May, 2015, Part 2, Why No American Should Pay An Additional Penny In Federal Taxes

Hundreds of times we have shown in this blog how the Federal government and the Washington political class have wasted untold trillions of dollars of taxpayer wealth over the years. This has left the taxpayers nothing in return to show for their money except a whopping $18 TRILLION national debt. Many times the money was spent on one time, wasteful projects:

• The Navy built two new ships almost to completion at a cost of $300 million only to spend another $10 million to junk them immediately.
• Hillary Clinton’s State Department spent $40 million to build a U.S. consulate in the hinterlands of Afghanistan only to find out after spending the money that it had to be abandoned because it could not withstand a terrorist attack.
• The TSA purchased hundreds of millions of dollars of equipment for airport security in order to get a bigger discount but ended up not using a high percentage of the equipment anyway, leaving it stacked in a warehouse never to be seen or used.
• The National Science Foundation has spent millions and millions of dollars on such inane projects as building a video game to simulate prom week, studying when dog became man’s best friend, determining of dating sites were racist and other equally useless projects.

But many of these one time wastes of money pale in comparison to the money that is consistently wasted in the same manner year in and year out:

• Medicare and Medicaid lose upwards of $100 billion every year due to inefficiencies and outright criminal fraud.
• Social Security loses upwards of $100 billion every year due to inefficiencies and outright criminal fraud.
• Other welfare programs such as Federal housing support and food assistance lose billions and billions of dollars every year due to inefficiencies and outright criminal fraud.
• The IRS loses billions of dollars every year to identity theft in the income tax filing system every year.
• The IRS is so inept that it admits that it fails to collect almost $400 billion a year from tax evaders.
• The President’s debt reduction commission easily identified $100 billion a year that could be removed from the Pentagon’s annual budget without endangering national security.

Thus, it is pretty obvious that no American, no matter how rich or poor, should [pay a penny more in taxes given that the Federal government and the Washington politicians that operate it easily waste or fail to collect a whopping $800 billion or so EVERY YEAR.

But this reality is apparently lost on a Georgia Congressman. 

Hank Johnson recently stated that when it comes to taxes, “we [Washington politicians] don’t have enough [taxes] to do what the government - and do what the country needs the government to do and that’s the problem.”

The Congressman went on: “If everyone is paying their fair share of taxes than we certainly should and can live within our means. But our problem now is that taxes are being paid by the middle class. The rich, the wealthy and the corporations are not paying their fair share and so therefore we don’t have enough to do what the government and do what the country needs the government to do and that’s the problem.”

Note: before you consider whether the Congressman’s position has any merit, remember that this is the same Congressman who claimed in public:

• That the island of Guam might tip over in the middle of the ocean if too many U.S.military resources were placed on the island. That’s right, he actually stated in a Congressional committee meeting that an island could tip over.
• He also lamented the possibility that there would not be enough helium gas to blow up birthday balloons if Congress stopped funding a Federal storage facility for helium.

Yesterday we focused on how much the Federal government and the Washington political class wastes of taxpayer money every day of every year and how inane and out of touch politicians like Hank Johnson are when they ignorantly claim that more Americans need to pay more taxes. 

We reviewed any number of credible sources and analyses that constantly show that a very small percentage of people in this country pay a very high percentage of the Federal tax bill. And with more and more of these wealthier people renouncing their citizenship every year and moving away, taking their tax payments with them, that means that the rest of us will end up paying more and more in taxes unless our politicians finally get a handle on wasteful spending.

But the odds of that happening are probably pretty slim, given that they have no even tried despite being shown where the wasteful and useless spending is within the budget. Obama actually commissioned a blue ribbon commission to identify the waste, which they did and which he promptly ignored. 

Today, let’s explode another Congressman Johnson fantasy by showing that no matter how much you tax the high earners and the wealthy in this country, it will make absolutely no difference in the quality of life for every citizen or the financial chaos of the Federal government.

