Voting with Your Feet

Many years ago, some pundit was saying great things about Cuba, espousing the healthcare and high literacy rate.  The opposing pundit replied that people vote with their feet (i.e., they leave or enter a country) and Cuba had net negative migration.  People were choosing to leave.  Though I cannot recall who said it, this idea has stuck with me ever since.  Often, when someone starts bashing America as a bad country, I ask why everyone wants to migrate here rather than all those superior countries?  A change in topic is the typical result.

With that in mind, there was a link on Instapundit to a page showing tax burdens by state.  The most burdensome states are New York, Connecticut, Hawaii, Vermont, and California.  The states with the lowest tax burden were Alaska, Wyoming, Tennessee, South Dakota, and Michigan.  Given that, where are people moving?  Let's take a look at U-Haul.

The highest inflow is to Tennessee, Texas, Florida, Ohio, and Arizona.  The highest outflow comes from Maryland, Massachusetts, New Jersey, Illinois, and California.  There are a couple of matches between the U-Haul chart and the tax burdens, but not much.  Let's see what northAmerican Moving Services moving shows.  Alaska and Hawaii are listed as undefined so there are only 48 states to consider.

Tennessee and Florida are again ranked in the top five for destinations while New Jersey, Illinois, and California are listed for departures.  The inflow states tend to have lower taxes than outflow states.  However, Texas and Michigan have about the same tax burden, just levied in different ways (Texas has no state income tax while Michigan does).  The departure states are generally colder than the destination states, but California, Ohio, and Idaho throw a wrench in that theory.

Let's go back and get the tax burden ratings for the states that appear in the two charts.  What does that look like?

Again, it is pretty clear that the inflow states have the lower tax burden but Michigan is an outflow state with a low tax burden.  Odd.  Idaho is an inflow state with an above median tax burden.  What gives?  Let's combine the three charts and sort:

I pasted them all together and then sorted by the total of Tax Burden + northAmerican Ranking + U-Haul Ranking.  I should have gone back to the various charts and filled in the missing numbers, but I've already spent enough time on this.  After a little more investigation, there was a pattern.

There is a clear migration away from Democrat-controlled states toward Republican-controlled states.  People are voting with their feet.

Supreme Legislature Writes Tax Law

In South Dakota v. Wayfair, the Supreme Court - in its infinite wisdom - decided that ecommerce had reached such a level that it was unfair for brick and mortar stores to pay sales taxes while internet companies did not.  Though I agree that it is unfair, that is a legislative matter.  The court doesn't get to change policy because the economy has changed.  This new ruling is going to create far more trouble than it solves.  If anything, it might nix a lot of ecommerce as companies refuse to do business with a vast number of localities with differing tax structures.

It is one thing for Texas to require Texas-based companies to collect sales taxes for all sales within the state, but now Texas can require Alaska-based companies to collect Texas sales taxes for internet purchases and forward it to Austin.  Alaskans will be conscripted as tax collectors for a state where they are not represented.  Hmm, taxation without representation?

 

The way to do this would be to have citizens required to report out of state purchases and pay the tax.  Of course, there is no way the citizens would approve such a law.  It is easier for state governments to strong-arm thousands of businesses than millions of citizens, especially since many of those citizens have a negative view of business.

 

Such consequential changes in tax law should not be made by a 5 - 4 majority of lawyers.  The appropriate answer should have been to refer South Dakota to Congress to change the laws.

Generosity with Other People's Money

I found it very interesting how many people are so eager to have the government redistribute other people's money.  Most of those who are wild about Bernie Sanders KNOW they aren't going to be supplying the money for all the goodies he is promising; they don't have any money.

Image a group of 100 people.  Bob, who is a chronic smoker, has lung cancer.  Just about everyone feels that is unfortunate but fifty believe someone should do something to help.  Rather than fork out money from their pockets, they call a vote.  The fifty plus Bob vote to pay for Bob's cancer treatment while the other 49 vote against.  Majority rules so Bob's cancer treatment is paid.  Here's my question: If the 50 were so concerned about Bob's health, why didn't they raise the money among themselves?  Why force the other 49?  Well, because they had to pay a lot less that way.  They soothed their consciences by donating the money of others.

 

We now live in a country where nearly 50% of the population pays no income tax.  Sure, they pay Social Security and Medicare via payroll taxes but when looking at the cost of other government services (military, welfare, food stamps, foreign aid, bank bailouts, etc.), it has no impact on their taxation.  That is a recipe for the untaxed to vote for ever increasing benefits that will further burden those who do pay taxes.  It is easy to be generous with other people's money.  I'd like to see how these folks would vote if they had to foot the bill.

