April, 2016, Part 10, Political Class Insanity: Hillary's Lack Of Trabsparency, Our Opppresive Tax Freedom Day, and The Failure of Dodd-Frank

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.

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) After seven and half years of Obama and his administration hiding secretes, stonewalling Freedom Of Information Act Requests, spying on journalists, and falling miserably short of his campaign promise to operate the “most transparent” administration ever, it would certainly be refreshing to have a President who actually is honest, in integrity, and not suppressing information that Americans have every right to see and examine, no matter how embarrassing to anyone in Washington. But if Hillary Clinton gets elected, we should probably expect more of the same thing, a government and administration shrouded in secrecy and corruption.

We make that assumption based on two of Clinton’s recent actions that provide no indication that she will be any different than Obama. It is no secret that Hilary is very chummy with and gets a lot of campaign donations from Wall Street firms and executives. In fact, she has given many private speeches to those same firms and executives for which she received hundreds of thousands of dollars.

But she refuses to release the texts of those speeches to the public, a suspicious move that many have interpreted as saying that she will be very friendly to Wall Street interests if elected President. In fact, some people who heard those speeches verify that assumption. But she still refuses to release what could be very embarrassing and hypocritical texts of her speeches that would be in opposition to her public stands where she talks tough about Wall Street while secretly telling them not to worry.

And she followed up this potential scandal with the following little shenanigan. According to Chuck Ross, recently writing for the Daily Caller website, the Clinton campaign managers used a white noise machine to prevent reporters from hearing what Clinton was saying at a fundraiser speech in Colorado. This was reported by Stan Bush who is a reporter for Denver’s local CBS affiliate, CBS-4, who was present when the noise machine was turned on. 

The fundraising event was held outdoors at the home of Governor John Hickenlooper, a Democratic super delegate. Bush posted a video online of what it sounded like, comparing it to a low intensity throbbing noise, like a helicopter off in the distance. As with Obama and his lack of transparency, what is Hillary hiding? At least relative to transparency, maybe a Hillary Clinton Presidency would be just like having a third Obama term….unfortunately for democracy and integrity.

2) Earlier this week we talked about how insane Bernie Sanders is in that he actually wants to raise taxes on EVERY American if elected in order to fund is socialism/communism government programs. This insanity is despite the reality that the Washington political easily wastes hundreds of billions of taxpayer dollars a year from inefficiencies, duplication, uselessness, and criminal fraud. 

How heavy and despicable has the tax burden become in this country BEFORE Bernie Sanders tries to increase taxation in this country. Consider the latest Tax Freedom Day analysis from the Tax Foundation: 

• On average across the country, Tax Freedom day in 2016, the day we stop working for al levels of government and start working for ourselves and our families, will fall on April 24th.
• This is 114 days into the year, about a third of the year we now work for the American political class and the government levels they so ineptly operate.
• This breaks down to working 46 days to pay our Federal, state, and local income taxes, 26 days to pay our payroll taxes, 15 days to pay sales and excise taxes, 11 days to pay our property taxes, 9 days to pay the corporate taxes,and 7 more days to pay other assorted government taxes.
• And understand that this is a national average, some high tax states such as NewYork and California likely have Tax Freedom Days that extend into May, the fifth month of a 12 month year.
• If you include the deficit spending of the Federal government, essentially taxes that have been delayed into the future, then the true Tax Freedom day is actually 16 days later or May 10.
• In 1900, the average American paid only 6% of their income in taxes compared to almost a third in 2016.
• To more fully illustrate how oppressive taxation is now in this country, the Tax Foundation points out that in 2016 the average American will spend more in taxes than they spend on housing, clothing and food COMBINED:

Besides the insult of taking so much or our wealth in the face of how much money our politicians and government waste, such a high tax burden severely impacts our personal freedoms. We have less money to start our own business. We have less money to send our kids to the schools we want them to attend. We have less money to help out our favorite charities. We have less money to live where we want. We have less money to live the lives we want to live despite working hard to get the wealth we end up giving to the government.

And as we have said many times before, it is not as if we have a lot to show for giving the political class almost a third of our annual earnings. Our roads, bridges, and tunnels are still falling apart. Our borders still leak. Our public schools still continue to not educate our kids. Our government retirement plans, Social Security and Medicare, are plummeting towards insolvency. Current political and government economic policies have resulted in anemic economic growth.

If giving government and the politicians that operate it one third of our earnings has failed, maybe we need to do the opposite, reduce taxation and reduce government’s size and wasteful spending habits. How much worse could it get? This country was formed under the banner, “Taxation without representation.” Today, taxation with representation is not much better.

3)The Dodd-Frank legislation passed early in the Obama administration was supposed to make sure that the Great Recession never occurred again. Besides being over 1,000 pages long, the regulations that have been written so far to support the law now total over 22,000 pages. It was this legislation that created the term, “too big to fail.” This means that big financial institutions and banks would never again be allowed to have such a big negative effect on the industry and the national economy that it would cause another recession and/or require the American taxpayer to bail them out.

Despite what its supporters of the law said at the time, it is pretty obvious from a number of perspectives that this law was doomed to failure from the start. First off, anything that is 22,000 pages long is way too unwieldy to be effective. No bank or government entity is going to efficiently, effectively or legally understand what is buried in 22,000 pages of government jibber jabber.

Second, if anything, today’s banks and financial institutions are bigger and riskier than they were ten years ago prior to the Great Recession. JPMorgan, Goldman Sachs, and others are not any smaller. Although they may have set aside more resources to cover a cash crunch, market crash, or other downturn, they still are too big to fail today.

