When taxes are inherently excessive, they simply are not paid.
Unlike many essays on this Web site, we not only present the problem here but also the solution. Consider the statement above, "when taxes are inherently excessive, they simply are not paid." History has shown that when taxes were reduced from say the 90% burden of the mid 20th century to something reasonable, government revenue increased. Just like you and I, the rich don't want to be ripped off, and when taxes are fair, they choose to pay their fair share. Watch what you demand in taxes from the rich because, by percentage you may win, but by volume you will definitely lose.
After we set up the problem, we will introduce the solution.
Collapse of the Market
Government does not help when it intervenes in anything. When anybody wants something done, the last group they will call onn is the government. Exceptions exist where the governmen has a monopoly -- such as police and military. Look at the people we elect into office. We know at one time they must have had some modicum of intelligence because they were slick enough to get into office.
When government does x to get y, y never comes. From the stimulus bill for example, which was supposed to get the economy rolling and crete tons of jobs, we got high unemployment and an awful lot of pork sausage for a bunch of bungling, self-serving politicians. Was it not sickening to watch them greedily grab their earmarks, hoping to assure future reelection while people were losing their jobs.
Congress has done such a poor job in recent years, and for that matter in years past also, though not so obviously, that it is no wonder fo many see them a simply a pack of buffoons. They are so bad that they are not looked upon as jokesters, they are in fact the jokes. For Congress to get better reviews from the people, it needs to bein to serve the people.
While they were working on the pork, they seemed to forget about the collapse of the mortgage lending market and the collapse of the collateralized and securitized debt and derivatives market along with it. They had already rolled out the big TARP bill to solve that and though it gave banks some stability, it did little to get banks to begin lending. Moreover, it rewarded the very culprits who created the crisis in the first place.
Ironically, besides Wall Street, there was one other entity repsonsible for the collapse. It was the government. The government had been manipulating requirements and creating and refining laws like the Community Reinvestment Act (CRA), and repealing good laws like Glas-Steagel that have kept bankers honest since the Great Depression. What did they expect?
Meanwhile, there is the ignominious Fed, which has always been manipulating and making life great for billionnaires on the backs of those of us whose net worth does not end in "aire." The Fed and the government keep making things worse.
None of the Fed's bad medicine, nor Congress's bad medicine helped the economy because the right medicine was to cut taxes. Instead, the government chose to start spending wildly like there was no limit the resources of the US treasury. And, of course, the friends of government prospered while the people suffered greater and greater levels of unemployment and inflation.
Back in 2010 President Obama took credit for making the banking industry all better. Though this had nothing to do with pork, it had a lot to do with bull. Chris Dodd, Senator from Connecticut, Barney Frank, Representative from Massachusetts, and Paul Kanjorski, Representative from Pennsylvania, were at it again along with the Fed trying to manipulate something that should be left all alone. Dodd retired and Kanjorski was summarily defeated in the general election so neither of them are in the 112th Congress. Somehow, ole Barney made it to Congress again from his liberal district in Massachusetts. Their bill did not work but it did permit companies to get so big the government will not let them fail.
For the strong to survive in America, bad debt must be written off. Bad banks should not be propped up with taxpayer dollars. The Dodd, Kanjorski, and Frank solutions cannot work for the people, but they are very good for campaign spending warchests.
Government sponsored actions continue to prolong and then intensify the eventual devaluation of our dollar and the destruction of the buying power of the middle class. Who is not hurting besides our esteemed representatives in Congress? Let's look at some of these great acts in detail so you can fully appreciate why you should never trust government -- even with simple acts.
The Stimulus Bill
Ron Paul offered some thoughts on the first anniversary of the stimulus bill last year. "Last week marked the one-year anniversary of the American Reinvestment and Recovery Act, or the stimulus bill, passing into law. While the debate over its success has been focused on whether or not it is stimulating the economy and on various questionable uses of funds, in my estimation this legislation is accomplishing exactly what it was intended to accomplish – grow the government."
The growth of government can kill this country? Government bureaucrats are concerned about the sugar in your soda, the number of ply's in your toilet paper, the # of TP rolls you consume each week, whether you can have one or more chocolate bars in a week, whether the programs you watch favor the sitting government, whether the radio talk shows show respect for the government, and whether two gallons of ice cream per week should be disallowed per household. Why isn't one gallon enough? Welcome to the new liberty-hating America. Find your freedom quickly and hold on to it because this progressive socialist government is hunting freedom and stealing it every cance it gets.