Progressive Income Tax Explained

This video is very funny.  Obviously, it simplifies a lot but it makes a very good point.  I side with Harry throughout.  Dick's flat tax would be nice but no income tax would be better.  Imagine the shrinkage of the government if it couldn't play rich against poor against middle class with the progressive tax scheme?  Oh, who am I kidding?  The government is spending trillions of dollars it doesn't have so a sudden loss of tax revenue would hardly impact our spendthrift government.

The idea of From each according to his ability and to each according to his needs was popularized by Karl Marx, Father of Communism.  That describes the progressive income tax.  Is it any surprise that Hillary Clinton calls herself a Progressive?  Bernie is much more honest, declaring himself to be a socialist who honeymooned in the Soviet Union (that's the Union of Soviet Socialist Republics).  Bernie doesn't think the tax rate described in the video goes far enough.  No, Harry should pay much more.  And so should Dick!

Charity must be Voluntary

I had a conversation with one of the members of the legislature the other day. I said, ‘I respect the fact that you believe in small government. I do, too. I also know that you’re a person of faith.

‘Now, when you die and get to the meeting with St. Peter, he’s probably not going to ask you much about what you did about keeping government small. But he is going to ask you what you did for the poor. You better have a good answer.’

John Kasich, Ohio Governor and Presidential Candidate

 

Let's ignore the separation of church and state for the moment and just ponder this future conversation with St. Peter.

 

St. Peter: What did you do for the poor, John?

Kasich: I arranged for tax dollars to pay for their healthcare.

St. Peter: You took monies coerced from the citizens of your state and directed them to the poor to benefit you in the afterlife?

Kasich: What?  Coerced?

St. Peter: I presume the citizens were required to pay the tax or suffer some penalty of law?

Kasich: Well, yeah.  But it was for charity.

St. Peter: You realize it isn't charity unless it's voluntary?

Kasich: Funding through voluntary contributions isn't the way government does things.

St. Peter: Taking money from the person who earned it and giving it to the poor is not a virtue.  Good intentions do not change the fact that it was government-sanctioned theft.  How much of your money did you give to the poor?

 

Imagine if, instead of having government fund this directly, Governor Kasich funneled the money to a church-run charity that did exactly the same thing.  By his own admission, he is funding healthcare for the poor because he wants to have a good answer for St. Peter.  This is about his religious convictions, not secular governance.  Though it would have the same end by different means, there would be a firestorm of protest.  If the Catholic Church is all in favor of the government coercing the taxpayer to fund the poor - a task that was once handled by churches, shouldn't it be automatically opposed as a mix of church and state?  Hasn't government funding allowed churches to direct their money to other issues?  By taking the expense of supporting the poor from churches, isn't that a contribution to churches?

 

Government cannot engage in charity.  Everything government does is founded on its monopoly on the use of force.  Only government can 'legally' initiate force to make people comply.  Non-governmental entities that initiate force are called criminals.

AAAAAAAAAAAAAAAHHHH!!!!

Yes, it's official.  Well, maybe I'm a couple of hours early but there is no deal to prevent the fiscal cliff and, as I predicted, the president wanted to go off the cliff anyway.  Rather than extend the BUSH tax cuts, tomorrow he can propose the OBAMA tax cuts.  And amazingly, he is going to cut taxes for people earning less than $250,000, just like he wanted.

These people were elected to resolve problems like this.  The cliff was manufactured in Washington a year and a half ago.  This is a government-created problem.  Capitalism didn't do this.  The private market didn't do this.  The 'rich' didn't bring us to this cliff.  No, it was government.  And people wonder why I have so little faith in government.

 

What else is coming?  I have heard that Obama will now demand tax increases - above and beyond what the cliff gives him - if he is to provide any cuts in spending.  The spending cuts will be illusory but the taxes will be quite real.  On whom do you suppose those taxes will be levied?  I'm guessing the 'rich' still aren't paying their fair share.  He's going to 'ask' them to pay 'a little more.'  Ah, I love when government 'asks' citizens to pay taxes.

Random Thoughts

Michelle's Recollections

 

You see, even though back then Barack was a Senator and a presidential candidate…to me, he was still the guy who’d picked me up for our dates in a car that was so rusted out, I could actually see the pavement going by through a hole in the passenger side door…he was the guy whose proudest possession was a coffee table he’d found in a dumpster, and whose only pair of decent shoes was half a size too small.

