FT97: “The poor may hate the rich yet that doesn’t stop them from trying to be rich.” -Old Pithy

Posted by PITHOCRATES - December 23rd, 2011

Fundamental Truth

Politicians use Class Warfare to Blame Others for their Economic Destruction

Class warfare is on the rise.  Which is typical during a presidential election season.  Especially when a president’s policies haven’t exactly improved the economy.  When your policies give Jimmy Carter’s misery index a run for its money you have to find something else to run on beside your record.  So you blame the rich.  Which tends to go over well for those who aren’t rich.  Because while they’re cutting back to stretch what little they have to last in the face of record unemployment, the rich aren’t.  It doesn’t help the un-rich.  But somehow having someone to hate brings them some comfort.

So they listen to the class warfare.  And like what they hear.  The rich aren’t paying their fair share of taxes.  Rich people paying millions in tax dollars isn’t enough.  They should pay more.  But they try not to.  Because they’re selfish.  Evil.  They hate poor people.  Hungry people.  Children.  And they really hate poor, hungry children.  For it is the rich who always oppose paying more taxes to help these people.  The poor never do.  They are always in favor of taxing the rich more to help other people.  To help themselves.  Because the poor aren’t selfish.  Or greedy.  Like the rich.  The rich have more than enough.  Everyone knows this.  So they should pay more in taxes.  After all, fair is fair.

At least, this is the thinking of class warfare.  It’s sort of like magic.  Magicians use misdirection to take your eyes away from what they’re really doing.  A little sleight of hand.  Doing something with one hand while they have you looking at the other.  You’re amazed.  And feel entertained for being fooled.  You like it.  And asked to be fooled again.  Politicians have picked up on this human desire.  And use it to their advantage.  To get us looking at something completely different.  And not the economic destruction they’re causing.  And then, like magic, we blame the rich for all the ills in our lives.

Poor People know one thing for Sure, it is Better to be Rich

So the rich are greedy, evil and selfish.  The scum of the earth.  We have nothing good to say about them.  Because money is the root of all evil.  And anyone who has money must be evil.  A classic American novel set during the Great Depression, The Grapes of Wrath, epitomized this when the mother wanted to treat her men to some sugar in their coffee but couldn’t afford it.  She asked for just a little free sugar.  The clerk said she couldn’t.  Because she wasn’t the owner.  And would get in trouble if she did.  But she gave her a little sugar anyway.  And slipped some of her own money into the till to pay for it.  A rich person wouldn’t do this.  Only a poor person would help another poor person.  Because the poor are good.  And the rich aren’t.

This is why class warfare works.  But there is a fatal flaw in it.  The poor people may say they hate the rich and want them punished, but it’s the poor people who are predominantly buying lotto tickets.  Why?  To become rich.

Rich people don’t buy lotto tickets.  Poor people do.  In hopes of a Cinderella rags to riches story.  Because poor people know one thing for sure.  It is better to be rich.  And they will spend their meager wages on lotto tickets for that gazillion in one chance of becoming rich.

More Government Benefits paid for by the Rich is the Ultimate Goal of Tax and Spend Class Warfare

Of course, a person’s definition of ‘rich’ differs from another.  And for the most part it’s relative.  To their own wealth.  Anyone who has more than them is rich.  And because someone always has more than they have they are not rich.  Simple.  So class warfare works.  Despite its fatal flaw.

But class warfare isn’t about fairness.  It’s just misdirection.  A little political sleight of hand.  To help a politician escape blame for the economic damage they’ve caused.  By tapping into a base human trait.  Greed.  That insatiable desire to get-rich-quick.  By spending their meager wages for that gazillion in one chance.

Or for more government benefits paid for by the rich.  The ultimate goal of tax and spend class warfare.  Something the poor are all for.  Because fair is fair.  Until, that is, they do win the lotto.  And these people see what it’s like to have more than others have.  As people crawl out of the woodwork to ask for some of their new found wealth.  Because they have more than enough.  And should share.  Because fair is fair.

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When Democrat Policies Fail and they Fall in the Polls they Scramble to Endorse Reaganomics

Posted by PITHOCRATES - October 5th, 2011

Democrats have Blamed every ill known to Mankind on Reaganomics

The Left hates Ronald Reagan.  Proclaimed the era of Reagan was over.  No more were these Reagan Republicans going to screw over the poor so the rich can live a better life.  Yes, they hated this man with a passion.  And everything he stood for.  This supply-sider of the Austrian School.  He and is unfunny Laffer Curve.  This cold-hearted tax cutter.  But now they love him.  Why?  Because he supported taxing the rich.

I’ll pause a moment for those of you who have fallen out of your chairs.  Ready?  Good.

You know Congressional Democrats are grasping at straws to promote their policies when they claim their archenemy would have supported them, too.  You know why they’re trying, though, don’t you?  If you listened to the protesters on Wall Street you should know.  With their control of public school teachers and college professors (both dependent on taxpayer money for generous pay and benefit packages), they can revise history.  And keep kids ignorant.  Hopefully keeping them oblivious of things they don’t want them to know.  Such as the true legacy of Ronald Reagan (see MILLER: Ripping off the Gipper by Emily Miller posted 10/4/2011 on The Washington Times).

Liberals are trying to twist Ronald Reagan’s words to muster support for raising taxes. House Minority Leader Nancy Pelosi’s press office sent a memo on Monday to congressional Republicans claiming they’d found evidence proving that President Reagan was the real inspiration for President Obama’s tax-the-rich “Buffett Rule.” The California Democrat posed the question: “What would Reagan do?”

The correct answer is: He would cut taxes. Mrs. Pelosi’s memo sends people over to the liberal Think Progress website, where a video montage interweaves clips of Mr. Obama and Reagan saying apparently similar things about tax rates. “We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share,” said the Gipper.

You’re supposed to think that’s just what Mr. Obama is doing, but the liberals edited out the context of the 40th president’s remarks. In a June 1985 speech at an Atlanta high school, he called for a total overhaul of the tax system. He wanted loopholes closed to lower the tax rates for everyone, for a net reduction in the tax burden. Congressional Republicans point out that’s precisely the opposite of what the Democrats are now trying to do.

You see, the Democrats can’t rely on telling the truth to pass their policies.  Because their policies only benefit those in government.  And those who live like parasites on the wealth creators.  Such as those protestors on Wall Street.  Who want the wealth of the wealth creators.  But want no part of capitalism which created that wealth.  And are too ignorant to understand that you can’t have one without the other.

Thank you public school teachers and college professors.

So they must lie.  Revise history.  To try and fool people into believing that their policies are just like Ronald Reagan’s.  And apparently hoping people don’t remember that Democrats have blamed every ill known to mankind on these very same policies.  ReaganomicsTrickledown economics.  The scourge of mankind.  But the majority of Americans apparently love the big lug so they’ll swallow back their bile and say, hey, we love him, too.  And hope that the grimace on their face doesn’t look as bad or as painful as it feels.

Fannie Mae and Freddie Mac created America’s Financial Mess, not Wall Street

So where did these Wall Street protests come from?  Where did the primary impetus come from?  Apparently Canada.  Thanks, Canada.  As if the corrupting influence of Terrance and Phillip wasn’t enough already.  So I guess we have to Blame Canada (Warning:  Blame Canada contains adult content) for this, too (see Occupy Toronto leaderless, unfocused but hopeful by Dana Flavelle posted 10/4/2011 on the Toronto Star).

