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Wednesday, December 20, 2017

Disconnect

I am not an economist, and don't play one on the internet. I, however, do keep an eye on my finances, and have protected my little nest egg relatively successfully -- I, after all, am Jewish.

I have been following the twists and turns of the latest tax bill, and listening to the hyperbolic talking points unleashed against it by our old friends, the so-called progressives. It seems that we are all going to die! Well, I mean, of course, those of us will die who have not already been killed by Brexit, the election of Trump, the withdrawal from the Paris Climate Accord, the end of "net neutrality," and the declaration of Jerusalem as Israel's capital.

The craziness of the progressives is, once again, on display.

I wrote a long time ago (May 31, 2011) that modern democracy has turned into a battle between the voters and the taxpayers. The two groups increasingly do not overlap,
[T]he real source of the crises facing the major currencies, and, in fact, our core economic well-being . . . all comes down to a very simple and basic fact. The western nations have developed societies where those who pay for government services, in general, are not the ones benefitting from the services. In the United States, for example, we have the top one percent of earners paying 38-41% of all Federal income tax. We have nearly half of Americans who pay no income tax, and another large percentage 15-20% who pay minimal income tax (and lets not even get into "Earned Income Tax Credits".) We essentially have a society where some 25% of the income earners pay close to 90% of all Federal income taxes. That 25% does not consume anywhere near 90% of the services provided by the Feds.
We have a major political party, the world's oldest, the Democrat Party, that has decided to throw its lot in with the voters and ignore the taxpayers. It's not a totally stupid short-to-medium-term policy, although ultimately it leads to Venezuela, Greece, and Detroit. The Democrat base is increasingly composed of people who do not pay income taxes or who directly benefit from those and other taxes. The Dem voters are those on the public dole (including in Virginia, felons), those who work for a variety of public or semi-public organizations (including NGOs who rely on favorable tax laws), and in fields such as academia, the law, media, entertainment, and other occupations removed from the nitty-gritty of the real and productive economy. In other words, most of them don't have to meet payrolls. They do not have to engage in make-or-break investment decisions; they live in a fantasy bubble. The Dem Party also has a curious assortment of billionaires who have made it themselves, love virtue signaling, and really don't care if others can't make it because of the policies advocated by the Dems; those who can't make it are put on the dole controlled by the Democrat Party machine. Win-win.

The GOP tax plan is hardly, despite what its most ardent supporters proclaim, a revolutionary break with the past. It does make a very useful reduction in the absurdly high corporate tax, and should encourage investment in the US and job creation. Jobs! Good! It probably put another (fatal?) bullet into Obamacare by eliminating the penalty for failure to sign up. All good. It, however, doesn't do much with the taxes paid by the wealthy, with most of them probably paying about the same as they do now, and some paying more as they find that the break they get for paying taxes to high-tax states is capped, as is interest on "super" mortgages. It did not eliminate the idiotic death tax. Full disclosure: My preliminary calculations show that I end up about the same as before, so . . ..

The GOP tax plan is most certainly not the death sentence its strident opponents pretend to believe it. That does not and will not stop the Dems from their crazy talk. That's all they have left on the left, well, that and a hope that the blight of economic ignorance will continue to spread across the Western world.

Disconnect.

34 comments:

  1. Why the emphasis on federal Income Tax, Mr Mad? There must surely be other taxes people pay. Do the Feds receive money from duties on booze and ciggies, on imports, on fuel, on ....? Or don't they matter; does income tax dominate?

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    Replies
    1. I suggest that it comes down to a difference in incentives:
      Any tax revenues derived from sales on booze and ciggies, fuel, etc. are the result of voluntary purchases by individuals. E.g., consumption, as determined useful or of utility by the purchaser.
      The U.S. income tax is derived from the ambitions and productivity of labor -- whose goal is [usually] to maximize his income to the extent possible. So, the more he succeeds, the more he is taxed.
      Different incentives at "work"!

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    2. Good question and reply. I agree with Dearieme that we focus perhaps too much on the income tax and let the government get away with imposing and raising other taxes. That is certainly the situation in California with the recent gas tax increase there. In California there was a successful revolt against property taxes but the state gov has responded by raising other taxes--that's a major reason I am no longer there.

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    3. In Montana 2-3 decades ago, a referendum was passed limiting property tax increases (they had to be approved in another referendum). The state legislators, seeing that they couldn't get enough people to agree to property tax hikes to actually get one through, revised how property values are appraised. Basically, they said, "F*** you, you lousy peasants!" And then mooned us.

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    4. One thing to keep in mind when discussing income taxes is that a lot progressives consider income fair game for 'fair taxation', and sales taxes at the state and local level to be "regressive" and unfair (excepting taxing the bad things, like fuel that's ok).

      That's the coming fight in WA state - it's starting in Seattle, and the rallying cry is "It's the most progressive, fair way to tax." They actually passed one here, and it will basically hit a bunch of business owners if it somehow survives (if I remember right, to have an income tax they'd have to have an amendment to the state constitution).

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    5. This comment has been removed by the author.

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    6. I live in S. Snohomish County, NE of Seattle. I wouldn't live in Seattle just because of the liberal politicians there who think the answer is always more government spending and taxes.

      Don't get me wrong, we need government services, protection of open spaces to be used by all (aka parks), etc. But Seattle, despite their liberal politics, is now only affordable to people with good incomes or income producing assets. It's San Francisco north.

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    7. I live in Seattle. It is a hellhole of liberal groupthink and getting much worse. We will be selling our house in spring and heading east of the mountains. Probably not far enough but, at least out of Seattle. The State of Washington is now a one party state and that is no good no matter who is in charge. The entire state will now be at the mercy of Puget Sound lunacy. I hope the split the state movement succeeds.