First Lady Michelle Obama

That is what Ms. Obama said in her speech last night but I find myself disbelieving.  Michelle and Barack met in 1989, 6 years after he had graduated Columbia.  He was attending Harvard at the time (1988 to 1991) where he got his J.D.  Michelle had graduated Princeton and then got her JD at Harvard in 1988 but she was interested in dating a man who couldn't get shoes that fit?  On another point, they met while he was working at a law firm in Chicago; what did he wear there?  My grandfather detested lawyers but he'd probably agree they dressed well.  If I knew a guy who graduated from an Ivy League school and was proud of furniture acquired from a dumpster, I'd tell him to stop screwing up his life.  Maybe Michelle did exactly that.

 

Tax Now or Tax Later

 

I listen to EconTalk, a podcast by Russ Roberts of George Mason University.  He recently had a discussion that explained how government can pay for things by taxing now or by borrowing which amounts to taxing later.  Our skyrocketing debt (broke $16 trillion) indicates which path has been chosen.  The people who are enjoying the current benefits are deferring the costs to future taxpayers.  Sometimes, that is appropriate.  For instance, borrowing money to build a school that those future taxpayers will attend could be argued to be reasonable.  Borrowing money to pay for healthcare, retirement, food stamps, and other ephemeral social programs is not reasonable.  Politicians love funding through borrowing because it allows them to have the benefit of spending without the penalty of taxes.  Unfortunately, the bill eventually comes due for those future taxpayers as Greece is discovering.

 

The Race Card

 

Back when Obama was elected, I celebrated one thing: Racism in America had finally been purged.  Sadly, it turns out that I was completely wrong.  Now everything is racism.  It is racist to point out that the debt has soared under Obama.  It is racist to mention Chicago in relation to Obama's campaign.  It is racist to call Obama the Food Stamp President though Food Stamp use has gone from 30 million to 46 million people.  Chris Matthews is foaming at the mouth with constant allegations of racism.  I have had a family member imply I was racist for opposing Obama.  The point of the racism charge is to silence the opposition but with its frequent use, it is becoming a punch line.

 

Voter ID

 

Democrats are opposed to Voter ID laws, claiming that they will disenfranchise minorities and the elderly.  In other news, the Democratic Convention in Charlotte requires photo ID to enter.

 

Booing God

 

The Democratic Platform had purged any mention of God.  This did not play well so the platform was rewritten to include God.  There was a floor vote that required a two-thirds majority to put God back in the platform.  Watching the vote, it is obvious that that bar was not met.  Nonetheless, the motion was declared successful and there was much booing from half the delegates.

 

Can't have an Empty Chair

 

Obama's planned acceptance speech at a 70,000 seat stadium was nixed in favor of the 20,000 seat auditorium of the convention.  It is said that potential inclement weather is to blame.  Republicans are saying that Obama can no longer fill a 70,000 seat stadium and empty seats would recall Clint Eastwood's conversation with an empty chair.  I am skeptical of the weather claim.  Obama should pray for a hard rain tomorrow night to bolster the claim.  A sunny day will look bad.

Tax the Rich?

Just read an article that explains how the rich need government more than the rest of us.  You can find it here:

http://blog.buzzflash.com/node/13605

I have some issues with this.  Of the five 'benefits' that government provides, only one of them is particularly costly: Security in the form of the military.  The military is the third largest item on the budget each year, trailing Medicare and Social Security.  Nonetheless, let's go through them one by one.

1. Security: Back in the 18th Century, rich people were attacked by mobs so they get more benefit from police, military, and emergency services.  Those of us who aren't rich don't benefit from these things.  Oh, we don't?  The argument presented is nonsense and drifts into unsupported claims of police attacking the poor to make the wealthy feel safe.

2. Laws and Deregulations: Okay, just the title makes my head hurt.  Make up your mind on this one.  Deregulation is the removal of laws.  So, the rich benefit when laws are passed and when they are repealed.  Wow!  Sheer genius!  Government is a protection racket.  Legislatures pass laws that prod business into supporting the legislators who in turn write loopholes in those very laws.  The problem is not with the rich but with the corrupt legislators.  As an example, back in the 90s, Microsoft spent nothing on lobbying the central government.  Then, suddenly, Microsoft was sued for giving away a product free with their operating system.  Having learned their lesson, Microsoft now spends millions on lobbying (i.e. bribes to Congressmen).