This last assumption was recently voiced by Neel KashKari. Mr. Kashkari was the main driver and developer of the Federal government’s bank bailout program during the Great Recession and oversaw the infamous TARP program (Troubled Asset Relief Program) that fed taxpayer funds to the big financial institutions and banks. He is now the President of the Federal Reserve Bank in Minneapolis. Thus, Mr. Kashkari has some pretty impressive credentials when it comes to knowing what is going on in the financial industry today.

In a recent speech, he boldly stated that the country’s major financial institutions are still too big to fail. That in the next financial crisis, Dodd-Frank be damned, the American taxpayer will have to rescue these same financial institutions again despite 22,000 pages of useless regulations. His solution is much simpler than 22,000 pages of regulations: turn the too big to fail banks into smaller banks by breaking them up into smaller component pieces.

Then, if a new, smaller bank failed during an economic downturn, no big deal, no taxpayer bailout. Simple, elegant and not a chance of ever becoming reality, given how closely big banks and American politicians have become: favorable legislation and treatment for continual campaign donations.

Another day, another set of insanity from the political class. Ineffective financial reform legislation, as stated by an insider expert, despite much ado about nothing, the oppressive and tyrannical tax burden in America today, and Hillary’s lack of transparency, i.e. what is she hiding? 

This is the last post in this month's continuing series of Political Class Insanity. This month has set a record in that we needed a whopping ten days to get through all of the nonsense, idiocy, wasteful spending, loss of freedom, and other fiascos from the American political class. Things are getting worse over time vs. getting better. 

Maybe it is finally time to implement term limits, for lord knows allowing the same tired and corrupt politicians to stay in office year after year is not working. How much worse could it get if we got some new people in those chairs in Congress and the White House:

www.howmuchworsecoulditget.com

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

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

Analysis: Proof That Reducing Income Taxes Significantly Increases Economic Vitality

We have often talked about the high level of taxation that the American political class places on hard working Americans. Recently, we ran a post where we found that the Tax Freedom Day this year is a day later than last year, with the average American working almost until the end of April just to pay their taxes to all levels of government. This is more than the average American spends on clothes, food, and shelter COMBINED.

And it is not as if the average American gets much good or benefit in exchange for this taxation oppression:

• The Federal government’s welfare programs lose over $200 billion a year via wasteful spending and outright criminal fraud.
• The IRS readily admits that it utterly fails in its mission to collect lawful taxes by not being able to collect almost $400 billion a year from tax evaders, placing more tax oppression on those Americans who do comply with the law.
• We have talked about how the Federal government continues to spend taxpayer wealth on stupid programs and projects such as the study to determine when dogs became man’s best friend, developing a video game to simulate prom week, and other such nonsense.
• The Washington political class continues its rich history of crony capitalism, giving ill-advised taxpayer funded incentives and tax breaks to large corporations and industries that support the continual reelection campaigns of politicians.
• Over the decades, despite high and oppressive taxation levels, the country’s political class continue their perpetual failure to resolve any major issue facing American including a lost war on drugs, escalating health care costs, leaky borders, out of control military spending, the lack of a national energy strategy and plan, etc.

So this sets up the theme of today’s post: would we be better off if taxes were dropped significantly, meaning that politicians would have less government bureaucracies to manage, fund and interfere into our lives and freedoms, considering that high taxation gets us very little in return, as witnessed from our previous statements above?

One way to consider what would happen if taxes were lowered is to see what happens at the state level when tax rates vary. Consider the latest tax analysis and rankings from the American Legislative Exchange Council (ALEC). ALEC recently released its “Rich State, Poor State”analysis and rankings. Their effort is based on the following criteria: “The Economic Performance Ranking is a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment—all of which are highly influenced by state policy. This ranking details states’ individual performances over the past 10 years based on this economic data.”

Thus, this effort gives us a good measure across three parameters (overall wealth in a state, how many people are moving in or out of a state looking for a better life, and employment opportunities) of how well the economic conditions are in a state. What we did next is to cross this state level economic conditions with the state income tax rates as published by the Tax Foundation. In our analysis we took the highest marginal income tax rate in each state as a surrogate for the tax burden in that state, i.e. the higher the the highest marginal income tax rate is the more oppression the tax burden in that state.

The top economic performing states according to the ALEC analysis, along with the Tax Foundation tax rate information is listed below:

1. Utah 5.0%
2. North Dakota 3.2%
3. Indiana 3.4%
4. North Carolina 5.8%
5. Arizona 4.5%
6. Idaho 7.4%
7. Georgia 6.0%
8. Wyoming 0.0%
9. South Dakota 0.0%
10. Nevada 0.0%
11. Texas 0.0%
12. Virginia 5.8%
13. Alaska 0.0%
14. Wisconsin 7.6%
15. Florida 0.0%

A few observations:

• The arithmetic average of the above top performing states is 3.4%.
• Six of the top performing states do not have any state income tax at all.
• All of the states without a state income tax in the country are in the top fifteen performing states from an economic performance perspective.

Now let’s look at the worst performing economic vitality states over the past ten years as measured by the ALEC analysis with their top marginal tax rate also indicated (note: in this list, New York is the worst performing state and West Virginia is the 15th worst performing state:

1. New York 8.8%
2. Vermont 8.9%
3. Minnesota 9.8%
4. Connecticut 6.7%
5. New Jersey 8.9%
6. Oregon 9.9%
7. California 13.3%
8. Montana 6.9%
9. Maine 7.9%
10. Pennsylvania 3.1%
11. Illinois 5.0%
12. Rhode Island 6.0%
13. Delaware 6.6%
14. Hawaii 11.0%
15. West Virginia 6.5%

A few observations:

• The arithmetic average of the tax rates of these fifteen worst performing states, 7.9%, is substantially more than twice the average of the best performing states.
• None of the worst performing states are state income tax free.
• Only one of the worst performing states’ top state income tax rate, Pennsylvania, is equal to or less than the average of the fifteen best performing states.

