzenegger.

Some of these bills do raise revenues, but legislators believe they can avoid the necessary two-thirds majority by reclassifying some taxes as “user fees”, while raising taxes elsewhere and claiming the end result is “tax neutral”.

A call to the Legislative Counsel’s office pointed to the part of the State Constitution which explains the need for a two-thirds majority: “any changes in state taxes enacted for the purpose of increasing revenues collected pursuant thereto whether by increased rates or changes in methods of computation must be imposed by an Act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature, except that no new ad valorem taxes on real property, or sales or transaction taxes on the sales of real property may be imposed.”

But when pushed for an explanation as to where the law allows a simple majority, by creating “revenue neutral” taxes and exchanging a tax for a user fee, we were directed to the Assembly Speaker Karen Bass’s office.

Her office did not return calls or emails (though the emails were read). Other calls asking for guidance were met with silence, and another reference to the section of the state constitution cited above.

So, this is what Karen Bass means when she says Republicans have been terrorized into voting against revenue? Let’s revisit her quote and fill in what’s actually happening:

The Republicans were essentially threatened and terrorized against voting for a law that deliberately violates taxpayer protections in the Constitution. Now [some] are facing recalls. They operate under a terrorist threat: “You vote for a law that deliberately violates taxpayer protections in the Constitution and your career is over.” I don’t know why we allow that kind of terrorism to exist. I guess it’s about free speech, but it’s extremely unfair.

Karen Bass is saying that pressuring politicians to simply follow the law is terrorism. As Instapundit would say, the state is in the best of hands!

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I have to give the man some credit

I happen to live in Arizonas 5th congressional district; and am currently represented in the house by Harry Mitchell.

Congressman Mitchell and I disagree about a lot of things. Abortion, social security and government health care, school choice and education policy, many economic issues, government intervention and regulations in general, and the overall wisdom of his party leadership and the DNC…

However, I have to give the man some credit. He has generally been good on energy policy, and on guns since he came to congress (as a local politician his record on guns was mixed). He was also against the auto industry bailout, against TARP, and especially against the unconstitutional TARP bonus tax. He’s even reasonable on national security issues, and veterans affairs.

I believe he has ably represented the interests of his district within the congress; and bucked the leadership when he thought it was best for the district (if perhaps not bucking them enough outside of issues of direct interest to the district).

Today, he voted against his leadership; choosing to vote for the greater good of Arizona, and of the nation; against the Waxman cap and trade bill.

Unfortunately, we all lost in that vote; but senate leaders are already saying it’s dead on their floor… so we’ll see.

Last week, and again this morning, I urged congressman Mitchell by telephone to both his offices, and by email, to vote against the bill; as it was against the interest of both the district, and the nation. This evening, having found out how he voted, and reading his statement on the issue, I called to thank him.

We may disagree with our elected representatives, we may have voted for the other guy, we may think they are the wrong person to be in that chair; but once they are there, they are OUR representatives. The peoples representatives.

Letting them know how you feel about something, how important it is to you, what benefit or harm it will do you personally; it works. It may not seem so much of the time, but most congressmen really do care about what the people of their districts think; if for no other reason that it improves their chances for reelection.

So participate. Let them know. After all, it can’t hurt; and it just might make a difference.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

California Department Of Real Estate Trust Fund Nearing Deficit!

The California Department Of Real Estate oversees and administers the state’s real estate agent and broker licensing program. During the big housing boom, the fees generated by the high level of real estate activity (and the agents/brokers who were licensed to enable that activity) has caused them to build up some a nice Trust Fund. But activity is down, and there may be trouble ahead:

DRE, as the department is called, gets all its money for its 344-person department from license fees, license exam fees and subdivision fees (which are going up, too). But all those things are down because fewer people are taking the license test or getting licenses. And development fees? Well, homebuilding has been all but mothballed.

All these things have taken a $13.7 million bite out of the department’s $44 million budget.

For example, license exams have dropped from around 22,000 in March 2005 to just under 2,900 this past March. And the number of licensees dropped in March for a 14th straight month.

But don’t worry! They’ve got a trust fund! They’ve lent their reserves to the state of California, so all is well!

To make matters worse, the state Legislature and the Govenator have borrowed about $10.9 million from DRE reserves. If the state doesn’t repay that loan, and if the fees don’t go up, DRE projects its reserves will dry up and it’ll run out of money next year. In just over four years, DRE would be almost $88 million in the hole.

Wait… How could that make matters “worse”? How can they just suggest that the state might not pay back that loan — or worse, the implicit notion that they might do so out of higher taxes on the rest of Californians? If they’ve loaned the money to the state of CA, what could possibly go wrong? After all, the State of CA and the California DRE have two different revenue streams, so loaning from one pocket to the other is not in any way a fiscal end-around!