Our proof of this last assertion rests on some simple logic and math:

• The Federal government spends about $4 TRILLION a year.
• Let’s round it off and assume that the Federal government spends about $11 billion a DAY.
• According to the latest Forbes analysis, Bill Gates is the richest American with a net worth of about $81 billion.
• Congressman Johnson and other politicians want to tax people like Bill Gates more.
• But let's assume that Johnson et al get the ultimate politician wish and do not just raise taxes on a wealthy person’s income but that they confiscate EVERYTHING that the wealthy person owns.
• In the Gates case, if the Washington political class took everything Bill Gates owns, it could use that wealth to operate the Federal government for a grand total of … about seven days, just over one week.
• It could pay off only .45% of the national debt, less one half of one percent.
• Not only that, whatever Federal income tax Gates would have paid in the following years would now be equal to zero since it is doubtful he would ever work again, knowing that the Federal government could come along and take everything he owns. This would force the rest of the taxpayers to make up the difference.

Taking everything the richest American owns could support the Federal government bureaucracy for only a week or so. So taking less than that, something that Congressman Johnson and others would like to do would be even far smaller. 

How much smaller? Let’s assume that Bill Gates earns $8 billion a year, a totally made up number, 10% of his current net worth. And that Johnson raises his Federal income tax rate by 10% which yields an additional $800 million a year to the Federal government. In this case, taxing Bill Gates income at a 10% higher rate could result in tax revenue that could operate the Federal government for...about an hour and 45 minutes. This would pay off .004% of the national debt.

Don’t these politicians ever do any simple math before opening their simple mouths? You cannot fix what is wrong with this country by raising taxes, there are not enough rich people to get it done.You have to cut spending, starting with the hundreds of billions of dollars wasted every year by Washington.

Let’s take this imaginary confiscation example and extend to other rich Americans, first assuming that the Washington political class took EVERYTHING they earned and somehow turned it into cash:

Bill Gates $81 billion - could operate the Federal government for just over 7 days.

Warren Buffet $67 billion - just over 6 days.

Larry Ellison $50 billion - about 4 and a half days.

Charles Koch $42 billion - just under 4 days.

David Koch $42 billion - just under 4 days.

Christy Walton $38 billion - about 3 and a half days.

Jim Walton $36 billion - about 3 and a quarter days.

Mike Bloomberg $35 billion - not even 3 and a quarter days.

Alice Walton $35 billion- not even 3 and a quarter days.

Robson Walton $35 billion - not even 3 and a quarter days.

Mark Zuckerberg $34 billion - just over 3 days.

Sheldon Adelson $32 billion - just under 3 days.

Larry Page $31.5 billion - just under 3 days.

Sergey Brin $31 billion - just under 3 days.

Jeff Bezos $30.5 billion - about 2 and three quarters day.

Total - $620 billion which could operate the Federal government for only 56 days, less than two months, about eight weeks or pay off only 3.6% of the national debt.

As with the Bill Gates example above, you cannot make this work even if you take EVERYTHING the richest 15 Americans own in their lives. You could only operate the government for two months in only one year because in the following years these people would have nothing to contribute Federal tax wise. Which means that everyone else would have to make up the difference.

If we continue the Gates example with the 15 richest Americans, than that $620 billion becomes $62 billion which could not operate the Federal government for even a week. And, if you used that money to operate the government, you still have not paid off any part of the growing and dangerously high national debt.

No matter what people like Hank Johnson say, taxing the wealthy even more cannot overcome the out of control spending and government waste of people like Hank Johnson. All this kind of rhetoric does is divide America, waste more wealth, allow the debt to soar, and get nothing accomplished. And remember, this economic wisdom is coming from a man who was worried a Pacific island would tip over take anything he says with a huge grain of sand.

Note: we have already shown how to take trillions of dollars out of the Federal government’s budget without negatively impacting government operations and returning trillions of dollars to pay down our debt and pay back taxpayers. That analysis can be seen at:

http://loathemygovernment.blogspot.com/2012/12/day-7-eight-days-of-logic-and-sanity.html

The analysis was developed by someone who knows that Pacific islands cannot tip over.

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www.loathemygovernment.com

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Please visit the following sites for freedom:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w