Free Markets, Free People

Monthly Archives: October 2011


115 year old electric car gets same mileage on charge as Chevy Volt

We’ve come a long way baby:

As the New York Times reported September 5, “For General Motors and the Obama administration, the new Chevrolet Volt plug-in hybrid represents the automotive future, the culmination of decades of high-tech research financed partly with federal dollars.”

Decades of research.   Yield?  40 miles on a battery charge.

Meet the Roberts electric car. Built in 1896, it gets a solid 40 miles to the charge — exactly the mileage Chevrolet advertises for the Volt — the much-touted $31,645 electric car General Motors CEO Dan Akerson called “not a step forward, but a leap forward.”

The executives at Chevrolet can rest easy for now. Since the Roberts was constructed in an age before Henry Ford’s mass production, the 115-year-old electric car is one of a kind.

What a leap, no?

Yeah, I know, the Volt is much heavier, yatta, yatta, yatta.  But seriously, if it was really a “leap forward” and the “culmination of decades of high-tech research”, why does it get the same per charge mileage as a car 115 years old?

I mean maybe I have a higher standard for things described as a “leap forward” and perhaps I expect too much from the “culmination of decades of high-tech research”, but 40 miles a charge?  Come on.

So why didn’t the Roberts catch on then?  Well, the market said “no”:

If you didn’t know there are electric cars as old as the Roberts, you aren’t alone. Prior to today’s battle of electric v. gas, there was another battle: Electric v. gas v. steam. This contest was fought in the market place, and history shows gas gave electric and steam an even more thorough whooping than Coca-Cola gave Moxie.

Now, of course, we find that the market isn’t to be trusted and government knows best – thus the “leap forward” (sound familiar to anyone?) and the brutally poor sales of the Chevy Volt.

Yes, friend, you’ve got it.  We’re again seeing the government – which knows best – picking winners and losers.   Except, as usual, the government’s winner is a loser.

Can you say Solyndra? 

Sure you can.

~McQ

Twitter: @McQandO


Economic statistics for 14 Oct 11

Today’s economic statistical releases:

Retail sales in September were much stronger than expected, rising 1.1%, and 0.6% less autos.

Export prices were up 0.4% last month, while import prices rose by 0.3%. On a year-over-year basis, import prices rose 13.4%, while export prices rose 9.5%.

Despite strong retail sales, consumer sentiment continued to slide last month, with the index dropping to 57.5.

Business inventories rose 0.5% August, in line with sales, while the stock-to-sales ratio remained unchanged at 1.28.

~
Dale Franks
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How clueless? This clueless

Rep. Keith Ellison, a Democrat member of the House from MN, explained why he thought creating more and more regulations was a good idea.  You see, the more you pass, the more people businesses have to hire to comply with them, per Ellison:

"I think the answer is no," Ellison said when asked if he believes regulations kill jobs. "And here is why: When we talked about increasing fuel efficiency standards, the industry responded, and they need engineers and designers and manufacturers, and they need actually more people to help respond to the new requirement."

"I believe if the government says, look, we have got to reduce our carbon footprint, you will kick into gear a whole number of people that know how to do that or have ideas about that, and that will be a job engine. I understand what you mean, because if anything adds a cost to a business, you could assume that that will diminish that business’s ability to hire. But I don’t think that’s actually right. I think what businesses want is customers and what — if they are selling product, if they have a product to sell they will do well even if they have some new regulations to meet," the Congressman said.

The economic ignorance in that statement is dumbfounding.  The man obviously has no idea of what productive vs. non-productive work entails.  Bureaucrats don’t “produce” anything but cost.  They impose a cost burden that the producer must pass on or eat.

Most producers choose to pass on the cost burden in the price of what they produce (it obviously depends on the competitiveness of the market, profit margins, etc.).   So in essence, every new regulation that imposes a compliance cost on a producer means those who consume the product end up paying the compliance cost in the price of the product at some point or another.  And the man hours that could have been used in a productive job are wasted in seeking compliance with bureaucratic regulation.

These are the guys in Washington DC making decisions about your future.   They’re deciding what portion of what you earn you should be allowed to keep.  And they have no idea of what makes an economy run.

Here’s a representative that figures a job is a job.  And he actually thinks he’s creating jobs what will benefit the economy by increasing regulation and bureaucracy.