The Wall Street protests were inspired by Canadian anti-consumer magazine Adbusters.

Editor in chief and co-founder Kalle Lasn said he’s been calling for this kind of protest movement for 20 years.

It’s finally happening because people are angry with the financial fraudsters on Wall Street who created America’s economic mess and largely went unpunished, he said in a telephone interview from Vancouver.

But that isn’t who created America’s financial mess.  It was government.  Specifically the government sponsored enterprises (GSE) Fannie Mae and Freddie Mac.  If it wasn’t for them buying and/or guaranteeing risky subprime mortgages there would have been no subprime mortgage crisis.

That was government policy.  Putting as many people into houses as possible.  Even if they couldn’t afford them.  That wasn’t Wall Street.  Wall Street was merely an accessory after the fact.  Aiding and abetting Fannie Mae and Freddie Mac.  By selling those toxic subprime mortgages in collateralized debt obligations (CDOs).  Promoting them as high yield yet low risk.  Because they were backed by mortgages, historically the safest loans in all of America.  So investors bought these.  Not knowing how risky they were.  But you know who knew how risky they were?  The GSEs Fanny and Freddie.  Because they bought them.  And remember what the ‘G’ stands for in GSE.  Government.

If you removed government from this equation mortgage bankers would not have approved these risky subprime mortgages.  Because that risk would have been on their books.  But when government said ‘don’t worry  we’ll take that risk off of your books’ what did they have to lose in approving risky subprime mortgages?  Less harassment from the government for not approving mortgages for the poor and minorities who didn’t qualify?  Yeah, like they were going to miss that harassment.

If these protestors want to protest those responsible they should protest government.  Not Wall Street.

Damn Canadians.  If it’s not making our kids fart and curse they’re getting them to protest the wrong people.  (Editor’s note:  We like Canada and Canadians.  And mean them no disrespect.  We’re just having a little fun with the movie South Park: Bigger, Longer & Uncut.  In which incidents lead to war between Canada and the U.S.  A premise so ridiculous that it’s funny.  For Canada and the U.S. have been the best of friends.  And will always be the best of friends.)

The more Public Sector Union Employees paying Dues the more Money is collected for Democrat Coffers

Perhaps that’s the problem.  Too much government.  The federal government has grown into a behemoth.  On top of thousands and thousands of local governments throughout the country (see Infographic: Local government by the numbers by Mary Mahling and Carla Uriona posted 10/4/2011 on Stateline).

There are 89,476 local governments in the United States. They include counties, cities, villages, towns and townships, as well as special districts that handle utilities, fire, police and library services.

That’s a lot of government.  And there’s only one way to pay for a lot of government.  With a lot of taxes.

So we have government upon government upon government.  Surely with all that government we must be getting some value for all of these taxes.

More than two centuries of American democracy have resulted in a profusion of governments at the local level, not only cities and counties but villages and townships, park districts and sanitary districts and a host of others. To those trying desperately to bring a state’s budget into balance, many of these are useless anachronisms incapable of providing any service that could not be provided higher up the governmental chain. But to the tens of thousands of people who hold office in these local entities — and to millions of citizens who live within them — multiple local governments are a crucial piece of evidence that American democracy reaches down to the grassroots level.

Apparently not.  And don’t call me Shirley.

They just provide a lot of jobs for the unemployable.  By taxing the wealth creators.  And redistributing it to people whose job is a duplicate of one at another level of government.

They do serve a purpose, though.  Being totally funded by taxpayers, they have a vested interest to keep raising taxes on the taxpayers.  Which is, of course, helpful to Democrats.  So the more local governments the better.  The more public sector union employees paying dues the more money finds its way into Democrat coffers.

Any Attempt to Quantify Human Behavior will Ultimately Fail

And then you have academe.  And Keynesian economists.  Furthering the growth of government with their government-spending Keynesian economics (see Tis The Gift To Be Simple by Paul Krugman posted 10/5/2011 on The New York Times).

To be sure, IS-LM is an attempt to squeeze a dynamic economy into a static model, which is why people like me usually cross-check our conclusions with something intertemporal. But it’s actually a pretty darn sophisticated approach — as demonstrated by the fact that economists who dismiss or attack IS-LM as too simplistic or something almost always end up making assertions that are much more simplistic than IS-LM, if not falling into outright logical fallacies. In fact, I can’t think of a single exception to this rule: every attack on IS-LM I’ve ever seen (as opposed to suggestions that we should also look at more complex models) was followed by some kind of empirical or logical howler.

I have a criticism.  Any attempt to quantify human behavior will ultimately fail.  Because you can’t quantify human behavior.

Economics belong to the branch of science we call social sciences.  That is, it’s not real science.  Because the wildcard is that human behavior can always produce some unintended consequence to government action.  Such as Prohibition giving us organized crime.  Whereas the equations of science typically don’t.  We can use science to build bridges, buildings and airplanes.  And they work pretty much as planned.  Without any unintended consequences.

You can’t represent human behavior by mathematical formulas.  We know some behavioral responses.  Such as sex in advertising gets men’s attention.  But that’s a base primeval instinct.  There’s not a whole lot of thinking going on.  Not so in a complex economy.  Where there is a lot of thinking going on.  Keynesians like to think the economy is as simple as impulse buying at the point of sale checkout aisle.  Put more candy on display and you sell more candy.  Not so with buying a house.

Everyone will like to own a beautiful home.  But people won’t buy a house on impulse.  Not when there’s record unemployment.  And talk of a double-dip recession.  Because if you learned anything from the subprime mortgage crisis it’s this.  Too much debt is bad.  And there is no such thing as a guaranteed job.  Playing with interest rates won’t change that.  Only time will.  When enough time has passed to let people feel secure in their jobs again.  Then and only then will they consider taking on debt again.  No matter what the IS-LM model predicts.  Because you can’t quantify human behavior.

The Wall Street Protestors with Student Loan Debt Probably don’t have Science or Engineering Degrees

All government policy is social science.  It’s not an exact science.  That’s why strange things happen.  Unintended things.  Whenever government tries to influence behavior.  And when government tries they have a track record of failure.  Which is why they don’t run for reelection on the success of their policies.  They run on the success of someone else’s (Ronald Reagan’s) policies.  And say that their policies are the same.  And they are except with a few minor changes.  And by ‘few’ I mean they couldn’t be any more different.  So they lie.  Or they just demonize their opponents.

But our kids are blissfully ignorant.  Thanks to public school teachers.  And college professors.  Who care more about improving their taxpayer funded pay and benefits than education.  That’s why government grows.  And why we have degrees like women’s studies.  And poetry.  Degrees that offer no hope for employment in a capitalistic economy.  For what business that relies on pleasing their customers (like Apple does consistently) need people with these skills?

No.  They need people with science and engineering degrees.  You know, the hard ones.  So the kids who took the easy route in college must depend on teaching others their worthless knowledge.  Or get a government job.  Which has a lot to do with the anger of these protestors who have huge student loan debt.  And no job.  Because if they hate capitalism you can guess what their degrees are in.

(Editor’s note:  This was written before news of Steve Jobs’ passing broke.  Our condolences go out to his family.  We decided to leave the Apple reference in as a tribute to Steve Jobs.  He was one of America’s greatest entrepreneurs.  The world is a better place because of him.  For the gifts he gave us.  And the inspiration he gave to the next generation of great entrepreneurs.)

