Talking with a young person about how the government gets its money saw me making an analogy to my mother crying decades ago over an empty bank account.
When I was a little girl, we weren’t living in poverty, but we were hanging onto my mother’s cherished middle-class lifestyle by our fingertips. I vividly remember one day when I was quite little, maybe six, seeing my mother’s distress when she didn’t have the money to buy something we needed. I knew what to do. “Just write a check for it, Mommy.”
Because I was six that was cute. It’s a whole lot less cute to see adult Americans who don’t understand that government money doesn’t magically appear for all their needs, including unemployment checks, welfare, and other funds that were meant for widows and orphans but too often end up with slackers.
Just yesterday, I was trying to explain to a 20-something that the government has no money of its own and creates no wealth. The only way that the government can write a check to X is to take money from Y. And it takes money from Y at gunpoint. The IRS or the state tax boards don’t literally wave that gun at the taxpayers, but we all know it’s there. If you don’t pay your taxes, unless you’re a connected Democrat, the government will take everything you’ve got and maybe throw you in jail.
Imagine what would have happened back when I was a little girl and my mom had the power to operate as the government does. In that case, when I told my mom to “write a check,” she would have grabbed a gun, walked out on the street, and ordered passers-by to put money into her checking account — and it would have been perfectly legal. It would be even better for her if she could ensure that everyone else would be disarmed. She wouldn’t have earned or created the sudden wealth in her checking account, nor would she have had any hand in expanding the community but she sure could spend it.
Moreover, because my mother would believe that she had an unending supply of cash, she would have no incentive to spend or invest that money wisely. If she overpaid, bought unnecessary things, invested poorly, or generally squandered the money, she’d just grab her gun (legally) and get more.
It’s true that, at first, my mom would have spent carefully. She’d be leery about constantly going out and taking more money. However, once she realized that the gun gave her leverage that those people on the street lacked, she’d stop policing her spending. If she wanted it, she’d buy it. And why take time to comparison shop or find good bargains? Those are for people who need to husband their money. She doesn’t. There’s always more walking by on the street when she goes out with her gun.
Also, she’d start making all sorts of new friends who, like my mom, had no qualms about spending other people’s money. They’d give her all sorts of fun ideas for spending the money, with the assurance that she’d make sure the money flowed their way. For a while, even those from whom my mom took the money might be dazzled by the new buildings going up and by the spending she was doing at her friends’ stores. Eventually, though, people would notice that their own houses were in disrepair and that the money mom kept taking was going to her friends and not to them.
If this hypothetical criminally-inclined mother of mine were to do a little long-term planning, she’d realize that those monied citizens walking around the street waiting to be robbed would start changing their behavior, especially as they saw their money being used on my mom’s pet projects and dear friends. They’d start doing things to put themselves out of her reach.
Some would move far away. Others would figure that, if Mom’s going to empty their wallets no matter what, they shouldn’t be working so hard. After all, they’re no longer working for themselves and earning money to spend on their needs. They’re now working for her. Mom might recognize that she needed to start trickling a little cash in their direction. She might take time off from buying at her friends’ store and spend a bit at the stores of those from whom she’s taking the money in the first place. However, these storeowners would realize that, after their costs, they’re only getting back a mere pittance of what she took from them in the first place.
Eventually, my mother would discover that it’s getting harder to fill her checking account. Of course, by now she’s addicted to the free-spending she did over the years with other people’s money. There’s no way she’s giving it up. She’s going to get herself a bigger gun….
And that’s how the government gets its money. It doesn’t earn it; it takes it. And because it believes this spigot is always open, it has no incentive to handle that money with care. Those who take the government largesse simply because it’s there or who deliberately use the government to send money their way are complicit in the government’s abuse of its citizens and its money.
The American principle was supposed to be that people willingly handed some of their money over to the government as a part of an arms-length contract. People would pay the government to provide services that the people could not provide for themselves: National security (including a standing military), guidance over and policing of interstate commerce, foreign relationships, etc. This agreement never envisioned an America government that could just take and take and take until it reached the point at which the government — meaning career politicians, bureaucrats, and their cronies and beneficiaries — stopped viewing the money as belonging to the people and started viewing it as rightfully belonging to the government in the first instance.
Trump has been working hard to force the government to change this attitude. No wonder he’s getting so much pushback. My hypothetical mom-government and her cronies wouldn’t want to change the status quo either, not when it worked so well for them.
Postscript: Just to clarify, my actual mother, as opposed to this hypothetical mother, was an honest, principled woman who, along with my father, worked like a dog for most of her life to fund her checking account. A lifelong Democrat, she never realized that she might have gotten more value for her efforts if the government hadn’t helped itself to as much as it did from that same checking account over the years.
In 2016, I wrote several posts for my I Don’t Like Bernie blog. With Bernie rising in the polls, this post revisits his terrible tax proposals.
The website I Like Bernie, But…, created in 2016 and updated for 2019, tries to calm people’s fears about Bernie Sander’s socialist extremism. It states questions reflecting concerns that people might have about Bernie, and then provides pithy little answers refuting those fears.
In a previous post, I addressed the myriad falsehoods, omissions, and misconceptions in the website’s assurance that Bernie isn’t a dangerous socialist, he’s a good socialist. This post addresses the misleading answer to a concern that “I heard he [Bernie] wants to raise taxes.”
Here’s what I Like Bernie, But…. has to say about Bernie and taxes:
That’s simply false. Here’s the truth:
To fund his proposed $97.5 trillion in spending over the decade after his election, Bernie must tax everybody and tax them hard. This is not a Republican viewpoint. Back in 2016, when Bernie’s goals were less grandiose, Vox, a internet media outlet known for its strong Progressive orientation, examined Bernie’s plans and found them wanting.
