Friday, June 23, 2017
For the sake of this argument, let's divide the population into three groups. The first group consists of children, dependents, retirees, and those who manage to live off government handouts like disability, food stamps, etc. This gro...
June 23, 2017
For the sake of this argument, let's divide the population into three groups. The first group consists of children, dependents, retirees, and those who manage to live off government handouts like disability, food stamps, etc. This group does not earn enough income to contribute to income taxes.
The second group consists of people with regular employment, either with employers or in their own businesses. They earn enough income to pay taxes, but they generally compete for interchangeable jobs in a transparent, free job market. As a result, individually, they do not have a lot of influence over the level of income their jobs generate. Also, due to their large number, if they manage to increase income through collective bargaining, any increases are immediately absorbed by inflation in the prices of the goods and services they purchase from each other.
The third group consists of people with a specialized skill or education. These individuals can more or less set their own income: when you ask a Harrison Ford or a Hillary Clinton what you need to pay her to do some work for you, she is not easily replaced, and she does not need to know what the prevailing wage is for the job.
This is where the dirty secret comes in: people in the third group typically set an expectation for themselves of how much money they want to take home. Then they add taxes to that and set the result as the price of their services. They do not really "pay" any taxes from an "income" that is limited in some way. Their taxes are paid by their customers, and they merely "pass them along" to government, exactly as a retailer does with sales taxes.
This is true also of the people in the second group: their taxes are included in the level of their income and are paid by their employers or their customers. But the people in the second group do not have the flexibility to decide how much they want to take home. If they do that, they run a high risk of losing the job to somebody else who is willing to work for the income offered.
It is useless to try to get the "rich to pay their fair share" through progressive taxes. If we doubled the highest federal income tax bracket from 39.6% to 79%, Mr. Ford would merely charge $34.9 million per movie instead of $25 million. He would still take home the same $15 million, but now middle-class theatergoers, DVD buyers, and movie streamers would be charged an additional $9.9 million to see him in action. With movie stars and celebrity politicians, at least we have a choice: to buy their services or not. But what of the surgeon you need to save your life or the accountant you need to make sure you file your taxes correctly so you don't go to jail?
The bottom line is that all income taxes are paid (deducted from an inflexible income) only by the people in the second group, or the "middle class." Any tax increase is ultimately paid by them only, in the hard day-to-day facts of higher taxes and higher prices. Government handouts eventually rise with inflation. The third group can charge what it wants to.
But what of the other taxes, you say? Sales taxes, property taxes, capital gains taxes, estate taxes? What if we limit their tax deductions? The third group can easily factor those things into their prices as well: if Mr. Ford needs a new helicopter, that cost is what he'll charge for his next movie. If there are sales taxes, they are easily included. A new home for Mrs. Clinton with new real estate taxes? Included in the fee for the next speech about the need for higher taxes.
So isn't there anything we can do about this? Yes, we can implement schemes like the new proposed "single-payer health care system" (Senate Bill 562) in California. If we make it illegal for all those third-group professionals to set their own prices, then we can surely get them to work for less, can't we? History shows us what we would have to do to maintain such a system: Communist countries, where everything is essentially single-payer, have to imprison, torture, and murder on average 20% of their population to get the others to cooperate for the "greater good of the workers."
No, the only things proven to contain third-group prices are increased competition and increased free-market transparency. Stock brokers used to belong to the third group. Now their income is fiercely competitive.
Here is an idea: each year, we take the amount that our politicians spend, add any budget overruns from prior years, and divide it by the value of everything that has changed ownership that year. Then we get the banks to deduct the tax for each dollar that changes hands equally. Now everybody (and every corporation) pays "his equal share" of the policies, defense, and handouts we vote for. The three groups still operate the same way, but at least the middle class no longer penalizes itself for its class envy.
Posted by The Mexican Invasion & Occupation at 8:47 AM
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Let's get back to that rather depressing subject of violence south of the border. We learned today that May was a horrible month, indeed: Mexico registered a record number of murders last month, officials said, underlining the country&...
June 23, 2017
A very bad month for Mexico
Let's get back to that rather depressing subject of violence south of the border. We learned today that May was a horrible month, indeed:
Mexico registered a record number of murders last month, officials said, underlining the country's struggles to deal with the horrific violence surrounding the multi-billion-dollar narcotics trade.
There were 2,186 homicides in May, said a report from the National Public Safety System – the highest figure since the country began keeping track 20 years ago.
The deadliest state was Guerrero, in the south, a hotspot in Mexico's war on drugs where 216 people were killed.
In the western state of Sinaloa – where rival factions have been battling for control of the Sinaloa drug cartel since its kingpin, Joaquin "El Chapo" Guzman, was extradited to the United States in January – 154 people were killed, the highest number in six years.
Since Mexico first sent the military to fight drug trafficking in 2006, a wave of bloodshed has left more than 200,000 people dead or missing, as rival cartels wage war on each other and the army.
Depressing, indeed. By the way, the resort of Acapulco is in the aforementioned state of Guerrero.
It's interesting to see how Mexico has dropped from the news radar in recent weeks. It has been replaced by North Korea, Syria, Russia, and our own fanatical and ridiculous obsession with the Trump-Russia collusion. Yet I submit that Mexico is undergoing a critical time, and we need to sit down and find ways of helping each other.
What can we do? There aren't many options, but we can start by expanding The Merida Initiative (aka Plan Mexico) that President Bush approved in 2007. It provided the Mexican armed forces with up-to-date technology to fight the cartels. The bad news is that the cartels have the best of weapons. The good news is that the Mexican Army is willing to fight them, as they've been doing since late 2006.
We must also take Central America into consideration. El Salvador is a killing field at the moment, and people are leaving to make it to the U.S.
We should discuss how our drug consumption is killing our young people and funding these cartels.
It's complicated and very depressing, what's going on south of the border. I was fortunate to live and work in Mexico years ago. Mexico had problems then, but nothing like what we see every day on the front pages of newspapers. The daily killings are tearing up the country.
Posted by The Mexican Invasion & Occupation at 8:02 AM