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If Taxing the Rich won’t Reduce the Deficit then it’s not Tax Reform, it’s Class Warfare

Posted by PITHOCRATES - September 25th, 2011

The Rich are Paying Far More in Taxes than People like Warren Buffet’s Secretary

It’s tax reform.  It’s not tax reform.  They may not have their story straight.  But this much we know.  Obama’s Warren Buffett tax will do nothing for deficit reduction.  But it sure will fan the flames of class warfare (see WH self-contradicts, admits tax hikes arent reform by Joel Gehrke posted 9/25/2011 on The Washington Examiner).

President Obama and White House Senior Adviser David Plouffe have adopted contradictory rhetoric regarding  President Obama’s proposed tax increases, which the president has touted as “tax reform…”

Plouffe responded that “the president would like to do tax reform . . . But absent tax reform,  the president believes the right way to get our fiscal house in order is to ask the wealthy to pay their fair share.”

So according to Plouffe, raising taxes isn’t tax reform.  It’s to punish the rich.  That’s what making them ‘pay their fair share’ means.  Even though, right now, they’re paying more than their fair share.  Far more.  (More on that later.)  Obama, though, sees it differently.  And the way he sees it punishing the rich is reforming the tax code.

When two people can’t get their story street it typically means one thing.  They’re lying.  And can’t keep their stories straight.

Now, the Republicans say they’re in favor of tax reform.  Let’s go.  Let’s reform this tax code.  And let’s reform it based on a very simple principle:  Warren Buffett’s secretary should not be paying a higher tax rate than Warren Buffett. It’s a simple principle.

Why not?  Warren Buffett is still paying more tax dollars.  The rich are paying far more in taxes than people like Warren Buffet’s secretary.  So why keep saying this?  Can be for only one reason.  To punish the rich.  And to show the people that you want to vote for you that you’re punishing the rich.

Wallace pointed out to Plouffe that “the top 10 percent pay 70 percent of federal income taxes. Meanwhile, 46 percent of households pay no federal income tax at all.” Plouffe countered that “you can manipulate the statistics in any way you want,” and also said that “they are making a ton of money” while “we have inequities,” presumably in the tax code. And then Plouffe offered what would qualify as an argument for tax reform, except that Plouffe is admittedly not pushing for tax reform:

The American people are screaming out saying it’s unfair that the wealthiest, the largest corporations who can afford the best attorneys, the best accountants, take advantage of these special tax treatments that the lobbyist have, along with lawmakers, have cooked in the books here. So, the question is: how are we going to move forward as a country?

Wallace interjected, “Because 70% isn’t enough?”

For tax revenue?  Yes.  That 70% should be enough.  Perhaps too much.  But for class warfare?  No.  Because there’s a lot more money they can take from the rich.  And the more they take the more votes they gain from that 46% that doesn’t pay any federal income taxes.

It’s not that the President is Losing White Independents.  It’s just that Blacks Refuse to Give Up on Obama.

So why the class warfare?  Because it’s election time.  And when you don’t have a good record you don’t win reelections running on that record.  So you don’t.  Instead, you go class warfare.  Pit one group against the other.  Find narrow slices of the population that you can turn against your political opposition.  And, if you get enough of these slivers, you may just have a chance at reelection.  Despite your horrible record while in office (see Obama 2012 campaign’s Operation Vote focuses on ethnic minorities, core liberals by Peter Wallsten posted 9/25/2011 on The Washington Post).

President Obama’s campaign is developing an aggressive new program to expand support from ethnic minority groups and other traditional Democratic voters as his team studies an increasingly narrow path to victory in next year’s reelection effort.

The program, called “Operation Vote,” underscores how the tide has turned for Obama, whose 2008 brand was built on calls to unite “red and blue America.” Then, he presented himself as a politician who could transcend traditional partisan divisions, and many white centrists were drawn to the coalition that helped elect the country’s first black president.

The problem is that Obama is about as partisan as they come.  That’s why the tide has turned against him.  A lot of people hated George W. Bush.  And thought Obama was going to bring in the love.  Make the country as a whole link arms and sing Kumbaya.  But that hasn’t happened.

He spent more than George W. Bush.  Giving us record deficits.  And he keeps blaming his spending on the rich not paying their fair share of taxes.  The people see what’s going on, though.  They’re not blind.  It’s his spending.  Not a lack of taxes.  And all that spending hasn’t done a thing to help the economy.  The economy was, after all, far better under George W. Bush.  So they’re seeing the same old tax and spend liberal.  Not the candidate that was going to get us all to link arms and sing Kumbaya.

But not everyone is turning against this president.  The blacks haven’t turn on him.  They would have but for one reason.  He’s black.  The black community is furious with him.  But they still can’t abandon him.  As the chair of the Congressional Black Caucus, Maxine Waters, said in Detroit.  “If we go after the president too hard, you’re going after us. When you tell us it’s all right and you unleash us and you’re ready to have this conversation, we’re ready to have the conversation,” Waters said.

Today, the political realities of a sputtering economy, a more polarized Washington and fast-sinking presidential job approval ratings, particularly among white independents, are forcing the Obama campaign to adjust its tactics.

Operation Vote will function as a large, centralized department in the Chicago campaign office for reaching ethnic, religious and other voter groups. It will coordinate recruitment of an ethnic volunteer base and push out targeted messages online and through the media to groups such as blacks, Hispanics, Jews, women, seniors, young people, gays and Asian Americans.

It’s not that the president is losing white independents.  It’s just that blacks refuse to give up on Obama and join the exodus from him.

When you’ve been a poor president.  When your policies have made things worse.  There’s only one thing you can do.  You do everything to divide the American people.  Drive wedges.  Find reasons.  Why blacks should hate Republicans.  Why Hispanics should hate Republicans.  Why women should hate Republicans.  Why seniors should hate Republicans.  Why young people should hate Republicans.  Why gays should hate Republicans.  Why Asians should hate Republicans.

When you have failed you become what you said you weren’t.  Or stop pretending to be something you never were.  And you incite hatred.  Fan the fires of class warfare.  You pursue policies that further divide the American people.  Even if those policies hinder the economic recovery.

The campaign officials say they have not given up on wooing independents, and the 2012 presidential election will certainly involve a fierce fight for the college-educated whites and suburbanites who were more likely to back Obama in 2008 than the working-class whites who have always been more skeptical.

By ‘college-educated’ they mean ‘favorably-educated’.  Universities lean left.  Continuing the work of the public school teachers.  Both of who depend on government funding.  And growing tax rates.  So they need government to grow.  And will always vote for the party that will grow government.  And will ‘teach’ their young students to do the same.

Working-class people, on the other hand, have spent more time in the real world.  They’ve had a chance to get deprogrammed from their public school indoctrination.  That’s why it’s harder to fool the working-class.

When you’ve ‘Jimmy Cartered’ the Economy you can’t Run on your Record

It’s election season.  Little more than a year to go before the 2012 election.  So candidate Obama is back.  Running like he wasn’t the president for the last 3 years or so.  Somehow trying to explain to his most loyal base that he’s made things better than his predecessor.  George W. Bush.

But he hasn’t.  However you measure it.  GDP.  Unemployment rate.  Consumer confidence.  Whatever.  And the kicker is that the cause for the Subprime Mortgage Crisis that started under Bush wasn’t caused by Bush.  Putting people into houses they couldn’t afford was a liberal Democrat policy.  So housing wasn’t exclusive to only those who could afford a house.  Policies the Obama administration favors.  And policies that they want to implement again.  Despite having just suffered the Subprime Mortgage Crisis because of those policies.  Why?  Because it gets you more votes at election time.