The first thing you need to understand, before we even get to the numbers, is that if you imposed a 100% tax rate on every single “rich” person in America (from the super-rich to the pretty darn comfortable), you might be able to fund Bernie’s plans for a month or so. Even if you followed that up by then confiscating all the assets from these same “rich” people, you still wouldn’t be able to pay for even a fraction of Bernie’s plans.
Don’t believe me? Check out this video made when the Occupy Protesters started demanding that the 1% pay for everything. As you’ll see, Bernie’s demands can’t exist in the real world:
After watching the video or reading the post, you will know with absolute certainty that “the rich” cannot fund Bernie’s grandiose plans. That means that other people are going to be tapped for money — and you might be surprised at how far down the economic food chain that tapping goes. Let’s go back to that Vox article (remember, this is a Progressive publication from 2016, when Bernie’s plans were slightly lower dollar), to see what even Left leaning out let has to say.
Matthews notes that Bernie likes to throw out big, conclusory answers when he’s asked where the money will come from for his plans:
And for every plan, he’s got an idea to pay for it. College? Slap a financial transactions tax on Wall Street. Infrastructure? Tax corporations on profits they earn abroad. Single-payer? Raise income and payroll taxes, and then a bunch of others too.
While Sanders tends to portray these as separate ideas with separate financing, I thought it’d be worth adding them up and seeing what the tax code looks like with all of them. I looked specifically at his changes to personal income, payroll, and capital gains tax rates.
What Matthews discovered when he “looked specifically” at Bernie’s tax changes is that all Americans will need to pay more taxes — often significantly more taxes from those who can least afford them — to finance Bernie Sander’s dream of a government that will provide everything for everybody. For clarity’s sake, Matthews leads with a graphic showing that everybody will be paying marginal increases on their taxes, whether they can afford it or not (and keep in mind that this graphic is from 2016, not 2019):
There’s no doubt that those making more than $250,000 a year will bear the greatest burden under the new tax scheme:
Most taxpayers would see a single-digit increase in their marginal tax rate. People with taxable income below $250,000 would see an 8.8 percentage point increase.
But the very rich would see eye-popping increases in marginal rates: from 36.8 percent to 62 percent for people with taxable income between $250,000 and $413,350. The big change here is applying the Social Security payroll tax, which adds another 12.4 points.
For the very richest Americans, with more than $10 million in taxable income, Sanders’s proposal would produce a 77 percent marginal rate. That’s not unprecedented — under Dwight Eisenhower, the top income tax rate was 91 percent — but it’s higher than the top rate at any point since 1964.
If you’re wondering, there’s a reason that America did away with those top rates back in 1964: High top rates don’t bring in more money. The reality is that the rich are better than anyone at protecting their money from what they perceive as unreasonable income taxes. They take it offshore, shelter it, hide it and, most importantly, refuse to invest it, leaving their wealth unavailable to the rest of the country for such useful things as business start-ups, employment, exploring innovative ideas, etc.
The clearest representation of the damage too-high taxes do to an economy is the “Laffer Curve,” which Art Laffer came up with more than 40 years ago. It’s a simple premise: If you make it too expensive for people to make money, they’ll stop making money. Here’s a more comprehensive explanation:
As drawn, the Laffer Curve shows that at a tax rate of 0%, the government would collect no tax revenue, just as it would collect no tax revenue at a tax rate of 100% because no one would be willing to work for an after-tax wage of zero. The reason for this is that tax rates have two effects on revenues: one is arithmetic, the other economic. The arithmetic effect is static, meaning that if rates are lowered, the tax revenues per dollar of tax base will be lowered by the amount of the decrease in the rate, and vice versa for increasing tax rates. In other words, this is what happens when a hypothetical 1% tax collects $1 million, so people assume that a 2% tax would collect $2 million… and a 5% tax would collect $5 million. Likewise, under the same scenario people would similarly assume that a .5% tax rate reduction would collect only $500,000.
And here’s a helpful visual:
That’s all very easy to say in theory, but how does the Laffer Curve really work in fact? Well, it turns out that, when put to the test of real world economics, the Laffer Curve performs as predicted:
Solid supporting evidence came during the Reagan years. President Ronald Reagan adopted the Laffer Curve message, telling Americans that when 70 to 80 cents of an extra dollar earned goes to the government, it’s understandable that people wonder: Why keep working? He recalled that as an actor in Hollywood, he would stop making movies in a given year once he hit Uncle Sam’s confiscatory tax rates.
When Reagan left the White House in 1989, the highest tax rate had been slashed from 70 percent in 1981 to 28 percent. (Even liberal senators such as Ted Kennedy and Howard Metzenbaum voted for those low rates.) And contrary to the claims of voodoo, the government’s budget numbers show that tax receipts expanded from $517 billion in 1980 to $909 billion in 1988 — close to a 75 percent change (25 percent after inflation). Economist Larry Lindsey has documented from IRS data that tax collections from the rich surged much faster than that.
Reagan’s tax policy, and the slaying of double-digit inflation rates, helped launch one of the longest and strongest periods of prosperity in American history. Between 1982 and 2000, the Dow Jones industrial average would surge to 11,000 from less than 800; the nation’s net worth would quadruple, to $44 trillion from $11 trillion; and the United States would produce nearly 40 million new jobs.
Critics such as economist Paul Krugman object that rapid growth during the Reagan years was driven more by conventional Keynesian deficit spending than by reductions in tax rates. Except that 30 years later, President Obama would run deficits as a share of GDP twice as large as Reagan’s through traditional Keynesian spending programs, and the economy grew under Obama’s recovery only half as fast.