If it’s such a bad thing for the state of CA to borrow money from the CA DRE reserves, why is it a good thing that the US Federal Government is borrowing the surplus generated by Social Security payroll taxes?

You Can Tax My Beer When You Pry It From My Cold Drunk Hands!

Now it’s personal:

Consumers in the United States may have to hand over nearly $2 more for a case of beer to help provide health insurance for all.

Details of the proposed beer tax are described in a Senate Finance Committee document that will be used to brief lawmakers Wednesday at a closed-door meeting.

Taxes on wine and hard liquor would also go up. And there might be a new tax on soda and other sugary drinks blamed for contributing to obesity. No taxes on diet drinks, however.

Beer taxes would go up by 48 cents a six-pack, wine taxes would rise by 49 cents per bottle, and the tax on hard liquor would increase by 40 cents per fifth. Proceeds from the new taxes would help cover an estimated 50 million uninsured Americans.

I suppose, if this goes through, I’ll just have to homebrew more often. In addition to being cheaper in general, this tax won’t apply. Yeah, that missing tax revenue may mean that little Timmy never gets his operation… But that’s what the little bastard gets for basing his health care plan on my drinking habits.

Hat Tip: Reason

Don’t Apologize For Funny

Comedy is hard. Really, really hard. Funny requires stepping outside the box — saying something a bit unexpected. There are a lot of ways to screw it up, and often what sounds funny in your head is not so funny when a listener hears it. There’s a reason why many actors say that comedy acting is a lot harder than drama acting.

Comedy and politics is even more difficult, because you have a pretty significant group of people just salivating over the chance to vilify and embarrass you if what you say is at the least bit unfunny.

So I’m not going to criticize Anderson Cooper for this. It’s funny.

Gergen: “They still haven’t found their voice, Anderson. This happens to a minority party after it’s lost a couple of bad elections, but they’re searching for their voice.”

Cooper: “It’s hard to talk when you’re teabagging.”

There are a lot of reasons why that’s funny, but key is that Mr Highbrow Serious Reporter-man Anderson Cooper went for a scrotum joke. If Bill Maher or Jon Stewart said it, it would be expected and might get a chuckle. To see that from Anderson Cooper, though, is priceless. And he deadpans it! It would be too easy to try to play it up, to try to emphasize the line. If it were Rachel Maddow, she’d have said it with that annoying smirk and ruined the joke.

This was funny. It’s a shame he apologized.

Video below:

Obama’s Against Deficit Spending?

Just who is he trying to fool?

President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

There’s only one way this is a coherent statement, because he’s obviously not against spending obscene amounts of money.

So if he’s going to stop deficit spending, but he’s not going to cut spending, that leaves one option. Taxes. Get ready.

Hat Tip: QandO

Nominal SSA/Medicare “Solvency” Dates Worsen Slightly; Journalists Apoplectic

As I’ve thoroughly explained here and here, the whole Social Security “trust fund” issue is a joke. It’s an accounting gimmick designed to push the supposed date of concern out into the future.

When does Social Security become “insolvent”? Well, let’s look at what the word means:

adjective
not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.

Assets are a printing press, taxpayers, or the farce of a “trust fund” that contains nothing but promises to raid the printing press or taxpayers in the future. There is absolutely nothing tangible there. Nothing backs up the future liabilities of the system.

But the accounting gimmick is still there, and people still argue as to what year Social Security and Medicare will start running into trouble. They argue about this as a problem to be solved for the future, but those dates for both Social Security and Medicare are coming in a bit as the economy collapses:

The financial health of Social Security and Medicare, the government’s two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives.

Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year’s report.

The trust funds — which exist in paper form in a filing cabinet in Parkersburg, W.Va. — are bonds that are backed by the government’s “full faith and credit” but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.

I credit this AP writer for pointing out the italicized text, and for hammering the point home later in the article. Very few journalists have understood or expressed the idea that the “trust fund” is not full of actual assets, only promises. This doesn’t mean the situation will be bad in another decade and only dire in the 2037 time frame; it means this situation is worsening every year.

To illustrate this [yet again], let’s pull out a business example. Let’s create a corporation, and we’ll call it Ubiquitous Spending & Aggravation, Inc. We’ll use USA, Inc. for short.

Let’s say USA, Inc. has three divisions. They have the General Products Division, the Depends Adult Diaper Business Unit, and the Viagra & Ensure Business Unit. As you’d expect, one is a general purpose spending group, another caters to the general needs of the elderly, and the final caters to the medical needs of the elderly.

