Your Life in 4:17

Pretty much sums it up. So are you going to keep voting the same way or finally throw the micromanagers out of office?

The Tax System Explained in Beer!

My friend Jake G found this:

Suppose that, every day, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this...

* The first four men (the poorest) would pay nothing

* The fifth would pay £1

* The sixth would pay £3

* The seventh would pay £7

* The eighth would pay £12

* The ninth would pay £18

* The tenth man (the richest) would pay £59

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement; until one day the owner threw them a problem. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20."

Drinks for the ten now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

* And so the fifth man, like the first four, now paid nothing (100% savings)

* The sixth now paid £2 instead of £3 (33% savings)

* The seventh now pay £5 instead of £7 (28% savings)

* The eighth now paid £9 instead of £12 (25% savings)

* The ninth now paid £14 instead of £18 (22% savings)

* The tenth now paid £49 instead of £59 (16% savings)

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. "I only got a pound out of the £20," declared the sixth man. He pointed to the tenth man, "But he got £10!" "Yeah, that's right," exclaimed the fifth man. "I only saved £1 as well. It's unfair that he got ten times more than I!" "That's true!!" shouted the seventh man. "Why should he get £10 back when I got only £2? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill! And that is how our tax system works.

The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up any more. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier. For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

And just in case you were curious:

Freedom? Whazzat?

If you ask 100 different people what exactly freedom means to them, you'll probably get 100 different answers. To liberals, it may mean the right to marry whomever you wish (even a dolphin), smoke what you want, or the freedom to abort whatever you want (ignoring the right of the unborn to live)...but I can't think of many more pro-freedom positions they take. Progressive Democrats are very good about taking away your choices/freedoms. Another way to look at it is to look at what liberals consider rights. A right to Social Security, a right to health care, a right to food stamps, unemployment "benefits", etc. None of these are real rights, because to provide them you first must take from someone else, and who gets the goods is purely based on the benevolence of the government. AKA, we can get votes "providing" a right or a freedom we deem worthy. Conservatives do not believe that rights are granted by a chest-beating, power-hungry government to whomever they please; they are universal guarantees that apply to everyone equally without taking away another person's rights.

Conservatives offer something greater: economic freedom. The Declaration of Independence states that we have the right to "life, liberty, and the pursuit of happiness." Life was put first. Why? Well we certainly have the right to have our lives protected from harm, but I feel in this context it means a whole lot more. How would you define a good life? I define it as being financially able to live out your dreams. Being able to sleep at night because you easily paid your bills. To be able to see the sights you want to see. To work your dream job. To be able to feed your kids without having to worry about how. I interpret it as a right to a life as you see fit through your own efforts. To pursue your own definition of happiness.

Let me put it this way. Liberals will try to help the poor by taking from the rich and providing assistance to those in need in some form or another, which creates some dependence, rather than creating independence (freedom). They try to bring the bottom up, and those on top down, making us all some form of middle class. How is that really allowing/encouraging people to pursue their dreams? The message is that we'll raise you up just to where we want you, and then we'll hit you hard with taxes to bring you back down.

Shouldn't the goal be to get as many people as possible to the point where they can start to take advantage of compound interest and investing, freeing people from the 9-5 job cycle and putting them in better position to pursue their dreams? To live? Redistribution will not do that, it only disincentivizes ambition and promotes mediocrity. Only economic freedom and opportunity to fail/succeed based on one's own talents and to keep the money that you rightfully earned will guarantee the right to life, liberty, and pursuit of happiness as each individual sees fit.

Imagine you're walking head first into the wind toward a door. On the door is the phrase "financial independence". The closer you get to the door, the harder the wind blows, making it harder for you to walk and take another step. Harder and harder until you finally get your foot in the door and it's calm and peaceful. Wouldn't it be nice if the wind blew more gently as you worked your way to the door?

Four Ways to Spend Money

Economist Milton Friedman (may he rest in peace), on the four ways to spend money:

How the Great Depression Really Ended

A lot of people think that FDR ended the Great Depression with his big-government, New Deal policies, but a closer look really shows that his policies in reality perpetuated the depressed economy, rather than fix it. I fear that some of the same actions taken by the current administration are pushing us down the same path, creating a stagnate economy for years to come and provide government with excuses to take from us more of our freedoms in the name of "security."