The U.S. Bureau of Labor Statistics released its state-level jobs report today for the Month of November , providing 23 months of employment information to track how the Tax Cut and Jobs Act may have shaped job growth trends across America. The results strongly suggest that the 27 low tax states (with average SALT deductions below $10,000 in 2016) are significantly outperforming the 23 high tax states and the District of Columbia (where filers claimed more than $10,000 in SALT deductions).
From December 2017 to November 2019, the low tax states added nonfarm payrolls at a rate 93.8% greater than the high tax states. Nonfarm jobs include those in the government sector. Limiting the scope of job growth to the private sector, where small business owners’ decisions on when and where to grow their businesses are directed affected by the tax code, shows and even larger job creation advantage for the low tax states, with a 97.9% higher rate of job growth in the past 23 months. Capital-intensive manufacturing shows an even larger disparity, with the rate of manufacturing jobs growing 3.3% in the low tax states compared to 1.3% in the high tax states, a massive 151% disparity in favor of the low tax states. In the past 12 months, the difference in manufacturing job growth is an astounding 1,209% advantage in favor of the low tax states. This may be because manufacturing facilities take longer to get up and running than do other sectors such as retail, with the effect of the tax cut being slower to manifest in this sector.
The table below shows the percentage of jobs added in three categories, nonfarm, private sector, and manufacturing over three time periods, since President Trump was sworn in in January 2017, since the passage of the tax cut in December 2017, and over the past 12 months.
All of this boils down to a single point: If Bernie’s tax plan goes into effect, over time there will be less money available to the government, not more. People will earn less, create less, innovate less, spend less, and invest less. It just won’t be worth it.
For the first year or two of the new, higher tax rates, the rates will look successful because they’ll sweep in money already created through investing, earning, innovation, etc. After that, though, the tax revenues will slide steadily as the economy becomes more and more sluggish.
I assume that, at this point, some people will point out that the real benefit of Trump’s economy is only for those rich enough to invest in the booming stock market. That’s not true, and you can see why if you compare the Trump economy to the Obama economy.
During the Obama years, it’s true that the stock market did grow. However, if you were really paying attention, you might have noticed that the boom was entirely unrelated to job creation and other signs of a thriving economy.
What’s happened is that, in a high regulation, high tax, unstable environment, the rich, rather than investing (and risking) their money in job and wealth creation, were just storing it in the stock market, waiting for a sign that investment will be less risky. For everyone else — that is, for businesses and their employees — stagnation was the name of the game, whether in the number of jobs available or in the salaries people could earn.
If we were to reverse the Trump gains and embrace Bernie’s proposed capital gains tax (going from an already high, compared to Europe, rate of 23.8% to a new high of 64.2% at the very top), most investment would stop altogether.
Again, don’t believe me (a conservative); believe Vox, a Progressive publication:
The Sanders campaign estimates they’ll earn $92 billion a year from taxing capital gains the same as wages. But there’s reason to think they’ll actually lose revenue.
One thing that happens when you increase the capital gains rate is that people stop selling assets — and thus realizing gains on capital that can be taxed — as frequently. That means there’s a point beyond which raising the capital gains tax would reduce sales so much that revenue actually falls.
Note that this is a very different question from whether taxing capital gains at a high rate hurts economic growth. Many economists think it does, but that effect would reduce revenue by lowering the price at which assets are sold, not making them less likely to be sold in the first place. The latter is a different effect whose existence is much less controversial.
By the way, if you’re tired of hypotheticals and what to see what it looks like in places where Bernie’s financial plans have already been put into effect, look around the world: In the years after World War II, Europe looked like a strong economy that also managed to be socialist. What this ignored was that (a) Europeans were having babies to repopulate after World War II; (b) America paid for Europe to rebuild its infrastructure; and (c) America paid for most of Europe’s defense costs. Going into the 21st century, though, Europe had a declining birth rate, the infrastructure benefit had gone away with time; and, with the end of the Cold War, America stopped pouring so much money into European defense and the European economy.
So it is that, in the 21st century, most of Europe is having economic problems thanks to the withdrawal of American Cold War funding, the 2008 recession, the dramatic drop in birth rates, and the influx of immigrants who drew on the system without funding it, all of which made it impossible for European countries to continue what was essential a Ponzi scheme, whereby they kept taxing the up-and-coming generation of workers to pay for the perks accorded older people. Add to this hyper-regulation from the EU, which makes conducting business very difficult, and you can see why Europe’s system isn’t so admirable anymore.
An even better example of what happens when you implement Bernie’s tax policies is Venezuela, which had such a rapid decline after socialization that you can see the Bernie-style problems playing out before your eyes. Venezuela implemented Bernie’s socialism a few years ago and went from being one of the most prosperous Latin American nations (thanks to oil revenue) to being flat-out broke, with shortages of everything from food to toilet paper to (ironically) oil.
Government manages money very badly. When you have your own money, you presumably worked hard for it and depend a great deal on it. You’ll therefore be careful with it, and quite possibly want to do things that make you earn more of it.
Government is different. The government bureaucrats who are making decisions about and spending your money didn’t earn that money. They won’t be affected if they spend it unwisely.
Worse, when they run out of your money thanks to unwise management, these bureaucrats don’t have to do what ordinary people do, which is either to cut spending or work even harder to pay bills. Instead, they just have to demand more from you, since they have the vast punitive power of the government at their back to take that money from you. (Robin Hood, incidentally, didn’t steal from the rich; he stole from the tax collectors, and gave the money back to the taxpayers.)