Now, just because there is a strong inverse correlation between tax rates and economic growth (i.e., the lower the tax rate the higher economic vitality) does not mean causality. However, given that the ALEC analysis is measured along three pertinent economic parameters (state GDP, migration, and employment), you could also make the case the lower tax rates make for or cause better economic conditions.

Thus, at least at the state level, allowing residents to keep more of their worth from a state income tax perspective correlates with higher state GDP, better instate migration, and/or better employment opportunities. And that correlation could also be a causality relationship also, less taxation = better state economy.

Given that we get few benefits from the Federal government, a political entity that is better at wasting taxpayer wealth than providing vital and efficient services, why not try the state model at the national level? What have we got to lose? We pay high for low returns, what if we pay less and still get low returns, how much worse off are we than if we continue to pay higher taxes?

And the argument that taxes have to stay high to provide these inadequate government services is inane. Most of this blog’s writing has been to show how the Federal government and the politicians that operate it waste our taxpayer wealth everyday of the year. We have already provided a comprehensive plan of how to take $9 TRILLION out of the Federal government expense stream:

http://loathemygovernment.blogspot.com/2012/02/united-states-of-purple-presidency-plan.html

Thus, our conclusion is take this $9 TRILLION savings plan, reduce government spending, reduce our tax burden, and see if the same good economic results occur nationally that happened at the state level. What have we got to lose except not finding out when dogs became man’s best friend and other such government funded nonsense.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

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

April, 2015, Part 6,Political Class Insanity: Tax Freedom Day Despair, Massive Conflict Of Interest and Coal Fallacies

It is the beginning of another month which means it is time to review the latest political class insanity that has cropped up over the past 30 days or so. As regular readers of this blog know, political class insanity comes in many different forms including, but not limited to, the following craziness:

• Spending taxpayer wealth on idiotic programs and projects.
• Wasting taxpayer wealth on their own selfish financial and political needs.
• Implementing legislation to resolve problems that make the original problems worse or which created unintended bad consequences as a result of their legislation.
• Implementing legislation that supports their political donors and financial backers rather than the typical American citizen.
• Issuing idiotic and stupid comments.
• Overseeing government organizations that are incompetent, inefficient, ineffective, and wasteful of taxpayer wealth.

As always, we identified new forms of insanity over the past week or so as we reviewed the past ineptness coming out of Washington and other bastions of American politicians. We will finally get through all of the latest insanity below:

1) According to a recent New York Times article, that was reviewed in the March 13, 20915 issue of The Week magazine, since Mary Jo White became chairwoman of the Security and Exchange Commission (SEC), she has had to recuse herself from more than four dozen current SEC investigations, many of which involve Wall Street firms, in order to avoid conflict of interest potential. 

She is a former Wall Street lawyer and her husband works for a corporate law firm. The four dozen cases involve former or current Wall Street clients of both her and her husband. Tough to do your job when you are so deeply involved in the industry you are supposed to oversee that you have to stay out of the very investigations you are supposed to be managing. Maybe she was not the best choice for the job.

2) A famous quotation from early in our history was “no taxation without representation” and it was part of the rallying cry for the American Revolution against England, the over taxation of American citizens. A recent, cynical spinoff of that quote is “taxation with representation isn’t so great either.” That was driven by the high amount of taxation every American faces from all levels of government. 

Well, it turns out that 2015 will be another bad year for taxation since the “Tax Freedom Day," the day when Americans stop working for the government and the political class and start working for themselves and their families worsened again. According to the latest analysis from the Tax Foundation:

• The national Tax Freedom Day in 2015 is April 24.
• This is a day later than Tax Freedom Day in 2014.
• For comparison, in 1900, the Tax Freedom Day was January 22.
• Americans will pay $3.38 trillion in Federal taxes and $1.57 trillion in state and local taxes this year, for a total of more than $4.8 trillion, or 31 percent of the nation's income. 
• If you were to spread that tax burden evenly across every American household, the individual household portion would be over $40,000 each.
• In total, American taxpayers will spend more on taxes in 2015 than they will on food, clothing, and housing combined.
• Taxpayers will work 43 days this year to pay all levels of income taxes, 26 days to pay payroll taxes, 15 days for sales and excise taxes, 12 days for corporate income taxes, 11 days for property taxes, and seven days for estate and inheritance taxes, custom duties, and other levies.
• The latest-ever Tax Freedom Day was May 1, 2000 so we are close to the all time record.
• Tax Freedom Day varies by state with Tax Freedom Day arriving the latest in Connecticut and New Jersey, May 13, and in New York on May 11.
• The earliest Tax Freedom Day in Louisiana (April 2), Mississippi (April 4), and South Dakota (April 8).
• "Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels," Tax Foundation economist Kyle Pomerleau said in a release. "Arguments can be made that the tax bill is too high or too low, but in order to have an honest discussion, it's important for taxpayers to understand the cost of government."

Truly insane how much we are taxed in what is supposed to be a free country with minimal government interference in our lives. Given the $40,000 per household calculation done above, ask yourself: are you getting $40,000 worth of services and benefit back from any level of government? How much more freedom would you have to send your kids to better schools, have a better vacation, start your own business, give more to charities, etc. if you could just keep half of that $40,000? 

