” People shouldn’t be surprised about the botched roll-out of Obamacare and all the damaging effects of the law that are now generating headlines. Over the decades, federal efforts to subsidize and manipulate the economy have failed over and over again.
That lesson has been driven home to me in researching Downsizing Government. Farm policies, for example, have been an ongoing boondoggle for more than eight decades. President Herbert Hoover’s Federal Farm Board blew $500 million trying to stabilize crop markets, but it did the opposite by inducing overproduction and depressing prices. Every farm bill since then—including the one moving through Congress right now—has been based on two very dumb ideas: that farm businesses need welfare and that agriculture needs government central planning.
I recently came across “The Sickness of Government,” (PDF) a 1969 essay by famed management theorist Peter Drucker. It is strikingly relevant to the problems we see in Washington today from Obamacare, to farm programs, to IRS abuse, to NSA spying. Unlike, say, Ayn Rand–who at the time was writing about government from the standpoint of individual freedom–Drucker was writing from the practical perspective that Big Government simply wasn’t working.
“Modern government has become ungovernable. There is no government today that can still claim control of its bureaucracy and of its various agencies. Government agencies are all becoming autonomous, ends in themselves, and directed by their own desire for power, their own narrow vision rather than by national policy.” “
In simple terms , big government runs contrary to human nature . Competition , ambition and self-interest are the motors of the human spirit and government is the antithesis of all . Big government , by it’s very nature , contradicts the natural order of things as it attempts to do FOR the individual that which should be done BY the individual .
” That’s not a concept that Americans contemplate lightly. But it’s one that many of them seem to be considering – and acting on.
The number of expatriates renouncing their US citizenship surged in the second quarter of 2013, compared with the same period the year before – 1,131 cases to 189 in 2012. It’s still a small proportion of the estimated six million Americans abroad, but it’s a significant rise.
The list is compiled by the Federal Register and while no reasons are given, the big looming factor seems to be tax.
A new law called the Foreign Accounts Tax Compliance Act (Fatca) will, from 1 July next year, require all financial institutions around the world to report directly to the US Internal Revenue Service (IRS) all the assets and incomes of any US citizens with $50,000 (£31,000) on their books. The US could withhold 30% of dividends and interest payments due to the banks that don’t comply.
It’s an attempt by the US authorities to recover an estimated $100bn a year in unpaid taxes on US citizens’ assets overseas. Unlike other countries, Americans are taxed not only as residents of the US but also as citizens, wherever they live.”
” The Mercatus Policy Guide is intended to summarize and condense the best research available on the most pressing topics. It serves as a starting point for discussion, not a comprehensive overview of economic policy. Anyone who wants to go deeper into these studies should consult the references listed at the back. Mercatus scholars are available to further explain the results of their studies. We hope the guide will prove to be a valuable tool in your evaluation of economic policy.”
” Liberals are trying every tool at their disposal this year to go after guns. They have failed on Capitol Hill to restrict the Second Amendment, so they are moving through the states to enact their agenda. The latest maneuver is to hike the tax on guns and ammunition to dissuade the law-abiding from buying firearms. It’s the perfect storm of liberalism — more revenue for a bigger government and fewer people keeping and bearing arms.
President Obama’s hometown of Chicago started the movement late last year by enacting a $25 tax on new firearm purchases, which went into effect on April 1. Cook County stopped just short of adding a levy on ammunition.
In February, Rep. Linda T. Sanchez, California Democrat, and 26 of the most uber-liberals in the House introduced a bill to amend the Internal Revenue Code to create an excise tax of 10 percent on any concealable gun in order to empower Attorney General Eric H. Holder Jr. to establish a firearms buy-back grant program. Since the Newtown, Conn., school-shootings tragedy, anti-gun states across the nation have introduced similar measures.
A new bill in the House would prevent this infringement on the Second Amendment. Rep. Sam Graves introduced legislation on June 13 that would make it illegal for states and municipalities to raise taxes or fees on firearms and ammunition. The Missouri Republican’s proposal would also prevent raising taxes in order to pay for background checks. “The Constitution says ‘shall not infringe,’ ” Mr. Graves told me in an interview Thursday.
These costly measures disproportionately affect lower-income people, who often live in higher-crime areas. Along with other costly mandates, such as maintaining liability insurance, these restrictions would likely be overturned as unconstitutional by the courts.
“This is no different than a poll tax — but on the Second Amendment,” said Lawrence Keane, general counsel of the National Shooting Sports Foundation. “These anti-gun politicians are clearly trying to unduly burden the exercise of the Second Amendment by pricing firearms and ammunition out of reach of many law-abiding Americans. Mr. Graves’ bill will put a stop to these sinister schemes.”