And one final point about those government bureaucrats: As a friend reminded me, F. A. Hayek’s The Road to Serfdom makes the point that it doesn’t matter how good, honest, and caring the manager is. There is simply no way for one person or government department to accumulate enough knowledge about what’s going on in the economy for that person or department to make good decisions.
Even with powerful computers and all the technology of the 21st Century, the knowledge needed to make smart economic decisions is so diffused through the country and the population that shortages WILL occur….and then the attempt to deal with them will make things worse, and so on and on, ad infinitum.
Here’s the bottom line: Governments do not create wealth. The only way they get money is to take it from people who have earned it. They then hand that money out to favored constituencies, picking winners and losers as they go. Invariably, because government is slow, inefficient, and cares more about reward friends and punishing enemies than profits and losses, the money dribbles away, having enriched a few and impoverished many.
At the end of the day when the government takes it upon itself to be the money manager — to suck up everyone’s wealth through constantly increasing taxes, and then itself to run the businesses and make the calls — everyone ends up poorer. Just ask the people in Venezuela.
When you hear a Democrat presidential candidate say “Let me make this perfectly clear” . . . you are about to hear a lie at worst, a non-answer at best.
Elizabeth Warren in particular, but several of the proggies on stage last night, all exhibited the same verbal tic. When they were about to lie by omission or refuse to answer a question, they began their response with some variant of “Let me make this perfectly clear . . .” What followed was clearly NOT an answer to whatever question was asked. The formula was to follow “Let me make this perfectly clear” with some sort of re-direction — often several meaningless personal anecdotes — then the big, flourishing, holier-than-evil-conservatives and bad-orange-man finish.
Exhibit one: Sitting Bull, when asked whether she will admit her health care plan will drive up middle class taxes:
WARREN: So, let’s be clear about health care. And let’s actually start where [the] vice president did. We all owe a huge debt to President Obama, who fundamentally transformed health care in America and committed this country to health care for every human being.
And now the question is, how best can we improve on it? And I believe the best way we can do that is we make sure that everybody gets covered by health care at the lowest possible cost. How do we pay for it? We pay for it, those at the very top, the richest individuals and the biggest corporations, are going to pay more. And middle-class families are going to pay less. That’s how this is going to work.
So are taxes going up for the middle class under a Lieawatha plan? It’s not hard to read the smoke signals on this one. An honest answer would, of course, have been a simple “yes.” Or if she actually believed that cost savings on health care would be greater than any tax increase, she could simply say that. Clearly, Fauxcohauntus says neither. Stephanopoulos, to his credit, pointed that out and gave her a second bite at the apple, but the only thing she made “clear” in her second opportunity to answer the question was that she was using unique mathematical equations to imply middle class savings:
WARREN: Look, what families have to deal with is cost, total cost. That’s what they have to deal with. And understand, families are paying for their health care today. Families pay every time an insurance company says, “Sorry, you can’t see that specialist.” Every time an insurance company says, “Sorry, that doctor is out of network. Sorry, we are not covering that prescription.
Families are paying every time they don’t get a prescription filled because they can’t pay for it. They don’t have a lump checked out because they can’t afford the co-pay. What we’re talking about here is what’s going to happen in families’ pockets, what’s going to happen in their budgets.
And the answer is on Medicare-for-all, costs are going to go up for wealthier individuals and costs are going to go up for giant corporations. But for hard-working families across this country, costs are going to go down and that’s how it should work under Medicare-for-all in our health care system.
Exhibit 2: Still on the same issue. Biden points out the reality of Warren’s plan yet again, and again Stephanopoulos asks her about the numbers.
BIDEN: . . . The senator said before, it’s going to cost you in your pay — there will be a deductible, in your paycheck. You’re going to — the middle class person, someone making 60 grand with three kids, they’re going to end up paying $5,000 more. They’re going to end up paying 4 percent more on their income tax. That’s a reality. Now, it’s not a bad idea if you like it. I don’t like it.
STEPHANOPOULOS: Okay, now I want everybody to keep to the time, but you did invoke both senators. I have to get responses from them . . . and then we will broaden it out. Senator Warren, you go first.
WARREN: So, let’s be clear, I’ve actually never met anybody who likes their health insurance company. . . . I’ve met people who like their doctors. I’ve met people who like their nurses. I’ve met people who like their pharmacists. I’ve met people who like their physical therapists. What they want is access to health care. And we just need to be clear about what Medicare-for-all is all about.
Instead of paying premiums into insurance companies and then having insurance companies build their profits by saying no to coverage, we’re going to do this by saying, everyone is covered by Medicare-for-all, every health care provider is covered. And the only question here in terms of difference is where to send the bill? . . .
Exhibit 3: Paleface Who Speaks With Forked Tongue was clearly the worst of the bunch. But Bernie the Red’s “clear” answers weren’t that far behind, as he demonstrates when given the chance to admit to those numbers Biden had just raised:
SANDERS: Let us be clear, Joe, in the United States of America, we are spending twice as much per capita on health care as the Canadians or any other major country on earth.
BIDEN: This is America.
SANDERS: Yes, but Americans don’t want to pay twice as much as other countries. And they guarantee health care to all people. Under my Medicare-for-all proposal, when you don’t pay out-of-pocket and you don’t pay premiums, maybe you’ve run into people who love their premiums, I haven’t.
What people want is cost-effective health care, Medicare-for-all will save the average American substantial sums of money on his or her health care bill.
Exhibit 4 is Bernie again, this time trying clearly not to admit that Venezuela is socialist, and that any government with enough power to impose socialism is one with enough power to become dictatorial and tyrannical.