So when you’ve ‘Jimmy Cartered‘ the economy you can’t run on your record.  The best you can hope for is to paint your political opponent as being everything the slivers of your most loyal base hate.  Attack the rich.  And promise more free stuff to that 46% that doesn’t pay any federal income taxes.

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Taxing the Rich in America, Taxing Everyone as Rich in Europe

Posted by PITHOCRATES - September 24th, 2011

Spending is so Great the Only Way to get Serious Deficit Reduction is with Spending Cuts

Dan Greenhaus with BTIG looked at Obama‘s proposed Buffet Tax.  Crunched the numbers from the 2009 U.S. tax returns.  And found that the Buffet Tax is more politics than deficit reduction (see A Little Bit Of Math On The ‘Buffett Tax’ by Joe Weisenthal posted 9/19/2011 on Business Insider Politix).

Nonetheless, if we add up the $1,000,000 and above categories, we get taxable income of $623.6 billion that resulted in $177.5 billion in income tax paid, a rate of less than 28.5%. If we were able to somehow change that tax rate to say 35%, an increase of more than 7 percentage points, the income tax paid in 2009 would have been over $218 billion or an increase of a bit less than $41 billion. If we were able to do this over ten years, the U.S. would have extra income of $410 billion. All from raising taxes by seven full percentage points on those making income over $1,000,000.

Unfortunately, $410 billion is “only” about 7% of the deficit we expect to incur over the next ten years. That is not an inconsequential portion but considering the debate surrounding hiking tax rates by any amount, let alone generating an increase sufficient see a seven percentage point increase in taxes paid, as well as the negative consequences such a sharp adjustment would engender, this hardly seems to be the “only” place to go to achieve debt reduction.

The magnitude of the deficit is too great to pay with new taxes.  As it is now, the 2011 deficit will come in at $1.65 trillion.  A 7% tax rate hike would net an additional $41 billion.  Or $410 billion over ten years.  This would reduce the 2011 deficit from $1.65 trillion to $1.61 trillion.  Not impressive.  Remember, Standard and Poor’s wanted to see $4 trillion in debt reduction over the next decade.  And $410 billion is a long way from $4 trillion.

Take a close look at these numbers.  A $1.65 trillion dollar deficit.  And taxable income as reported to the IRS of $623.6 billion.  The deficit is 2.6 times the total taxable income from those making $1 million or more.  In other words, you could tax away all of their money and the government would still run a deficit.

The spending is so great that the only way you’re going to get serious deficit reduction is with spending cuts.  Because spending is big enough to cut to make a difference.  Unlike taxing the Warren Buffets.  Whose incomes aren’t big enough to make a difference.

So when Keynesian tax and spend liberal Democrats talk about serious deficit reduction it’s just misdirection.  They know they can’t reduce the deficit.  But that’s okay with them.  For that isn’t their goal.  They want to raise taxes for a different reason.  They like to spend.  It’s how they get power.  And votes.  But when you run such massive deficits it’s hard to spend more.  Unless you raise taxes.  And that’s why they want to raise taxes.  Not to reduce the deficit.  Which is impossible to do with tax hikes.  They’ve just run out of money.  And they want more to spend.

Left of Center Welfare States are Always Good for Vote-Getting

And if you think it’s bad on this side of the Atlantic, you should see what they’re doing on the other side.  The Europeans have a lot of social democracies.  Left-of-center governments.  With huge welfare states.  Which is always good for vote-getting.  But it comes at a price.  High taxes.  And lots of debt.

To keep spending at their levels of spending they have raised tax rates on the ‘rich’.  And lowered the threshold for being ‘rich’.  The Business Insider crunched the numbers and put together a little slideshow showing the tax rates.  And what it means to be rich in these countries.  We pulled the data from the slide show and put them into tabular form below (see These Are The Toughest Taxes For Europe’s High Earners by Nick Jardine posted 9/24/2011 on Business Insider Europe).

We calculated the numbers above based on the threshold salary that puts these taxpayers into the top tax rate.  And the tax rate.  All numbers are in U.S. dollars.  The numbers very a little from the Business Insider slideshow possibly due to rounding error.  Or other tax considerations.  But the numbers were close enough to fill in the blanks where needed.  Though it may not be completely accurate, the numbers should be close enough in magnitude for the purpose of discussion.

When they couldn’t Tax the Rich Anymore, they Taxed the Middle Class.  By Redefining them as Rich.

Depending on your political persuasion, you no doubt will draw different conclusions from these numbers.  A Keynesian liberal Democrat will say Germany isn’t taxing their rich enough.  That they are the richest of the rich.  And that they should probably tax everyone earning over, say, $100,000 at the highest rate.  Like in Greece.  A non-Keynesian will see it differently.  They will note that only the German economy is rich enough to bailout the poorer nations of the Eurozone.  Particularly Greece.  Meaning that the more rich people you let be rich the more tax revenue you will have.

A non-Keynesian will think it’s not fair that a rich German only gets to keep $3,581 from the $6,511 he or she earns every week.  The Keynesian will have no problem with that.  Of course, they may not think it’s fair that a Belgian only gets to keep $446 of the $892 he or she earns every week.  They’ll think it’s fair to take about half of what the rich make.  But they don’t think it’s fair calling someone rich who makes only $46,349.  Or calling someone rich who only makes $20,613.  Especially if they earn more than they do.  And currently pay no income taxes.

None of these countries started out at these income thresholds or tax rates.  They’ve lowered income thresholds through the years.  And they’ve raised tax rates.  Whenever their governments spent more money than they had.  Employing class warfare they vilified the rich.  Raised their tax rates.  And when they couldn’t raise tax rates on the rich anymore, they raised taxes on the middle class.  By redefining them as rich.  And they then paid the higher tax rates.  It’s gotten so bad in some countries that people who pay no income tax in America would be paying the highest tax rate in some European countries.  But it all starts with taxing the rich.

With Keynesians in Power you’ll never see Spending Cuts because that’s how Democrats Buy Votes

We have to be careful of what we ask for.  Such as taxing the rich.  Because we may be rich ourselves one day.  As the threshold for being rich shrinks over time.  First it was the billionaires.  Then the millionaires.  Then those earning $200,000 or more.  Then those earning $100,000 or more.  Down to as low as $20,000.

Fair is fair they’ll say.  So you’ll agree to make the rich pay their fair share.  And then those earning less than you will also agree to make the rich pay their fair share.  And by rich they’ll mean you.  Until all earners will be taxed at the highest rate.  To support those non-earners who vote Democrat.

But no matter how much they’ll take it will never be enough.  Because you can’t reduce the deficit/debt by raising taxes.  They’re just too big.  The only way you can reduce these is by reducing the thing that made them so big.  Spending.  But that’s not likely to happen.  As long as Keynesians are in power.  Because that’s how Keynesian tax and spend liberal Democrats buy votes.