So assume that the below are true:

Today:
USA, Inc. Today

So it looks to me like USA, Inc. is losing $20 Million per year, but two business units are profitable. Would you call that a healthy company? Would you invest in it?

Now, let’s project earnings into the future.

2017:
USA, Inc. 2017

So what’s happened here? The company is still losing $20M a year, and now the two previously profitable divisions are losing money, while the General Products division is actually earning money due to the CEO instituting his AMP – Advanced Mugging Policy. Does this now look like a healthy company? Does it now look investment-worthy? Unfortunately, you’re already invested, because their stock certificates are printed with the words “Federal Reserve Note”. And they’re going to be issuing new shares soon.

I’ve said it before and I’m sure I’ll say it again. This is all a shell game. As long as the government keeps borrowing money and the debt keeps going up, it doesn’t matter how the individual accounting entities are performing. They can raise payroll taxes, offset by a cut in the income tax, and if it’s overall revenue neutral, it doesn’t matter whether Social Security and Medicare are “saved”. About the only benefit to doing so would be that journalists could quit wasting ink arguing over whether 2016, 2017, 2137 or 2141 are the “important” milestones.

There are no “important milestones”. The feds are going to run a $1.8T deficit this year! The problems we have are far larger than a 4-year swing in projected “insolvency” of an entity that is completely insolvent right now. The only “assets” the Social Security administration has access to are the Federal Reserve printing press or our wallets, and you can be SURE they’re going to be reaching for both.

Cap And Tax

Coming from Ezra Klein

Via Dave Weigel and Matt Yglesias comes the depressing news that the vast majority of the public doesn’t know what cap and trade” is. And I don’t mean in the sense that they don’t understand the auctions. They have no idea what problem the policy actually refers to.

“Given a choice of three options, just 24 percent of voters can correctly identify the cap-and-trade proposal as something that deals with environmental issues. A slightly higher number (29 percent) believe the proposal has something to do with regulating Wall Street while 17 percent think the term applies to health care reform. A plurality (30 percent) have no idea.”

Sounds like a perfect time to properly articulate it to the American public. And to do this, I’m going to steal borrow an explanation I commonly here on my weekend listening from the Financial Sense News Hour (which I highly recommend you download or subscribe to the podcast — great stuff).

It’s not cap and trade, it’s Cap And Tax. It caps economic growth, and it taxes just about everything.

Truth Hurts… Ignorance Hurts Worse

I disagree with Schiff on hyperinflation; but we’re DEFINITELY going to be seeing significant inflation. I’m thinking 1979 levels or so.

Note: Schiff is also a firm believer in the inherent value fallacy; which is just that, a fallacy. There is no such thing as a stable currency, because nothing has inherent value. All value is circumstantial.

Fiat currency is a horrible thing, but the solution is NOT specie currency, which has its own issues (which can be just as bad as those of fiat currency). The solution is a global free currency market, without government value setting by fiat, OR by an arbitrary commodity standard… or any other arbitrary standard for that matter.

Let the market decide what the currency of a nation is worth, and it will seek its natural level AT ANY GIVEN MOMENT. Let the markets set their own confidence level, based on whatever a currency represents, is backed by, what its purchasing power is… whatever the market values.

We are approaching the technology basis that will allow this, though we aren’t there yet. Universal realtime international communications are a pre-requisite for an efficient currency market. Currently, currency markets present significant arbitrage opportunities based on asymmetric information, communications lag, and government distortion.

Unfortunately, now that governments have the power of fiat currency, they will absolutely refuse to give it up.

We’ve got maybe a 24 month window of slight recovery and plateauing of prices; then we doublehump this, with real economic contraction spurred on by the devaluing dollar, rapid inflation; and concomitant high interest rates, and tighter credit (you think credit is tight now? Not even close).

If you want to buy a house, do it 18-24 months from now on a fixed rate mortgage; and plan on living there the rest of your life. Inflation is going to wipe out a significant amount of your debt anyway.

… Presuming the Chinese don’t bail out on us entirely, and kick this off SIX months from now, instead of 24 months from now.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

No Secession, No Legitimacy!

Many Republicans, having discovered that Bush’s policies are tyrannical, are making noises about wanting out of the fascist state that they were cheering on a few months ago. While we may wonder why it took the trivial matter of having people who have the letter D appended to their names on news reports executing Bush’s policies to open their eyes, we must welcome the fact that they are dimly becoming aware of how thoroughly their leaders had betrayed their country and are looking for ways to undo the damage these leaders wrought.

Some Republicans have even endorsed secession! This is keeping with American tradition that started the first time the idealogical ancestors of the Republican party – the Federalists – lost an election for the Presidency. In that case the merchants of New England threatened secession since Tomas Jefferson’s policies of trade embargoes with foreign markets were crippling them. Since then threats of seccession have been a regular part of the political landscape.

