Tag: taxes

–Four lessons about Congress and our economy

The debt hawks are to economics as the creationists are to biology.

What lessons does the following article provide?

7/31/10: (AP) “WASHINGTON (AP) – Tucked into the new health care law is a requirement that could become a paperwork nightmare for nearly 40 million businesses. They must file tax forms for every vendor that sells them more than $600 in goods.

“Business groups say it will swamp their members in paperwork. “This foolish policy hammers our business community when we should be supporting their job growth,” Sen. Mike Johanns of Nebraska said. The requirement would hit about 38 million businesses, charities and tax-exempt organizations, many of them small businesses already swamped by government paperwork . It would also create an avalanche of paperwork that could strain the IRS.

“Republicans want to repeal the filing requirement and pay for it by changing other parts of the new health care law. Democrats want to repeal the filing requirement and pay for it by raising taxes on international corporations and limiting taxpayers’ ability to use special trusts to avoid gifts taxes.”

Four lessons:

#1. Federal taxes represent the single most damaging factor in our economy – far more damaging than bankers’ greed or speculators’ law-breaking. Taxes not only remove massive amounts of money from our economy, but they waste millions of hours for preparation, and enforcement.

#2. Congress does not understand the fundamentals of government finance. Federal taxes do not pay for federal spending, and tax reductions do not need to be “paid for” by increases in other taxes.

#3. Taxing business, while simultaneously trying to stimulate employment, makes no sense. Every tax on business hurts the economy, while increasing unemployment.

#4. Senators and Representatives are far worse than the “greedy” businessmen Congress loves to criticize. Congress’s greed is both for money and for votes. Members of Congress have one concern, and it is not the best interests of America. It is re-election. In that sense, Congresspersons are the least patriotic people in America, often taking actions they know will hurt the country, merely to assure themselves of ongoing personal power. Each day, Congress does more damage to America than have Al Qaeda, the Taliban and oil spills combined.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–How President Obama’s National bipartisan Commission on Fiscal Responsibility and Reform could destroy America

The debt hawks are to economics as the creationists are to biology.

Parade Magazine, in its 7/4/10 “Intelligence Report”, printed an interview by Steven Beschloss and Janet Kinosian titled, “Can These Men Fix the Deficit?” The men are Erskine Bowles, a former White House chief of staff, and Alan Simpson, a former Republican Senate whip. Today, Messrs. Bowles and Simpson are co-chairs of President Obama’s National bipartisan Commission on Fiscal Responsibility and Reform.

Here, with my comments, are what they said:

BOWLES: “If we don’t solve the (federal) debt problem, we will be paying $1 trillion in interest in 2020. That’s money we can’t spend on Social Security, Medicare, education, infrastructure or innovation to make sure America is competitive in a global economy.”

RMM: “Of course, he’s dead wrong. America is a monetarily sovereign nation. Future spending is restricted neither by past spending, by debt, by deficits nor by tax collections. That $1 trillion in interest will function as an economic stimulus. This is classic cognitive inconsistency. Mr. Bowles believes the government cannot do what he sees with his own eyes, the government actually doing, i.e spending trillions on stimulus plans, despite debt that has grown more than 1,500% in only 30 years. In addition to cognitive inconsistency, he suffers from anthropomorphic economic disease – the mistaken belief that the government’s finances are like yours and mine.

BOWLES: “We’re looking at how we can reduce discretionary spending – things like education, transportation, the military, homeland security – and mandatory spending which includes Social Security, Medicare and Medicaid. We also need to raise revenue.”

RMM: He believes that cutting back on education, transportation, the military, homeland security, Social Security, Medicare and Medicaid, while raising taxes, will “make sure America is competitive in a global economy.” The notion would be laughable if it weren’t so dangerous.

SIMPSON: “We’re not going to cut Social Security – we’re going to stabilize it. None of the ideas that have been presented will affect anyone over the age of 58.”

RMM: “Stabilize” is political double talk for, “We are going to cut Social Security for everyone 58 and younger.”

SIMPSON: “As it is, it (Social Security) can’t sustain itself.”

RMM: Ah, the old (and false) “unsustainable” claim.

BOWLES: “We’re going to work our hearts out succeed.”

RMM: In their world, “Fiscal Responsibility and Reform” are code words for austerity, which always causes recessions and depressions. Heaven help us from those who have power, yet cannot learn.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–Taxing banks to pay for bailouts

An alternative to popular faith

“By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, WASHINGTON – Treasury Secretary Timothy Geithner says the world’s major economies disagree over taxing banks to pay for future bailouts.”

Thank goodness this “one-size-fits-all” idea isn’t flying. The EU nations, which are not monetarily sovereign, use tax money to pay for bail outs. The monetarily sovereign nations — U.S., Canada, Australia, Japan, China, South Korea et al — do not use tax money, but rather pay for bailouts by creating money ad hoc.

A tax, specifically to pay for bailouts, may make sense for the EU, but not for the others. Of course, this all begs the question of whether banks should be bailed out, or whether bank creditors should be saved, while the banks are allowed to fail.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–License and tax marijuana

An alternative to popular faith

Finally, a good idea from government:

5/28/10: (CBS/ AP) “Local governments in California and other Western states have tried to clamp down on medical marijuana, but Oakland has taken a different approach: If you can’t beat ’em, tax ’em. After becoming the first U.S. city to impose a special tax on medical marijuana dispensaries, Oakland soon could become the first to sanction and tax commercial pot growing operations. Selling and growing marijuana remain illegal under federal law.

“Two City Council members are preparing legislation expected to be introduced next month that would allow at least three industrial-scale growing operations. One of the authors, Councilman Larry Reid, said the proposal is more of an effort to bring in money than an endorsement of legalizing marijuana use – although the council has unanimously supported that, too.

“The city is facing a $42 million budget shortfall. The tax voters approved last summer on the four medical marijuana clubs allowed under Oakland law is expected to contribute $1 million to its coffers in the first year, Reid said. A tax on growers’ sales to the clubs could bring in substantially more, he said. “

Cigarettes, liquor, gambling. All are addictive. All are harmful. All are legal. All are taxed. Why not drugs? Prohibition didn’t work. In fact, it may have increased the use of alcohol. Similarly, the “war on drugs” is an abysmal failure, causing more gang activity, smuggling, murder and other hardship than it prevents. Outlawing something people want never works. That’s why Oakland has a great idea.

Not only will this reduce crime and addiction, but it will bring the city much-needed revenue. Unlike the federal government, state and local governments are unable to create money at will, and so must rely on taxes and other sources.

Unless the righteous federal government messes things up, this will work, and will be followed by legalized (and licensed and taxed and controlled) poppy products.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity