Posts Tagged ‘taxes’

This quote is from a 9/25/10 AP story on the GOP “Pledge to America”, PBO’s predictable response and the philosophical differences between the Dems and the Repubs:

“Perhaps the biggest difference was on taxes, where Republicans want to extend all of George W. Bush’s income tax cuts permanently — at a cost of some $4 trillion over 10 years.”

“Cost.” Says who? Keeping taxes where they are will cost $4 trillion? Partisan bull.

There is an element of our population that does not understand the simple economics of this discussion, but I hope most Americans get it. The left does – at least those who don’t have their heads so far up their ideology that they can’t hear the howls of outrage of the electorate. The rest of them will stick their fingers in their ears and remain willfully ignorant when this is explained because they know it undoes their agenda.

Imagine a produce stand. It makes enough in sales that Farmer Brown can support his family. His wife gets the idea that she’d like to add a swimming pool to the old homestead, so she convinces him to raise his prices – tomatoes, for example, are now $15 each. He is surprised to find that his sales have dropped off to nearly nothing, even though he’s the only produce stand for miles around. In one week, he sold only 2 tomatoes, so he’s made $30 on his tomato sales. He’s experiencing a seriously sluggish micro-economy, and now he can barely afford to keep the lights on at the farm.

He wants to lower the price of his tomatoes from $15 each to $1 each. Still outrageous, but not as hopelessly overpriced. Based on last week’s sales figures, his wife calculates that when they sell the 2 tomatoes this week that his low price plan will “cost” them $28 in lost revenue.

But an amazing thing happens – sales go up, and he sells 50 tomatoes (still a far cry from the glory days, but an improvement nonetheless). He can now happily put $50 toward his electric bill and keep the lights on. His sales went up $20 in just one week. But his angry wife points out that if he’d left the price alone like she wanted, they’d have made $750 on those 50 tomatoes! She’s so preoccupied about the $700 he “let get away” that she can’t get her brain around the simple cause-and-effect scenario – that lowering the price caused the higher sales, and that charging too much chased the sales away. Her $750 sales day could never have happened.

Will lowering taxes (prices) cost the government (farmer) $4 trillion ($750)? Or will it generate more income, like it has in every credible example ever recorded?

Watch out for AP statistics that use “static accounting”, which is a fancy way of saying that they assume a change in one variable will not trigger change in anything else. A change in price will affect sales at the produce stand, and a change in our tax rates (or even uncertainty in future tax rates) will affect our GDP.

The real question is whether the “Tax! Tax! Tax!” ideologues will give up on this failed and faulty path we’re on before the bank forecloses on the farm.

This article is part of a five-part series. See Part 1 here.

Economic Intervention
Every government program is an intervention in, and thus an interruption of, the free market. The post office, for instance, is a competitor of UPS and FedEx. But because the USPS isn’t required to make a profit, its rates are artificially imposed – and that in turn affects the rates of the private companies, too. Public schools draw funds away from every property owner in order to compete with private schools that have no captive pool of contributors – they can only charge the customers they provide a service to. (The truly criminal part of this situation is that the private school customers are often also paying the taxes that fund public schools!) Minimum wage laws prevent employers from discovering the actual value of their workforce and their ability to hire more workers. CAFE (Corporate Average Fuel Economy) standards for vehicles limit the availability of designs that are offered to the public (and have actually been proven to have cost more lives in the name of ecology). Taxes of every kind influence the fiscal decision-making of every company and individual in this country. There’s virtually no area of trade untouched by the federal, state and local governments.

So when the federal government starts talking about spending a great deal of money on a plethora of new government programs to “stimulate” the free-market economy, a perfectly reasonable and understandable reaction would be one of horror.

Mark Levin writes in the chapter called On the Free Market:

The reason stimulus plans of this sort do not work is a fundamental reality of governance: The government does not add value to the economy. It removes value from the economy by imposing taxes on one citizen and providing cash to another. Or it borrows money that would otherwise be used by investors and redistributes it elsewhere. Or it prints more money and threatens the value of the dollar. Nothing is stimulated. Spending power is not increased.

There is another aspect of government in the marketplace that should not go unmentioned. No one thinks FedEx is an inferior product to the USPS. The mere fact that private schools can charge for enrollment indicates that they clearly have a better product than the “free” public, government schools. There is nothing that government can do in the marketplace that private business cannot do better, cheaper and more efficiently. Levin writes:

Moreover, politicians and bureaucrats are substituting their uninformed, largely political decisions for those of the marketplace. Their past miscalculations demonstrate that they do not and cannot possess the information, knowledge, means, and discipline to manage the economy.

Or anything else, for that matter. Without going into too much detail, my biggest gripe when it comes to Washington’s virtual takeover of AIG, Chrysler, and now the credit card industry, is this: why does D.C., and especially our new President (who has no experience in business of any kind at all), think that they can make better corporate decisions than the people who worked ridiculous hours for years and years, clawing their way to the top of their corporate chart to become masters of their industry?

Our current federal government is taking their lead from the president – and he hates the free market. There is a specific, leftist image of what the world ought to look like, and they want to compel or coerce the country into that mould. The free market often disagrees with this image, and the Statist is alarmed that it’s wise, parental advice is being dismissed. Obama will impose the image through force onto the world rather than revise the image to fit reality. For the world’s own good, of course, whether anyone wants it or not.