Often the threats of secession are not taken seriously… usually the benefits of leaving the union are not sufficiently great to attract many supporters, and thus the powers-that-be can ignore the movements completely.

Today, though, the Democrats and political leadership are reacting in horror at the reemergence of threat American phenomenon – their dreams of social engineering will go up in smoke if the masses have the option to escape! And many people who should know better are agreeing with them.

People make three arguments against secession:
1)That it is illegal
2)That it is immoral
3)That it is unwise

Let us examine these arguments. » Read more

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

An Open Letter To Jan Schakowsky

Dear Representative Schakowsky –

I’m a taxpayer.  The Tea Partiers are also taxpayers.  We are the people who make the enterprise of government possible.

People in government would object to that statement.  They would say that the US Government has multiple revenue streams:  the income tax, other federal taxes, the Social Security Trust Fund, other intergovernmental funds, external bond sales, bond sales to the Federal Reserve.  They’re right, on a technical level.  Year to year, the full burden of federal spending doesn’t rest on the taxpayers.

There’s more to the story, though.  Any money borrowed by the US Government is borrowed in the name of its taxpayers.  The more than $2 trillion that will be borrowed to close the deficit in Obama’s first budget is being borrowed in our name.  The same goes with the undisclosed billions borrowed to pay for the Bush bailout plan.  We currently have a national debt of $11,194,472,663,030 that the Congressional Budget Office projects will grow to over $20 trillion under the Obama spending plan.  As one of the approximately 138 million Americans who paid taxes last year, I look at the Obama deficit of $2 trillion and realize that almost $15,000 was borrowed in my name alone, just this year.  Over 10 years, the Obama plan will borrow over $65,000 in my name.  As scary as those numbers are in the aggregate, they are frightening when made personal.

I imagine it must be a pretty amazing job, being one of the 536 people that direct an enterprise with a limitless credit card that will be paid off by others.  Unlike every corporation and citizen in the country, Congress and the President don’t have to worry about where the money’s going to come from.  You have the authority to fund anything you want by pretty much any means you want.  Max out the credit card?  Just write a bill that increases the credit line!

From the perspective of this ordinary, hard-working taxpayer, that authority has gone to your heads.  You never bother to stop and ask us whether we want your spending anymore.  When Obama debuted his budget, it faced severe opposition from the taxpayers of this country.  Instead of wielding the power granted to him responsibly and reconsidering based on that opposition, he began moving to ram his budget down our throats without even a moments pause.  He tried to sic his campaign machine on us to “persuade” us that the irresponsible borrowing and spending was for our own good and that we should take it with a smile.

Between that and Bush’s TARP debacle, it became clear to ordinary taxpayers all across the country that we had no voice in Washington anymore.  Democrats and Republicans were spending all their time pandering to core constituencies and special interests while ignoring the people who pay the freight.  In fact, it’s gotten so bad that we taxpayers are not even perceived as an independent group anymore.  This is shown so clearly in your own comments on the Tea Party protests:

Rep. Jan Schakowsky (D-Ill.) blasted “tea party” protests yesterday, labeling the activities “despicable” and “shameful.”

“The ‘tea parties’ being held today by groups of right-wing activists, and fueled by FOX News Channel, are an effort to mislead the public about the Obama economic plan that cuts taxes for 95 percent of Americans and creates 3.5 million jobs,” Schakowsky said in a statement.

“It’s despicable that right-wing Republicans would attempt to cheapen a significant, honorable moment of American history with a shameful political stunt,” she added. “Not a single American household or business will be taxed at a higher rate this year. Made to look like a grassroots uprising, this is an Obama bashing party promoted by corporate interests, as well as Republican lobbyists and politicians.”

We are in an age of taxation without representation. The taxpayer has no voice in Washington. The charade of democracy fostered by the two major parties has no place at the table for ordinary, hard-working Americans.  If you’re a Wall Street executive or an ACORN organizer, you have a say in how much money is borrowed and spent in America.  If you’re a simple plumber, electrician, or office worker, you have none.

You and the rest of Congress are gambling with our futures and you couldn’t care less what we have to say about it.  That’s why the Tea Parties are happening.  You want to deny us our voice?  Our place at the table?  Fine.  We’ll take it back from you.  Tea Party after Tea Party, letter after letter, column after column, we will make ourselves heard again.

The only shameful and despicable thing here is the fact that we have to take back our voice at all.  You and the rest of the ruling class have ignored the people who make your existence possible for far too long.  I’m sure your comments will be the first in a long line of bleating on the part of the ruling class, that we will have to endure rhetorical slings and arrows far worse than yours before we are heard again, but it doesn’t matter.  We WILL be heard, whether you like it or not.