This is a prime example of why you cannot have personal and political freedom if you do not have economic freedom. The first step towards what this country should be about was outlined in Step 1 in “Love My Country, Loathe My Government,” which called for a 50% reduction in all government spending over a five year period. This would force government and the politicians that operate it to become more efficient with our tax dollars and get our Tax Freedom Day down to a saner level than what is has become.

3) I always love it when politicians do not look at the underlying numbers and realities of their faulty reasoning and policies. In fact, if you enter the phrase, “by the numbers” in the search box above, you will see a whole host of previous posts that examined the numbers that truly define what is going on rather than relying on the spin and deceptions of politicians. 

Consider the faulty reasoning of the Al Gore types and other global warming advocates, including President Obama, when it comes to using coal as an energy course. It is not a secret that Obama has never liked the coal industry and his plans to reduce U.S. carbon emissions another 15% or so is mostly going to be accomplished by forcing the coal industry to repress its energy production.

But that will just be only an incremental reduction in the current emissions of the the U.S.’s 600 coal fired plants. However, according to an article in the March 27, 2015 issue of The Week magazine, China, which currently gets 70% of its electricity from burning coal, plans on building 363 additional coal plans in the near future. 

India, which has 340 million people who currently do not have access to electricity, plans on building 455 coal fired power plants. Thus, China and India are planning to bring at least 818 new coal fired plants online while Obama wants to reduce the output of 600 U.S. plants. 

Thus, you can see how even if the U.S. does reduce its carbon footprint by 15%, that reduction will be overwhelmed by over 800 new power plants in just two other countries. This will cause the cost of electricity to go up for American businesses and customers, depressing our economic growth, while the rest of the world inflicts far more carbon impacts that increases their economic growth. Insanity.

That wraps up this month's insanity. Six days of stupid government programs, wasteful spending, over taxation for under performance, and a whole host of other forms of insanity. Please consider visiting our term limits website at:

www.howmuchworsecoulditget.com

Because, really, how much worse from a political insanity perspective could it get if we replaced every Washington politician with a new person. Hard to see how much worse it could get.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

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

Tax Day Travesties and Facts, Part 3

This will hopefully be the final post in a three part series that we have been doing in light of income tax filing day last week. We have randomly reviewed the insanity of the tax situation in this country, from the ungodly length of the tax code to the unproductive, difficult, and lengthy times it takes Americans and businesses to fulfill their tax filing obligations to the many examples, both inside and outside of the country, where the American political class takes our hard earned tax dollars and just wastes them on idiotic and ineffective programs.

The bottom line is that we have a tax code and a political class that both result in wasteful spending and drags on the economy. In addition, we have proposed many times that we have crossed over the line from heavy taxation to oppressive taxation. When most of the country’s workers have to work well into April, and some into May, to pay for American government at all levels (“Tax Freedom Day“), our freedoms and liberties are also severely damaged by this horrendous and oppressive tax code.

1) Our first discussion today comes from the Tax Foundation, that wonderful organization that tracks how oppressive and onerous our tax situation is, including the annual calculation of Tax Freedom Day. A recent post on their website went into detail about how they arrived at the calculation that the tax code is now over 70,000 pages long.

Their detailed breakdown of the 70,000 pages was in response to Andrew Grossman, the legislation counsel for the Congressional Joint Committee on Taxation that helps write tax laws. Grossman attacked the Tax Foundation in Slate, claiming that the Federal tax code is “only” 2,600 pages long, not 70,000 pages long. Even if he is right, “only 2,600 pages” is still a ridiculous number. But the Tax Foundation attacked back with the following detailed and responsible reply and analysis:

1. Statutes: There’s the literal statutes that Congress has passed (Title 26 of the U.S. Code). According to the Government Printing Office, it sells the tax statutes in two volumes. The first volume is 1,404 pages and the second volume is 1,248 pages, for a total of 2,652 pages. The Tax Foundation estimated that at perhaps 450 words per page, that puts statutes alone at well over 1 million words. By way of comparison, according to the Foundation, the King James Bible has 788,280 words; War and Peace runs 560,000 words; and the Harry Potter series is just over 1 million words. And those publications do not change every year, unlike the tax statutes which change constantly, making it more and more difficult to keep track and file accurate taxes based on “only 2,600 pages.”
2. Statutes and Regulations: However, a tax expert, accountant, or preparer who relies just on the tax Congressional statutes would likely go to jail, since a lot of Federal tax law is in IRS regulations, revenue rulings, and other clarifications. In reality, Congress will enact a tax law and leave it to the IRS to develop and write all the rules to implement it. And these regulations aren’t short: the National Taxpayer Advocate did a Microsoft Word word count of the tax statutes and IRS regulations in 2012, and came up with roughly 4 million words. Again at roughly 450 words per page, that comes out to around 9,000 pages. The National Taxpayer Advocate also noted that the tax code changed 4,680 times from 2001 to 2012, or an astonishing average of once per day. This gets us way beyond the “only 2,600 pages estimate,” we are now looking at about three and half times more than 2,600 pages.
3. Statutes, Regulations, and Caselaw: But, a lawyer or tax professional who relies just on cases and regulations isn’t a very good lawyer or tax pro because most court decisions are made on the basis of previously decided cases. The legal publisher, Commerce Clearing House (CCH), puts out such a compilation, the Standard Federal Tax Reporter which consists of ….70,000 pages, with notations after each statute containing relevant cases and other information. CCH itself considers this volume to be representative of “the tax code,” since an expert needs to know all 70,000 pages to fully understand the tax code in full. 

“Only 2,600 pages” would be bad enough but honestly Mr. Grossman, you are grasping at straws. To really be in the know about the U.S. tax code, one would have to know all about the statues, the regulations, and the historical case law, over 70,000 pages, over 3,000,000 words, Insanity, idiocy, and crazy.

