Thursday, September 3, 2020

September, 2020, Part 1, Political Class Insanity: Hypocrisy From Pelosi and Cuomo, Crazy Tax Idea From de Blasio, and And Even Crazier Tax Idea In California

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.

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.

1) Politicians never cease to amaze with their affliction, “do as I say, not as I do.” We have discussed examples of this behavior during the pandemic and its lock downs several times over the past few months:
  • The mayor of Chicago had her favorite hair salon open up only for her to get her hair done even though she prevented other salons and regular citizens from doing the same.
  • The mayor of Beaumont, Texas did the same thing but it was to get her nails done at her favorite nail salon vs. hair salon.
  • The mayor NYC had his gym opened up only for him so he could get some exercise but the rest of his city residents were prevented from doing the same.
And this hypocritical behavior continues today with the following two “do as I say, not as I do” examples:
  • Andrew Cuomo is the governor of New York.
  • He has done a terrible job managing the virus crisis in his state but that is a story for another day.’
  • One of his most stringent edicts is that New Yorkers should always be wearing a mask during the virus crisis whenever they are outside.
  • Many times he has put out tweets demanding that New Yorkers wear masks.
  • He went so far as calling people who don't wear masks in public as not being “real patriots.”
  • But of course those rules are not for him since he was recently seen out and about walking his dog but NOT wearing a mask, a demand he puts on every other citizen of the state.
  • And several months ago he was seen not wearing a mask when he was outside during a trip to Georgia.
  • Across the country in San Francisco the same hypocrisy was unfolding with Nancy Pelosi.
  • Pelosi has been a big and constant advocate of wearing a mask whenever outside the home.
  • But alas, she needed her hair done so she arranged to have her hair done at a shutdown hair salon.
  • Closed circuit security cameras show her walking about the salon without a mask even though the salon should have been shut down for virus protection.
Do as I say, not as I do” because apparently those in the American political class are special and have special rules for themselves but not for the rest of us.

2) We have often put forth the argument that Bill de Blasio, the mayor of New York City, is the worst mayor in the country right now. Granted, he has some heavy competition in that category from the mayors of Chicago, Portland, and Seattle but he is holding his own.

The city he is in charge of has seen the murder rate, the robbery rate, the violence rate and the homeless rate go up and up during his administration. In fact, a fellow Democrat, a NYC Congressman, called de Blasio not only the worst mayor today but the worst mayor of any city in the country ever.

As a result of high taxes, rising crime, rising homelessness problems, citizens are moving out of the city at a great rate. Moving companies report they cannot keep up with the demand to help move families out of the city and away from its deteriorating conditions. 

This starts a potential financial death spiral since the majority of people moving out are probably the wealthier and thus, the higher paying taxpayers. As your high earners and high taxpayers move out, the city experiences a drop in tax revenue which forces it to raise taxes and cut city services which causes more people to move out which results in another drop in tax revenue, etc.

In light of this out migration of likely high tax paying residents, one would have thought that the mayor would be looking for ways to cut spending to balance the budget, not to raise taxes even more and feed the death spiral. But if you thought that you would be wrong:
  • According to Julia Marsh and Carl Campanile, writing for the New York Post, de Blasio wants to RAISE tax rates on the wealthiest city residents.
  • During a recent radio interview de Blasio said: “Help me tax the wealthy. Help me redistribute wealth. Help me build affordable housing in white communities if you want desegregation.” 
  • Furthermore: “That’s not actually going to change things. What changes things is redistribution of wealth. Tax the wealthy at a much higher level.” 
  • Seriously, people cannot move out of the city fast enough and you want to raise taxes even more, you cannot make this idiocy up.
  • One voice of reason, Councilman Rober Holden pointed out how stupid this approach is: “Everyone should pay their fair share in taxes, but instead of begging for even more money from taxpayers, the mayor should consider cutting out the enormous waste in his bloated budgets with programs like ThriveNYC that have no measurable outcomes. Middle-class residents are already being driven out of the city, and the ‘tax the wealthy’ mantra is just de Blasio’s code for continuing to use the middle-class as his cash cow because he considers everyone who makes a decent living as ‘wealthy.’"
  • Further proof that the NYC financial death spiral has started comes from Suffolk County out on Long Island, just outside of NYC.
  • Since many wealthy NYC residents have second homes out on Long Island, many of the people moving out of the city do not even have to buy a new house, they already have one on the Island.
  • As a result, the public school districts out there report that they are seeing the highest school enrollment levels in decades as the city folk move to their Long Island homes and enroll their kids in Long Island schools with no immediate intention of moving back into the city.
  • Kathryn Wilde, the CEO of the Partnership For New York City business group, admitted this reality when she conceded that at least these folks leaving the city for Long Island are still paying New York state taxes: “We should be glad this is happening in Suffolk County rather than Florida.” 
I would counter that some of those out migration families from the city are also going to Florida and taking all of their New York taxes with them but you get the idea: most people realize what is going despite de Blasio’s inane intention to drive even more people out of the city.