OK, that is not all. If you have a coal furnace (some still do and some remember) they want you to pay four times the current price for your coal. If you burn oil, they think they got you for a bunch more in energy expense, Electricity is already going through the roof. Look at the price of gas even withou the effect of these bills. The government wants energy prices to go higher and higher so you will use none. They say Carbon dioxide is bad. But, they conveniently forget that humans breathe out (exhale) carbon dioxide so what are we supposed to do?
I say 'too cold' is bad in the winter and 'too hot' is bad in the summer I say having to have the car permanently in the driveway is bad when gas prices are too high, and being able to take it for a nice spin is good.
Unfortunately, the government wants to limit even these simple pleasures in your life. They are very pleased that gasoline and oil prices are through the roof. After all, it was their plan all along. These are a few of the things you can do because you are a member of the US middle class. Government thinks these are bad and they think they have a right to stop any behavior of yours that they do not like! Actually, the government is now annoyed that there is a middle class so figure out which jump you will make -- up or down...
When has government ever been right? OK, never.... I agree. The problem is we have given them all way too much power and the only solution is to take it back. If you let them get away with it by voting the same people back again, the government may very well limit more of your freedoms. How about limiting driving to about 5 miles a week. That might require a new kind of governor.
They won't say that though because they like to avoid the truth. Instead, they will raise gasoline tax to about $20.00 per gallon and then they will use the tax revenue for Public Relations work to convince you they did the right thing by limiting your freedom and raising your cost to live. If there is any tax money left, they will hire more government bureaucrats. If there is no more money left, they will still hire more government bureaucrats, and they will charge it to your granchildren's account.
By the way, while you are driving those five miles a week or fewer, make sure you keep your head out the window. After all, that will be the only air-conditioning you get until the next week. You don't need a 3000 + page healthcare bill to make healthcare better in the US. But, you do need 3000 + pages to describe in minute detail the freedoms that the government will no longer permit. And, remember, when you cross the government, it's not like having words with your husband or wife except the government will put you in real jails. Go ahead and try not buying an insurance policy and not paying the fine. Enjoy the Big House.
Don't worry about government lies. They never lie. They merely underestimate and when needed, they prevaricate. The stimulus bill, which stimulated nothing but earmarks, for example, was pegged at $787 billion. This was the original estimates for the bill. True to form as they say in government-eze, the actual cost was 10 percent more --- that's $862 billion. What's a few billion among Senators and esteemed Representatives.
Just recently I learned a lesson in perspective as the US state department revealed that it had cost a mere one billion dollars for their new ornate embassy in London. With all the high numbers being bantered about a mere billion seems like nothing. I guess they were right. Compared with the government takeover of healthcare at $1 trillion, that measly $1 billion dollars does seem like chickenfeed -- doesn't it? The other perspective I had was that while we are all scrounging around making ends meet, the government is paying British contractors to build a Taj Mahal embassy in London. Was this really a necessary expense?
Now, your trustworthy government is ready for you to give it all up and you are now required to trust them with your health.
The promise of the stimulus was to keep unemployment lower than 8%. There were dire threats that unemployment might reach 10% if the stimulus did not pass. You may recall the Administration went into hurry-up mode and demanded that Congress pass the bill and give them the money ASAP so that the country did not have to absorb the 8% inflation factor. They got the bill passed in the dim of night while most of the country was dead set against it and still are. Officially tallied government Unemployment is currently well past 8% and just under 10%. Surely, the Obama administration never did care about employment or Obamacare would not have passed.
By the way, government cannot count. For example, the consumer price index (CPI) is the government's measure of inflation. In it, they include the price of a house, which most families buy perhaps once or twice a lifetime. Housing prices are on the way down so that pushes the CPI down. So they don't have to pay Social Security recipients an inflation raise, they conveniently forgot to include food or gas or oil in the CPI. Is that deception, smooth prvarication, or simply a lie?
With the major $862 billion stimulus behind us along with another bunch of smaller stimuli bills ahead, unemployment is officially still stuck at just about 10%. It's just 2% off or about 20% of what was promised. As they say, not bad for government work!
Of course, the unempkoyment rate is a big lie also. It does not include those whose benefits ran out. So, the most needy unemployed are not in the count. The count would be ablut 18 to 20% if all unemployed were included. That means that one in every five americans is unemployed. But, government won;t tell you that -- now way, no how!
Does the government ever intentionally lie?
CPI, unemployment & seniors, a summary
Let's go through the CPI one time more so you really beelive that the government intentionally lies to us. Seniors have become convinced by the way, and they are right-- that the government rigs the CPI to avoid giving them cost of living raises in SS. The 10% unemployment rate is also a joke. The second 10% (20%) is not a joke but like the CPI factors, it is uncounted. The people in the second 10% who have no jobs are finished collecting and they are so disgusted that they have stopped looking for work because there is none. Thus, unemployment is really about 20% but the government will not admit it is lying so we say it is just under 10%.