2) How fast is the tax code complexity growing? Consider the following chart from the Commerce Clearing House (double click on graph for larger view):



Much like taxes and our national debt, at the complexity of our tax code has been accelerating at a growing rate over the past twenty years or so, making the ability to accurately, quickly and reasonably pay one’s taxes that much more difficult. At this rate we will soon reach the point of “who cares“ since trying to cope with the code is not worth the effort or the risk of jail time, it is just too hard.

3) One famous American has already reached that point of giving up. Former Defense Secretary Donald Rumsfeld sends a letter to the IRS every year along with his tax returns. The essence of the letter is that he basically has no idea if he completed his taxes accurately, that even as an educated man it is nearly impossible to get the tax code right. Excerpts from his current letter include the following:

• “I have sent in our federal income tax and our gift tax returns for 2013. As in prior years, it is important for you to know that I have absolutely no idea whether our tax returns and our tax payments are accurate. I say that despite the fact that I am a college graduate and I try hard to make sure our tax returns are accurate.”
• “The tax code is so complex and the forms so complicated, that I know that I cannot have any confidence that I know what is being requested and therefore I do not know. and I suspect that a great number of Americans cannot know whether or not their tax returns are accurate.”
• “As in past years, I have spent more money than I wanted to hire an accounting firm to prepare our tax returns…”
• And I should add that my wife of 59 years, also a college graduate, has signed our joint return but she also knows that she has no idea whether out tax return payments are accurate.

Well said. Taxes are confusing, time consuming, and expensive to file, expenses that could be well served in more productive parts of the economy, not making sure that people like Mr. Grossman are satisfied.

The Heritage Foundation, which commented on Mr. Rumsfeld’s letter, had the following suggestions regarding our 70,000 page tax code:

Since tax reform would make what is taxable—i.e., the tax base—easier to define and would have at most only a few deductions and credits necessary to maintain neutrality, filing taxes annually would be immensely simpler for all families.

There would be no need for pricey software, and only those families with the most complex financial arrangements would require paid tax preparers. Highly skilled lawyers and accountants could put their considerable talents to more productive uses, which would further boost the economy.

But again, do not expect easier, simpler, and inexpensive from the Washington political class. As we have said many times before, they are the clowns that got us to 70,000 pages, it is unreasonable to think that they can get us down to “only 2,600 pages,” never mind a few pages.

4) Former Treasury Secretary William Simon, had a wonderful insight a few decades ago, long before the tax code got close to 70,000 confusing pages: “A nation should have a tax code that looks like someone designed it on purpose.” This is the furthest thing from the truth that we have today. 

Today, we have a monstrosity that has been pieced and patched together over many decades, with political class expediency as the overarching strategy, not economic optimization or fairness. But it should not be that hard. 

In fact, back in February, 2012 in this blog we came up with a simple set of 12 principles that would be fairer, revenue neutral, and much, much simpler to execute by individuals and businesses in the country. Those simple 12 principles, vs. 70,000 pages, include the following:

1.No tax reform would ever get passed the Democrats if it was not progressive, so any reforms would have to include higher marginal percentages of taxation as income goes up.

2.However, the number of marginal tax rates should be kept to a minimal for simplicity reasons.

3.Every American would receive a tax exemption on the first $15,000 earned. Married couples filing jointly would get a family exemption of $30,000, i.e. no matter marriage penalty or benefit.

4.A dollar earned is a dollar taxed beyond $15,000 regardless of how it is earned. In other words, a wage dollar, a dividend dollar, an interest earned dollar, a domestic dollar earned, a foreign dollar earned, etc. would all count as one dollar from a tax perspective. 

5.No more U.S. tax breaks for paying taxes overseas. No more lower tax rates for dividends vs. other types of dollars. This should make investment in the U.S. no better or worse than investing overseas, possibly keeping more investment dollars in this country. No more discriminating against other forms of earnings vs. dividends .

6.Since about 45% of Americans now pay no Federal income tax, even though they get all of the benefits of the Federal government, any tax reform must bring more Americans into the Federal income tax payment process except for the least fortunate (which is handled by exempting the first $15,000 in earnings).

7.The new tax plan would be phased in over ten years in order to minimize and ease the transition to the new, simplified tax code. Every year, the tax owed would move from the current tax code to the new tax code by 10% a year. 

8.For example, in the first year, the taxes owed would move 10% closer to the new tax code results from the old tax code results. In the ninth year, the taxes owed would have moved 90% closer to the new tax code results form the old tax code. 

9.This would require that taxes be calculated two different ways every year. However, given that almost all tax returns today are calculated by computer programs, the extra work involved should be minimal, let the machines do the work.

10.With two exceptions, the new personal tax code would have no deductions, no exemptions, no credits, no teacher supply accommodations, etc. after ten years, including mortgage deductions. The first exception would be the ability of a taxpayer to contribute to a Health Savings Account (HSA). Long term, this would help take pressure off of the skyrocketing costs of Medicare and Medicaid. The second exemption would be contributions to retirement accounts to make people more accountable for their retirement and take pressure off of the failing Social Security system.

11.The new tax code has to be revenue neutral so that the political class does not get their hands on any more of taxpayer wealth than they get today.

12.The new tax code would have only two marginal tax rates, 11% for earnings up to $100,000 and 28% for earnings over $100,000 for single filers, 11% for earnings up to $200,000 and 28% for earnings over $200,000 for married filers.

Twelve easy steps, a lengthy transition process to ease the confusion and pain, and eventually no need to hire an accountant to do your taxes, saving the household and business time, effort, money, and stress. How much easier could it be? No clarinet deductions, no Fido deductions, etc. 