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LESSONS LEARNED #83: “Those who don’t pay taxes will always approve higher tax rates on those who do.” -Old Pithy

Posted by PITHOCRATES - September 15th, 2011

To win Elections using Class Warfare you need lots and lots of Poor People

The Democrats want to tax the rich. To make them pay their fair share.  As determined by them.  And they accuse Republicans of cutting taxes for the rich.  Giving them tax breaks.  Credits.  And loopholes.  All paid for by the poor.  Or so they say.  The Republicans deny this, of course.  They want lower tax rates across the board.  For they believe lower tax rates create jobs.  By removing uncertainty for business.  Giving them confidence to invest.  And grow their businesses.  Thus creating those jobs.  The Democrats counter that lower tax rates just make more rich people.

We call this class warfare.  Getting the poor people to hate the rich people.  Blaming the rich for their poorness.  And making the poor understand that if it weren’t for the taxes the poor pay the rich couldn’t have their mansions.  Or their private jets.  Because the poor subsidize the rich in America.  As least according to the Democrats.  As nonsensical as this is.  For mansions and private jets are expensive.  So expensive that the poor can’t afford them.  Yet their taxes can buy them for the rich.  Silly argument, yes.  Then again, class warfare isn’t based on logic.  Or common sense.  It’s based on pure, raw emotion.  Feelings.  The rich are rich.  The poor are not.  And that’s all the poor need to know.

This is how Democrats win elections.  By promising to raise taxes.  Normally, anyone who says they will take more of your money will find it difficult to win elections.  But when you promise to take more of someone else’s money, well, that’s a different story.  You just need one thing.  Lots and lots of poor people.  Who you can make feel good by taxing the rich.  By punishing the rich.  Making sure the rich get their just deserts.  And I don’t mean some hoity-toity crème brûlée.  Which, incidentally, is delicious.  No.  We’re talking about a good ole fiscal smack-down.  A swift kick to the financial bonbons.  The wallet.  It won’t change your life.  If you’re poor.  But it’ll make you feel good.  And that’s what class warfare is all about.  Feelings.

Using the IRS Numbers to see who has been Paying the Bulk of our Federal Taxes

You get tired hearing the same old lies.  No doubt you agree with me.  Regardless of what side of the aisle you hail from.  Some of you are absolutely sure the Democrats are lying.  And some of you are absolutely sure the Republicans are lying.  Can’t be both.  Well, it can be both, I guess.  But one side has to be more truthful than the other.  Considering how diametrically opposed the two sides are.  So let’s ignore the arguments.  Let’s find our own truth.  Let’s go to the numbers.

The IRS breaks downs tax revenue in numerous ways.  One of which is by income groups.  So we looked at these breakdowns.  For the years 1995 – 2008.  This takes us from the midpoint in Bill Clinton‘s presidency.  Through George Bush‘s.  The IRS breaks down incomes across many income groups.  We’ve added some of them together to reduce their numbers down to four groups.  As shown here:

The percent of returns is from 2007.  This is the percentage of total federal income tax returns filed with the IRS.  We picked this year to show where income had trended to before the subprime mortgage crisis.  So, without further adieu, let’s see who has been paying the bulk of our federal taxes.  The rich.  The poor.  Or somewhere in between.

The Rich and Middle Class pay over 90% of all Federal Taxes

We’ve broken these numbers down into the four income groups.  Then we calculated the percentage each group paid of the total tax revenue.  And graphed the results.  As shown here:

(Source:  SOI Tax Stats – Individual Income Tax Rates and Tax Shares)

We can glean a couple of things from these numbers and this chart.  First of all, the middle class still makes up about half of all taxpayers.  And there are very few ‘rich’ people.  Only about 16% in 2007.  And that counts anyone earning $100,000 or more as rich.  Based on how few rich there are and the amount of federal taxes they pay, it’s hard to say that they aren’t paying their fair share.

People earning less than $14,000 virtually pay no taxes.  They hardly paid anything during the Clinton presidency.  And paid even less through the Bush presidency.  If we call these people poor, then the poor aren’t paying for the rich.  They’re not even paying their own way.

The next income group also shows a continuous decline.  Those who start to earn some serious money for the first time in their lives pay little in federal taxes.  Less than 10% for the last fifteen years.  And less and less as the years go by.  So, clearly, those earning less than $30,000 per year are hardly paying any federal taxes at all.  And are not subsidizing the rich in any shape, manner or form.  If anyone is being subsidized, it is those earning less than $30,000.  Some 33% of all taxpayers.  And who’s paying their way?  The rich and middle class.

So who’s paying the most in taxes?  The rich and middle class.  In that order.  In fact, they are paying about 90% of all federal taxes.  And have been for the last 15 years.  (Or more.)  During Clinton.  And Bush.  In fact, the rich paid a larger percent of all taxes under Bush (the Republican) than they did under Clinton (the Democrat).  Not exactly what you’d expect based on the political rhetoric.  And the middle class paid less under Bush than they did under Clinton.  In further fact, everyone except the rich paid less in taxes under Bush than they did under Clinton.  So whoever says the ‘rich’ aren’t paying their fair share are either lying.  Or grossly misinformed.

The more Rich People there are the Bigger Percent of Total Tax Dollars they Pay

Notice the top two graphs.  They’re almost mirror images of each other.  As the rich pay more in taxes, the middle class pay less.  This is a good thing, yes?  Transferring more and more of the tax burden to the rich?  It’s what the Democrats say they want.  So it’s interesting to see when the rich pay more in taxes.  During good economic times.  When policies are favorable to business.  And there are lower tax rates.  Never was more of the tax burden transferred to the rich than it was than after the Bush tax cuts.

There are a couple of things happening here.  During recessions (early 2000s and late 2000s), tax revenue from the rich fell.  Because businesses revenue fell.  So business profits were down.  As were income taxes.  On businesses.  And highly paid employees these businesses laid off.  So overall tax revenue was down.  Which made the middle class’ portion of tax revenue a greater percentage of the total.  Not because they were paying more.  But because the rich were paying less.  Which explains the mirror image of these two graphs.

But there’s something else happening, too.  Remember when the Democrats said tax cuts don’t create jobs?  They just create more rich people?  Well, they were partially right.  As the economy expands so does wealth.  Employees leave their companies and start their own businesses.  People advance in their careers and make a lot more money.  Entrepreneurs strike it rich with new innovation.  And you know what all of this means?  People leave the middle class.  And join the rich.  Where they pay more taxes than they ever did before.  Transferring more and more of the tax burden from the middle class to the rich.  Which also explains the mirror image of these two graphs.

The more rich people there are the bigger percent of total tax dollars they pay.  So if the Democrats were true to their word they wouldn’t punish the rich.  Instead, they would focus their energy on making more rich people.  To help the poor and middle class.

The Democrats sacrifice the Poor for Votes

Now it’s interesting how the different political parties interpret these graphs.  Republicans are interested in the top two.  They would like to make business friendly policies to grow business.  And create jobs.  Make as many rich people as possible.  So more and more of the tax burden can be transferred to them.  Not by high tax rates.  But by robust economic activity.

The Democrats, on the other hand, are interested in the bottom two graphs.  Those making $30,000 or less.  They want to see these graphs falling to zero.  And they want to increase the total number of people earning $30,000 or less.  Because those who don’t pay taxes will always vote for you if you promise to raise tax rates on the rich.  And the more poor there are the more political power the Democrats have.  I mean, that 33% who pays virtually no income taxes?  Who do you think they’re going to vote for?  That’s right.  Whoever promises to punish the rich.  And punish they will.  For they want to transfer as much of the tax burden to the rich as possible.  Not by robust economic activity.  But buy punitive tax rates.

