Tuesday, May 10, 2016

May, 2016, Part 4, Political Class Insanity: Tax Code Idiocy, Gun Control Idiocy, and Other Idiocy

It is the beginning of another month which means it is time again to review the latest political class insanity from the American political class. Each month it takes us multiple posts to cover the wasteful spending, incompetent government organizations and employees, government programs that usually make a problem worse than resolving it, inane and idiotic politician comments, etc. In fact, last month we set a record, needing ten full posts to cover it all.

To review past posts on this insanity and idiocy, just click on the first few posts in each month listed to the right of this page. After reviewing just a handful of these insanity posts we think you will agree that we are currently being served by the worst set of American politicians ever to hold office in our entire history.

It looks like our politicians have been especially insane over the past month or so let’s get started with the latest insanity from today’s American politicians:

1) Let’s start today’s insanity with some quick hitters. Obama likes to claim that he saved the economy and that every is going great from an economic perspective. We have already proved this point is totally wrong for a number of reasons:
  • 45 million Americans still receive Federal government food assistance every month.
  • The labor participation rate is at 45 year lows.
  • The real unemployment rate is still almost 10%.
  • Wages and household income levels have remained stagnant, six years after the recession ended.
And now we have even more damning evidence that Obama has totally mismanaged the economic welfare of this country. According to a recent analysis from the Federal Reserve Board, 47% of Americans would need to borrow money or sell possessions if confronted with an unexpected expense of just $400. In addition, in inflation adjusted terms, middle class American families on average earn 7% less than they did 15 years ago.

Thus, despite spending over $830 billion on a failed economic stimulus program, experiencing the lowest energy costs in decades, and having the benefit of the Fed pumping trillions of dollars into the economy, Obama’s administration and economic policies still could not make it work. As a result, we now have a middle class in America that would find it difficult to replace a busted washing machine, fix a broken car, or cover any other relatively inexpensive and unexpected expense. Insane and so sad.

2) Let’s stay with economic insanity for a bit. As I am writing this, the latest economic conditions, as reported by the government, are not pretty:
  • Monthly job growth for April came in at a seven month low.
  • Rather than the composite estimate of economists of seeing 202,000 jobs created in April, only 160,000 came about.
  • The 160,000 was about 20% lower than the first quarter monthly average of 200,000 per month.
  • According to the Bureau of Labor Statistics, a whopping 94,044,000 Americans are not participating in the labor force, as this measure continues to be near historic highs.
  • This increase was an increase of a whopping 562,000 people from March.
  • This means that more than three times as many Americans dropped out of the labor force than jobs were created by the economy.
  • There were 5,962,000 Americans who had to settle for part time work in April even though they desired full time employment.
  • The real unemployment rate, not the one the government uses, was 9.7%, almost double what the official government unemployment rate is, 5.0%.
In other words, the 47% of Americans who cannot outright afford an unexpected $400 expense, did not get much relief from Obama’s economic policies in April, despite the economic stimulus plan, low energy costs and the Fed pumping paper money into the economy.

3) We have often pointed out that the city of Chicago has some of the most stringent gun control laws and rules in the country, if not the most stringent. And yet despite these draconian gun laws, according to a recent article in the Chicago Tribune, over 1,000 people in the city have already been shot this year.

This comes out to about 10 people a day taking a bullet in the city. This is the highest gun violence rate since the 1990s. Although much of the shootings involves gang violence against each other, it does show the fallacy of people like Hillary Clinton who seem to think that MORE gun control laws is a good thing and that it would reduce gun violence. 

Anybody with a lick of sense could see from this Chicago reality that gangs will get guns in the face of any kind of gun control that Hillary puts in place and more gun control equals more gun-related woundings and killings. The insanity is that people like Clinton are so stupid in the face of this reality.