No more irresponsibility.  Not in our name.  Not without a fight.

Sincerely,

A Taxpayer

Weekend Open Thread: Tea Parties As Pent-Up Hostility?

As said before, much “ink” has been spilled on these “pages” to discuss the libertarian response to the tea parties. Several of us have suggested that while we’re happy the partiers have regained their allegiance to small government and fiscal conservatives, we’ve thought it a bit strange that these folks seem to come out of the woodwork once they lose power.

But I’m struck by the thought that these people may have been just as fed up with the behavior of elected Republicans as we libertarians, and although they weren’t very vocal about it, they largely laid down at the polls due to that disgust.

Why weren’t they vocal? Well, as former CA state Republican chairman Gaylord Parkinson once called The Eleventh Commandment (as recalled by Ronald Reagan):

Thou shalt not speak ill of any fellow Republican.

Given that one of the biggest problems in the libertarian movement is constant infighting and purity battles, I can understand the desire to hold your ammunition for the enemy, not expend it on friendly fire.

So here’s my thesis. Republicans, getting disgusted by the behavior of Bush and his spendthrift Congress, but conflicted about in-party fighting opening the door to the Democrats (particularly during wartime), acquiesced at the spending as the “cost of remaining in power”. Then, when finally Bush was gone and the Republicans lost control of Congress, the built-up rage at the spending immediately erupted into an onslaught of protest. This sudden protest seems like a change of position, but it was a position that already existed under the surface and the acceleration of spending was the catalyst to open it up.

Two things must, of course, be said:

1) Republicans remaining silent during the Bush administration was wrong. Not only did they not get small government, they ended up losing control of Congress and the White House. Had they enforced spending discipline and acted like Republicans, they might have gotten small government and kept control. At worst, they would have slowed the rate of government growth before losing, instead of dramatically increasing the growth of government.
2) Obama’s spending levels are far beyond those Bush envisioned. Even if Bush’s wish list came to fruition, Obama’s intended spending is a whole new level.

So what do you folks think? Is the tea party protest an eruption of latent hostility that was masked during the last 8 years, or is it simply an about-face of our partisan American polity?

Keeping What What We Make Away From the Tax-man

The furor over the Tea Party movement has been quite exciting.  While I love watching government officials and their sycophantic propagandists energetically denounce people for daring to suggest that people should be permitted to keep their earnings,  I, like others, think the protests – in and of themselves – are insufficient to meaningfully change the vampire economy that has seized the U.S. in its fangs.

The people protesting are not, however, wrong.   The basis of a free society is the independence of the people: their ability to choose how to conduct their lives, what professions they will pursue, where they will live, how they will order their lives.  The more resources a person has at their disposal, the wider the range of choices available to them. Freedom from taxation is as fundamental a human right as choosing whom we love.

The protesters are, however, seemingly oblivious to the real problem, the control the state has over the institutions of finance, banking and trade.   It is this control that not only allows the state to plunder without any limits, but also encourages people to acquire wealth through dishonest means – through rent seeking, wealth distribution, or other forms of special privilege.

If we wish to be a free people, we must build the institutions and the cultural habits that encourage individuals to amass these resources through peaceful commerce and production. The fundamental act by which people stockpile these resources is called saving. In a simple economy, such as an agrarian one, the importance of having people stockpiling seed-corn, or hay for feeding their herds during winters or periods of famine is obvious to everyone.

In a complex economy, people typically stockpile money, since there is a degree of uncertainty as to how those savings will be put to use in the future, and money is provides them with the most options when looking to consume savings to satisfy some present need. Unfortunately, people have stopped saving, largely because the current monetary regime makes saving a sucker’s game. A dollar stuffed under a mattress exponentially loses its value. A dollar deposited in a bank also steadily loses value, albeit at a lower rate; the bank typically makes up much but not all of the losses do to inflation by paying interest.

The story of the 20th and 21st centuries are, if nothing else, the capture of the banking system by the state. It is becoming increasingly difficult for people to amass wealth that is securely theirs. Bank accounts can be confiscated. Their money can be held hostage via a banking holiday. Regulators can learn intimate details of the private affairs of individuals by reviewing the banks’ records.

Those of us who wish to reverse the trend towards an ever more powerful and intrusive state must take the lead to restoring the ability of people to stockpile savings.