This is class warfare.  Based on raw emotion.  Feelings.  Not logic.  Or common sense.  They get the poor angry.  And blame the rich for their poorness.  This is how they win elections.  They lie.  The Democrats.  And say they are punishing the rich.  When they are in fact punishing the poor.  And the middle class.

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FUNDAMENTAL TRUTH #68: ” Beware the demagogue, the champion of the poor, for he has dictatorial aspirations.” -Old Pithy

Posted by PITHOCRATES - May 31st, 2011

A Despot needs a Mob

A despot can’t rise to power alone.  Because there is only one of him.  Or her.  A despot needs a mob.  Either to take power by force.  Or to vote him or her into office.  And unless the despot is in a despotic/third world country, the taking of power by force is not an option.  Military coups are just not that common in first-world democracies.  Mainly because no one’s life is that bad where they would risk the punishment for treason.  Because things like that will stay on your permanent record.  Doesn’t look good on a resume.  And treason can get you killed.

So, in a democratic country, you need to get people to vote for you.  Because the path to power is through the ballot box.  Even Adolf Hitler got his power in an election.  And he did that by lying.  Well, if you read his book (Mein Kampf), you had an idea.  Because he pretty much spilled his guts out in that book.  But few read it, apparently.  Even though it became a best seller.  After the fact.  When he had already ascended to power and it became required reading.  Or, required ownership.  It was the Nazi Bible.  Everyone had to have one.  Though few read it.

So how did Hitler rise to power?  He made the people like him.  And took advantage of some crises.  The armistice that ended World War I.  The Versailles Treaty reparations.  The Great Depression.  Things that really hurt the German people.  Made them angry.  Looking for relief.  And Hitler promised it.  Delivered in some magnificent oratory.   He hypnotized the masses with his speeches.  He knew what was wrong.  And it wasn’t the people’s fault.  It was others who wronged them.  The Allies.  The politicians who stabbed Germany in the back at Versailles.  And, of course, the Jews. 

Class Warfare works because it’s Emotional

It’s a winning formula.  Take advantage of a crisis.  By blaming it on someone.  It doesn’t really matter who.  As long as it is a small voting bloc.  And, of course, championing the little guy.  Being their voice.  Say the things they would like to say.  Say what they want to hear.  And who is the little guy?  None better than the poor.  Because there are always a lot of them.  And a lot of them are uneducated.  But they know one thing.  Rich people have a better life.  And an easier life.  While they have little.  And have a harder life.  Anyone can see how that isn’t fair.  Anyone that is poor, that is.  And anyone looking to exploit the poor.

There’s a reason why class warfare has been successful.  It works.  It’s irrational.  Illogical.  But it’s emotional.  Which is how you win elections.  By tapping into the feelings of the masses.  You don’t want them to think.  You want them to feel.  To feel their wrath.  Their frustrations.  Their hopelessness.  For them to feel how unfair life is.  How those in power (the politicians, the rich, the Jews, etc.), are keeping you down so they can live a privileged life.  It’s powerful.  And wins elections.

Of course, it’s often nothing more than a bunch of lies.  A complicated formula of treaties started World War I.  After the assassination of an Austrian duke.  In contested land in southeast Europe.  The Balkans.  A great historical crossroads of culture and religion.  That everyone and his brother has laid claim to since time immemorial.  It was a mess getting into.  And a bigger mess getting out of.  It had less to do with Jewish bankers.  And more to do with territorial ambitions of empires.  Which Germany had.  As did Hitler.  But that doesn’t go over well with the masses at election time.  Because history is boring.  No one wants to hear about it.  History is old.  About a time long ago.  The voters don’t want to hear about that.  They want to know what you are going to do for them now.  What are you going to do about their anger and frustration now?

The Power of the Lie

Well, you lie, of course.  You have to.  Because an angry and frustrated people want some kind of relief.  And they’re going to vote for the person who promises to give them the most.  They’re not going to vote for someone that is going to take away their freedoms and make them live in a police state.  I mean, if Hitler had told the truth in one of those magnificent speeches instead of putting it in a book that was painful to read, people would have heard the truth.  And it would have made a difference at the ballot box.  “So, Heinz, who are you going to vote for?  The Independent (Hindenburg)?  The Communist (Thälmann)?  Or the Nazi?  That guy that’s going to create the Gestapo that will oppress us and make us live in fear?  And conscript us and send us away to fight in a world war while our cities are bombed?”  “Hmmm, I don’t want a harder life, Günter, so I’ll probably vote for the Commie or the Independent.”  Incidentally, the vote tally in 1932 was as follows:  53.1% (Independent), 36.7% (Nazi) and 10.1 % (Communist).  Hitler didn’t win the presidential election.  But because of the large vote he got, Hindenburg reluctantly made him chancellor.  Proving the power of the lie.  And the rest is history.

No one willingly votes for a harder life.  And that’s what a despot will do once elected.  Because the despot wants power and wealth.  Not to help the poor.  The poor are only a convenient tool to use during an election.  So the despot must lie.  And because they are lying and have no intention of following through on any of their promises, the sky is the limit.  They can promise anything.  Even things that are impossible to do.  And attack the rational plan of the opposition as radical and extreme.  So they appeal to the emotions.  And attack the rational.  That’s why dictators in third-world nations round up intellectuals, college professors, students and anyone with glasses (a sign that they can read).  They don’t want people thinking.  They want them feeling.   Feeling their anger.  And feeling their frustration.

And this is why they win elections.  For people would rather hear a pleasant lie than an unpleasant truth.  Because it feels better.  Vote for me and I will give you a free college education, a housing subsidy, a shorter work week, a longer summer vacation, a younger retirement age, a richer pension and, of course, free health care for everyone.  We’ll pay for it by taxing the rich.  And we’ll tax them so much that we’ll be able to cut your taxes.  People like that message.  Those who don’t consider themselves rich, at least.  They don’t want to hear that the country is broke.  That we can’t afford these generous benefits anymore.  They want to hear yes we can.  If only the rich pay their fair share.

Pushing People down into Poorer Classes

Of course, the problem becomes that dividing line between the rich and everyone else.  Because the rich are the bad guys.  The ones living the comfortable life without having to work hard.  They’re easy to demonize.  The poor have no love for them.  But the middle class is another story. 

The middle class is the sweet spot of the population.  They’re not rich.  And there are a lot of them.  More importantly, they’re not poor.  And they vote.  So what to do?  If you lump them in with the rich when you attack the rich, they may not vote for you.  But politics is about one thing.  Money.  And you get it by increasing taxes.  The rich are taxed so much that raising rates on them does little.  They got rich because they’re smart with money.  And they will only pay so much in taxes.  And the poor are poor.  No, if you’re going to increase taxes, you have to do it on the middle class.  So you do.  After the election.  After the lying.  Then you raise their taxes.  So much so that you force those at the bottom of the middle class into the poor class.

For this is the goal of the despot.  To push people down into poorer classes.  Push some of the rich into the middle class.  And a lot of the middle class into the poor class.  Then you champion the poor.  Attack the rich.  While taxing the middle class.  Those you allow to remain rich become your cronies.  As in crony capitalism.  Who lavish you with wealth in exchange for government contracts.  While the middle class toils away for less.  And the poor look up to you as their savior.  Grateful that you’re one of them.  Even though you live in a palace.  While they don’t.  And even though their lives are still pretty wretched, the rich at least got theirs.  Sure, it doesn’t put food on the table.  But it feels good.

