Category Archives: Totty

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Rule Five Taxation is Theft Friday

A Wealth of Bad Ideas

It’s no surprise to anyone that has been paying attention that Democrat Presidential candidate Spreading Bull Warren is proposing a wealth tax to pay for her massive spending proposals, not least of which is “Medicare for All.”  While her proposals suck for a number of reasons, this one is perhaps one of the worst.  Let’s look at the reasons why.

Practical Reasons

Let’s forget legal aspects for a moment and look at the practical aspects of this proposal to confiscate the wealth of successful Americans by force.

By her own words, she claims that her proposal would only affect either “billionaires” or “the top 1%,” depending on which day you listen to her.  But these people are the same people who are best equipped, best prepared and most able to evade just such a tax; the inevitable result of this plan would yield only a massive capital flight from our shores, and a resulting catastrophic crash of our financial markets.  Less wealthy Americans, less able to flee the new taxation scheme, would see their retirement accounts evaporate.  Businesses would suffer; layoffs and business closings would follow.

And bear in mind that her proposal isn’t a one time thing.  It would tax the assets of every American that meets the criteria, every year.  And her claim of 2%?  Well, that’s how the income tax started, too.  How long do you suppose the wealth tax would stay at 2%?

At best, we could expect a prolonged recession that would make the 2008-2009 “Great Recession” look like a blip.  At worst, we could see a prolonged Depression, quite possibly worse than the 1928-1938 Depression, very likely the worst downturn in our nation’s history.

But there are stronger arguments against Princess Spreading Bull’s plan, and those are found in the Constitution.

Constitutional Reasons

Article One, Section Nine of the U.S. Constitution, Limits on Congress, contains the following unambiguous statement:

No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

What does this mean?  Simply this:  Congress can levy no direct tax unless that tax is levied in proportion to the population of the several States.  In other words, if California contains 12% of the nation’s population, then California must supply 12% of any direct tax.  If Alaska contains 2%, then the residents of Alaska are only responsible for 2% of the total.  Now it’s pretty apparent to anyone who’s been paying attention that a few states, like New York and California, contain a proportion of wealth far higher than their percentage of the nation’s total population; other states, like Alaska and Arkansas, rather less so.

In order to levy the existing income tax, the Sixteenth Amendment was passed:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Note that final clause; a specific exemption was stated to allow the current income tax to be collected without regard to “…any census or enumeration.”

Liawatha Warren’s wealth tax, in which she proposes to confiscate the wealth of many successful Americans, a tax which would wreck our economy and lay a heavy levy on wealth generated with post tax dollars – thus representing double taxation – would require a Constitutional amendment, one which has rather less chances of ratification than would an amendment denying the vote to all persons with red hair and blue eyes.

In Conclusion…

Liawatha Warren is perhaps one of the most dangerous politicians to ever seek the office of the President.  Her proposals would destroy the Constitution, would result in economic ruin, and would drive wealth out of the country.  Fortunately, while she seems to be in a good position to gain the Democratic nomination, her odds thereafter are not good; if for no other reason, her Medicare-for-All plan would strip the generous,  union-negotiated health care plans of millions of blue-collar and middle-class Americans.  If the Democrats lose the labor unions, they lose the election, and this plan guarantees that loss.  Add to that the fact that her proposals would prove wildly unpopular to all Americans other than the far left, and her nomination is little more than a gift to the Trump re-election campaign.

But still, it’s important to examine her policy plans, and spread the word on why and how they would result in disaster.  Let’s hope most Americans are paying attention.

Rule Five Civil War Friday

The American Conservative’s Michael Vlahos, earlier this week, had some interesting thoughts on the possibility of a second Civil War.  Excerpts, with my comments, follow.

A Georgetown Institute poll finds that two-thirds of us believe we are edging closer “to the brink of a civil war.” Yet Americans cannot properly analyze this “gathering storm.” We lack a framework, a lexicon, and the historical data (from other civil wars) to see clearly what is happening to us.