How can we do this? There are several ways:

  • Create new forms of money that are easily stockpiled. This does not have to be gold and silver, but can be things like cell-phone minutes
  • Create new markets to trade without interference
  • Create new systems for storing forms of money safely

Building these institutions will not be easy. They cannot be imposed from outside. They cannot depend on some messianic leader to encourage their adoption. They must attract users who have no interest in the political agenda, but because they satisfy the users’ personal needs. It is important to bear in mind that this regime has existed so long that for most of us who are alive today have no idea that it could ever be otherwise. Furthermore, the public is the target of a pretty comprehensive propaganda campaign that pervades all forms of mass media that distorts history and aggrandizes the growth of the state. At this point, the vast majority of people are absolutely convinced that a free society is at best doomed to economic collapse and in all likelihood a violent, brutish, dog-eat-dog dystopia.

While I don’t have a particular “magic bullet” to restore the vital freedom to amass wealth without having to fear government confiscation or debasement, I do have some suggestions:

  • Accept as wide a variety of currencies and goods as payment as you can.
  • Likewise be prepared to proffer as wide a variety of goods and currencies as possible.
  • Store some of your savings in places that others do not have access to. Limit knowledge about the size of your savings on a strict need to know basis. Loose lips sink ships! (NB. Safety Deposit Boxes don’t count; FDR had his thugs systematically go through people’s safety deposit boxes throughout the country, confiscating the newly illegal gold) .
  • Do not cooperate with the state any more than your conscience, or willingness to engage in civil disobediance permits. Keep in mind, though, that principled non-cooperation with the state can easily lead to being thrown in jail, beaten, or even murdered.
  • Keep your eyes peeled for new ways of doing business, new products, and new marketplaces that increase your independence. When you find something, publicize it as widely as is appropriate.

In the end, the current system cannot last. The United States Government is consuming resources at a rate that is unsustainable. Using the collapse of other states as a guide, it is quite likely that its officers will wreck a large portion of the U.S. economy in their efforts to delay the inevitable. How destructive the collapse is, how vulnerable people are to the destructive edicts issued by government officials will be a function of how well we do in fostering the growth of alternate institutions. Shielding ourselves from harm is but a first step. If we wish to avoid experiencing that which Germans did 100 years ago - the destruction of an enlightened culture by a voracious predatory state leading to totalitarianism, death and war (see here for the illustrated version)- we must also figure out how to shield our neighbors too.

So I have a homework assignment for you, dear reader, what will you do to build the institutions that make it easier for you and your neighbors to keep what they make away from the tax-man?

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

Debts, Deficits, Taxes, and Tea Parties

In watching the MSM coverage of the Tea Party protests, the following arguments are used to try and debase the factual arguments of the protests:

  1. Obama plans to lower taxes on the majority of Americans while raising them on the rich.
  2. Obama’s budget cuts the deficit in half over the next 10 years.
  3. Right now tax rates are the same as they were when Obama took office.
  4. Most Americans are OK with their taxes.

These are all true, but none invalidate the point of the protests.  The protests are not talking about current taxes, they are talking about future taxes.  Each and every dollar borrowed today is a dollar taxed out of the economy at some point within the next 30 years.  This is a simple, undeniable fact.

When trying to figure out bad our future tax burden is, one number concerns us:  The National Debt.  This number is staggering, standing at $11,176,642,012,673 at the moment I type this.  According to the CBO, Obama’s budget will increase this debt by over $1,800,000,000,000 in just the next year.   So, while Obama is correct that his budget cuts the yearly budget deficit in half by 2019, that means that his spending plan will add a mere $900,000,000,000 to the national debt that year.  If the CBO estimate holds, the debt will top $20,000,000,000,000 in 2019.  This means that between 2009-2019, the amount of money borrowed against the full faith and credit of the US taxpayer will almost have doubled.

Say it to yourself… twenty trillion dollars.  That’s the massive future tax liability for the citizens of the United States being protested today.  The anger about this future tax liability is very real among those who see it.  While the tea party movement might get co-opted by big-spending Republicans and fade away, the sentiment that started it is as genuine, grassroots, and truthful as any protest movement in American history.

Stephen Gordon On Rachel Maddow

As Jason noted last night, our own Stephen Gordon appeared on Rachel Maddow’s show last night discussing the rift between conservatives and libertarians over the Tea Party’s.

Here’s the video:

Visit msnbc.com for Breaking News, World News, and News about the Economy

UPDATE: Huffpo on Gordon’s appearance here. HotAir here. Raw Story here. Maddow fan site here.

Tax Day Protestors — Time To Put Your Money Where Your Mouth Is

A few weeks ago, I asked those who were interested in fighting back against the forces of taxation to actually do something tangible to make a difference. I asked for a real Tax Day protest.