” The US economy is creating new wealth and growing employment, albeit at a slow pace. But uncertainty is the key word that describes the economic situation at mid-2013.There are major unknowns with respect to Fed policy, taxing and spending, the effects of the Affordable Care Act on employment, the implementation of Dodd-Frank financial reform, regulatory policy affecting the production of electricity, and the prospects for Europe’s recovery from an extended recession. Add to this pallid picture reductions in growth in China,India, and the developing world taking some of the edge off the global boom, which, in spite of that growth haircut, is still tugging away on America’s export growth.
With the closing of the books on the 2012 economy, real GDP growth registered 2.2 percent. But the current picture suggests we will be lucky to break 2.0 percent in 2013 and a bit more in 2014. This compares with the results of the Federal Reserve Bank of Philadelphia’s Livingston Survey in December 2012, which predicted 2.1 percent growth in 2013’s first half and 2.3 percent in the second half of the year. It will be a while before Livingston speak again, but right now, Economy.com’s dynamic GDP growth meter indicates the economy is expanding at 1.8 percent.
As Goldilocks might put it, “It’s not just right.” Not by a long shot. We can see images of the slowdown in the Institute of Supply Management’s indexes for the manufacturing and non-manufacturing (service) economies shown below. Both indexes are headed south of the border. Recall that 50 is the magic number that coincides with zero growth.”
” Now the bad news. Consider the next chart. It shows in nominal terms the level of federal receipts and expenditures for 1Q 1990 through 4Q 2012. Even with progress being made, there is a yawning gap waiting to be closed.
If the gap is to be closed, there is no doubt but that it will take more revenue and less spending. But when it comes to getting revenue, there is a never ending political debate regarding tax-rate fairness and which taxpayer income group, if any, should pay the higher or lower tax rate. (After all, there could be a flat tax.)There is hardly any discussion of revenues, which seems odd, to say the least.
But of course, there is reason to be concerned about fairness. People understandably rebel when they perceive they are being treated unfairly by government. (Consider the current IRS controversy.) But if revenues are the chief concern, then how much revenue is collected may be an equally important consideration when politicians talk about taxes.
Writing in 1924, treasury secretary Andrew W. Mellon said this about the political manipulation of rates:
I have never viewed taxation as a means of rewarding one class of taxpayers or punishing another. If such a point of view ever controls our public policy, the traditions of freedom, justice and equality of opportunity,which are the distinguishing characteristics of our American civilization, will have disappeared and in their place we shall have class legislation with all its attendant evils. The man who seeks to perpetuate prejudice and class hatred is doing America an ill service.
But why pay attention to the thoughts expressed by Andrew Mellon? Does he have credentials that command attention? Yes, indeed. As Secretary of Treasury during the Harding, Coolidge, and Hoover administrations, Mellon led a successful effort to reduce the size and debt of the federal government. In the earlier part of his government service, the nation was adjusting to a post–World War I environment, with lots of debt overhang. Sound familiar? His arguments about the relative merits of lower tax rates to produce higher revenues won the day. And he saw higher revenues when rates were reduced. He literally discovered the basis of what we now celebrate as the Laffer Curve. In all fairness, we should call it the Mellon-Laffer Curve.”
Read the whole thing for it’s glimmers of hope and dread .
” The creation myth of American wealth is almost always rooted in the entrepreneur.
It’s the two kids who start a computer company in their garage or dorm room. Or the former standup comic who creates form-shaping undergarments, or the South African immigrant who creates a new electric car and private space program.
But despite the high-profile examples, America may actually be falling behind the rest of the world when it comes to creating entrepreneurial wealth. A new study from Barclays, “Origins and Legacy: the Changing Order of Wealth Creation,” finds developing countries now lead the U.S. when comes to wealth creation by entrepreneurs.
So is America losing its entrepreneurial mojo? There is some evidence that entrepreneurial activity is flagging. The latest data from the Kauffman Foundation found that there were 514,000 new business owners a month in 2012, down from 543,000 in 2011. The 2012 numbers marked the lowest in five years.”
Another one for the Obama record books … killing the entrepreneurial spirit … all is proceeding as Alinsky planned .
” Public policies often have unintended consequences that outweigh their benefits. One consequence of high state cigarette tax rates has been increased smuggling, as criminals procure discounted packs from low-tax states to sell in high-tax states. Growing cigarette tax differentials have made cigarette bootlegging both a national problem and a lucrative criminal enterprise.