Unfortunately his type are more prevalent that you might imagine.  And our present situation is beyond their understanding.  How does one go on a national television network and make statements like that and think they’re being profound when in fact what they say is profoundly ignorant?   He obviously doesn’t know that.  That’s just scary.

When all is said and done about our current situation, when the hindsight evaluations are made and the scope of the disaster is understood, it will be clear that people like Rep. Keith Ellison were as responsible as anyone for our economy’s inability to recover.

And he won’t even know it.

~McQ

Twitter: @McQandO


Bill Clinton: No new taxes until economic upturn

This is so “Econ 101” I’m surprised it has to be stated out loud, but of course it does because the Democrats insist on raising taxes now.  Bill Clinton, for heaven sake, on the David Letterman show last night:

“Should you raise taxes on anybody right today — rich or poor or middle class? No, because there’s no growth in the economy,” Clinton said on the “Late Show.” “Should those of us who make more money and are in better position to contribute to America’s public needs and getting this deficit under control pay a higher tax rate when the economy recovers? Yes, that’s what I think.”

Duh. 

I disagree with his final bit of collectivist nonsense, but his point about raising taxes now is simply common sense, something which seems to be in short supply on the left these days.

Look, the problem isn’t one of revenue, it’s a problem of spending.  More revenue won’t solve the problem.  It  may slow the debt accumulation a bit, but until these yahoos face up to the fact that the rich aren’t the problem -they are -we’re going to see the same spending patterns that have gotten us into the mess we’re in now.

Like it or not, soaking the rich for more taxes won’t change a thing in terms of debt unless Congress kicks the spending habit and restores fiscal sanity.  This class warfare meme the Democrats are running is just another version of kicking the can down the road because they want to spend just like the old days.

This nonsense is directly out of Karl Marx’s “‘Critique of the Gotha Program” which outlines this deadly principle of socialism – “From each according to his ability, to each according to his need.”

We continue to be told we’re not a socialist nation and we’re not headed in that direction, but observation and listening to what certain politicians say gives lie to that claim.  The first part of the Clinton quote may be “Econ 101”, but the second part is “Marxism 101”.

We need to quit tiptoeing around and call it what it is.

~McQ

Twitter: @McQandO


The undemocratic left

Recently, there has been a spate of people who fall ideologically on the left wishing out loud that President Obama would essentially ignore the Constitution and do what is necessary to fix this mess.  Democratic Governor Perdue and Peter Orszag among a number of others on the left who’ve talked about extra-constitutional action (Perdue wants elections suspended so lawmakers can’t be held responsible for the actions they may have to take) in this situation.

Now we have another voice added to the chorus.  Rep. Jesse Jackson Jr. spouts off with this bit of nonsense:

Illinois Democratic Rep. Jesse Jackson, Jr. told The Daily Caller on Wednesday that congressional opposition to the American Jobs Act is akin to the Confederate “states in rebellion.”

Jackson called for full government employment of the 15 million unemployed and said that Obama should “declare a national emergency” and take “extra-constitutional” action “administratively” — without the approval of Congress — to tackle unemployment.

“I hope the president continues to exercise extraordinary constitutional means, based on the history of Congresses that have been in rebellion in the past,” Jackson said. “He’s looking administratively for ways to advance the causes of the American people, because this Congress is completely dysfunctional.”

I.e, he should just “rule”, you know, like a king, because, well, democracy is messy and slow.

And of course there’s the veiled racial reference with the Confederate states nonsense.  Can anyone guess at whom that is aimed?

Imagine the blowback if a national emergency was declared by a Democratic president when that was the supposed fear of leftists when they talked about George Bush in the waning days of his presidency.  Here you have a Democrat calling for Obama to actually do that.

Of course economic ignorance is again given prominence of place by Rep. Jackson when he says the government just ought to employ those 15 million.

Here’s a clue Mr. Jackson – paying 15 million unemployment compensation has about the same effect as what you’re calling for.   It is the usual underwear gnome solution we’ve become accustomed to hearing from economic scholars like Jackson.  The jobs needed are in the private economy, not the public economy.  And any suggestion that such a boondoggle wouldn’t cost us our other arm and leg (the first arm and leg presently tied up in the $14 trillion debt folks like Jackson have run up on your behalf) is simply smoking dope.  This is tired old New Deal thinking which simply doesn’t work.