Yes, Virginia, that is propaganda spewed by your friendly bureaucrat fearing that telling the truth may harm their ability to keep their jobs. When somebody stops looking for work, are they not still unemployed? Why use chicanery unless you are trying to convince somebody that something is working that is really not working.
So, there is no Senior cost of living adjustment because the numbers are rigged. Most people know that but again most do not want to believe the government is lying to them. They pretend to believe the government is a truth-teller. If you can handle the truth read on.
When you wonder why food and gasoline cost so much while the government says inflation is low, just remember: You have just hear a lie. This is probably something you figured out long ago, merely by going to the supermarket and the gas station. Government can hardly afford to pay Social Security without the CPI COLA factor. If the CPI factor reflected the real cost of living, the government would be bankrupt sooner and nobody would be getting anything-- or so the logic seems. So, why not just say that? Why not just tell the truth? Lying becomes too easy the more times government lies.
Ron Paul has a way of netting it out:
"the American people know that more government spending obviously equals more government, and that is a pain the future cannot endure." He quotes an economist who says that if the original methodology of CPI had not changed, Social Security checks would be nearly double what they are today!
"According to the official Consumer Price Index calculation, life has gotten cheaper for the first time in decades. If the government can show statistically that the cost of living has gone down, not up, then they can make the case for not giving a cost of living increase to social security recipients. But does this match reality? Using older calculations of CPI, the cost of living has actually increased – by roughly 5 percent!
"The CPI (Consumer Price Index) is a calculation based on the average price of a fixed basket of goods that was initially designed to help businesses adjust for inflation. The government eventually started using it to determine cost of living adjustments for entitlement programs. Couple that with politicians’ discovery that they could raid the social security trust fund to pay for new spending programs, and you have a perfect storm to deny seniors what they were promised, while hiding the true size of the deficit. For politicians, it is a win-win.
"For seniors, it is a different story. Economist John Williams of Shadow Government Statistics has estimated that if the original methodology of CPI had not changed, Social Security checks would be nearly double what they are today. This represents a lot of money that politicians have been able to literally steal from seniors, to spend on their own wasteful programs. One example of how they do this is to substitute hamburger for steak, which lowers the average price of that basket of goods. But living on hamburger, or maybe dog food, instead of steak does not represent a constant standard of living. This renders the measurement virtually meaningless, even though politically it comes in very handy. "
Is government's goal to strengthen the private sector? I would hope so but it is hard to tell nowadays. In a recession like now, it sure should be nice if government were on the side of the people. Of course the way to help the people is not by bankrupting the country with excessive spending. If helping the economy were the goal, a thoughtful Congress would have allowed businesses and individuals to keep more of their own money to incent them to grow their businesses to make even more. Businesses that do not pay all their earnings to the government have something left to hire a few more people when they would like to expand. Those who are crippled by the government simply try to make do.
That is Capitalism and the free market system. When business does well, it hires people. When business fears government action like taxation, it retreats and runs cautiously. With Obamacare, and Obamanomics, hiring will stay negative for some time to come. Is that why we have representatives? Why are they not fixing this? Do they think we do not want to work?
For the government to have helped, rather than provide handouts to friends all over the world with no checks and balances, the simplest way to turn things around would have been to provide meaningful tax cuts. John Kennedy did not care whether he was Republican or Democrat in the early 1960's when he wanted to help the American people. The Kennedy tax cuts were huge and they were largely responsible for the recovery in the early to mid 1960's. Though Kennedy, God Bless Him, were with his maker, the country prospered because he was for the people.
Why did John F. Kennedy think tax cuts were a good thing? Other than his brother Ted (RIP), most people agreed that he was correct and that tax cuts are the best way to move a stagnant economy forward. When people have money to spend, and they spend the money, industry prospers.
Roosevelt (FDR) and Hoover (HH) who raised taxes saw bad things happen when they took all the money from the people. You may recall one of these periods of history. It was known as the "Great Depression." The Bunkers once sang about it in the beginning of their popular show "All In The Family!"
The Roaring / Booming Twenties With Low Taxes
Andrew Mellon, a name which anybody who touched an American History book in their lives is quite familiar, noted the success of tax policy after his prescribed 1920 tax cuts had created a boom period known as the "Roaring 20's." As the "Tim Geithner (Treasury Secretary)" back then, Mellon first of all was not a tax cheat. Second, he was not a socialist, and third, he did not have a lot of Wall Street insiders that he had to pay off.
Mellon was independently wealthy. His Presidents, one of whom was Calvin Coolidge did believe in capitalism and free markets and they were not driving the country to become a socialist Utopia. So, I concede that those times with their leadership have little similarity to these times with our, and I use the term loosely, "leadership."