Every two years, scholars at the Mackinac Center for Public Policy, a Michigan think tank, use a statistical analysis of available data to estimate smuggling rates for each state. Their most recent report uses 2011 data and finds that smuggling rates generally rise in states after they adopt large cigarette tax increases. Smuggling rates have dropped in some states, however, often where neighboring states have higher cigarette tax rates. Table 1 shows the data for each state, comparing 2011 and 2006 smuggling rates and tax changes.
New York is the highest net importer of smuggled cigarettes, totaling 60.9 percent of the total cigarette market in the state. New York also has the highest state cigarette tax ($4.35 per pack), not counting the local New York City cigarette tax (an additional $1.50 per pack). Smuggling in New York has risen sharply since 2006 (+70 percent), as has the tax rate (+190 percent).”
” Each July Fourth, Americans celebrate their freedom, the result of a revolution over “taxation without representation.” This month, we celebrate another type of freedom – from our own tax man. It turns out that taxation with representation is no picnic either.
According to the Tax Foundation, Tax Freedom Day – the day on which the average American has earned enough money to pay off his federal, state, and local tax bills for the year – occurs on Thursday. In 2013, the average American had to give up all of his earnings from Jan. 1 through Feb. 6 to pay his state and local taxes. He then had to work from Feb. 7 through April 18 to cover his federal tax bill. On average, each of us will work 108 days this year only to pay taxes, and we’ll spend more, shockingly, on taxes than on food, housing, and clothing combined. This is what government costs.
The earliest Tax Freedom Day has ever fallen was Jan. 22. That was in 1900, when Americans paid less than 6 percent of their income in taxes, as opposed to almost 30 percent today. Of course, the government provides a lot more services today, and therein lies the rub. Politicians want us to think of government as Santa Claus – a jolly fat man with unlimited resources that it hands out to good little boys and girls. Like Santa himself, this is a myth, and it is time we all grew up and realized it.
The government has no money. Every single dollar our governments – federal, state, and local – spend comes from the people. In essence, the government forces people to spend money on things they would not have bought voluntarily, and that we, very obviously, cannot even afford. The current generation is already taxed at a high rate, and future generations will be taxed even more heavily to pay off the massive debt the government is accruing.”
” It’s Tax Day, and for millions of Americans that means ponying up to the IRS. The federal government does many things these days—most of which would be more efficiently carried out at the local level, or in the private sector. But Uncle Sam also engages in a particular form of charity that many Americans overlook: spending many tens of billions of dollars to defend wealthy, developed nations.
A new Cato infographic puts it all in perspective. It shows how much American taxpayers spend to subsidize the security, and to defend the interests, of other nations that are more than capable of defending themselves.”
” Looked at another way, U.S. alliances constitute a massive wealth transfer from U.S. taxpayers (and their Chinese creditors) to bloated European welfare states and technologically-advanced Asian nations.”
” There’s video at the link, but this quote from Steve Forbes ought to shock you right down to your socks:
Before a final deal was done, Forbes penned a piece explaining why Cyprus could be a disaster for all of us, lamenting the attempt to seize depositors money. But with a final bailout agreed upon that saves insured depositors, is it less of a disaster?“Not really,” he tells The Daily Ticker. “Because the idea’s out there that now in a crisis politicians won’t hesitate to seize any asset they can lay their hands on. So it just guarantees more fear in the future when a crisis comes, which it will come.”
On the other side of the Atlantic, the European Central Bank isn’t allowed to run the printing presses like Ben Bernanke has been doing at the Fed these last few years. So, the grubby statists will seize whatever assets they can get their panicked little hands on.
On this side of the Atlantic, the grubby statists will keep the printing presses running until the value of your assets (and their debts) is inflated away.”
Ah , Everything old is new again … Gold and Silver my friends , two things government can’t devalue .
” The prospect of a tax on deposits in the banks of Cyprus has even left-leaning economic commentators in a tizzy.“A tactical blunder,” declared Lawrence Summers, who was President Clinton’s Treasury Secretary and chairman of the National Economic Council for President Obama. A proposed tax of 6.75% on deposits up to about $130,000 and of 9.9% on deposits of more than $130,000 “would unfairly punish savers and could do lasting damage to confidence in banks in other euro-zone countries in financial crisis,” the New York Times wrote in an editorial denouncing the idea
Is it the taking? Bloomberg View columnist Caroline Baum, a sage, criticized the Cyprus proposal on the grounds that it is a confiscation that “amounts to a seizure of private property.” For those of us Americans who will see the IRS or state governments withdraw funds from our own bank accounts next month for tax owed, or who are seeing payroll withdrawals and estimated tax payments this year that are higher than they have been in a decade, the distinction between “seizure of private property” in Cyprus and here at home will be, alas, an awfully fine one.”