But rather than recognize that we overthrew the monarchy a few hundred years ago because we found it to be an unacceptable form of government, Jackson calls for the establishment of the modern equivalent.

Rule by one man based on what he deems to be the best for his kingdom country. No consultation.  No check.  And that pesky Constitution.  Hey, ignore it.  What the heck – it was written by a bunch of dead, slave-owning white men.  We don’t need no stinkin’ Constitution.

Just the rule of a benevolent community organizer king president who knows what’s best for all his children citizens.

While Congress may indeed be ‘dysfunctional’, it is also Constitutional.  And history says that despite the messiness of their deliberations and the political theater they constantly treat the public too, they’ll figure out a way to work out some sort of action.  The problem, of course, is it most likely won’t be the solution the president presented or preferred.

And that’s the point here.   You have a failed president who is about as ineffective as one has ever been and the only way his followers see him having any success is if he cuts out all the Constitutional stuff and just takes over.

I sit here and try to imagine Rep. Jackson ever making the same plea when George Bush was president and the Democrats routinely ignored his proposals and ran around calling him incompetent.

Would you have liked to have seen Mr. Bush take “extra-Constitutional action", Mr. Jackson?

Yeah, I didn’t think so.

~McQ

Twitter: @McQandO


Female rapists target hitchhikers in Zimbabwe

It isn’t bad enough that the African country that used to be the bread basket of Africa is now the basket case of Africa.   It isn’t bad enough that it takes a trillion or so Zimbabwe dollars to buy a loaf of bread.  It isn’t bad enough that the place is run by a delusional octogenarian megalomaniac and no one seems able to pry the guy out of his position of power.

Now we have this strange story out of that benighted place:

DETECTIVES investigating a spate of kidnappings and sex attacks on male hitchhikers by female rapists have made three arrests.

Police seized 31 used condoms with semen after a chance breakthrough when a suspect vehicle was involved in an accident in Lower Gweru.

More than a dozen attacks, thought to be for ritual purposes, have been reported mainly in the Midlands and Masvingo provinces. A few more attacks have been reported in Harare and Mashonaland West.

Oh, man the lines just flow in reaction to that story, don’t they.  It’s just that most are unprintable.

I’m just imagining the sudden volume of police volunteers for undercover (oh, no, that’s just too easy) work on this one.

“Please, commissioner, it is time I did my fair share and took on some of the burden of undercover police work”.

Yup, you can hear it now. 

And hitchhiking?  For guys, it’s the new national sport.

I’ll leave it to you folks to come up with the lines – but remember, this is a “safe for work” blog.   Have fun, but keep it that way, please.

~McQ

Twitter: @McQandO


Should Liberal’s support Occupy Wall Street?

That’s the question the editorial staff asks and answers in an editorial written for the publication’s November 3rd edition.

The answer they give is a qualified “no”.  Qualified in that while they sympathize with some of the points raised (which they note ironically are similar to those raised by the Tea Party), they find the movement mostly too radical. 

Why?  Well here’s the reasoning that struck me as interesting:

One of the core differences between liberals and radicals is that liberals are capitalists. They believe in a capitalism that is democratically regulated—that seeks to level an unfair economic playing field so that all citizens have the freedom to make what they want of their lives. But these are not the principles we are hearing from the protesters. Instead, we are hearing calls for the upending of capitalism entirely.

Okay.  Liberals are capitalists.   Let that sink in.  How does one seek to “level an unfair economic playing field” and claim to be a capitalist, where an unleveled playing field is almost a prerequisite to its economic success.  That may sound odd, but it is capitalists who fund capitalism and they’re usually far and away richer than most of those who end up benefitting from the economic system.

The very people OWS is protesting.

Venture capitalists are usually found in the 1% the protesters are decrying.   While I agree that under law, the playing field should be equal, crony capitalism (which isn’t capitalism at all) should be ruthlessly discouraged and government intrusion in markets dialed back to zero.  I see neither of those latter two items on the liberal agenda.  And remember – capitalism doesn’t claim to have a “level playing field”, but what it does promise is to be like a rising tide and lift all boats to a different and higher economic level of prosperity.   Its record backs that claim.