Mellon had a lot of bucks in his personal wallet since there were no credit cards then. He was as rich as they come and he was irreproachable. He did not need another buck and his actions on behalf of the country analyzed ninety years later shown no signs of personal avarice.
Mellon made his own money and he used his great financial knowledge to gain either major or controlling ownership in what would become great companies. The list is a "whose-who?" of successful industries goes on and on. For example, Mellon had big stakes in Alcoa, Carborundum, and Gulf Oil. He did not need the money and so he was immune to corruption. He figured out what would be best for America, got the concurrence of his President, and then implemented the deal successfully. Never was he photographed looking frightened as our own "Little Tim Geithner" is all the time. I love the Dickens Carol so much that I could not use the words, "Tiny Tim."
Mellon did not have Turbo-tax so he paid his taxes faithfully and ultimately he became a renowned philanthropist. He did have some issues during the depression but when he had the power, he used it well. As a philanthropist, for example, he was creator of the National Gallery of Art in Washington, D.C. He understood the value of money and exactness, as well as the beauty of art. We could use a good man like Andrew Mellon today. But the corrupt 111th Congress would probably have railroaded already him out of town because he was not a progressive liberal.
Excessive taxes simply are not paid
In the 20's Mellon argued that the history of taxation clearly showed that when taxes are inherently excessive, they simply are not paid. It is amazing how many ways those who think they are being treated unfairly can hide income. Mellon believed that high tax rates inevitably put pressure upon the taxpayer to withdraw capital from productive business ventures and invest their funds in non-profit or tax-exempt securities. When these means are not available, he knew that smart investors would find other "lawful" methods of avoiding the realization of reportable and taxable income.
Just ask President Obama's buddy, GE CEO, Jefrrey Immelt, whether excessive taxation was the reason GE hired 1000 accountants and lawyers to assure the company did not have to pay any taxes for 2010, due in 2011. Immelt was so good at it, he got a bonus from the government for cheating so well. With a bit of pressure he gave that back. Left on his Own, Obama would have given GE a tax refund for not paying any taxes on billions in earnings.
What is my point? My point is simple but not original: the history of taxation clearly shows that when taxes are inherently excessive, they simply are not paid . So, why . . .. .
So what happens to government revenue during these periods in which the rich are holding their cards and are not as active? As the major sources of taxation dry up; Mellon noted that wealth fails to carry its expected share of the tax burden. Capital is then diverted into channels which yield neither revenue to the Government nor profit to the people but do help the wealthy protect their income. As Peter Paul and Mary say quite astutely, "When will they ever learn?" I would add that you cannot get blood from a stone. .
Bailouts -- Paying For Costly Failures
Why reward failure?
Suppose you had a big job and you got a little greedy and you were loose with your money as well as all the money you touched, no matter its source. In other words, you squandered everybody's money. Now, suppose you lost a lot of money for a lot of people. Would you ever expect that a group representing those people, whose money you squandered, would give you several more million dollars so you could try again?
Somehow Bernie Madoff went to jail for that. So, why is it that other corporations that do risky things, like guess wrong on a big investment, many of which are a violation of fiduciary trust, have no consequences? Why is it that the people whose money they lost have to refinance their businesses with no recourse while, unlike Madoff again, the perpetrators are permitted to survive and gain?
Why would any corporation ever expect to be bailed out by taxpayers? How is it that certain entities have to be bailed out because of their economic importance and others are OK to fail? Who makes such decisions? Supposedly, some entities can be so big, so important, that no matter what they do, citizens must perpetually sustain them.
I do not buy that argument and I do not think you do either! In a system designed for survival of the fittest, the unfit should not survive. And those just going along for the ride, such as uninformed investors should not have to pay the full toll.
Some banks on Wall Street should fail. Fannie and Freddie should fail. They have been perpetrating fraud against the people while rewarding their executives. Yet, for its own reasons, government insists on rewarding behavior, which should instead be investigated, prosecuted, and punished. Amen! That's the change I will bring to Washington.
Ron Paul notes that "Just as economies that turned away from slave labor had a transition period, our economy would transition as well, but in the end, if we turned to honest, sound money and a truly free market, we would end up with a more just society, founded on truthfulness and decency, not subject to the violence of force or the whims of fraudulent institutions."
The government is basically dishonest and the closer we permitted these sheisters to get close to the sources of huge amounts of money, the more they took liberty to divert that money away from the people and into other hands. I don't even care whose hands the money was diverted. I think these people, the political part of the government, are all crooks and they should be expelled from Congress perhaps even before the next election. Who in Congress has the guts to put such a resolution on the floor?