Tag: wealth

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ideological culture media and media people tax policy

Post California Soaking

California, taxes, wealth, government

Rumors that Washington Post owner Jeff Bezos has been pushing the Post in a more commonsensical editorial direction could very well be true.

A recent Post editorial slams progressives who “think of taxation the way teenage boys think about cologne: if some is good, more must be great.”

I’m no fan of even a moderate amount of that brand of cologne. But anyway. The Post is discussing a proposed ballot measure backed by the ultra-​lefty Service Employees International Union.

SEIU troops are currently collecting signatures. And before they’ve even gotten enough to post it to ballot, the people being targeted have started moving. 

Out of state.

The measure would impose a new 5 percent tax on billionaires. Some of the state’s billionaires, including Google cofounder Larry Page and Palantir cofounder Peter Thiel, aren’t willing to wait and see whether it actually reaches the ballot and passes in November. Why? The measure would apply retroactively “to those who were California residents on January 1, 2026.”

Some Democratic lawmakers are saying “good riddance,” as if it’s possible to loot billionaires who don’t wait around to be looted. Or that it’s good for state coffers to lose their billionaire entrepreneur “contributors.”

The Post says the retroactivity would open the measure to legal challenges, but that if it gets passed and survives litigation, “it’s a safe bet this won’t be a one-​off. Funding ongoing expenses like health care with one-​time taxes isn’t sustainable. Progressives will want to return to the well until they’ve sucked it dry.”

And no one should know better than Californians how dangerous dry wells are.

This is Common Sense. I’m Paul Jacob.

California, taxes, wealth, government

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free trade & free markets judiciary

Musk’s Bête Noire

Elon Musk, judge, space

Should a judge decide how much Elon Musk can be paid?

Well, when the job that Musk is doing is not a government job and a company’s internal process of determining the compensation is voluntary and aboveboard … no.

But according to a Delaware judge, Chancellor Kathaleen McCormic, who last January rescinded Tesla’s compensation package then worth $56 billion, now worth more than $100 billion, Musk is not entitled to this compensation. And she has just affirmed her ruling.

Musk says that “shareholders should control company votes, not judges.”

Tesla says: “The ruling is wrong, and we’re going to appeal.”

The appeal could take a year or more.

There’s nothing in the U.S. Constitution authorizing judges to run private companies or decide how much their most valuable personnel may be paid. The judge has no constitutional warrant. And no moral warrant. 

Not her business.

Ignoring the enormous success of Tesla, McCormic is simply deciding that Musk’s pay is way too much with respect to some arbitrary personal criterion that is irrelevant to the decisions that companies must make to attract and keep their greatest entrepreneurial talents, the ones who do the most to make it all go.

Still, maybe we should give the judge a break — I mean, just a tad?

Remember, it was Chancellor McCormic who forced Musk to go through with his Twitter purchase — which turned out to be the most consequentially favorable free-​speech/​-​free-​press event of our time. 

Sure, then too she was grinding a personal or ideological animus against the magnate.

But credit where credit’s due!

This is Common Sense. I’m Paul Jacob.

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general freedom media and media people national politics & policies

Awkward for Ideologues?

Congress, taxes, wealth redistribution

There’s good news about inequality?

In late March, George F. Will argued that the truth about inequality in America, according to his op-​ed title, is “awkward for the left and right.”

He points to the reality of transfer payments in the United States. 

Ignoring that reality is what leads to awkwardness.

On the left, critics of capitalism portray low-​income earners as a growing class of the impoverished … and high-​income earners as a growing class of filthy rich. 

But by “not counting about 88 percent of government transfer payments that enlarge the buying power of lower-​income households, and not counting taxes that lower the wealth of higher-​income households, government statistics purport to prove that the average income in the top quintile of earners is 16.7 times that of the average in the bottom quintile. Counting transfers and taxes, however, the actual ratio is 4 to 1.”

So leftists ignore the “successes” of the very system they set up, the better to complain and demand more of what has already been done.

But what do rightists ignore?

That’s where Mr. Wills’s Washington Post editors (a class of professionals who usually determine titles and blurbs) may have given us the wrong impression. Most of his column explodes leftist interpretations of contemporary reality. But he does talk about “the populist right,”: the “national conservatives” who mimic the progressive left in favoring “industrial policy” that, he notices (as I’ve noticed here at Common Sense) “regressively funnels money upward to corporations.

“The populist right advocates protectionism (tariffs to shield corporations from competition), and the populist left advocates hundreds of billions of dollars of subsidies (for semiconductors, electric vehicles, solar panels, etc.).” Both favor the rich when it comes to regulations, while complaining about the rich in other contexts.

A poor way to help the poor.

This is Common Sense. I’m Paul Jacob.

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Accountability general freedom

The S‑Word in California

California, immigration, socialism, spending

Frédéric Bastiat called it “spoliation”; California’s Democratic politicians call it social justice.