So make what you will of the editorial’s claim about the liberal version of capitalism, however they are seeking to distance themselves from the OWS crowd because it seems to mostly represent those who anti-capitalist.  However flawed the liberal idea of what constitutes capitalism, they at least acknowledge its worth and the fact that it is the basis of our success.

As Daniel Foster says – “let’s hold them to this” and make sure to remind them the next time they go on an anti-capitalist rant or write approvingly of government intrusion in the markets.

Uber liberal Oliver Willis  rejects everything the New Republic says because, he claims, they’ve been wrong about everything in the past.  I assume that passes for “critical thinking” in WillisWorld.  Willis obviously finds the OWS platform, such that it is in all its anti-capitalist glory, to be pleasing enough in some form or fashion that he implies support.

In fact, I believe what the New Republic sees for the most part is a genuine but very small core of people who began this simply out of frustration and now have the usual radical, anti-capitalist, socialist A.N.S.W.E.R. professional protesters along with labor unions like the SEIU joining in and taking over the protest sensing a chance to again push their tired and failed agendas.

Dana Milbank gives an example on who or what has shown up at the Washington DC event in, well, less than impressive numbers:

But while the Occupy movement in the capital has invigorated left-wing groups — Code Pink, Veterans for Peace, Common Dreams, Peace Action, DC Vote, Community Council for the Homeless and a score of other labor and progressive organizations are represented on Freedom Plaza — it has not ignited anything resembling a populist rebellion. To swell their ranks, protesters recruited the homeless to camp with them.

Already, there are factions. While the Freedom Plaza group, calling itself “Stop the Machine,” prepared to storm the Hart building, an AFL-CIO group was planning a conflicting event on the plaza. A few blocks away, in McPherson Square, an outgrowth of Occupy Wall Street had established an encampment of a few dozen sleeping bags.

The Occupy movement is in the midst of being co-opted by the usual suspects.  And that will bring the usual results.  Rhetoric that most Americans will find offensive coupled with childish actions that will have those who tentatively support the movement drop them like a hot rock.  Right now, of the “99%” out in flyover land, only 36% support the protests.

Anyway, Daniel Indiviglio at the Atlantic pretty much agrees with the New Republic and gives a reason that is more closely aligned with the progressive view of “capitalism” as it defines and supports it and as I’ve always understood them to believe:

The sort of anarchist-socialist radicals that can be found at the OWS protests threaten the progressive view that there are times when it is sensible and morally righteous for the government to intervene and prop up the economy, an industry, or even specific companies, if that action is thought to benefit the economy on a whole. The difference here is that the radicals think the occasional need for a bailout proves that capitalism is doomed and should be shuttered, while progressives believe that bailouts can help capitalism to work.

When you realize what is at the root cause of the problems we now are fighting to overcome, you realize the progressive version of “capitalism” is a failure.   As usual, their instrument of change is the blunt force of government where one doesn’t have to convince, persuade or sell.  Just dictate and do.  That’s the antithesis of capitalism and markets.

I don’t think the word means what they think it means.

But don’t tell them … they really, honestly think they’re capitalists. 

~McQ

Twitter: @McQandO


Economic statistics for 13 Oct 11

Today’s economic statistical releases:

The US trade balance was little changed from a deficit of -$44.8 billion in July to -$45.6 billion in August.

Initial claims for unemployment dropped 1,000 to 404,000 from last week’s revised 405,000. Last week was originally reported at 401,000. Anything above 400,000 isn’t very good.

The Bloomberg Consumer Comfort Index hovered at a historic low of -50.8 last week, as American consumer pessimism increased.

~
Dale Franks
Google+ Profile
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Solyndra v 2.0 — It’s called SunPower

Another example of the poor job government does in picking winners and losers is emerging.   Solyndra, a solar panel company, was the first to go under, taking with it half a billion in taxpayer money.

Now we have the specter of another “green jobs company” that received guaranteed government loans doing the same.   But this one seems to have consumed over twice the amount of money that Solyndra did.

SunPower is its name and right now, bankruptcy seems to be its game.

How well did the government, via the Department of Energy, do this time?

The Energy Department says on its website that the $1.2 billion loan to help build the California Valley Solar Ranch in San Luis Obispo County, a project that will help create 15 permanent jobs, which adds up to the equivalent of $80 million in taxpayer money for each job.

Brilliant.