I read a great book on just this topic which looks into this subject in depth, The Forgotten Man: A New History of the Great Depresson, by Amity Shales, which I highly recommend if your reading list is getting short.

From today's Wall Street Journal:

Did FDR End the Depression?

The economy took off after the postwar Congress cut taxes

By BURTON FOLSOM JR. AND ANITA FOLSOM

'He got us out of the Great Depression." That's probably the most frequent comment made about President Franklin Roosevelt, who died 65 years ago today. Every Democratic president from Truman to Obama has believed it, and each has used FDR's New Deal as a model for expanding the government.

It's a myth. FDR did not get us out of the Great Depression—not during the 1930s, and only in a limited sense during World War II.

Let's start with the New Deal. Its various alphabet-soup agencies—the WPA, AAA, NRA and even the TVA (Tennessee Valley Authority)—failed to create sustainable jobs. In May 1939, U.S. unemployment still exceeded 20%. European countries, according to a League of Nations survey, averaged only about 12% in 1938. The New Deal, by forcing taxes up and discouraging entrepreneurs from investing, probably did more harm than good.

What about World War II? We need to understand that the near-full employment during the conflict was temporary. Ten million to 12 million soldiers overseas and another 10 million to 15 million people making tanks, bullets and war materiel do not a lasting recovery make. The country essentially traded temporary jobs for a skyrocketing national debt. Many of those jobs had little or no value after the war.

No one knew this more than FDR himself. His key advisers were frantic at the possibility of the Great Depression's return when the war ended and the soldiers came home. The president believed a New Deal revival was the answer—and on Oct. 28, 1944, about six months before his death, he spelled out his vision for a postwar America. It included government-subsidized housing, federal involvement in health care, more TVA projects, and the "right to a useful and remunerative job" provided by the federal government if necessary.

Roosevelt died before the war ended and before he could implement his New Deal revival. His successor, Harry Truman, in a 16,000 word message on Sept. 6, 1945, urged Congress to enact FDR's ideas as the best way to achieve full employment after the war.

Congress—both chambers with Democratic majorities—responded by just saying "no." No to the whole New Deal revival: no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.

Instead, Congress reduced taxes. Income tax rates were cut across the board. FDR's top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.

Corporate tax rates were trimmed and FDR's "excess profits" tax was repealed, which meant that top marginal corporate tax rates effectively went to 38% from 90% after 1945.

Georgia Sen. Walter George, chairman of the Senate Finance Committee, defended the Revenue Act of 1945 with arguments that today we would call "supply-side economics." If the tax bill "has the effect which it is hoped it will have," George said, "it will so stimulate the expansion of business as to bring in a greater total revenue."

He was prophetic. By the late 1940s, a revived economy was generating more annual federal revenue than the U.S. had received during the war years, when tax rates were higher. Price controls from the war were also eliminated by the end of 1946. The U.S. began running budget surpluses.

Congress substituted the tonic of freedom for FDR's New Deal revival and the American economy recovered well. Unemployment, which had been in double digits throughout the 1930s, was only 3.9% in 1946 and, except for a couple of short recessions, remained in that range for the next decade.

The Great Depression was over, no thanks to FDR. Yet the myth of his New Deal lives on. With the current effort by President Obama to emulate some of FDR's programs to get us out of the recent deep recession, this myth should be laid to rest.

Mr. Folsom, a professor of history at Hillsdale College, is the author of "New Deal or Raw Deal?" (Simon & Schuster, 2008). Mrs. Folsom is director of Hillsdale College's annual Free Market Forum.

Constitutional Amendment.....Yes!

Finally! Some Republicans are starting to act like Republicans again!

A constitutional amendment requiring the national government to have a balanced budget each year (you know, PAY for what we spend), I feel, is the only way to ensure the longevity of our country. We cannot sustainably continue this philosophy of having our cake and eating it too.

Americans are not asked to sacrifice at all for the entitlements or actions of government when they can simply deficit spend, where the government gives us things, yet does not ask anybody to pay for it through taxation. Nobody pays attention to what government does, either, if it doesn't affect their pocketbook.