The idea was simple. Decrease your tax withholding to the minimum level to avoid penalties, in order to ensure that the FedGov doesn’t get your money until it’s absolutely required. I even gave a simple metric, for those of you who work standard salaried corporate jobs, claim me, myself, and I, plus spouse and/or dependents. For me, that number is 6 (me, myself, I, wife, son, soon-to-be-born-son).

In my case, that resulted in my claimed exemptions moving from 4 federal, 3 state, to 6 federal, 6 state.

What I want to know is — who’s coming with me? Who’s actually changing their claimed exemptions to reduce their withholding?

Frankly, folks, this will mean more than showing up to some mass protest today. If you’re joining the Tax Day Withholding Party, post your changes in the comments section.

The Tax Day Coalition

A lot of digital ink has been spilled on these pages over the tax day “Tea Party” protests. Not all of it has been supportive, but I think there’s to some extent a need to clear the air and explain our position. Granted, this is a group blog and I can’t quite speak for everyone here, but we’ve had some backroom discussions so hopefully I’ll give a general enough overview.

The Liberty Papers has signed up to be a part of the Tax Day Coalition.

There are a lot of conflicting thoughts about this. There is some concern over whether the Tea Party has been co-opted by the type of folks who had no problem with the big spending of the Republicans over the last 8 years, and only seem to have that “come to Jesus” moment when they realize that it’s the opponents who are holding the purse strings. To some extent, of course, the levels of spending we’re seeing are a pretty significant expansion on those of the Bush administration, and many of those on the Right applauded his big war spending and national security spending, and forgave the NCLB and Medicare Part D spending as politically necessary to keep “the agenda” moving forward.

Either way, we see a large group of people opposed to high taxes and high spending. And that’s a good thing. The art of politics is knowing where coalitions can be formed, and making use of them. We see the populist appeal of this movement, and we see this as the tangible reaction of a group of people who have been betrayed by their own party but were too internally conflicted to organize resistance until they were out of power. They’ve come back to the correct side of the debate now, so it’s a good idea to work together rather than fight them out of a libertarian purity purge.

The Liberty Papers has been fighting against this taxation and spending since we formed this blog in 2005. We’re not joining the Tax Day Coalition, we’re excited that the Tax Day Coalition is joining US.

You are “The Rich”, and you didn’t even know it

Video From Reason.TV:

A lot of folks hear numbers like “the top 5%” of income earners, and they think that means Bill Gates, and fortune 500 CEOs etc…

No, although that’s exactly what the government, and the media, would love for you to believe.

It’s how they pit us against one another. It is a very deliberate divide and conquer strategy for class warfare; and the fact that 52 million people voted for it shows just how well it’s working.

It works, because “The Rich” is always the other guy. You aren’t “The Rich” after all, you’re “working class” or “middle class” whatever those mean (and who exactly says the “middle class” don’t work?).

Nobody wants to pay more taxes (well, except some of the extreme left), and very few people would vote to increase their own taxes; so they employ this class warfare rhetoric to get you to support tax increases on “The Rich”, which will supposedly favor you, and “the less fortunate”.

The only problem is, according to the government, there’s a pretty good chance that You (yes You, with a capital “Y”) ARE “The Rich”.

How can that be? They’re always talking about the “top 1%” or the “top 5%”, and again people start thinking about Bill Gates, and bank CEOs, and Wall Street traders…

Actually, the top 5% likely includes a lot of folks you know. Theres a fair chance it includes you. It almost certainly includes people you interact with every day.

When we get down to as low as say, the top 15%, most folks would think that got to be people making like $250,000 a year right?

No, actually people who make $250,000 a year are the top 1% (in fact, anyone over about $180,000 a year is in the top 1%. $250,000 puts you into the top .8% or so).

Wait a sec… the top 1% is just $180,000 a year?

Yes, yes it is.

The estimated individual income numbers for 2008 (actuals wont be available for another two years. Also don’t confuse these with household numbers, which account for multiple incomes) look like this:

The “top 1%” of earners in this country, is everyone who makes over about $180,000 a year.

The top 5% is everyone who makes over about $152,000 a year

In case you were interested, $100,000 is the top 5.63%

The top 10% is everyone who makes over $76,000 per year.

The top 15% is everyone who makes over about $64,000 a year.

The top 25% is everyone who makes over about $46,000 a year.

The top 50% is everyone who makes over about $32,000 a year.

So when somebody says “we’re going to tax the richest 15% to pay for the other 85%” what they’re really saying is anyone who makes more than $32 an hour.

Ayup, if you make more than $32 an hour, guess what, YOU are “The Rich”.

If they say “we’re going to tax the richest 25%” that means anyone who makes more than $23 an hour.

So, let me ask you, are you rich?

The top 15% pay more than 85% of all income taxes.