The DoE also claims:

“This project underwent many months of rigorous technical, financial and legal due diligence by career employees in the DOE loan program,” Energy spokesman Damien LaVera said in a statement to FoxNews.com. “It was approved for one reason only: because it meets all the requirements of the program – helping America win the clean energy race and create entire new industries for American workers.”

Did it indeed undergo such “rigorous” analysis?  Well if so, then they should have known all about this:

But SunPower posted $150 million in losses during the first half of this year and its debt is nearly 80 percent higher than the market value of all its outstanding shares. The company is also facing class action lawsuits for misstating its earnings.

It truly makes you wonder how bad a company would have to be not to get a DoE loan (obviously it would have to be a “clean energy” company, because those are the “winners” this administration has chosen to fund).

Oh, and then there’s this:

The company is also politically connected. Rep. George Miller’s son is SunPower’s top lobbyist. The elder Miller, a powerful California Democrat, toured the plant last October with Interior Secretary Ken Salazar, and reportedly said, "We’ve worked hard to make renewable energy a priority because it represents America’s future economic growth. Today, businesses like SunPower are moving forward, hiring 200 people for good clean energy jobs in the Easy Bay."

It’s not clear what role, if any, either of them played in securing the loan. Miller’s office did not respond to a request for comment.

An Energy Department official denied crony capitalism was a factor in the loan guarantee.

“The notion that political connections played any role in this application is simply false,” the official said. “This application was approved based on the exhaustive due diligence of the career professionals in the loan program, and nothing else.”

Of course.  Because there was such a sound financial basis to approve such a loan, wasn’t there?

And politicians wonder why people are more and more cynical and less trusting of our government all the time?

~McQ

Twitter: @McQandO


Gabriel Malor makes me sad

One of the interesting things about Twitter is that it can provoke some interesting policy debates, at least in my geeked out poli-sci time-line. The frustrating thing is that it’s impossible to debate these things on twitter, 140 characters at a time. So, after a brief discussion with Gabriel Malor concerning the Value-Added Tax, I’m going to have to transfer the debate to here and Ace’s place. Gabriel hates the VAT, apparently, and has, in the past, made three main objections to it:

Whatever its merits, they are outweighed by its key features: the VAT obscures for the taxpayer just how much money is being sucked up by the government; it is prone to Congressional abuse; and it is, in the words of economists, "efficient."

We’ll take these objections one at a time, but first, let’s review the liberty-damaging implications of the income tax itself.

First and foremost, it requires that you provide the government with intensely private details about your financial life—every corner of it. How much income you make, who pays you, how much you save and invest, how much interest you make from savings, etc., etc. This is information you wouldn’t willingly share with anyone, yet the government forces you to divulge it to unknown bureaucrats on pain of imprisonment. Once the government has that information, it can always be used against you in any sort of civil or criminal proceeding the government wishes to implement against you. And that’s the best-case scenario. Some worker at the IRS could illegally access your income tax records. If you come to the negative attention of a powerful politician they might decide to have you audited.

Nor is this an unreasonable fear, considering the intricacies of the 3.7 million word US Tax code. Anyone with a minimally complex tax return could probably be found to be in violation of the code. Especially since it’s almost impossible in some cases to even know what the tax code means. It’s so far from clear and concise that even the IRS doesn’t seem to know what it means . And yet, you are legally required to provide the government with the means to make your life unpleasant at the very least, and destroy it at the very worst, every time you submit a 1040, quite apart from the possibility of skullduggery by unscrupulous individuals. And if you ask the IRS for tax advice, there’s a 1 in 5 chance they’ll get it wrong. And you get a nice new lien on your house. Or a completely new house, with bars on the windows.

Next, in order to provide this information, you must spend an inordinate amount of time and/or money to ensure that the information is accurate.

The average cost for the preparation of an itemized Form 1040 and state return is $229 nationally.  An “s-corp” is in the neighborhood of $665 whereas filing an Estates Form 706 could cost up to an average of $2,044…

The most recent estimates available purport to contend that individuals, businesses and nonprofits “spend an estimated 6 billion hours complying with the federal income tax code.”…

The high estimates then yield a total of tax cost to society (not including actual taxes paid) of approximately $1.165 trillion dollars 2010, relatively using 2008 GDP data.

