Category: tax policy

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tax policy too much government

For a Thousand Years

government, monster, politics

Time for a gas-tax holiday. 

When the people lie prostrate, when the people groan under heavy burdens, when the people just can’t take it anymore — and when an election is coming up — that is the time for politicians to relieve everyone’s burden.

A bit.

Treasury Secretary Janet Yellen favors considering a temporary gas-tax holiday to emulate some of the states. Reviving the Keystone oil pipeline — no, not something to consider, she says. But she’s okay with a brief gas-tax break.

Let’s do better.

I propose a millennium-long gas-tax holiday, government-barriers-to-drilling holiday, regulation-of-all-industries holiday. Under my plan, government gets all the way out of the way of all markets so we can all be as prosperous as possible, whether or not a big economic crisis is underway.

But would there be any such crises — long-term and intractable economy-wide crises, I mean — if my plan were enacted?

When government does everything possible to injure the economy and prevent recovery, it takes a long time for markets to bounce back from shocks. If ever.

Un-fetter the markets, though, and economic actors would be able more rapidly to adjust to major jolts. If gas imported from overseas plummets, producers could then quickly adapt by expanding production. They cannot readily do so now because government imposes so many barriers.

The politicians’ preference for modest, namby-pamby reprieves are not only substantially weak, they send the wrong signals. They get doled out as if government were doing us a special favor . . . by not beating us up so badly for a very little while.

We need freedom. On an ongoing basis.

This is Common Sense. I’m Paul Jacob.

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Accountability privacy tax policy

Stay On Call 

facial recognition, taxes, privacy, freedom

Backlash can be good. Against lousy ideas, for example. Sometimes, the response to the backlash is to relinquish the lousy idea, at least temporarily.

We must hope for more than a moment of reprieve from the Internal Revenue Service’s plan to require facial ID recognition of persons who use certain functions of its website.

Both Republican and Democratic congressmen, among many others, were outraged.

It’s good that many congressmen regard some forms of surveillance as beyond the pale. (Meanwhile, legislation to promote scanning of everybody’s online messages at will, Lindsey Graham’s EARN IT Act, is back in Congress. Bipartisan Backlash, can you take a look at this?)

The IRS said that it wanted to use facial recognition technology to help prevent scammers from posing as taxpayers.

But a database of such facial info would itself pose a huge security risk. For decades now, we have been inundated with stories about major databases being hacked.

Nor would legal access have been restricted to the less-than-trustworthy IRS. A third-party vendor would have been involved.

So the IRS has retreated, saying they grasp “the concerns that have been raised” and pledging to pursue “short-term options that do not involve facial recognition.”

The Biden administration has also proposed expanding IRS staff by 80,000+ personnel and permitting minute governmental monitoring of the bank accounts of millions of Americans — notions now in abeyance but undead. And who knows what other innovations in overseeing us are coming up?

Stay on call, Bipartisan Backlash.

This is Common Sense. I’m Paul Jacob.

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Fourth Amendment rights privacy tax policy too much government

A Closer IRS

IRS, privacy, banking, audit

Congressman Jared Golden, a Democrat in a Trump district, may be feeling heat.

“First, Nancy Pelosi said she’d raise taxes. Now, she’s coming for what’s left,” warns an American Action Network television advertisement airing in Golden’s Maine district. 

“To help pay for trillions in new spending, Pelosi wants the government to spy on nearly every American bank account, looking for new money to spend,” the spot continues. “Your deposits, payments, bank balance . . . under Pelosi’s plan, the government monitors them. 

“Call Jared Golden and tell him to . . . keep the government out of your bank account.”

Fact-checking the spot, News Center Maine determined that, “yes, as part of that plan, banks would be required to give two additional pieces of information to the IRS: how much money went into certain bank accounts over the course of the year and how much came out.”

Those “certain” accounts started out being those with $600 going in or out. After the public uproar, the plan hiked the amount to $10,000. 

Same principle, though.