RAMOS [addressing Bernie the Red]: You haven’t been asked about Latin America in the previous debates, so let’s begin. Senator Sanders, one country where many immigrants are arriving from is Venezuela. A recent U.N. fact-finding mission found that thousands have been disappeared, tortured and killed by government forces in Venezuela. You admit that Venezuela does not have free elections, but still you refuse to call Nicolas Maduro a dictator — a dictator. Can you explain why? . . .
SANDERS: Well, first of all, let me be very clear. Anybody who does what Maduro does is a vicious tyrant. What we need now is international and regional cooperation for free elections in Venezuela so that the people of that country can make — can create their own future. . . .
Then it was the turn of the only true brown-noser on stage, Kamala Harris, to be clear:
DAVIS: Also a concern for people of color is criminal justice reform. Senator Harris, you released your plan for that just this week. And it does contradict some of your prior positions. Among them, you used to oppose the legalization of marijuana; now you don’t. You used to oppose outside investigations of police shootings; now you don’t. You’ve said that you changed on these and other things because you were, quote, “swimming against the current, and thankfully the currents have changed.” But when you had the power, why didn’t you try to effect change then?
HARRIS: So, there have been — there have been — I’m glad you asked me this question, and there have been many distortions of my record.
Let me be very clear. I made a decision to become a prosecutor for two reasons. One, I’ve always wanted to protect people and keep them safe. And second, I was born knowing about how this criminal justice system in America has worked in a way that has been informed by racial bias. And I could tell you extensively about the experiences I and my family members have personally had. But I made a decision that, if I was going to have the ability to reform the system, I would try to do it from the inside. . . .
At any rate, this is far from the only progressive verbal jiujitsu you will see from our modern left. The other you will inevitably see is when you hear a progressive claim that someone is “weaponizing” something against them. What that means is that a conservative has raised a completely valid issue and the proggie can only defend by saying the conservative is evil for even raising the issue, thus making of the proggie the morally superior victim. It is clearly as intellectually a dishonest argument as you will ever hear raised.
By: Mike McDaniel The United States of America is without peer in generosity, not only of pocketbook, but of spirit. No nation in history has been as altruistic, and as willing to sacrifice blood and treasure for the welfare of others. We give foreign aid–at last count just under $50 billion per year–to 96% of all nations in the world. The amount is likely considerably larger as the means for determining what, exactly, is “foreign aid” are remarkably flexible.
While we in Hanover and New Kent are behind the lines, I will try to keep you informed – from a Brat campaign email:
Last week, the Senate Finance Committee heard testimony from IRS Commissioner John Koskinen, who stunned members with his admission that the IRS looks the other way when illegal aliens use stolen social security numbers to file tax returns.
Mr. Koskinen stated that when people fraudulently use Social Security numbers to get a job, and then file taxes using their IRS-issued individual taxpayer identification numbers (ITIN), the IRS is only concerned whether taxes are paid — not about people in the U.S. illegally, committing identity fraud.
Oftentimes, the Social Security numbers are borrowed from friends with permission, he told the committee, and, although the IRS is aware that the tax returns contain false W-2 information, the IRS proceeds to process the returns normally. Incredibly, this highly placed federal official then went on to say that the agency does not even bother to notify the people whose social security numbers have been abused!
Brat sought to clarify comments Koskinen made in a recent Senate hearing about illegal immigrants using someone else’s Social Security number to work and an individual tax identification number to file a tax return.
“Should any agency go along with what it knows to be illegal activity?” Brat asked.
“Our responsibility is the administration of the tax code and it’s been made clear that not everybody who has an ITIN as it’s called is an illegal alien –for some reason they can’t get a Social Security number. And so the tax code is set up and our enforcement is that people who are earning money have an obligation to pay taxes, and we do everything we can to make sure they pay those taxes,” Koskinen said.
“To the extent that to get the employment they have borrowed or somehow gotten a Social Security number, that’s not a jurisdiction we have. In other words, our responsibility is to make sure they pay their taxes,” he added.
So Brat comes out this with:
Mr. Koskinen must be removed as head of the IRS
This admission by the IRS Commissioner is another example of why I and 62 other members of the House have signed on to a Resolution calling for Mr. Koskinen’s impeachment due to the repeated breach of his basic fiduciary duties.
I can understand the IRS’ dilemma but there must be a better way than placing people’s personal info at risk. Cong. Brat is taking a bold stand. Read my next post if you want to consider a protest at the polls about losing our beloved Representative.
I have a modest proposal about that: Nothing. The Panana Papers are a gross violation of the most important legal privileges in existence – one that in most states does not end with the death of the client (see the litigation over the late DC Madam and her legal papers for example) in most states in the USA.
The attorney-client privilege is designed to ensure that the right to counsel is not a hollow promise. No court can demand (subject to carefully crafted exceptions such as helping the client commit a present or future crime or defraud someone or knowing perjury) the attorney to “rat out” his client. Even if the client admitted to a past crime. Even willful murder. Even where a body being found would provide closure to a grieving family. The privilege wins. Even if the client is deceased in most states. You might as well repeal the Sixth Amendment right to counsel if there is no privilege. The attorney must go to jail before disclosing privileged information. The privilege is essential to a legal system consistent with due process.
BUT isn’t that what these off-shore accounts designed to do? Evade taxes? Maybe money laundering? Not necessarily. From the Orange County Register article:
In an unparalleled release of documents and data, the so-called Panama Papers have thrown open for public scrutiny the secretive world of offshore accounting – used in many instances by business interests with legitimate aims and traditional practices, but also by corrupt figures in public and private life trying to hide dirty money, launder cash, mask ill-gotten gains and often to evade various forms of taxation. (emphasis added by me)
The leaker (even if the law firm did it) and/or the investigative reporters are not a court or other authority that can demand the law firm reveal illegality under the strict exceptions to the privilege. No due process or privacy considerations for these clients. Their private financial transactions are now public knowledge.