Maybe it’s just me, but that seems…unreasonable. $1.165 trillion in compliance costs, on top of the actual tax cost is just…insane. I suspect that some portion of that money might be used to create, you know, wealth, if it wasn’t sucked up by regulatory compliance.

Whatever criticisms may be leveled at the VAT, one thing it doesn’t do is place your personal liberty at risk—at great cost to yourself—when you submit your annual tax return. Indeed, you don’t submit an individual tax return at all. Under a VAT, your income is your business, and your personal finances are completely removed from government concern. That seems like an increased measure of liberty, by which, I mean a removal of a portion of government interest in your personal life.

Gabriel Malor, alas, seems to disagree. Indeed, he seems offended by those of us who think replacing the income tax with a VAT might be a good idea.

It’s disappointing to see conservatives using the Obama-spawned budget crisis as an excuse to propose a tax scheme. Shame on them.

Now I’m sad.

But, what is it that makes the VAT so "fundamentally awful", and why should I feel shame for advocating it? Let’s start with his first objection:

Yes, you can put VAT on each and every sales receipt. But unless the taxpayer keeps and diligently tallies every receipt, he will have no idea what he’s ended up handing over to Uncle Sam.

This feature of the VAT is a tax-and-spend liberal’s wet dream because it keeps the taxpayer-voter in ignorance of how much of his property the government is appropriating over time.

Prior to 1913, this pretty much described the entire US Tax code. The Federal government was funded entirely by customs duties, tariffs, and excise taxes. All of those, of course, are hidden taxes, so, from 1789 until 1913, no one knew what they were paying in Federal taxes unless they kept and diligently tallied every receipt. Or, you know, cared. It seems to have worked out pretty well. It doesn’t seem people really worried all that much about how much of the purchase price of goods went to the Feds back in Oldy Days. Part of that, of course, was that the Federal government was pretty remote from the citizenry back then. But, I suspect part of it was also because knowing how big a cut the Federal government was taking didn’t have any relation to being sent to prison for getting it wrong.

What didn’t seem to work out well was an income tax whose top rate rose from 1% in 1913 to 90% in 1943, where it stayed until 1962 or so. Then we got a big tax cut to 70% at the top rate. If you want to look at a tax system that turned into a "liberal’s wet dream", a system whose top rate increased by 990% in 30 years seems like a good place to start. The explosion of big government didn’t start with the pre-1913 tax system. It was the current tax system that fueled the move from a minimalist to a maximalist state.

So, I’m not sure that arguing the post-1913 income taxation system is a better way to go in restraining tax increases is the way you want to go. Because it hasn’t really done a bang-up job of restraining government.

Moreover, even I don’t know what I pay—or even what I might owe—until my CPA tells me at the end of every year. My LLC has to buy all sorts of stuff. I might have to hire a subcontractor. There’s lots happening, so I don’t know what my tax burden is on a day-to-day basis. I may do work for some clients who can make it a charitable deduction instead of paying me in money. So I have to sequester thousands in income to be sure I’ve got the scratch to pay the bill every April 14th. And even then, I don’t really know what I’ve paid until the actual minute I look at my tax return. I’d trade knowing that on one day a year for not worrying about it and giving me my full cash flow to play with to upgrade software, buy new computers, etc.

The thing about a VAT is, that, unlike the income tax, you can pretty directly control how much tax you pay. You just buy less stuff. Maybe save more, since the VAT doesn’t penalize saving. Or investment. Like the income tax does. And avoiding paying the VAT doesn’t require that you forego income. The income tax does. It seems pretty apparent that the individual has a far greater degree of control over how much VAT he pays by altering his purchasing habits, and he can do so without penalizing himself in terms of income. There’s simply no way to exercise that sort of control over income taxation without making less income, or spending an inordinate amount of time burrowing through the tax code for some sort of shelter. Which may, or may not, get you audited, or sent to jail.

But you don’t get sent to jail if you don’t buy enough stuff under a VAT.

But at least that objection contains a colorable argument that makes sense. The remaining two objections are just unreasonable in terms of judging the two systems. First, there’s this:

And there, too, a VAT gives Congress even greater means to target disfavored industries and individuals. Progressive nannies can push for a higher VAT on soda and fast food. Social conservatives can push for a higher VAT on…er, morally questionable commerce. Other major targets: the oil industry (after all, they should pay more for being Gaia-raping capitalists); the pharmaceutical industry (it’s for the children, somehow); and, without a doubt, Big Tobacco (for obvious reasons).