Part 1: World Opinion and American Exceptionalism
Part 3: The Linguistic Psy-War Tactics of Liberals

Being fairly new to politics, and being increasingly alarmed at the direction the “majority” seems determined to take things, I was excited to attend the Atlanta Tax Day Tea Party on April 15, 2009. This event, and those held in over 800 cities and towns across the nation, was intended to bring attention to the idea that there is absolutely no consensus on the actions taken by the federal government in the last few months, especially in regards to bailouts, “stimulus” spending, deficits, pork, taxes and our Federal government’s obvious efforts to push the country away from capitalist free markets towards socialism. Media imbalance, legislative constitutionality and fiscal responsibility were also topics of great concern, judging by the amateur signage and speeches.

15,000-20,000 protesters fill the streets outside the GA state capitol

15,000-20,000 protesters fill the streets outside the GA state capitol

One look at the faces in the crowd and you knew this was not your typical political protest rally. The average age of the participants seemed to be around 55-65 years old. In addition to the grandparents, there were children, teens, college kids and mid-lifers all in evidence. It was as varied as a crowd at a state fair. And although most of the crowd was Caucasian, there were several Hispanic and Black people present – despite what some “news” outlets were reporting, I learned later. (Beware anyone who objects to something because of some perceived but otherwise completely fictitious racism. I did see one rebel flag at the rally, but the prevailing opinion was, “Why is that moron flying a rebel flag?”) There may have been some pro-Obama, pro-fascism counter-protests somewhere, but none that I could see. For many, it appeared to be their first foray into political demonstration of any kind. The crowd was obviously full of rookies.

My personal disclaimer – I loathe Sean Hannity. I don’t know who John Rich is. None of the speakers were familiar to me, with the exception of Dick Armey, who gave a logical, impassioned speech about how even Keynes would find the recent efforts of our President and Congress appalling. (And he looked great in that cowboy hat.) So there wasn’t much for me to see onstage. But I stuck around for the whole thing, because it was all still quite moving. No tea party anywhere was going to “accomplish” anything, but they were not (as some mainstream newsman put it) “silly and pointless” – the people who came were making a statement of unity and expressing their outrage. They were saying, “We don’t have all the answers tonight. But we know that these things are wrong, and nobody has been listening. 536 elected officials in D.C. have ignored us up until now – and will continue to do so at their own peril”

I learned the next day how outrageously biased the news coverage was on the tea parties. I think whatever small kernel of respect I had left for MSNBC after their abysmal coverage of the election was completely destroyed by their distasteful mockery of this honest, grass roots effort. Keith Olbermann used his broadcast to denigrate the protesters through double-entendre, suggestion and vulgarity. That was too much.

Despite the shrill claims of the Obama courtesans, there is no evidence that this was a “GOP funded and orchestrated” movement, and neither FOX nor the GOP ever had a valid claim to sponsorship. Homeschool moms, local bloggers, and Facebook links were not just the catalyst of most of the local events, but they were responsible for nearly everything that followed. FOX was admittedly enthusiastic in their coverage, but looking back and comparing the media’s saccharine accolades and embarrassing fawning that accompanied the Democrat National Convention and the inauguration, the FOX coverage was reserved, detached and actually informative. I’ve seen clips of the CNN coverage, and it was embarrassingly bad journalism – not worthy of a closed-circuit television class at a community college.

Being there was quite an experience. I parked 11 blocks and walked the rest. At 6:00 pm I was pretty close to the stage. By 9:15 most of the crowd had moved half a block away toward the Pajamas TV large screen where it was much easier to see and hear the goings on. This meant that no one could leave the area due to the crushing crowd at each end of the block, but ironically also caused a large section of the street very close to the stage to almost completely empty out. You couldn’t see anything from there, and the sound was horrible. I was able to take a cell phone call in this relatively quiet middle ground – and got to speak to my friends at the Libertarian Dime in time for their podcast.

Our phone interview ended around 10:00, just as the event began to break up. It was time for the long, somewhat frightening walk back to the car. I think the 15,000-20,000 people who attended in Atlanta made their point. I guess nation-wide it was near a million. It’s encouraging to see so many people come to something like that. I think it means that our public servants (that’s what they are – don’t let their arrogance or apparent power fool you) in Congress will have to consider their actions even when an ineffective, Republican minority is unable to halt their excesses. And don’t imagine the Republicans are ignorant of the meaning of the tea parties, either. I think that for any political lifer, this kind of spontaneous activism is a huge wake-up call. Or it ought to be, anyway.

This is encouraging for the libertarian. The protesters understand that big government is a threat to freedom. Our Constitution is in jeopardy and requires defense. Personal responsibility is preferable to a nanny state. Federal efforts at “social justice” are either misguided altruism or outright fraud. So although most of the protesters would probably identify themselves as Republicans or conservatives, the concepts that make them active are those that are most effectively aligned with libertarian ideas and ideals.

To borrow a (much over-quoted) phrase from Rahm Emanuel, the Libertarian Party should not let this crisis go to waste. There’s an enormous opportunity to score some points with people who are thinking about these things – some for the first time in their lives.