The top income earners in the city pay 43% of the city’s taxes so as they leave the middle and lower classes are going to have to start picking up that massive 43%. And the state and its governor, Andrew Cuomo, have an even bigger problem with the top income earners in the state paying a whopping 51% of the state’s taxes. The NY financial death spiral has begun.

3) Speaking of stupid tax reasoning, lets hop across the country to probably the heaviest taxed Americans in the country, Californians. We have previously covered the reality that California has billions and billions of unfunded future financial liabilities and no clear path, or no path at all, to honoring those financial liabilities. But I will give them credit for originality if not insanity when it comes to new taxation approaches:
  • Some of the state’s politicians and labor unions want the state government to implement what is really a wealth tax of .4% on Californians’ “worldwide property.”
  • Now, this would apply really only to the super rich that live in California since the first $30 million in property of a married couple would be exempt from the tax.
  • Any property, which I assume means real estate, cars, boats, etc., regardless of where that property is located, would be subject to the tax after the first $30 million even if it was not within the state of California.
  • Now one could conclude that this is a stupid tax on the very, very wealthiy since these folks could easily afford to move out of the state and live anywhere they wanted to avoid this tax on wealth along with the highest state income tax rates in the country.
  • But the people putting this plan together think they have that out migration problem covered since their plans also state, unbelievably, according to the LA Times, the “tax would also be imposed on former residents who left within the past decade, presumably to catch those who fled the state’s income tax rates, which already are the highest in the country.”
  • So if you were a rich person who left the state nine years ago to get away from the high taxes that existed even back then, this taxation concept says that somehow the state government of California would still tax your wealth even though you left the state years and years ago and no longer have any property within the state.
  • And these fools think that someone who moved to say, Texas, nine years ago would actually accept a tax bill from a state they moved away from long ago, insanity.
The creators of this insane idea think that they would get $7.5 billion a year from this concept if EVERYONE complied with the tax, a fallacy of an assumption if there ever was one. Anyone who left the state in the past ten years will simply throw that California wealth tax bill in the trash, no way a state government can tax non-state residents who no longer have a relationship with that state. 

Furthermore, if this wealth tax performed like every other tax in the history of the world, I can assure you that over time that $30 million exemption would shrink over time and that .4% tax rate will rise over time. As former Californians tell the current California political class to pound sand and not pay this wealth tax, state politicians will look for other ways to make up the shortfall and that is when the $30 million exemption starts to shrink and the .4% tax rate starts to grow.

So it is a stupid, and non-workable idea but certainly creative. Which is certainly necessary since besides having untold billions of dollars in unfunded future financial liabilities, California also has an immediate budget revenue shortfall of $54 billion. But rather than slash government spending, these politicians would rather continue to raise state taxes, drive more tax paying residents out of the state, and then come up with a harebrained idea to tax those that have already abandoned the state. Insane.

Quite the insanity for today: hypocrisy from Cuomo and Pelosi, an inane tax idea from Captain de Blasio and his sinking ship, NYC, and an original but equally inane tax idea from the California political class.


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