A bill went into effect last week, offering complete medical coverage to an estimated 700,000 undocumented — illegal — immigrants.  The price tag? 3.1 billion dollars.

Well, not “price tag”: call it a subsidy tag.

California taxpayers will pay for it. Or perhaps U.S. taxpayers will end up with the bill, as Dagen McDowell insisted on Fox News, prophesying that the program “will turn into a national issue” that will, inevitably, “swamp the federal budget.” 

Ms. McDowell also noted that the state’s targeted sugar daddies, the wealthy, “are going to other states, so much that they’ve lost a congressional seat,” all of which must lead to insolvency.

Indeed, the state is running far into the red — the color of the ink on budget columns, not voting columns. The state faces not merely annual deficits and a huge debt, there is also this looming trillion-​dollar debt implied by the unfunded liabilities of the state employee pensions.

There is an old pattern here, which is why I brought up an old author in the first sentence.

First we subsidize the poor. Then we extend the subsidies up the income ladder. Now we give huge subsidies to those who enter the country illegally.

It’s as if Californians have forgotten the nature of income redistribution: you have to have income to redistribute. At some point the wealth being taken from the productive vanishes, as society becomes unproductive and descends into ruin.

There are two meanings of Bastiat’s “spoliation”:

noun
1 the action of ruining or destroying something.
2 the action of taking goods or property from somewhere by illegal or unethical means.

The two are linked. 

This is Common Sense. I’m Paul Jacob.

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individual achievement

The Division of Adventure

Elon Musk, Jeff Bezos, Richard Branson

On Sunday, billionaire Richard Branson became the first person to ascend into space in his own spacecraft — assuming that myth, old rumors and sci-​fi stories of god-​kings and mad scientists going to the Moon or Mars remain just that, myth and rumor and fi.

“The launch with Branson marked the 22nd test flight of Virgin Galactic’s VSS Unity space plane,” writes Alex Veiga for MSN. “The company has planned at least two more space test flights this year.”

Thus Branson beat Jeff Bezos into space — depending how you figure. Later in the month Bezos’s Blue Origin spacecraft is set to launch Amazon’s less-​than-​beloved billionaire even higher above the planet.*

The billionaire space race is on, with the next level to be reached when regularly scheduled flights become the norm, ticket sales and all.

This is really “just” thrill-​ride fare we are talking about here — and likely when commercial space travel first becomes normalized. Neither man is aiming to rocket into orbital space.

Yet.

Which is not to say this is not of great significance.

Of course, the fledgling industry receives criticism. Why go to space now, some say, when we have so many problems on Earth?

Well, explorers and adventurers did not wait till Europe’s problems were solved to explore and settle the Americas. They pushed forward.

Just as there is a division of labor in society, there is a division of ambition, of venture.

I will likely never go into space. But I am happy Richard Branson got there.

And I’ll applaud if you, too, jaunt upwards.

This is Common Sense. I’m Paul Jacob.

 * Branson and Bezos publicly squabble about what “space” is. Virgin Galactic went above the American standard of about 50 miles, while Bezos aims for the worldwide “accepted” standard of 62 miles.

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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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ideological culture political economy

Cash Machine Cachet

cash machine, ATM, money,

Shutting down capitalism almost worldwide may prove to be the grandest disaster of all time. Folks on the margin of poverty in poor countries are already starving. Though scads of people seem to think we could ride out a lockdown indefinitely just by cashing government checks, the problem is that if we don’t produce, we cannot buy and consume products. 

It’s not about money, or profits as such: “It’s the productivity, stupid!” 

Elon Musk put it this way: “If you don’t make stuff, there’s no stuff.” 

A “universal basic income” won’t help if the re-​distributed money chases few-​to-​no goods.

So how did we come to believe that we can just shut down most business activity and still survive?

Maybe the idea seems plausible because many people already do not work to survive. As their numbers have increased, our civilization has forgotten that they survive upon the work of others. 

We guffaw at young children who, when their parents say something they want is too expensive, they innocently respond, ‘well, just go to the cash machine!’ But the more people rely upon checks and bank deposits from the government — for any reason — the harder it is to remember that the power to buy stuff doesn’t ultimately come from government. With taxation, redistribution and inflation thrown into the mix, even adults think of government as Cash Machine. 

And the Cash Machine as a model for the economy.

To fight a virus, the world has shut down production — as if we do not survive by producing goods in order to consume them.

Government has reduced capitalism — and us — to absurdity.

This is Common Sense. I’m Paul Jacob.

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Accountability folly general freedom moral hazard porkbarrel politics property rights responsibility tax policy too much government

No Rich No More

Connecticut, taxes, revenue, budget, tax and spend, wealth, common sense

Connecticut has a budget problem. There’s not enough money to spend.