The top 50% pay more than 96% of all income taxes.

The bottom 50%, pay less than 4%.

The bottom 40% pay nothing at all.

The bottom 30% are actually PAID BY THE GOVERNMENT (and I don’t mean civil servants).

Plumbers, carpenters, electricians, mechanics, pretty much anyone with more than 10 years experience in any mid-level or higher job, in any professional career field or trade; that most likely puts you into the top 15% or so. Are you rich?

If you own your own business, the government ALMOST CERTAINLY classifies you as earning in the top 10% or higher… of course how much of that you actually KEEP is another story. Are you rich?

If you’re reading this right now, demographically speaking, it’s very likely you are in the top 15%. Are you rich?

If you have a college degree, live in or near a major city, and have more than 10 years experience in your career field, you are very likely to be in the top 5%, and almost certainly in the top 15%. Are you rich?

I’ll tell you right now, I’m in the top 5% of income earners, and with my wifes income we’re in the top 5% of household earners (in fact, the top 3%); and we are very definitely not rich.

We don’t live an extravagant lifestyle. We have a 1600 square foot house in an old neighborhood in Scottsdale (not one of the McMansion areas), two used cars that were both under $30,000 each when we bought them, and we send our two kids to Catholic school that’s subsidized by the parish, or else we couldn’t afford it. We don’t have a vacation home; no RV, no boat, no vacations to Switzerland every six months…

We’re not rich.

As far as the government is concerned though, we are “The Rich”.

In fact, it’s very likely that you are “The Rich” too.

What they’re really saying when they talk about “taxing the rich”, is taxing you. Because as far as the government is concerned, unless you’re taking money from them, hey, YOU’RE RICH.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

Our Tax Day Protest, and Celebration

We’re not going to a tea party; mostly because we have jobs, and also because I think they’re both great, and ineffective.

Great, because it’s amazing that so many people are making it known publicly that they don’t want to have their freedoms abridged, and more of their money stolen from them.

Ineffective because basically all protesting is ineffective; unless the media is actively on your side, and making the protests seem huge, and significant etc….

Let’s face it folks, we could have 5 million people out there on tax day; the media would still report it as “a few right wing whackos, who are racist because they don’t support Obama, and hate poor people because they don’t want to have the government steal all their money”.

The only media reporting on the Tea Parties in any meaningful way (including the supposedly conservative Fox news; who are reporting in their typical populist and shallow manner) are the alternative conservative and libertarian media; like our blogs and other websites, and talk radio.

In effect we are playing to the home crowd with the Tea Parties. It’s a great pep rally and all; and I’m glad they are happening, but I don’t want to participate.

Besides which, there’s a lot of standing around at these things, and I’ve got bad knees.

I prefer more direct action. Lawsuits are a good start. Refusing to pay unlawful and unconstitutional taxes are also good; and generally result in lawsuits or even criminal prosecutions which can be taken to the supreme court etc…

Also, direct contact with your congresscritters tends to have at least some effect… sometimes… Make them understand that their constituents won’t vote for them if they don’t vote for tax cuts, spending cuts, etc…

So instead of standing around and getting all shouty, our tax day celebration and protest will involve pork.

Not the kind that Washington generates; the kind that you eat with sauce, beer, and cornbread. We’re going to be smoking pounds and pounds of pork, and then consuming it; along with other delicious comestibles.

We’re also going to be playing with firearms, and consuming large quantities of alcohol (obviously not simultaneously). We’d throw tobacco in for the full ATF trio, but none of us actually use the stuff.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

Nevada Government Turns Down Tax Revenue?

Talk about some strange incentives. A business is clamoring for the state to tax their services, and the budget-constrained state turns them down:

Nevada, suffering from a $3 billion budget crisis, passed on a chance to raise at least $2 million a year. Yesterday, lawmakers said “No Thanks” to a $5, er, service tax, for duties performed by the state’s few legalized brothels.

The tax created an eclectic opposition: Religious conservatives and feminists, Republicans and Democrats. It also made for strange, tip-toed responses. Sen. Terry Care (D-Las Vegas) said, “[t]here is an implication there that the business takes a toll, at least on some women” [Italics added]. Sen. Mike McGinness, (R-Fallon) said he voted “nay” because he doesn’t believe in taxing services. For Sen. Maggie Carlton ( D-Las Vegas) voting for the tax could have sent the wrong message to parents and daughters.

So brothels want legitimacy, and legislators are either moralists, or too afraid to pop their cherry.

Just as tobacco companies would rather pay punitive taxes than see their product made illegal, and the brothel owners are in the same boat. This is an offer of protection money, and for once I’m shocked to see government turn it down.

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