Here is a quick template for how we might more usefully decipher how this nation gets to another civil war. It is arranged as a short series of questions: 1) What is civil war? 2) Why do political-constitutional orders sometimes breakdown, rather than simply transform in response to change? 3) How is violence essential to constitutional and political resolution? 4) How close is the U.S. to such a break down, and its consequences?

My thoughts:  1) A civil war is two factions fighting for control of one nation; and yes, I’m aware that what we call the Civil War, wasn’t.  2) I think it’s likely inevitable, when you have two factions (we call them parties) competing for control, that eventually friction will build to the point of open hostility.  3) I don’t know that it’s essential, but Thomas Jefferson thought so.  4) I suspect something bad will happen in the next 50 years.

Now, the article on these four points; I’ll just give you a few words and let you read the rest:

What is civil war? 

Civil war is, at root, a contest over legitimacy. Legitimacy—literally the right to make law — is shorthand for the consent of the citizens and political parties to abide by the authority of a constitutional order. Civil war begins when this larger political compact breaks down. 

Why do some constitutional orders breakdown rather than transform?

Our political stability has depended on the tenure of periodic “party systems.” Legitimacy flows from the give and take of a two-party relationship. American party systems have had dominant parties or states.

How is violence essential to constitutional and political resolution?

Violence is the magical substance of civil war. If, by definition, political groups in opposition have also abandoned the legitimacy of the old order, then a successor constitutional order with working politics cannot be birthed without violence. Hence violence is the only force that can bring about a new order. This is why all memorable civil wars, and all parties, enthusiastically embrace violence.

How close is the U.S. to such a breakdown—and its consequences?

American constitutional order has not broken down, yet. Constitutional legitimacy still rules. Recent tests of legitimacy confirm this. A presidential impeachment in the 1990s did not lead to conviction in a trial, nor did anyone expect it to. The Supreme Court decided a contested presidential election in 2000, and the decision was everywhere accepted. 2016, in contrast, was bitterly accepted. Yet even the relentless force to depose the president that followed, through a special prosecutor, was spent by the spring of 2019. 

Yet if these are tests of robust legitimacy they are hardly reassuring.  A daily torrent of unfiltered evidence suggests that our constitutional order is fissuring before our eyes. That we have skirted constitutional crisis for the past quarter century is no reassurance, but rather an alarm of continuing erosion. Each new test is yet more bitterly contested, and still less resolved.

So, not too different than my preliminary thoughts.  But here’s the part that I find worrisome:

The issue here is not “What if?” but rather, “What then?” It is not about the authenticity of conflict scenarios, but rather about how contingencies we cannot now predict might bring us to a breaking point, and the breakdown of legitimacy.

Already, warring sides have hardened their hearts so that they will do almost anything in order to prevail. The great irony is that their mutual drive to win—either to preserve their way of life, or make their way of life the law of the land—means that the battle has already become a perverse alliance. Today they refuse to work together in the rusting carapace of old constitutional order. Yet nonetheless they work shoulder-to-shoulder, together, to overthrow it. For both sides, the old order is the major obstacle to victory. Hence victory is through overthrow. Only when constitutional obstacles are toppled can the battle for light and truth begin.

Here’s where I part ways with Mr. Vlahos.  I don’t see any “battle for light and truth” resulting from such a conflict.  I can see only the end of my country, the end of a nation that has been a beacon of freedom.  Some kind of tyranny or dictatorship will be the likely result; either that, or utter anarchy.  The best we can hope for is a balkanization, with several smaller countries arising where a superpower once stood.  This will result in a global power vacuum – and who will step into the void?  Russia?  Not likely; they are a dying giant.  China, perhaps?

Any civil war will be fought among us, in the fields, the streets, on the highways and in the neighborhoods of our country.  It will be brutal and deadly, and it will be the end of the United States.  Some folks on the right and on the left seem to think it would be a rebirth; it won’t.  It will be a death.  The death of our nation, and the death of a world of peace and order.