WTNH-​TV in New Haven paraphrased the situation along with the response of Connecticut’s very progressive governor: “Income tax revenue collapses; Malloy says taxing the rich doesn’t work.”

The news story explains, “Connecticut’s state budget woes are compounding with collections from the state income tax collapsing, despite two high-​end tax hikes in the past six years.”

Hmmm. Despite the tax increases? Or … “because the state of Connecticut depends too much on its wealthy residents,” as the report continued, “and wealthy residents are leaving …”

A Yankee Institute report notes that “the exodus of wealth from the state as top earners and businesses relocate to more tax-​friendly states” is a major problem. Institute President Carol Platt Liebau calls it a “terrible cycle of tax increases followed by deficits followed by even more tax increases.” 

Yet, state legislative Democrats are back pushing more tax hikes on “the rich.” Senate legislation would jack up the tax rate — retroactively — on those with income of $500,000 or more. House legislation would slap a 19 percent surcharge on some hedge fund earnings. In response, the head of the Connecticut Hedge Fund Association testified that his “industry is populated by exactly that type of person that will move based on tax policy.”*

A song by Ten Years After comes to mind: 

Tax the rich, feed the poor
Till there are no rich no more

Doesn’t sound like a good idea even in song.

This is Common Sense. I’m Paul Jacob.

 

* It’s worth noting that Gov. Malloy is now “against raising taxes again to fill the deficits and is instead focusing on spending cuts …”

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general freedom individual achievement responsibility tax policy

Plotting Progress

Angus Deaton, Nobel Prize, Economics, The Great Escape, Inequality, collage, photomontage, JGill, Paul Jacob, Common Sense

The prestige of the Nobel Peace Prize has been tarnished by some more-​than-​dubious awards, in our time … Henry Kissinger and Barack Obama, most obviously.

Same goes for the Bank of Sweden’s knock-​off “Memorial” prize for economics.

But, according to David R. Henderson, this week’s Nobel nod to Scottish-​born Angus Deaton, for his “analysis of consumption, poverty and welfare,” is “a fine pick.”

Deaton is, writes Henderson, “an important chronicler of the market’s abilities to create wealth and improve society.”

While it is all the rage, these days, to complain about increasing inequality, Deaton has been instrumental in showing that wealth, health and welfare have increased as poverty, worldwide, has decreased.

And this has been largely the result of markets. Not big government programs.

Deaton, Henderson tells us, “believes that the approximately $5 trillion given by governments of rich countries to poor countries over the past 50 years has undercut good governance by making poor countries’ leaders less accountable to their own citizens.”

ABC News seconds Henderson’s account:

In his 2013 book, The Great Escape, Deaton expressed skepticism about the effectiveness of international aid programs in addressing poverty.… China and India have lifted tens of millions of people out of poverty despite receiving relatively little aid money. Yet at the same time, poverty has remained entrenched in many African countries that have received substantial sums.

Peter G. Klein, at mises​.org, identifies a deeper insight by the latest Nobel economist: “aggregate measures of consumption and inequality conceal important differences among individuals.” This explains why Deaton came to his other (controversial) conclusions: he never took his eye off the real player in market life, the individual.

This is Common Sense. I’m Paul Jacob.

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Angus Deaton, Nobel Prize, Economics, The Great Escape, Inequality, collage, photomontage, JGill, Paul Jacob, Common Sense

 

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free trade & free markets ideological culture tax policy

Unfuzzying Up the Past

We hear a lot of talk about the disappearing middle class. Sometimes this jabber goes so far as to posit that normal folks — say, the “99 percent” — haven’t really experienced any progress since the ’60 or ’70s.

So blame the rich. And their government.

It’s not an implausible case. Wealthy interests do rent politicians at extravagant rates, changing policy in their favor.

But as economist Russ Roberts and Cornell University’s Richard Burkhauser discussed recently, sloppy statistics feed the hand-​wringing over middle-​class decline. Considering government transfer payments from rich to poor and plotting income by household rather than individually, the basic “stagnation” thesis doesn’t pass the “smell test.”

For the real stink, however, consult the Internet memes, particularly this goofy contention:

In the 1950s and 1960s when the top tax rate was 70 – 92%, we laid the interstate system, built the Internet, put a man on the moon, defeated Communism, our education system was the envy of the world, our middle class thriving, our economy unparalleled. You want that back? Raise taxes on the rich.

Forget the obvious nonsense (ARPANET was the Internet only in ovo; Communism collapsed in the ’80s), and concentrate on the main points, as Tom Woods has done: tax evasion was rampant back in the alleged “good ol’ days”; public schools have doubled in per capita spending since then, and not improved; and the stagflationary ’70s followed the booming ’60s, almost certainly as a consequence of the policies being touted, here.

Selective memories help in constructing just-​so policy “proofs.” The middle class has received some big hits, I grant you. Still, we’ve seen progress, too.

This is Common Sense. I’m Paul Jacob.