“The only way to ensure that upper-income taxpayers pay what they owe,” explained a U.S. Treasury press release, “is by giving the IRS the resources and information required to close the tax gap.”

But does our system work that way? Not according to the Fourth Amendment.

We do not keep “a closer eye” on people making a certain amount; it is un-American to require all such “suspects” be put through the wringer the better to find a few guilty of something.

This is Common Sense. I’m Paul Jacob.

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national politics & policies partisanship tax policy

Billionaires Backed Better

billionaire, Democrat, taxes

It’s a cliché of politics that the Republican Party is The Party of the Rich while the Democrats serve the Poor and Downtrodden.

But were that true, why so many Democratic billionaires?

And why is President Biden’s Build Back Better legislation offering the top income quintile a tax cut worth billions and billions?

At issue is a “$285 billion tax cut that would almost exclusively benefit high-income households over the next five years,” write Alyssa Fowers and Simon Ducroquet in the pages of The Washington Post. “The measure would allow households to increase their deduction from state and local taxes from $10,000 to $80,000 through 2026, and then impose a new deduction cap through 2031.”

“It’s the second-most expensive item” — when figured in budgeting terms, not merely in outlays.

True to form, Democrats promise that it would raise revenue, actually — eventually. In time-honored procrastination fashion, the legislation jiggers with the deduction cap over time, decreasing the cap in the future. A typical (and easy to re-jigger) politicians’ ploy.

What this is all about is subsidizing the rich in high-tax “blue states” — politically protecting Democrats in California and New York, to name the most obvious two, allowing them to pretend to “soak the rich” and “help the poor,” and decreasing the incentive in those states for the rich to leave for lower-tax environments, like Texas and Florida.

Arguably, these “SALT” caps are the worst sort of tax break possible, since they are regional (affecting different states differently) and even partisan. Not to mention regressive.

Instead of “Build Back Better,” the Biden plan should be dubbed the “Failed State Bailout.”

This is Common Sense. I’m Paul Jacob.

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Accountability local leaders tax policy

Balking in Baltimore

Baltimore, taxes

So far, the besieged businessmen of the Fells Point area of Baltimore are only threatening to withhold payments of taxes and fees to the city.

If and when they follow through, the plan is to place the withheld funds in escrow. The money would then be turned over to the city government if and only if the city again meets minimal standards of performance. 

Tax resistance? Sure. But not in the usual mode.

Fells Point shop owners are rebelling against a “culture of lawlessness” in their streets, streets managed or mismanaged by the city. They want police to do more — be free to do more — about crime.

In a letter to Baltimore Mayor Brandon Scott and other officials submitted not long after several shootings in the area, thirty-seven Fells Point businessmen demand that the city “Pick up the trash. . . . Enforce traffic and parking laws. . . . Stop illegal open-air alcohol and drug sales. . . . Empower police to responsibly do their job. . . . Please do your job so we can get back to doing ours.”

What will happen? I fear that, despite this worthy protest, city officials will continue to turn a blind eye. I fear that they will regard the protest as a PR problem, one that will go away and allow them to go on with the usual business of government — the way they see it. Their evasive initial responses to the letter are not encouraging.

Baltimore businesspeople are not trying to dodge city taxes here. They understand very well that one cannot expect to get something for nothing. They just want to get something.

This is Common Sense. I’m Paul Jacob.

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national politics & policies tax policy

The Six-Trillion Dollar Man

spending, taxes, government

“Mr. Biden is making a six-trillion dollar bet that promoting popular programs will be popular,” offered NBC Meet the Press host Chuck Todd on Sunday, “and that he’ll be rewarded for getting things done, long before the actual bill comes due.”

That “Six trillion dollars”? New splurging “on social spending, infrastructure, climate change, health care and more.” 

The host intoned that this constitutes the “return of big government.” 

“We have to prove democracy still works, that our government still works,” Joe Biden, the 47th president, implored Congress last week, “and we can deliver for our people.”

Spend = Deliver. 
Deliver = Democracy. 
Democracy = Spend!