Well, for our politicians, even something this simple is probably beyond their grasp or their desire to cede control of the tax structure to Americans, preferring to keep the tax situation as it is so that they can take care of their donors and their careers.

That wraps our review of tax day, 2014. Depressing and expensive, or, just another day within the confines of the American political class.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

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

Tax Day Travesties and Facts, Part 2

This is our second post regarding how much we paid in taxes last year and how little we received in return from the American political class for those taxes in both the quality and quantity of government services. The first post from yesterday can be accessed at:

http://loathemygovernment.blogspot.com/2014/04/tax-day-travesties-and-facts-part-1.html

We will be showing in these tax day posts that we have truly moved from a state of heavy taxation into a state of tax oppression. Many Americans’ Tax Freedom Day, that day of the new year when we stop working for all forms of American government and start working for ourselves and our families has not even occurred yet. Almost four months into the new year.

And what we do get from the political class in the form of government programs and support is usually inefficient, ineffective, criminally targeted and often make the original problem worse or create new problems for Americans via unintended consequences. The tax insanity continues today with the following random facts about taxation in America and how it is often no more than highway robbery.

1) Consider what some of your tax payments bought for you and the country last year, as documented by the Watchdog.org organization:

• An $876,752 study on snail sex - A University of Iowa study is trying to figure out if it’s better for snails to reproduce sexually or asexually. Finally, an answer to the question everyone has been asking, a question that has absolutely no bearing on the lives of 99.99999999% of Americans.
• A $16 million tropical vacation - That was the final price tag on President Obama’s most recent holiday vacations to Hawaii and Africa.
• A $750,000 study on how kid cartoons contribute to obesity - The National Science Foundation awarded two grants totaling $750,000 to find out if cartoon characters are making children overweight. No, eating too much junk food is making kids fat, not getting enough exercise is making kids fat. I could have answered the question for far less than $750,000.
• A $2.4 million program to develop “origami condoms” - It includes male and female versions and the “first of its kind anal condom.” There is a joke about screwing the taxpayer somewhere in here.
• A $30,410 “beauty salon” in a Federal prison -At least it’s a women’s federal prison.
• Millions in drugs for prisoners -Medicare sent millions in improper payments to incarcerated criminals. In other words, bilking Medicare is so easy even prisoners behind bars can do it and not get caught.
• A $98,670 outhouse -The Federal Bureau of Land Management may have just built the most expensive outhouse ever at the Swede Park Trail Head in Alaska.
• $700 million of Obama Care promotion -Despite President Obama’s claim that the government did not “make a hard sell” for Obama Care, his administration spent nearly $700 million to promote the law. Another Presidential lie.

When you wrote your income tax check to the IRS last week, some of that money you earned went to pay for idiotic programs like these.

2) The best way to grow the economy is for private business owners to expand their operations and grow their businesses. However, any distraction that keeps them from doing that, e.g. filling out tax forms and returns, hinders their ability to do that very important task. According to the U.S. Chamber of Commerce, the average small business owner spends 80 hours each year complying with U.S. tax regulations. 80 hours a year, the equivalent of two 40 hour work weeks. 4% of the entire year is spent just on filing small business tax forms on average.

This is time that the average business owner cannot use to look for new markets, develop new products, train his staff, take better care of customers, all activities that would eventually help us all by expanding the economy. Instead, he is sitting down and laboriously trying to stay legal in the face of a Federal tax code that is over 70,000 pages long. 

In light of this oppressive task, the Chamber calculated what one could do if they were given an extra 80 hours a year. Turns out, you could do quite a bit.

• You could complete 17 marathons (if you run the U.S. average pace of 10:34 mile/hour). 
• You could go around the world 1.7 times (on a commercial jet) or twice if you were on a military jet. 
• You could go to the moon 4.8 times (if you traveled on NASA’s New Horizons Pluto mission). 
• You could cook 14.5 perfect 20-pound turkeys (unstuffed, and back-to-back for 5.5 hours each, not simultaneously) 
• You could watch all eight Harry Potter movies four times.
• Or, if you are a small business owner, you could complete your 2013 taxes.

A new survey of small business owners by the National Small Business Association (NSBA) reveals that more than half of small employers say the administrative burdens and paperwork associated with tax season pose the greatest harm to their businesses. One in four business owners surveyed said they spend at least three full weeks on the annual chore. How sad is it when the American political class is the greatest source of harm for American small businesses?

If it is any consolation, a tax analysis by the American Action Forum found that even the Treasury Department and IRS are also buckling under the administrative burdens of tax season:

[T]he Department of Treasury’s paperwork burden is at its highest level in history. At more than 7.8 billion hours, Treasury’s paperwork budget has increased 1.5 billion hours since FY 2010, or 19 percent. Since 1995, the earliest year AAF could compile data, Treasury’s burden has increased 47 percent.

A 19% increase since just four years ago is a great measure of how out of control the tax system is in this country. It is a system that is robbing the economy of vibrancy and wealth and overburdening an already overburdened bureaucracy. In other words everyone, consumers, businesses, IRS are choking on the tax code with no substantial benefits.

The NSBA report also found that a the clear majority of small businesses (67%) polled by NSBA support broad tax reform that will reduce corporate and individual tax rates coupled with reduced deductions. This thought and feeling was recently captured by the Chamber’s Chief economist Marty Regalia: 

Comprehensive pro-growth tax reform is the major key to jump-starting the economy, promoting job creation, and ensuring long-run improvement in productivity, wage growth, and our standard of living. It can help us maintain our competitive edge in the global economy and address some of the problems in income and wealth distribution. Moreover, it is an absolutely necessary component to getting our fiscal house in order.