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The Obama Budget: High Taxes, Reckless Spending and Lies

Posted by PITHOCRATES - April 18th, 2011

Is it how Much we Give or how Much we Could Give that Counts?

Imagine, if you would, two people standing in front of an orphanage.  There’s a donation box there.  And we can see these caring people actually count out their money before placing it in the donation box.  One counts out $20.  The other counts out $100.  Who is more generous?

Is this a trick question, you ask?  Well, yes, I guess it is.  You see, normal people, like you and me, are inclined to say the person donating the $100 is more generous.  I mean, $100 is more than $20.  $100 buys more than $20.  $100 will do more for orphans than $20.  So it sure looks like to us, the normal people, that the $100 donation is the more generous donation.  But that’s not the way government would see it.  For I left out one important piece of information.  I didn’t say how wealthy these people are.  So let’s do that now.  The $20 donation is from a UAW line worker.  The $100 donation is from a rich business owner.  Now who is more generous?

$100 will still buy more than the $20 for the orphans, but $100 is a smaller percentage of the business owner’s salary.  The $20 donation is a larger percentage of the UAW line worker’s salary.  So, people in government, and those on the Left, will say the $20 donation is the more generous donation.  Even though it will buy less for the orphans.

We Pay Tax Dollars, not Tax Rates

This is a big problem clouding the debate over ‘fair’ taxation.  Devious politicians point to tax rates and cry that the rich aren’t paying their fair share.  When, in fact, they are paying far more tax dollars than those less rich.  Even in an attack on these rich bastards shows this (see Only Little People Pay Taxes by Dave Gilson posted 4/18/2011 on Mother Jones).

Leona Helmsley’s distaste for paying taxes eventually landed her in federal prison. But the rich have little need to break the law to avoid the tax collector. As Martin A. Sullivan of Tax.com recently calculated, a New York janitor making slightly more than $33,000 a year pays an effective tax rate of nearly 25%. And the effective tax rate for a resident of the Park Avenue building named after Helmsley, earning an average of $1.2 million annually? A cool 14.7%.

And the chart following this shows the income and taxes of the Janitor and the millionaire.  And even though the millionaire pays only 14.7% in taxes, the actual tax dollars paid in income taxes is $159,515.  And how much did that janitor pay?  Just $3,168.  The cheap bastard, the millionaire, paid $156,347 more in income taxes.  That’s 4,935% more than the janitor paid in income taxes.  Yes, 14.7% is a smaller percentage than 25%, but there’s no math in the world that says the janitor paid more in income taxes than the millionaire.

There’s a difference between tax dollars and tax rates.  And tax rates don’t pay the bills.  Tax dollars do.  And the rich pay more of them by far.  Anyway saying otherwise is fostering class warfare for political purposes.  Because if it was about tax dollars to pay for federal spending, $159,515 pays for a lot more spending than $3,168. 

Low- and Middle-Income Families don’t Pay their Fair Share of Taxes

So if the rich aren’t paying their fair share of taxes, who is?  And are there others, too, not paying their fair share?  Of course, that can’t be.  Because only the rich can get away with cheating the…  Hello, what’s this?  Low- and middle-income families aren’t paying any federal income taxes?  Really?  How can that be?  Wasn’t it the rich blankity blanks that were screwing the poor?  Not the other way around (see Nearly half of US households escape fed income tax by Stephen Ohlemacher, Associated Press Writer, posted 4/7/2011 on Yahoo! Finance)?

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization…

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Really?  They’ve told us that people flipping burgers for minimum wage were poor, but even people earning $50,000 are poor?  No wonder we have so many people in poverty.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment…

In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center.

No wonder the Democrats win elections.  You know there are a lot of Democrats in that 49% not paying federal income taxes.  That makes the Democrats a modern day Robin Hood.  Stealing from the rich.  And giving to the low- and middle-income.  And when you’re on the receiving end of this bounty, you’re all for class warfare.  Screw the rich, you’ll shout.  Until, God forbid, you become rich.  Just ask Nicholas CageSinbadWesley Snipes.  Or Willie Nelson.  And anyone who won the lotto.  Or a car.  Who did not realize that their bounty came with a hefty tax obligation (there’s no tax withholding for these people.  They have to write a check for all the taxes they owe).  People are stunned to learn the amount of their money the government wants.  And that isn’t fair.  But before they were rich, that was a different story.  Then nothing was fairer than sticking it to the rich.

The Rich aren’t Rich Enough to Pay all our Taxes

If the poorest half of all Americans aren’t paying any taxes, then who, exactly, is?  I mean, if the rich aren’t paying their fair share and the poor aren’t paying anything, who does that leave (see Where the Tax Money Is posted 4/17/2011 on The Wall Street Journal)?

Consider the Internal Revenue Service’s income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the “millionaires and billionaires” Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

That’s funny.  I thought the rich weren’t paying their fair share.  And in 2008 the top 1% paid 38% of all taxes.  I don’t know, but 38% sounds like a lot more than the 0% paid by the poorest 50%.  So the rich are paying a lot.  Can they pay more?  Can they pay all of our taxes?  Well, even if you confiscate all of the top 1%’s income, no.  They can’t.  They simply aren’t rich enough.

Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That’s five times Mr. Obama’s 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion. And remember, the top 10% already pay 69% of all total income taxes, while the top 5% pay more than all of the other 95%.

The richest 10% of all Americans, including everyone making $100,000 or more, won’t do it either.  At least, they can’t fund a $4 trillion budget.  Which means there’s no way no how you can pay for government by taxing the rich.  Even if you tax them at 100%.  You see, these rich simply aren’t rich enough.  You know who is, though?  The middle class.

So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.

This is politically risky, however, so Mr. Obama’s game has always been to pretend not to increase taxes for middle class voters while looking for sneaky ways to do it…

Keep in mind that the most expensive tax deductions, in terms of lost tax revenue, go mainly to the middle class. These include the deductions for state and local tax payments (especially property taxes), mortgage interest, employer-sponsored health insurance, 401(k) contributions and charitable donations. The irony is that even as Mr. Obama says he merely wants the rich to pay a little bit more, his proposals would make the tax code less progressive than it is today.

The $100-200 thousand earners are the largest group of earners in the country.  They may each make less than each of the top 1%, but their numbers are far greater.  And it adds up.  If you drop that low end to $50 thousand and the total pot of income is close to $3 trillion dollars.  That’s a lot of money to tax.  And a lot of tax deductions to disallow.  That’s the sweet spot.  The $50-200 thousand earners.  They’re just one plump, stuffed, cash piñata.  And oh how they want to whack it open.  But how to do it?  And blame the Republicans?  That is the question that faces them.

Only the Middle Class can Fund a $4 Trillion Budget

And you do this, of course, by lying.  In his speech to offer his ‘budget’ in a response to the Ryan budget, Obama said he would cut the deficit by $4 trillion over the next 12 years.  How?  In part with $2 trillion in spending cuts.  Which aren’t exactly all spending cuts.  They’re actually tax increases.  You see, he sees tax breaks and credits as federal spending.  Because it costs government by not having that money collected as a tax.  So he will cut that ‘spending’.  By eliminating those tax breaks and credits.  Resulting in you paying higher taxes.  And that additional money the government is ‘taking back from you’ will lower the deficit.  Confused?  You should be.  This is about as devious as it gets.