So goes a federal “democracy” wherein voters never get a straight, democratic choice on how much government should spend and tax.* Instead, politicians opt for their beloved “deficits forever” method. Purchase votes today — “People like it when you give them money” — and leave for future generations of voters the tax burden needed to pay that bill. No pain, all gain. 

Smart re-election strategy, some say. 

“Democratic strategists are betting that the infighting in the Republican Party, the extremism on display during the Jan. 6 attack . . . and the sheer scale of the trillion dollar programs Democrats have pushed through this year,” reports The Washington Post, “leads to a reorienting of partisan divisions that can overcome historical patterns.” Meaning Democrats avoid the traditional loss of congressional seats for a president’s party.

“Will voters care about the scope of Mr. Biden’s plans?” Todd inquired. “. . . care about the price tag?” 

Likely to the degree they notice paying that price. 

“President Trump and the Republicans may have made it a bit easier for Mr. Biden by spending big themselves,” reminded Todd.

He’s not wrong there.

This is Common Sense. I’m Paul Jacob.

* Colorado voters have such a choice: a vote on any tax increase and on government spending increases. It’s called the Taxpayer Bill of Rights (TABOR) and was passed by citizen initiative back in 1992. The politicians and lobbyists just hate it, as I detail here. 

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education and schooling tax policy

Race, Ignorance, Racism

Harrison Bergeron

Not spending millions more to hire and train swarms of Internal Revenue Service agents to poke, audit, investigate and squeeze more tax dollars from wealthier Americans would be — you knew this was coming — racist. 

That’s the new argument for siccing the IRS on wealthier Americans; they’re more likely to be white than black.

“The federal government is losing billions in unpaid taxes,” informs a Washington Post headline, “in part due to racial disparities in the tax code.”

What racially based inequalities, precisely?

“The inequity rests on long-established tax breaks that favor White Americans over Black Americans in three areas — marriage, homeownership and retirement, according to Dorothy A. Brown, an Emory University law professor,” writes Post columnist Joe Davidson. Because, for instance, “White people . . . are much more likely to be homeowners,” and more likely than blacks “to work for companies that offer tax favored retirement plans.”

Davidson offered no further discussion of marriage.

One can argue for or against hiring more IRS agents. (I’m against.) But to calculate the merits based on the skin color of the people most likely to be investigated is . . . racist.

Where does such skewed logic lead?

“The Virginia Department of Education (VDOE) is moving to eliminate all accelerated math options prior to 11th grade,” Fox News reports, “effectively keeping higher-achieving students from advancing as they usually would in the school system.”

This statewide policy designed to hurt so many individual students — and to help none — is predicated on closing a racial gap in math performance. By knee-capping the higher performing students of all races.*

So which is worse? That it’s a human rights violation . . . or that it is so incredibly stupid?

This is Common Sense. I’m Paul Jacob. 

* As a candidate in this year’s Virginia House elections explained to The Federalist, the proposed statewide policy “is incredibly belittling, arrogant, and racist in assuming that children of color cannot reach advanced classes in math.”

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tax policy

Just Never Satisfied

taxes, wealth, poverty, freedom

The top federal income tax rate is currently 37 percent.

It’s been higher — 94 percent at one point during the Second World War, 91 percent in the 1950s . . . on income above a certain threshold.

Back in the 1890s, the federal government briefly taxed income at 2 percent. It was quickly struck down by the U.S. Supreme Court as unconstitutional. 

Those were the days.

In 1913, the 16th Amendment was ratified, giving Congress “power to lay and collect taxes on incomes” overriding the constitutional provisions that the high court had cited in 1895. The first federal rates were 1 percent for the lowest income bracket, 7 percent for the top bracket, on income above $500,000.*

By 1916, the lowest percentage was 2, the highest 25, on income above $2,000,000.

The good news: skyward tax rates aren’t set in stone. The bad news: once a precedent for a new tax has been established, you can expect worse to come.

So what happens if California Assemblyman Rob Bonda gets his way? He seeks a tax of “just” 0.4 percent on the accumulated wealth of “just” “the top 0.15%” wealthiest Californians, “about 30,000 people.” If these wealthiest leave the state, they would still be subject to the tax for ten years(!). 