Now, all we need to do is educate the American people, elect a Congress that can work together for the common good, adopt a common goal, and convince the president that leadership sometimes requires the courage to get out and stay out in front.

Work together, common good, common goal, leadership, courage. Good luck with getting those attributes from the current set of politicians in Washington. These are the same people who gave us a tax code with over 70,000 pages in the first place.

3) We have been discussing how we get very little back in quality services from the Washington political class despite being placed under oppressive taxation. But sometimes we get absolutely nothing back for the tax check we wrote last week as shown by the fact that the State Department has allocated $1.5 million of our tax money for job development programs in distressed neighborhoods….in Belize. 

We are not going to spend money to help the over 20 million Americans who are either underemployed or unemployed. We are not going to help the hundreds and hundreds of distressed neighborhoods in the U.S. We are going to help distressed neighborhoods and unemployed people in Belize. I challenge anyone to find Belize on the map, never mind sending them $1.5 million an amount that probably will not make any difference anyway, given it is so small.

Specifically, the State Department Belize program has the following objectives:

1. “The proposal will confront the root causes of violence and crime in a creative and effective way and seek to create positive cultural and social conditions, which are the foundations of a peaceful and orderly society.” Sounds like BS and even if this was achievable, wouldn’t starting in U.S. cities like Detroit or Camden be a far better return on American taxpayer dollars? They certainly need the foundations of a peaceful and orderly society to be created in these decaying American cities.
2. “Root causes in Belize include, but are not limited to, the lack of economic development, the lack of skills and/or tradecraft, the lack of conflict resolution skills, and/or the lack of opportunity for youth.” Again, substitute Detroit, Camden or a hundred other American towns and cities for the word Belize and the statement would hold true except that it would intend to help Americans who are suffering.
3. “Marginalized youth are empowered when given a voice and opportunities. Equipping marginalized youth and their communities with economic opportunities and/or business training can help them reach their true potential as entrepreneurs and improve citizen security.” The current unemployment rate for American youth is almost 21%. Shouldn’t they get first crack at reaching their true potential?

Thus, you can rest assured that your tax money and belated Tax Freedom Day are helping out needy people in Belize, where ever that is.

So let’s review. Your hard earned money and ever growing Tax Freedom Day pays for such vital services as origami condoms and the intimate sex knowledge and lives of snails, it hinders small businesses from growing their businesses and economy as result of an onerous task of just completing the marathon tax forms and understanding a voluminous tax code, and it sends the money collected during tax seasons to far away places like Belize, not even trying to deliver quality government services and support to the very people who paid for it in the first place.

You cannot make this idiocy up and the sad part, we still need another day to complete the tax season shuffle of insanity tomorrow.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

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

Tax Day Travesties and Facts, Part 1

Today is the first in what is likely to be a multipart series on taxes and wasteful government spending. It is an appropriate topic given that most honest Americans filed their Federal and state income taxes last week. 

We will be going through a random hodgepodge of different taxation stories that arose in the past few weeks, all of which prove that: 1) we pay way too much in taxes for the lousy quality and quantity of government services we get in return, 2) the political class and the government they operate wastes so much money and taxpayer wealth on inefficient, criminally infested, and unneeded programs, and 3) we have probably already passed over from heavy taxation into pure oppression.

1) Let’s start this random walk through the taxation jungle with an article that appeared in the Independent Journal Review, 9 Facts About Taxes That Will Have You Looking Into Getting Stranded on a Desert Island, facts that are likely to make you either crazy or enraged:

#1: There are more than 72,000 pages in the federal tax code. That’s more than 146 times the size the tax code was in 1939 and about 26,000 pages longer than it was just 14 years go in 2000.

#2: It will take the average American worker 111 days to earn enough to pay their taxes. That day, which lands on April 21 for many but varies by state, is called Tax Freedom Day. Tax freedom day in 2014 is five days longer than in 2013, indicating our tax oppression is getting worse, not better.

#3: Over 300,000 federal employees and retirees were found delinquent on their taxes. A report published by Senator Tom Coburn, found that these Federal employee tax dodgers owe the Federal government $3.5 billion in back taxes. Coburn’s report also found that the number of Federal employees not paying their fair share of income taxes was increasing over time as was the amount of their unpaid Federal income taxes. 

#4: Federal taxes push 7 million childless Americans into or further into poverty. The Center For Budget and Policy Priorities, using U.S. Census data, found that Federal taxation pushes 1.2 million childless Americans under the poverty line and 5.8 million childless Americans further under the poverty line.

#5: In less than 20 years, the Social Security program will likely be insolvent. In reality, the Social Security program is already insolvent, paying out more than it takes in from a cash perspective. This point talks about the accounting trick of the Social Security Trust fund, a trust fund that is really a giant Ponzi scheme. 

The real crime here is that the Social Security Administration loses over $100 billion a year to waste, inefficiency, and criminal activities. That is why it is running out of money, the political class cannot run an effective and efficient program for retirement despite collecting trillions and trillions of tax dollars over the years.

#6: Payroll taxes are out of control. Payroll taxes are growing very, very quickly as a percentage of total taxation as the baby boomers age and retire, driving up Medicare and Social Security taxes. This trend is unlikely to naturally slow since the growth in baby boomer retirement is growing faster every day while the political class gets slower and less creative in problem solving every day.