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  2. With so many opportunities to die from so many causes, we're going to need nine lives at least.

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    Replies
    1. "With so many opportunities to die..."

      Laughed so damn hard inside, I farted out loud! Thanks for the comic relief w~w, this cat hates pussy-foot'n around on a 'hot tin roof'~~~On Watch~~~
      "Let's Roll"

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    2. These days a little humor comes in handy!

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    3. Amen Brother!
      Happy Holidays~~~
      OW~~~

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  3. The benefits of being a "Progressive" are only useful in a depressed or declining economy. So that is what the Democrats prefer to see.
    When things are improving (i.e., actually "progressing") they have nothing to offer, and they know it.

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    Replies
    1. Not actually. Many people live as parasites. Look at the welfare agencies and non profits who do well by doing good. When people live on the labor of others you have a society that will not end well.

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  4. Crying wolf is all the left has got. They have chosen a policy of "Resistance" and adhere to it lockstep. I have to admire the ability of the Democrats to control their people. The Republicans always have trouble getting enough votes, because somebody always has to hold out.

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  5. So 2018 will come down to whether voters believe the Media and Democrats (but I repeat myself) that millions of children will die and the elderly will eat dog food or will they believe in the increased weight in their wallets and the growth of their IRAs and 401Ks...and the Democrats are 100% hoping they can convince the voters of the former.
    Election season starts in 2 weeks and the Left is still fighting the last election.

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  6. D'Mad,

    The most hilarious complaint from the likes of Pelosi, Schumer, et al. is about how the tax plan will add to the deficit. Uhhhh, I thought they pushed through that useless "stimulus package" a few years back.

    Green Bear

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  7. Funny thing... so many people were for Obamacare, because "the cost of health care is skyrocketing out of control". Yet ask them if they want to go back to 1980's health care for paying only 5% of their current costs, and they'll all say 'NO!'.
    Healthcare should continue to be better, "but nobody should have to pay for it getting better".

    The only problem for progressives: The truly are no magic fairies.

    - reader #1482

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    Replies
    1. Right on, Anonymous. Only magical thinking exists.

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  8. They may be few in number, but the hedge fund managers still carry a big lobby loblolly ... carried interest tax treatment survives! This will be the dead animal that will continue to be hung around Republican's necks. Better fix this 'fore too long ...

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  9. I did have several fabulously witty and insightful remarks on the subject, but unfortunately I am dead. Fortunately miracles and wonders do exist in our modern times, though dead I still pay taxes and a multitude of "fees".

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    Replies
    1. Being dead will not prevent you from voting Democrat, so there is that . . .

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    2. I'd be dead too, but I'm still saving up for the Death Tax. I reckon in another 50 or 70 years, I'll be able to afford to die!

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    3. I am not buried in that center of miracles, Chicago!

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    4. The outlying cemeteries there are always slow to report election results...

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  10. I fully expect those against the tax bill to return to the government any refund they may receive over the old tax tables.

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  11. I hope Trump does what he promises. I hope he spends a week tweet-storming each and every dependent country which voted for that shameful UN resolution, and caps each with an elimination of aid. Not a reduction... complete elimination.
    After those are done, we move on to our erstwhile 'allies' who voted for it, and start restructuring our alliances towards those of our allies who voted against it... or at the bare minimum, abstained.
    Trump can probably get *months* of headlines full of progressive headsplosions out of it.... and it'll help balance the budget.
    Maybe we signal that our navy is going to take a few weeks off from policing the waters and making them safe for trade... see how the world likes that.

    This is *not* vindictive. This is about bringing most of the rest of the world a wake up call... back to reality... not the Obama-style "do whatever you want to us, we'll still give money not to attack us!"

    - reader #1482

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    Replies
    1. {{{{{Man Battle Stations Tweet'n'Twitter}}}}}

      A viable Plan of Attack numero 1482~~~
      Apparently the Senate Boss has had an epiphany, viz Trumps Twittering, and may NOW even endorse the CinC GO TO selection of Weapon platform, at least as a preliminary ordnance package to shape the battle space -- Tweets Away, , ,

      On Watch~~~
      http://dailycaller.com/2017/12/22/mitch-mcconnell-warms-up-to-trumps-twitter-habit/

      Delete
  12. "The Dem Party also has a curious assortment of billionaires who have made it themselves, love virtue signaling, and really don't care if others can't make it because of the policies advocated by the Dems"

    Ah, but they DO care. Very much. The tax code is a whip used to keep the upper middle class Payers down. While the truly rich may be theoretically liable to high rates of tax, they have a wide range of shelters to cut their actual rates down substantially. But if you're a professional, a skilled craftsman, or a small businessman - the people making $80K-ish to ~$200K-ish...you're hosed. And it's these people who are the greatest threat to the Truly Rich who run the Democrat Party.

    Never forget that most of the Dem ringleaders inherited power and wealth. They didn't earn it, and live in terror of those who could earn it. And will do everything in their power to kick those potential rivals in the face.

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    Replies
    1. "The tax code is a whip used to keep the upper middle class Payers down. . . Dem ringleaders... didn't earn it, ...And will do everything in their power to kick... potential rivals in the face."

      TRUE DAT Hammer... a bloody street fight, it seems, is only a block away. . .
      OW~~~
      "Let's Roll"

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  13. Dip,
    Hope you had a good Hannukah (escaping from Cali is a good start) and to others who run down this trail, Merry Christmas.

    ReplyDelete
  14. ...Merry Christmas.
    Same to you James, and all the best in the New Year too!
    OW~~~

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  15. Merry Christmas to everyone here! Have a cool Yule y'all!

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