Even with this amendment, government may still just try to tax the hell out of the rich and minimally tax lower income earners to maintain this "taxation blindness" on the majority of the country, which is why I feel a constitutional amendment for a balanced budget with some form of a flat tax will ensure America is around for many years to come.

Republicans as well as Democrats are both guilty for their irresponsible spending practices, so this amendment will remind politicians that the rule that money doesn't grow on trees also applies to them. We don't want to end up like Greece.

From U.S. News & World Report:

Give and Take

“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that, my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.”

--Dr. Adrian Rogers

U.S. to Companies: We Hate You

Obama said today in a press conference that he's going to crack down on offshore tax loopholes and other forms of tax havens. Companies do this to avoid the taxation imposed on them by the government and are looking for the "path of least resistance": the location where tax code can be most beneficial to them. Why would they act in such shady ways?

Well, what would you do in their situation? Here's what companies face: a corporate tax rate of 39.3 percent. Our country says fine. You can work here, provide jobs here, expand here, pay your employees well, and reinvest...but only after we take OVER A THIRD of your money! What would you do? Take a look at the state income taxes, which vary from state to state. Say you're just over the border living in Minnesota. You would be looking at a state income tax rate of 5.35%, 7.05%, or 7.85%, depending on your income. A couple miles away in South Dakota, the state income tax is 0%. People are moving from around the country (voting with their feet) in droves to places like South Dakota to avoid high rates of taxation.

That's exactly what these companies are doing!

So, President Obama, why don't we look at the root cause as to why companies (jobs) are literally running away from the United States? Rather than trying to stop the hemorrhaging of companies out of the U.S. through new overseas tax rules, why not make incentive for companies to stay here?

Here's a "radical" idea. Some CHANGE, if you will.

Why not drop the U.S. corporate tax rate to ZERO percent? We will be the nation that foreign companies will flock to, thirsty for a friendly business environment. Millions of American jobs would be created, and ultimately more money would be brought into the coffers of the U.S. Treasury. Industry will return to America. Sure labor may be cheaper overseas, but when companies aren't taxed at all here, that cost-saving measure might not really be a factor anymore!

One of the more common responses I'll get is that companies are big, rich, evil, and have a better ability to pay taxes than the little guy (me and you).

In response to that, I say that corporate taxes do nothing but HURT the little guy. Taking 40 percent of companies' profits inhibits a company's ability to grant pay raises and benefits to their workers and reduces how much the company can reinvest and build another wing on the factory (more jobs for little guys). Companies may compensate by raising their prices (so all us little guys have to pay more for all products). High company taxation also decreases the amount they are able to dish out in the form of dividends to their shareholders, which consist largely of 401k retirement accounts and similar things...accounts owned by the little guys like us that we rely on to create a sufficient retirement account for ourselves.

I would also mention that corporate taxes are double-taxation anyway...once companies are taxed, the remaining money dished out to all the workers and executives is again subject to personal income tax. And sales taxes. Excise taxes. Property taxes. Etc. Etc.

You want change? This is change that President Obama will never see through, yet would help you and me and all of America much more than any new overseas tax rules ever could.

Objective Media

Take a look at this video of a reporter "reporting" the tax day tea parties across the nation. She goes in to interview this guy with an incredibly vindictive attitude and literally fights with the protester, rather than asking questions and finding out what his point of view is.



Now watch another video, where we see how people really feel. This is the same reporter talking to people after that same interview, where it was insinuated that the tea party idea was only promoted by Fox. Let me just say that people wouldn't go if they didn't agree with it anyway. A network can't force people to go. I went to one and never actually watched any coverage of it on Fox or elsewhere. I heard about it through online social networking and email.



I think the worst part is when the reporter asked the guy, who was talking about freedom "what that has to do with taxation." Seriously? Our revolutionary cries for freedom from the British king had everything to do with just that: freedom. Specifically, economic freedom to do as we please with the fruits of our labor. Our EARNED money.

Are You Serious Mamn?

Here's more Sioux Falls Tea Party coverage from KSFY.