And he also said he would save $1 trillion by not renewing the Bush tax cuts.  So that’s another $1 trillion in new taxes (see Obama’s $2 trillion stealth tax hike by James Pethokoukis posted 4/17/2011 on Reuters).

If you’re keeping score, what Obama is actually proposing is $1 trillion in new taxes on wealthier Americans (and small businesses) and $1 trillion in higher tax revenues by reducing tax breaks and subsidies for a total of $2 trillion in new taxes over 12 years. That means total debt reduction, not counting interest, would be $4 trillion, 50 percent of which would come from higher taxes. The econ team at Goldman Sachs ran a similar analysis and found that 56 percent of Obama savings over ten years could come from higher tax revenue.

So that’s $2 trillion in new taxes.  And where do you think that will come from?  Not the 1%, that’s for sure.  If you took all of their money it would only get you half way there.  To raise that kind of money, you have to go to the sweet spot.  The middle class.  Including those making far less than $200,000.  You have to tax everyone making $50,000 or more.  And take away their tax breaks and credits.  Where it will really hurt.  And be political suicide.  So why promise to do just that?  Simple.  He’s not. 

The Obama plan is a non-plan.  It’s just a political tool for the 2012 election.  To show that it is the Republicans that want to cut Social Security, Medicare and Medicaid.  Not him.  He’ll say he fought like a dog to save these entitlements.  Because he cares for you.  Unlike those nasty mean Republicans.  And entitlement spending will continue to grow unchecked.  Making it that much harder to save these programs down the road.  But this is what politicians do.  Kick the can down the road.  For someone else to worry about.  For by that time, many of the Democrats will be dead.  And won’t care anymore.

It’s not the Taxes, Stupid.  It’s the Spending.

There’s a difference between tax rates and tax dollars.  And it’s the tax dollars that are important, not the tax rates.  The rich may have a lower effective tax rate but they pay an awful lot in tax dollars.  And as tax dollars go, they’re paying more than anyone else.  Far more than half of all Americans.  Who pay $0.00 in federal income taxes.  If anyone is screwing anyone, it’s the lower 50% screwing the top 10%.  And the top 10% probably wouldn’t mind so much if we weren’t constantly demonizing them despite their generosity.

When you can’t pay for your spending by taxing everyone making $100,000 or more at 100%, you’re spending too much.  This is a spending problem pure and simple.  It’s not that the rich aren’t paying their fair share in taxes.  They are.  And then some.  It’s that government is just trying to buy too many votes.  If there is any greed here it is in Washington.  Their spending is out of control.  Even Standard & Poor’s Ratings Service thinks so.  They just lowered our rating from “stable” to “negative” because of the “ballooning deficit.”   Because our out of control spending threatens our future ability to service our debt.

But the Democrats have other pressing concerns on their minds.  Like winning elections.  And you win elections by spending.  Not living within your means.  And if they play it just right, the day of reckoning will come conveniently in the future.  When they’re dead.  Problem solved.  For them, at least.  Their children and grand children?  Guess they just don’t care about them.

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FUNDAMENTAL TRUTH #5: “When it comes to regretting past choices, liberals lead conservatives when it comes to their vote.” -Old Pithy

Posted by PITHOCRATES - March 16th, 2010

A LOT OF conservatives regretted voting for Richard Nixon.  But not for the reason you think.  If the election was today with everything we know now, conservatives probably wouldn’t elect him.  Even if you take Watergate out of the picture.  You see, something changed during his presidency.  And it wasn’t the voters. 

He changed.  The conservative candidate governed as a liberal.  He embraced Keynesian economic policy (Big Government and big spending to solve all problems).  Deficit spending and inflation led to the end of responsible government (the decoupling of the dollar from gold so they could keep printing money).  If this was the conservative platform going into the election, few conservatives would have voted for the ticket.

This is one type of regret.  Regret at being tricked or duped.  This is when a person’s core beliefs don’t change.  It’s when their candidate changed.  But there is another type of regret.

THE POPULAR CONCEPTION liberals have of conservatives is that they are a bunch of old, stodgy white men.  Out of touch with reality and mired in the past.  Whereas liberals think of themselves as young.  Cool.  Progressive.  Their eyes are open to what the future can be, not to what has been.

Young.  That’s key.  Many liberals are young.  Or, better said, a lot of the young are liberals.  What else can you say about the young?  Many are in school.  Many don’t have a job.  Many aren’t married yet.  Many aren’t raising a family yet.  See the pattern?  They’re young and idealistic, i.e., liberal, because they can be.  When they start working, get married, buy a house, raise children, etc., they find they can’t be so idealistic anymore.

Binge drinking, getting high and bedding coeds was okay in college for you, but you’re not so keen on your daughters following your example.  In fact, you kinda gloss over that part of your life when talking to your kids about your past.  When the weight of being a parent really hits, you begin to regret all the hell you put your parents through.

In college you were all for lowering the drinking age, legalizing drugs, keeping abortion legal, taxing the rich to provide free benefits for the poor (and college students), etc.  As a parent, though, you’d like to see the drinking age raised to 35 and probably voted against allowing medical marijuana.  When you’re working 40, 50 or even 60 hours a week to provide for your family, you start looking at all that withholding tax.  And you’re not thinking about how you’re helping those who need help.  You’re probably thinking things like ‘what the f***’ and ‘get a job you leech’.  And, if you have daughters, you’d probably like to see chastity belts brought back into vogue (even though YOUR daughters will keep their chastity until their wedding night – when they’re 35).

GROWING UP IS a learning process.  Children think they can eat third helpings of cake and ice cream, washed down with glasses of super sweet fruit punch and then run out and play in the hot summer sun.  Those of you who have had to clean up the resulting mess know that eating and drinking like that does not end well.  Children learn, too.  In time.  Until they do, parents watch out for them.

Getting a driver’s license is special.  It severs the chains of childhood.  You can go places and do things.  Without your parents.  You can speed, drive around railroad crossing barricades and hang out on a Friday night drinking beer while driving.  And other dumb things.  There’s a reason car insurance is expensive for young drivers.  Because they do stupid things behind the wheel.  But they learn.  In time.  Until they do, the police are there to help them along.

Then these kids turn 18, graduate from high school, leave home and go to college.  And the party is only starting.  Some things never change.  Students are still binge drinking, getting high and bedding coeds.  And, of course, voting.

WE CHANGE AS we grow.  Children think about ice cream and cake.  Teenagers think about getting their driver’s license.  College students think about partying and trying to change the world (sometimes to enhance their partying).  Parents think about doing what’s best for their kids.  The middle-aged start to think about retirement and holding on to what they have (because most think that Social Security will not be there for them).  The elderly think about their mounting medical concerns and medical costs.

Where we are in the growth process influences our vote.  More kids (teenagers and early 20s) want to lower the drinking age, legalize drugs and tax the ‘rich’ than grownups.  More grownups want to lower taxes and cut government spending than kids.  But grownups were once kids.  They thought and prioritized like kids, too.  So it is likely that many voting conservative today voted liberal when they were a kid.  And they’ve grown to regret some of their votes.

This is the other kind of regret.  It’s when we change.  And realize the consequences of our previous votes.  Votes made for the moment, not the future.  And now that we have reached that future our youth helped to create, it is often not what we want anymore.  But the damage is done.  And it can’t be easily undone.  But you can’t tell this to kids today.  They won’t listen.  Just as you didn’t when you were their age.

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