Let’s leave aside the argument that an increase in the VAT would make every product more expensive, so I suspect people would notice that their salaries aren’t going as far as they used to.

Really, the trouble here is that Congress already has the plenary power to tax. Plenary. You can’t make Congress’ power…more plenary. This is not an argument against the VAT as much as it is an argument against, well, taxation. or, at least, the unlimited power of taxation.

There is nothing that prevents congress from slapping an excise tax on soda or fast food now. There’s already an 18.5¢ per gallon excise tax on gasoline, just as there are already massive excise taxes on cigarettes and alcohol. A Congress that wants to tax is going to tax. But I don’t think the solution to that is submit your personal liberty to the IRS. At least, it hasn’t been up ’til now. Nor do I think, in a larger sense, that the solution relies on any particular system of taxation, but rather on a restraint on spending. I think the evidence is pretty clear that a "starve the beast" taxation strategy simply doesn’t work when it comes to spending.

And let’s not kid ourselves that the income tax does not, somewhere in its 3.7 million words, do a perfectly fine job of targeting disfavored individuals. Which is something else the VAT doesn’t do. You can certainly target products with a VAT, if you want to reduce the incentive to buy certain classes of goods and services. But you can’t target individuals, and you can’t dictate economic outcomes for individuals by penalizing those you don’t like. But you can have a 90% income tax rate on successful individuals. We did it.

Our problem is not that revenue drives spending, but quite the opposite. It is the insatiable desire for more money to spend that drives the search for ever larger revenues. That is currently being expressed in the president’s "eat the rich" tax proposals, which would have the unpleasant side effect of penalizing individual success. Which, as I’ve already noted, is something the VAT doesn’t do. Limit the government’s spending to a defined percentage of GDP, and you automatically limit the desire for additional income.

Revenue is not the problem. Spending is.

And, of course, the key factor is the relationship of the individual to the state.

The last objection is equally confusing to me.

Economists laud the VAT because it is a "more efficient" means of collecting taxes. As a conservative, hell as a taxpayer, I am not in favor of more efficiency in letting the government take what’s mine.

So, are you in favor of draining 6 billion man-hours and $1.165 trillion in compliance costs from the productive economy? Are you in favor of having a massively large IRS, paying thousands upon thousands of employees to review and audit 175 million tax returns? I just don’t get this objection.

I thought that a more efficient tax code—in the sense that Gabriel seems to be addressing it here—means that we could reduce compliance costs, eliminate the time spent preparing tax returns, and reducing the size and scope of government. Those seem like pretty conservative/libertarian goals. So does removing the direct relationship of the individual to the IRS. I’m pretty sure efficiency is a feature, not a bug. A more efficient tax code is easier to comply with, and requires a smaller governmental mechanism to ensure compliance. I cannot, for the life of me, see why this would be a bad thing.

Of course, when we speak of tax efficiency, we usually are not referring to how efficiently the government gathers taxes. We are referring instead to the excess burden of taxation, i.e., "the economic loss that society suffers as the result of a tax, over and above the revenue it collects". Increasing efficiency in taxation refers to reducing the economic loss the tax imposes. I can’t really understand why anyone would be against decreasing the economic losses imposed by income taxation, which include moving people out of the work force, or into the underground economy, or reducing savings and investment.

However the term "efficiency" is being used in Gabriel’s quote above, I’m just having a really hard time understanding why it’s bad.

I want what taxes I’m paying to be SCREAMINGLY obvious.

Well…OK. Man up and keep your receipts, if it’s that important to you. Maybe buy a copy of QuickBooks.

My highest priority is not knowing to the cent the amount of taxes I pay. My highest priority is liberating myself from the direct financial supervision of the US government, and the possibility of being sent to jail or losing my house if I get it wrong. Secondarily, I’d like not to have to pay $1,000+ per year to a CPA to prepare my personal and LLC tax returns. I’m pretty sure I can use that thousand bucks for lots of things more fun than a CPA.

If the price of that is more effort tracking my federal taxes down to the penny, I’ll happily pay that to get the Feds off my neck.

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Dale Franks
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