Presumably, this latter, and quite brazen, aspect of an already brazen tax would be subject to constitutional challenges.

If Bonda’s proposal is enacted and upheld, would the scope of its reach stay put at 0.4 percent of holdings and 0.15 percent of Californian taxpayers?

It would not.

This is Common Sense. I’m Paul Jacob.

* That was a lot of money back then — worth $13 million today.

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deficits and debt tax policy too much government

No Shock and Awe

Benjamin Franklin, Death and Taxes,

They’ve crunched the numbers and the shocking truth is . . . Democratic Presidential candidate Joe Biden wants to raise taxes and debt.

The word “shocking” needs quotation marks, of course, for sheer lack of any shock whatsoever.

Also not shocking is who pays.

You see, “80 to 90 percent of the total proposed tax increases in Biden’s plan would fall on the top five percent of earners,” according to the Committee for a Responsible Federal Budget. That is the target taxpayer cohort, anyway. Economists know a hidden truth: the incidence of a tax’s burden shifts. All taxes siphon off production, but — because production is engaged in for consumption’s sake — in the end consumers pay.

In politics, of course, the idea is not to acknowledge this, instead focusing on the targets, tempting voters to get on board with spending and taxing and borrowing just so long as some other (preferably non-voting) people pay. 

“While tax burdens would rise by 0.2 to 0.6 percent for most households, they would rise by 2.3 to 5.7 percent for the top 20 percent of earners and by 13.0 to 17.8 percent for those in the top 1 percent in 2021.” The Democrats would have the highest earners in America pay an extra “$300,000 per year” and call that a benefit . . . to those who would pay less.

Meanwhile, the “additional revenue that would be raised through Biden’s tax plan would only pay for a portion of his overall spending agenda.” It would take “$6 trillion more . . . to stabilize debt-to-GDP at today’s near-record levels.”

According to the CRFB, because of pandemic panic spending, and before any proposed Biden add-ons, “debt will grow from 79 percent of GDP before the crisis to 101 percent by the end of 2020 and 118 percent of GDP by 2030.”

Have our politicians set out to revise Ben Franklin’s maxim? There is nothing more certain than death and taxes — and debt.

This is Common Sense. I’m Paul Jacob.

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tax policy too much government

California Schemin’

California, Democrats, taxes,

Is California a failed state? It has an electric grid problem. And a vagrancy problem. Both of which stem from the bizarre ideological blind spots of a political class “benefiting” from the state’s high legislator/citizen ratio, which insulates politicians from feedback.

Driving them power mad.

And one form of madness flowers in political greed, hubris and overreach.

“A pack of Democratic lawmakers in California are proposing a wealth tax for the state’s richest citizens, forcing them to pay more essentially just for owning a lot of stuff,” writes Scott Shackford at Reason. “They also, amazingly, want the tax to follow Californians who flee the state in response, attempting to make them continue paying taxes on wealth that’s not even in the state.”

Rob Bonta, Oakland’s Democrat in the Assembly, says the Golden State needs more gold, and he has made a startling observation. Wait for it. “Rich people have money,” Shackford summarizes, and Bonta wants to take it. To expand services.

But surely service expansion is not only not the only option, it is often the worst option. 

Take the state’s rolling blackouts. Was that caused by not enough or really bad legislation? President Trump points his finger at the Democratic-controlled Assembly: “In California, Democrats have intentionally implemented rolling blackouts — forcing Americans in the dark. Democrats are unable to keep up with energy demand,” the president tweeted on Tuesday. But the New York Post identifies as a cause not “intentionally implemented” blackouts, but “inadequate transmission and an over-reliance on renewable energy and issues with natural gas plants during high heat.”

Bad policy. Not too few “services.”

And the proposal to tax the richest Californians — or former Californians — to pay for more disastrous programs? 

Hubris and greed.

Not Common Sense. I’m Paul Jacob.

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