Rule Five Income Inequality Friday

Denver’s own Mike Rosen weighs in on income inequality, and as usual, he nails it.  Excerpt:

In a political auction for seductive but unachievable outcomes at someone else’s expense, socialist and progressive politicians unconstrained by economic reality can always outbid conservatives. Bernie Sanders’ utopian ravings and Elizabeth Warren’s cornucopia of extravagant “plans” magically funded by a new tax on “wealth” (on top of sharp increases in taxes on income) is this election season’s theme.

Their rallying cry is the evil of “income inequality.” But income inequality is not evil, it’s unavoidable and an essential element of a market economy and a free society. As historian Will Durant observed: “The concentration of wealth is a natural and inevitable result of the concentration of abilities in a minority of men and regularly recurs in history.” In microcosm, an obvious example is the disparity in income between a relative handful of elite professional athletes, rock stars, actors and captains of industry compared to those of average ability in their respective fields.

Durant added, “Despotism may for a time retard the concentration; democracy, allowing the most liberty, accelerates it.” Throughout history, he noted, societies have dealt with income inequality through, “legislation redistributing wealth or by revolution distributing poverty.” Alexis de Tocqueville, writing in Democracy in America in the 1830s, cautioned that democracy could be taken too far, “that there exists in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level, and reduces men to prefer equality in slavery to inequality in freedom.”

Take a good close look at that last line.

It’s been said that capitalism is the equal distribution of opportunity, while socialism is the equal distribution of misery.  Places like the former Soviet Union and present-day Venezuela illustrate that very plainly, although too many Americans aren’t paying attention.

But here’s the thing:  No two things in the world are equal – not a leaf, nor a tree.  Nothing and nobody.  There will always be differences in people, in talents, in abilities, in intelligence, in motivation, in circumstances.  That’s inevitable.

Whenever you hear someone decry income inequality or wealth inequality, remember this one fundamental fact:  They are proposing to satisfy someone’s envy by confiscating someone else’s property by force.  Were any private citizen or private company to do that, it would be robbery.  When the Imperial government (or any level of government) does it, it’s “taxation.”

And worst of all, the entire argument is based on a series of fallacies.  As Mike Rosen points out:

Incidentally, the influx of millions of legal and illegal immigrants from Latin America who took low paying jobs over these years had the effect of bringing down the national income average somewhat. Ironically, those same immigrants greatly improved their own standard of living from what it was in their native countries.

Income inequality is also skewed by official statistics that typically omit non-wage compensation like employer-provided health insurance and deferred compensation in the form of generous defined benefit pension plans for government employees. On top of that, the income of the rich is exaggerated by using their pre-tax earnings. This ignores the fact that the top one percent pays almost 40% of the total federal individual income tax burden all by themselves, while the bottom 50% pays only 3% of it.

Compounding the distortion, cash transfers and the value of government services and subsidies obtained by recipients amounting to trillions of dollars at the federal and state levels are simply ignored. It’s as if those taxes paid by the rich and the means-tested benefits given to those with lower incomes don’t exist.

Here’s the thing:  Income and wealth inequality just don’t matter – not today, not in the United States.   The poorest people in America today are inconceivably wealthy compared to the overwhelming majority of people that have ever lived on the planet; the poorest people in America today are in the top 10% of people on the planet.  There is no abject poverty in the U.S., only relative poverty, and the entire RHEEEEEE about inequality has only one goal for pols that engage in it – buying votes by peddling envy and promising Free Shit.

Mr. Rosen concludes:

As a matter of democratic political necessity, and in the name of “social justice” or public charity, government greatly mitigates income inequality in this country. Of equal importance is the reality that excessive taxation and redistribution of income and wealth can destroy a society economically. This is beyond Bernie’s and Lizzie’s comprehension ─ or concern.

I can add nothing to that.