Instead those involved are at best purveyors of stolen and illegal information. I am not even sure to what extent an attorney in the US could legally use this situation over the protests of the original client. I wouldn’t touch it. I would not use this information or any facts derived from anything found in the Panama Papers and the reporters, if they had any integrity would decline to do so as well.
But to the extent we as conservative/libertarians should comment on it, here’s what we must say: Tax avoidance, as long as it is legal, is not tax evasion. The President and the leading Democrat candidate for the White House both say some scary things:
Which brings us to the United States of America, where, so far, the Panama Papers have not made as big of a splash as abroad. But Democrats have seized on the opportunity to mount a relatively more populist case for tightening the screws on taxes. “There is no doubt that the problem of global tax avoidance generally is a huge problem,” said president Obama. “The problem is that a lot of this stuff is legal, not illegal.” He went so far as to say it shouldn’t be legal “to engage in transactions just to avoid taxes,” appealing to “the basic principle of making sure everyone pays their fair share.”
Hillary Clinton has mounted a similar response, vowing to ensure that nobody would be permitted to make off with the people’s money in her own administration. But this is a difficult development for her. (Emphasis added by me, again!)
So we should not try to pay the least in taxes? Isn’t it vaguely unpatriotic? Seems ironic to say in early April of any year! Compare and contrast President Obama with who might be the most scholarly (I would say learned but that would be a bad pun!) jurists never to sit on the United States Supreme Court: Judge Billings Learned Hand of the Second Circuit Court of Appeals in the early part of the last century. Here’s what Judge Hand said in judicial opinions about paying taxes:
#4 Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.
Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)
#5 Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) – dissenting opinion
The tax lawyer I got these quotes from [Andrew Mitchel] thanked Frank Santoro. I thank both of them!
So our goal should be: Let’s stand for financial liberty and privacy and to pay as little in taxes as legally possible! And take my advice: Protect the Attorney-Client Privilege! Boycott the Panama Papers. If there is no market for dubious goods, there will be fewer leaks.
Decades ago citizens decided the way to raise revenue for local gov’t was to tax personal property, land, homes, and various other forms . What seemed to appear equitable has today morphed into a quagmire of selectiveexemptions and specialtaxbreaks . At every level of gov’t (including local ) the tax code has become the “ dirty currency “ of politicians. Will the King William B.O.S address this in the 2016/17 budget ? Perhaps a reminder of how far out of balance local tax policy has become is a good place to start.
Land Use Tax Exemptions allow for generous reductions in the taxes paid on property that falls into 2 classes, Agricultural and Forestry. Land Use Tax Exemptions reduce revenue the County would otherwise collect by 1 million dollars a year. That shortfall is made up elsewhere, reflected in the K.W real estate tax rate of .94 per hundred, one of the highest in the entire State. 2 other local tax exemptions also add to this tax shifting , the first being an Exemption from the BPOL tax( Business Professional Occupational License ) that Farmers donotpay, the second is the Exemption from the Business/Machinery/Tools Tax, farmers are alsoexemptedfrompayingthistax, paid by most other forms of business in King William County.
Just what do these 2 tax exemptions cost in lost revenue to King William , shifting even highertaxes to the remaining tax payers ? I would hope that either the Commissioner of Revenue or the Treasurer could answer that question. Is it warranted to quantify the additional costshifting that occurs with every tax exemption ? If those receiving the tax break know what it’s value is, shouldn’t KW taxpayers know what it is costingthem ? Perhaps the Board should institute a “ costindex”, publicly showing a dollar value for every single exemption. We talk about transparency in government, let’s do something about implementing it.
Add Federal Farm Subsidies ( 1995—2012) over 17million in Federal tax dollars taken from tax payers and going to the Top 20 Farms in King William, subsidies for Crop Insurance ( some .68 out of every $1 ) paid by other tax payers, the Farm Use Vehicle Tag Exemption ( those pesky fees the rest of us pay DMV ) it is fair to say that the tax load at the local level is outofbalance, favoring 1 small distinct group at the expense of the remainder of King William Citizens.
Do the Supervisors have the backbone to do something about this ? November’s election was about TaxesandSpending, any attempt to describe it otherwise is fool hardy. Voters threw out 3 incumbents who defended the status quo. Should this Board fail to address what is no longer defensible King William citizens will know the courage wasn’t there to do so . We have already reserved the paid ad space.
I didn’t write these and honestly do not know who did. They were circulated as having been written by Peggy Noonan in a column for the Wall Street Journal. This was not the case. And while the false attribution gives rise to many believing they can discount the message, that is simply not the case. These are valid reasons to support Donald Trump. And these are all statements Trump has uttered at his packed rallies or elsewhere.
I tried to post this on Facebook and I believe Facebook is censoring it. I can post anything else I want it seems, so I posted this on my blog.
1.) Trump believes that America should not intervene militarily in other country’s problems without being compensated for doing so. If America is going to risk the lives of our soldiers and incur the expense of going to war, then the nations we help must be willing to pay for our help. Using the Iraq War as an example, he cites the huge monetary expense to American taxpayers (over $1.5 trillion, and possibly much more depending on what sources are used to determine the cost) in addition to the cost in human life. He suggests that Iraq should have been required to give us enough of their oil to pay for the expenses we incurred. He includes in those expenses the medical costs for our military and $5 million for each family that lost a loved one in the war and $2 million for each family of soldiers who received severe injuries.