#7: Most Americans’ taxes went up this year. This is due to the fiscal cliff deal raising payroll taxes, as well as Obama Care’s 3.8 percent net investment income tax and 0.9 percent Additional Medicare Tax. In a quirk of the voluminous tax code, the lowest earners and the highest earners in America this year will both see the greatest increase in their effective tax rate and the greatest decrease, on a percentage basis, in their net income after taxes. This is despite the fact that the highest earners in the top quintile of American workers pays more than 16 times the effective income tax rate of the lowest quintile earners.

#8: You probably pay more in Medicare and Social Security taxes than in income taxes. People can talk about having a “safety net,” but there’s a flipside to that: a lot of money lost to the government could be used by people hoping to start businesses or save for college – lost opportunities. 

#9: The majority of Americans feel that they pay too much in taxes. A long term tracking poll from Gallup finds that the majority of Americans think they pay too much in taxes. Could that possibly be because they do not get any quality services back in return for such high and oppressive tax rates? Why is that not reflected in our elected officials' actions and budgeting?

The Independent Journal Review article summed these findings nicely: While taxes are vital for a government to function, the government has an inherent duty to spend tax dollars in a responsible way, as well as a duty to reflect the will of its citizens when spending those dollars. Our Federal government is fulfilling neither of those responsibilities.

And neither are our Federal politicians.

2) While we may feel we pay too much in taxes, a recent Washington Examiner article pointed out that our politicians can still find ways to waste the billions of dollars we send to them every year, especially how there are so many stupid and wasteful tax deductions that the vast majority of Americans cannot take advantage of. 

You can be sure that some lobbyist somewhere paid off some politicians to make sure these narrowly focused tax breaks got into the tax code, not because they were good for the economy or many citizens, but because they were good for a politician’s career:

1. Pet moving. If you get a new job, you cannot not only deduct your regular moving expenses but you can also deduct your pet moving expenses. Specifically, if you don’t want to take your pet with you as you drive across the country, you can deduct the cost of shipping them to your new home. Really, how many people does this effect and what is even worth the administrative time to write this idiotic deduction into the tax code?

2. Fostering a pet. Did you know you can deduct expenses for fostering an animal? If you’re taking care of a dog or cat while it’s waiting for adoption, you can deduct expenses for food, vet bills, cat litter and more, assuming it is in conjunction a 501(c)(3) charity.

3. Guard dogs and service animals. If you use a guard dog (or cat, or ferret or whatever) to protect your property, you can deduct expenses related to its care. Who knew that Fido could be such a vital part of your tax planning?

4. Clarinet lessons. You can not make this stuff up.You can deduct the cost of a clarinet purchase and resultant clarinet lesson costs from your taxes. 

Why? Orthodontists lobbied the government for the deduction because playing the clarinet helps with the overbite. Obviously, the drum, trumpet, and other instrument lobbyists are not earning their money like the clarinet lobbyists are.

5. Whale, whale, whale, what have we here? If you happen to be a indigenous Alaskan with a whaling boat, you can deduct up to $10,000 for ship repairs, equipment and other whaling expenses. 

As with the non-clarinet instrument lobbyists, the cod fishermen in the Northeast and the grouper fishermen in the southeast must also be extremely disappointed with their fishing lobbyists since they were not able to get the same favored tax treatment that Alaskan fishermen get.

6. Legal defenses. Shouldn’t being a criminal exempt you from using your criminal defense lawyer as a tax deduction? Just saying, paying for your crime should not be in the form of the American taxpayer paying for your legal defense.

7. Wigs. The cost of wigs can be deducted if they are purchased “upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease,” according to the IRS. 

8. B-I-N-G-Oh heck yeah! In some parts of the country, e.g. Long Island, bingo is extremely popular and as such, you can deduct your bingo losses just like any other gambling. Besides bingo, should we really be having the American taxpayer paying the expenses of someone’s hobby or addiction, depending on how one defines gambling?

This is what your Federal tax filing helped to subsidize and pay for last year.

3) Finally for today, consider some analysis that was done by the group, Americans For Tax Reform: 

Since taking office in 2009, President Barack Obama has formally proposed a total of 442 tax increases, according to an Americans for Tax Reform analysis of Obama administration budgets for fiscal years 2010 through 2015. The 442 total proposed tax increases does not include the 20 tax increases Obama signed into law as part of Obama Care.

The number of proposed tax increases per year is as follows:

-79 tax increases for FY 2010
-52 tax increases for FY 2011
-47 tax increases for FY 2012
-34 tax increases for FY 2013
-137 tax increases for FY 2014
-93 tax increases for FY 2015

Two observations here:

•  These tax increases, proposed and actual, comes from a President who campaigned on the promise that no American earning over $250,000 would pay a penny more in Federal taxes during his regime’s time in office. I maintain it is impossible to propose and/or pass more than 400 new taxes and not seriously and negatively affect the take home pay for those Americans earning under $250,000. It cannot be done, and as we showed above, it has not been done, especially with the lower quintile of American workers who are paying taxes at a higher rate and a higher total dollar amount. Thus, another Obama promise seriously broken or seriously deceptive.
• Notice that in typical political fashion, the lowest number of taxes was during a major election year where the Obama administration proposed or passed “only” 34 new taxes. Once the election was over, that rate went up four fold. More cowardice and deceptions.

That will do it for today in our tax round up. Today we found out that this administration is tax crazy, taxes are going up for every kind of American in every income tax bracket, the political class has wasted away trillions of dollars of Medicare and Social Security taxes over the years, endangering the financial solvency of both programs, hundreds of thousands of Federal employees are Federal tax evaders, there are way too many stupid deductions in a way too large and too complex tax code and your dog should be part of your tax planning. 

Political class tax insanity at its worst. More gruesome details tomorrow of high taxes, low government service, and wasteful spending.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

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