4) As a follow up to the filing of Federal income taxes a few weeks ago, consider the insanity from the nation’s income tax processes as reported by the Washington Examiner and the American Action Forum:
  • In total, American citizens spent an amazing 11.4 BILLION hours completing all types of government forms every year including tax forms. 
  • This comes out to 35 hours per person, or about a week’s worth of working at one’s job on average.
  • The Federal government alone interfaces with Americans via 23,000 different forms.
  • The Health and Human Services organization alone has more than 5,000 different forms that citizens have to fill out depending on what their needs are.
Imagine how much more productively those 11.4 BILLION hours could be used. People would have more time to volunteer, to interact with their kids, to help their neighbors, to start a business and help grow the economy. Instead, the Jabba The Hutt, oversized government bureaucracy sucks up our time and energy filling out tens of thousands of different forms for government purposes. Please do not try to tell me that government in this country is not too big, anything with 23,000 different options is way too large to be effective and efficient.

5) It is a pretty well known fact that about 47% of the U.S. adult population pay nothing in Federal income taxes. In fact, for millions of Americans, the tax process is a revenue generator for them. We have pointed out why burdening fewer and fewer Americans with more and more taxes to pay for more and more government spending is a real problem:

- The number of Americans who renounce their citizenship every year and move out of the country has been growing steadily over the past few years. You can be sure that these are not the non-taxpaying, low income, low wealth citizens. These are mostly the highest earning, most productive citizens who have gotten so fed up with shouldering such a high tax burden that they are leaving the country, taking their wealth and initiative with them. But now that they have left but the government has not reduced its spending, that void left by the wealthy leaving now has to be passed to the non-wealthy.

-  We have already shown with a real life example of what happens when you raise the tax burden on your wealthiest, most productive citizens at the state level. The state of Maryland did that several years ago when it raised the tax rate on anyone making over a million dollars a year. Just a few years later, they found that the tax revenue they were receiving from millionaires was less than it was prior to raising the tax rate on millionaires. The state’s millionaires did the rational thing, much like those leaving the country altogether, they moved to a less tax heavy state. This left the non-millionaires with a higher tax burden despite a higher tax rate on millionaires.

The bottom line is as politicians put a higher and higher tax burden on fewer and fewer Americans, without cutting spending, the results are never good. This principle recently played out again in the state of New Jersey, as reported by the Tampa Bay Times:
  • David Tepper is a very successful and wealthy hedge fund manager.
  • Up until recently he lived in New Jersey but has now moved his home and operations to Florida, a state with no state income tax.
  • In stark contrast, New Jersey has a top state income tax rate of almost 9%.
  • For a person that averaged about $1.5 billion in income a year from 2012 through 2015, Tepper could save about $130 to $140 million a year on average in New Jersey income taxes by moving to Florida.
  • But more important, by taxing the wealthy so much, New Jersey loses that same amount of revenue every year, which according to a recent report by Frank Haines III, the New Jersey legislative budget and finance officer, a move by just one citizen like Tepper and “we may be facing an unusual degree of income tax forecast risk,” i.e., the out of state move by a single citizen could have significant negative impact on the whole state budget.
  • In Connecticut, Kevin Sullivan, commissioner of the Connecticut Department of Revenue Services, said that if just five or six of that state’s citizens follow Tepper to Florida to avoid the high Connecticut income taxes on the wealthy, there would be a “measurable impact on the [state’s] revenue stream.”
As we stated above, if the wealthy move, either out of state or out of the country, the government get’s less tax revenue and if spending is not reduced, than the rest of the state’s residents have to pick up the slack. This is not good or fair tax planning, it is economic suicide over time, higher and higher tax rates result in LOWER tax revenue. 

It is insane when one taxpayer in New jersey or five or six in Connecticut can create a budget crisis by simply moving out of state. The need for tax reform and the slashing of government spending has never been so obvious at the state and Federal level.

That will do it for today’s insanity: idiotic tax rules and regulations, a continuing lousy economy despite the lies of the Obama administration, and the continuing idiocy of gun control advocates as witnessed by the violence and murder rates in Chicago. More insanity tomorrow.

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