” It is said that two things are certain: death and taxes. Of course, that ignores the inevitability that those taxes will be spent on ridiculous crap. We asked our readers to show us what presidents have secretly splurged on with our hard-earned money. The winner is below, but first the runners-up … “
#8 By: Froggar
” In this article I want to point out who has benefited from the Fed’s operations over the past year.
There has been a lot of discussion about the large increase in reserves, and especially excess reserves, held by the banking system. Mostly this discussion is couched in terms of the increase in the money supply. While the increase in excess reserves—less than $2bn in August 2008 to almost $1.5 trillion at the end of 2012—does represent an increase in the money supply, some rule changes accompanying the crisis also signify that they are part of a bailout. One aspect of the Fed’s crisis response was to commence paying interest on required and excess reserve balances. (The required reserve is the amount of money banks must hold to meet the minimum reserve requirement on deposits, and excess reserves are any amount held in excess of this minimum.)
As we review the Fed’s operations in 2012 we see the usual outcomes. The banking sector has benefited from its operations (unusually so, thanks to the continued interest on reserve policy) and the government has received a free lunch by having a ready buyer for its ever-increasing debt, especially long-term debt, which might otherwise be susceptible to inflationary pressures increasing its interest yield. Let’s see what surprises the Fed has in store for us in 2013.”
As Barack Obama begins his second term in office, trust in the federal government remains mired near a historic low, while frustration with government remains high. And for the first time, a majority of the public says that the federal government threatens their personal rights and freedoms.
” President Barack Obama’s State of the Union address included few new or unexpected proposals, but many factually incorrect or misleading assertions. Here are the lowlights.
“Corporate profits have rocketed to all-time highs – but for more than a decade, wages and incomes have barely budged.” Wages and incomes may not always be the best measurement, because they leave out benefits, which have increased overall compensation over several decades. Regardless, Obama chose his timeframe carefully, because over the past four years, middle class income has actually declined.
“In 2011, Congress passed a law saying that if both parties couldn’t agree on a plan to reach our deficit goal, about a trillion dollars’ worth of budget cuts would automatically go into effect this year.” Obama is referring to the sequester. He omits the fact that he (or his White House) proposed the sequester, and he personally signed it, with the hope of using it to push Republicans into passing higher tax rates on high earners.
Illustration By Lisa Benson*
” The city’s hedge-fund executives are flying south — and it’s not for vacation.
An increasing number of financial firms, especially private equity and hedge funds, are fed up with New York’s sky-high city and state tax rates and are relocating to the business-friendly climate in Florida’s Palm Beach County.
And they’re being welcomed with open arms — officials in Palm Beach recently opened an entire office dedicated to luring finance hot shots down south.
“Florida is a state of choice,” said Thalius Hecksher, global development chief for Apex Fund Services, who moved many of his operations to Palm Beach. “It’s organically grown. There’s no need to drag people down here. It’s a zero-income-tax jurisdiction.”
” Turner has often spoken fondly of the European nation, and she was previously quoted telling German publication Blick, “I’m very happy in Switzerland, and I feel at home here. … I cannot imagine a better place to live.”
The diva isn’t the only star to give up citizenship of her native country — Gerard Depardieu famously accepted a Russian passport earlier this year after fiercely criticizing politicians in France over plans to hike up taxes for the country’s most wealthy residents.”
(CNN) – Phil Mickelson, aka Lefty, is thinking of leaving California and perhaps America because, according to his own reckoning, he is facing tax rates of 62% or 63%. Mickelson, probably the second-most-famous professional golfer in the world after Tiger Woods, later backed off from his initial comments about making “drastic changes.
” Mickelson’s instinctive reactions to high tax rates, even if his math may be a bit muddled, are sound and sensible ones. Tiger Woods certainly agrees with him.
Lefty has a point — high tax rates create disincentives. If the rates are high enough, people react by moving. This should not surprise us: American companies have been fleeing our shores for years, in droves. “
” “I think that it was insensitive to talk about it publicly to those people who are not able to find a job, that are struggling paycheck to paycheck,” Mickelson said. “I think that was insensitive to discuss it in that forum.”
He didn’t apologize for what he said — only that he said it.
“I shouldn’t have taken advantage of the forum that I have as a professional golfer to try to ignite change over these issues,” Mickelson said.”