2.) Trump wants America to have a strong military again. He believes the single most important function of the federal government is national defense. He has said he wants to find the General Patton or General MacArthur that could lead our military buildup back to the strength it needs to be. While he hasn’t said it directly that I know of, Trump’s attitude about America and about winning tells me he’d most likely be quick to eliminate rules of engagement that handicap our military in battle. Clearly Trump is a “win at all costs” kind of guy, and I’m sure that would apply to our national defense and security, too
3.) Trump wants a strong foreign policy and believes that it must include 7 core principles American interests come first. Always. No apologies. Maximum firepower and military preparedness. Only go to war to win. Stay loyal to your friends and suspicious of your enemies.Keep the technological sword razor sharp. See the unseen Prepare for threats before they materialize. Respect and support our present and past warriors.
4.) Trump believes that terrorists who are captured should be treated as military combatants, not as criminals like the Obama administration treats them.
5.) Trump makes the point that China’s manipulation of their currency has given them unfair advantage in our trade dealings with them. He says we must tax their imports to offset their currency manipulation, which will cause American companies to be competitive again and drive manufacturing back to America and create jobs here. Although he sees China as the biggest offender, he believes that America should protect itself from all foreign efforts to take our jobs and manufacturing. For example, Ford is building a plant in Mexico and Trump suggests that every part or vehicle Ford makes in Mexico be taxed 35% if they want to bring it into the U. S., which would cause companies like Ford to no longer be competitive using their Mexican operations and move manufacturing back to the U.S., once again creating jobs here.
6.) Trump wants passage of NOPEC legislation (No Oil Producing and Exporting Cartels Act – NOPEC – S.394), which would allow the government to sue OPEC for violating antitrust laws. According to Trump, that would break up the cartel. He also wants to unleash our energy companies to drill domestically (sound like Sarah Palin’s drill baby, drill?) thereby increasing domestic production creating jobs and driving domestic costs of oil and gas down while reducing dependence on foreign oil.
7.) Trump believes a secure border is critical for both security and prosperity in America. He wants to build a wall to stop illegals from entering and put controls on immigration. (And he says he’ll get Mexico to pay for the wall, which many have scoffed at, but given his business successes I wouldn’t put it past him.) He also wants to enforce our immigration laws and provide no path to citizenship for illegals.
8.) Trump wants a radical change to the tax system to not only make it better for average Americans, but also to encourage businesses to stay here and foreign businesses to move here. The resulting influx of money to our nation would do wonders for our economy. He wants to make America the place to do business. He also wants to lower the death tax and the taxes on capital gains and dividends. This would put more than $1.6 trillion back into the economy and help rebuild the 1.5 million jobs we’ve lost to the current tax system. He also wants to charge companies who outsource jobs overseas a 20% tax, but for those willing to move jobs back to America they would not be taxed. And for citizens he has a tax plan that would allow Americans to keep more of what they earn and spark economic growth. He wants to change the personal income tax to: Up to $30,000 taxed at 1%. From $30,000 to $100,000 taxed at 5%. From $100,000 to $1,000,000 taxed at 10%. $1,000,000 and above taxed at 15%.
9.) Trump wants Obamacare repealed. He says it’s a “job-killing, health care-destroying monstrosity” that “can’t be reformed, salvaged, or fixed.” He believes in allowing real competition in the health insurance marketplace to allow competition to drive prices down. He also believes in tort reform to get rid of defensive medicine and lower costs.
10.) Trump wants spending reforms in Washington, acknowledging that America spends far more than it receives in revenue. He has said he believes that if we don’t stop increasing the national debt once it hits $24 trillion it will be impossible to save this country.
11.) Even though he says we need to cut spending, he does not want to harm those on Medicare, Medicaid, or Social Security. He believes that the citizens have faithfully paid in to the system to have these services available and that the American government has an obligation to fulfill its end of the bargain and provide those benefits. Therefore, he wants to build the economy up so that we have the revenue to pay those costs without cutting the benefits to the recipients. He disagrees with Democrats who think raising taxes is the answer and says that when you do that you stifle the economy. On the other hand, when you lower taxes and create an environment to help businesses they will grow, hire more workers, and those new workers will be paying taxes that become more tax revenue for the government.
12.) Trump also wants reform of the welfare state saying that America needs “a safety net, not a hammock.” He believes in a welfare to work program that would help reduce the welfare roles and encourage people to get back to work. And he wants a crackdown on entitlement fraud.
13.) Trump believes climate change is a hoax.
14.) Trump opposes Common Core.
15.) Trump is pro-life, although he allows for an exception due to rape, incest, or the life of the mother.
16.) Trump is pro 2nd Amendment rights.
17.) Trump’s view on same-sex marriage is that marriage is between a man and a woman, but he also believes that this is a states rights issue, not a federal issue.
18.) Trump supports the death penalty. Trump believes that there is a lack of common sense, innovative thinking in Washington (Hmmm… looks like he believes in horse sense!). He says it’s about seeing the unseen and that’s the kind of thinking we need to turn this country around. He tells a personal story to illustrate the point: “When I opened Trump National Golf Club at Rancho Palos Verdes in Los Angeles, I was immediately told that I would need to build a new and costly ballroom. The current ballroom was gorgeous, but it only sat 200 people and we were losing business because people needed a larger space for their events. Building a new ballroom would take years to get approval and permits (since it’s on the Pacific Ocean), and cost about $5 million. I took one look at the ballroom and saw immediately what needed to be done. The problem wasn’t the size of the room, it was the size of the chairs. They were huge, heavy, and unwieldy. We didn’t need a bigger ballroom, we needed smaller chairs! So I had them replaced with high-end, smaller chairs. I then had our people sell the old chairs and got more money for them than the cost of the new chairs. In the end, the ballroom went from seating 200 people to seating 320 people. Our visitors got the space they desired, and I spared everyone the hassle of years of construction and $5 million of expense. It’s amazing what you can accomplish with a little common sense. On top of his saving years of construction and $5 million in expenses, he also was able to keep the ballroom open for business during the time it would have been under remodeling, which allowed him to continue to make money on the space instead of losing that revenue during construction time.