3. Research and Infrastructure: The text presumes everyone is getting the use of airports, seaports, the energy grid, and so forth for free.  The more you use, the more you pay.  As for public schools, the rich frequently don't use them (their kids often go to private school) but are still forced to pay for the public schools.  As for the research stuff, the government should get out of R and D and let the private sector do it.  As for infrastructure, Indiana privatized a tollroad and balanced its budget.  Rather than pay for roads indirectly through taxes, we could pay for them directly (and less expensively) with tolls.

4. Subsidies: 'Tax expenditures' is one of the silliest notions ever presented.  The idea is that if the government doesn't take your money, that's an expenditure on its part.  In other words, your money really belongs to the government and it is only through the generosity of the government that you keep as much as you do.  Your take-home pay is a 'tax expenditure' of the government.  Ha!  As for the actual checks sent to corporations, let's just stop that and call it even.  The idea that we need to tax the rich so we can cut them a check is circular reasoning.  Stop the checks and stop complaining.

5. Disaster Costs: On the one hand, we need to more heavily tax corporations (like Exxon) to pay for oil spills and on the other hand we need to tax corporations (the financial industry) to pay for bail outs.  I have a simple solution for the later: no bailouts.  Corporations need to fail if there is going to be any responsibility.  Failure teaches discipline while bailouts teach irresponsibility.  Let them fail so they go out of business and trouble us no further.  As for taxing corporations for cleanup, that is just a different route to taxing citizens.  Corporations do not pay taxes, they collect them for the government.  Taxing a corporation is just a variation of the sales tax.  No one thinks the 7Eleven is paying the sales tax, it just collects it for the government.  Better to penalize the corporation that spills, perhaps driving it out of business; future corporations will invest more in preventing such disasters if only to remain in business.

Common Sense: Government wants as much money as it can get from the populace.  It will tell you the Earth is warming and we need to tax.  It will tell you that the infrastructure is failing and we need to tax.  It will tell you that people don't have health insurance and we need to tax.  The government will always have a new cause that requires funds.  Moreover, government understands divide and conquer.  Government says it will only tax the top 1%.  Or maybe the top 5%.  Or the top 10%.  It is counting on the rest of us to gladly take money from Bill Gates or Warren Buffet that can go into our pocket.

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.

Alexander Tytler, 1787

Venture Capitalist says "Tax the Rich"

Nick Hanauer, a venture capitalist from Seattle, recently spoke at a Technology, Entertainment & Design (TED) forum but his talk was not initially made available by TED.  TED explained that his Tax the Rich speech was too political and came down clearly in one party's camp.  TED seeks to be non-partisan.  However, the speech has now been posted.  Mr. Hanauer makes several points:

1. Jobs are created when there is demand for products.  Demand comes from the middle class, not from a wealthy handful.  Therefore, jobs are created by the middle class having the funds to spend.

2. The tax cuts that the wealthy have enjoyed over the past three decades has improved their standing but not that of the middle class.

3. Taxing the rich to make investments that expand and enrich the middle class is a no-brainer.

He definitely makes some interesting points but he fails to follow through with his taxing plan.  Why is taxing the rich the solution to our problem?  What investments (i.e. government spending) does he propose with these tax dollars?  How does that work?  He never explains.  And his audience didn't seem to notice his failure.  One could infer that he wanted to transfer that money to the middle class to spur consumption.  Sounds like the old 'Spread the wealth around' comment from Obama.

As his success attests, Mr. Hanauer is a good businessman, but he is no economist.  He thought the idea of 'job creators' was upside down, thus his first point that consumers create jobs.  But consumers can't buy a product or service that isn't first offered.  Steve Jobs had to make the iPhone before the consumers could buy it.  Ford had to make the Model T before there could be any demand for it.  These are the great successes for job creators.  By the same token, few people bought John DeLorean's car though he certainly created jobs before he discovered the complete lack of demand for his stainless steel sports car.  So, the rich really do create jobs but it is the middle class who determine whether they are temporary or permanent.  As for demand, he seems to think that the rich who might have 1000 times the funds as a middle class person don't consume 1000 times as much.  See, it would be better if that money were in the hands of consumers.  This from a VENTURE CAPITALIST.  Is he hiding his money under a mattress or did he invest it in a variety of companies that became successful?

One can argue about the appropriate level of taxation on high earners but the notion of government 'investing' in the middle class is nonsense.  Government spends.  It will spend every dime it collects and then borrow a nickel to invest.  The government needs to stop investing before we become Greece.