By the way, Sandy Jerstad? You're a complete nutjob. Saying that we need to quadruple the national debt to get the country on stable economic ground in order to pay off the national debt accumulated over the past 8 years is like saying we need to eat a trillion Big Macs before we can go on a diet to lose 14 pounds. Why don't you go yell at a store clerk and tell them how important you are. Oh wait, you already did that...

She represents District 12, for all you South Dakota voters that live in that district! ;-)

Tea Time!

I was totally at the Sioux Falls tea party today, which was a ton of fun!

April 15th: The Democrats' Most Favorite Day of the Year

Today's tax day is unlike any in previous years past. This year, a citizen uprising over our current government's spending practices is happening all over the country, coming in the form of American Revolution-era Tea Parties.

Some out there are simply dismissing the nation-wide protest, saying that this is a far-right-wing political stunt motivated by Republican politicians trying to stir up trouble. No.... In fact, according to that Wall Street Journal article I linked to, the Chicago Tea Party declined a speaking opportunity offered by Republican National Committee Chairman Michael Steele. The tea parties are simply individual citizens organized through social networking that are fed up with our government.

In my mind, there is no reason this should be partisan. Democrats and Republicans alike criticized President Bush for his big government spending practices, and now President Obama is hosting Deficit Spending: Extreme Makeover.

The bottom line is this: deficit spending removes government accountability to the people. If a government is allowed to spend whatever it wants without paying for it with taxes, the people no longer have to supply the financial resources needed to fund government growth. When government no longer requires money from us to pay for its actions, less people care what the government does because it does not affect them financially. Thus, government is free to do whatever it pleases without limits and nobody cares.

And when that happens, as it is right now, the "limited government" that our founders believed so strongly in will be gone. That is why we're protesting. And you should be too.

Income Tax Unconstitutional?

Here's a thought that just popped into my head the other day, and I don't have an answer one way or another, so I was just wondering all of your thoughts on it.

Is income tax unconstitutional? Full disclosure, many of you know that I would personally favor a national sales tax, or FairTax, as opposed to income tax (I'll probably make a post about that at some other time), but I'm not really trying to push for one or the other in this post. I'm just looking at the idea of income tax in a new light, because taxation is taxation in one form or another, and whatever way we accomplish it, we can still have the argument over how much we should be taxed, so I don't really see this post as a partisan post.

First off, here is the 16th Amendment to the U.S. Constitution that explicitly allows for income tax collection:

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Pretty explicit, right?

What I'm thinking is that the 16th Amendment goes against the 14th Amendment (amended prior to the 16h), specifically in the first line. (The rest of the Amendment deals with abolishment of slavery, which gives us keen insight to the intent of the 14th Amendment). Here's the first part of the 14th Amendment, which deals with equal protection:

"All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

I specifically put "equal protection of the laws" in bold, because doesn't income tax go against that? It is specifically discriminates against citizens based on their accumulation of wealth. As in the context of the time, former slaves were being singled out simply because of their skin color and not given the same rights to life, liberty, and property. Fast forward to today, wealthier individuals are being singled out to "deprive" them of economic liberty and property (money).

Would not a flat tax or a flat sales tax grant more equal protection under the law, in that every citizen is subject to the same taxation rate under the law without discrimination?

For the poor, they (we) naturally pay less tax anyway, because either under a flat tax they make less income and are therefore taxed less, and with a national sales tax they buy less and buy cheaper items. Those are individual experiences outside the law, which under a flat/fair tax applies to all equally, and individuals are free to move up and down without any discriminatory change.

It is not the law's job to discriminate on any basis, but to afford equal protection to all individuals.

Here's another thought. If my argument were to be valid, that means that two parts of the U.S. Constitution conflict with one another (the 16th and 14th Amendments). What does that mean? Say, for simplification purposes, we pass an amendment that states, for example, "be it here deemed, capital punishment shall hereby be a legal and just means of disciplinary action in the United States."

Say 20 years later, we pass another law stating the opposite: "be it here deemed, capital punishment hereafter is found by the Congress and President of the United States to be an illegal and harsh means of disciplinary action in the United States."

This is just a side thought, but does the latter automatically invalidate the former, is there a repealing process? Any law students or more knowledgable people may be able to help me with this.

I would appreciate any thoughts on these ideas I was kicking around!