Donald Trump’s entire life has been made up of success and winning. He’s been accused of bankruptcies, but that’s not true. He’s never filed personal bankruptcy. He’s bought companies and legally used bankruptcy laws to restructure their debt, just as businesses do all the time. But he’s never been bankrupt personally.
He’s a fighter that clearly loves America and would fight for our nation. Earlier I quoted Trump saying, “I love America. And when you love something, you protect it passionately – fiercely, even.” We never hear that from Democrats or even from most Republicans. Donald Trump is saying things that desperately need to be said but no other candidate has shown the fortitude to stand up and say them. Looking over this list of what he wants for America I see a very necessary set of goals that are long past due.
We predicted it, we reported on it, and now it is becoming a reality in Hanover – tax increases are on the way in form or another. Every other word in today’s meeting between Board of Supervisors and State representatives was money, money, money.
None other than Bucky (“I Never Voted for a Tax Increase”) Stanley is finally on the record. Bucky thinks it’s time for local taxing authority to happen. Here’s what this means to the rank and file taxpayer.
The Board of Supervisors wants more authority to raise taxes without asking citizens to vote on approving such tax increases. These taxes could be an additional 1% or so on the sales tax, an extra tax on cigarettes or beer/alcohol tax or a general meals tax. Who’s going to notice this on their bill, right? Once these taxes are in place, they can be increased in the future and you can’t do anything to stop it.
The Board of Supervisors could also resurrect the $10 wheel tax proposed in 2012 to replace loss of proffer income. Property assessments will undoubtedly increase which is a backdoor tax increase.
So, it is evident that the well has run dry in Hanover. Board of Supervisors gave away $52 Million in proffer income – plus untold millions in additional proffer income from the recent surge in high-density housing approvals. Hanover is going to need that lost money pretty soon. The School Board recently reported that Atlee High School is above capacity – something Chickahominy Supervisor Angela Kelly-Wiecek previously denied when she promoted and voted for apartments near the Kings Charter neighborhood.
Wealthy developers and political donors benefitted at the expense of average citizens. And then there are the special tax classifications for certain developers like the $3,500,000 (that’s Million) property on Route 1 and Cedar Lane taxed at $54,000. Hanover continues to give away the bank while increasing the budget.
In addition, Hanover is currently building a $44 Million courthouse – on borrowed money (bonds) which citizens also did not approve. The County’s municipal bond debt is currently maxed out. The old courthouses are slated to be converted to office space for more government workers. Government never shrinks and there is never enough money to satisfy those who feed at the political trough. With budget gaps looming, what can be done? Raise taxes.
It is often said that all politics is local, though locals rarely show up to vote for their town councilmen, county supervisors, sheriffs, State Delegates and Senators. Obama can’t raise your property taxes, or your gas tax, or approve new utility fees, or build large condensed housing in the middle of your rural area. Your United States Senator can’t allow your local police force to perform shady deals, like purchasing dozens of cars from dealership friends of the sheriffs campaign. Congressman Dave Brat and Rob Wittman can’t pass on proffers and raise taxes on the good folks of Hanover County on behalf of local developers (or on behalf of themselves).
Your Sheriff is responsible for fighting crime in your neighborhood and protecting your children – so I find it hard to fathom that folks don’t bother getting involved in their elections for sheriff. County and Town Supervisors can raise your taxes. Cigarettes in Ashland have their own special little sticker missing from convenience stores in nearby areas. Folks in Ashland are paying an extra tax. Obama can’t be blamed for that.
Your State Delegate may be the only thing standing between a Medicaid Expansion that will bankrupt our State Budget and Republican Budgets that actually give our State a chance to stay competitive, economically, in the future.
These local elections are phenomenally important and your vote is immensely powerful! A Delegate here and delegate there and Governor McAuliffe gets to ram his liberal agenda down the throats of every Virginian. I can’t think of a single Republican Delegate running in the State of Virginia for whom I wouldn’t vote. While we have a decent majority in the House, the Senate majority is as slim as can be, and we need a strong, robust Republican force operating in the House of Delegates in Richmond.
That said, I suggest you get to know your Sheriff and your Supervisor. If they aren’t accessible, they might not be the Sheriff or Supervisor you want representing you in the first place.
Here in Caroline County, whether you support him or not, Sheriff Tony Lippa is utterly accessible. So is my delegate Wayne Acors. Now, in rural politics, partisanship doesn’t play as big of a role as it does in Richmond or Washington D.C. Many of these folks run as independents and they have nothing but their records and their accessibility to run on. Now, I can’t just come out and endorse Sheriff Lippa or Wayne Acors, because I haven’t lived in Caroline County long enough to truly judge their performance, but I can tell you they are both accessible and involved in the community. And when you, as an average citizen, can have the ear of those people representing you in your county, you have an influence you could never have with your United States Congressman or Senator.
November 3rd is coming fast, but you still have time to reach out to the people running for office. Judges, Clerks, Sheriffs, Supervisors, Delegates and Senators have an enormous impact on your daily lives, whether you notice it or not. Take the next week to get to know the people running for office, ask them for a couple minutes of their time, and ask them questions about what’s important to you. Talk to your friends and neighbors about the issues facing your communities and ask around about how the folks currently representing you have doing on your behalf. You just don’t know who’s going to vote on election day. Don’t let other people decide for you who represents you in your town, county, or in Richmond. Vote. Make your voice heard.