My View on The Tax System

Recently, I had a few arguments with conservative friends, spurred by the tax debate between Chris Christie and Steve Lonegan. I want get into that debate, I just want to express my opinions on the flat tax.

I think we live in a very socialist society, as exemplified by the highly redistributive progressive tax system. The idea of the progressive tax is that the more you earn, the more you pay in tax from every dollar you make. So let's take the federal tax. Let's say I make $200k/year, and a cashier at Walmart makes $20k/year. I will pay 28c for every dollar I make, while the cashier pays 15c. So according to this scheme, the dollars I earn are worth less than the dollar the cashier makes. I'm severely punished because I got a better job.

The flat (proportional) tax tries to replace this situation with a uniform tax rate, let's say 20% that everyone will pay. Of course, liberals will cry that this is unfair, but actually the flat tax is still an unfair redistribution of wealth. Even with the flat tax, I pay $40k/year in taxes, while the cashier pays only $4k. You'd say that this is normal, since I make more money, but again, why should I be punished because I got to a better job?? Just to explain, we the people pay taxes to the Government so it can fulfill its Constitutional duties, and provide services in return. So if we all receive the same kind of Government services, we should all pay the same tax, right? Otherwise, if I pay 10 times more than the cashier, I should get better roads in front of my house, better schools in my neighborhood and much better police protection. Anything less than this makes the tax plan unequitable and redistributive.

Of course, the alternative which is a lump-sum tax, is not feasible. And this is mainly due to the increased social programs that our rooted in our Government. But the most equitable way of taxation is when everybody pays the same amount of money to the Government. Under the 2008 budget, that would amount to about $16k/taxpayer (or $32k/married couple). And this is more than MOST of the population pays. It just shows how much people should be thankful to the rich that are paying for their Government services. After all, the 5% richest Americans pay more than half the tax bill (55.2%). The 20% top earners pay 83% of all the taxes. 60% of the Americans, the a solid majority, contribute only 3.2% to the federal budget.

The flat tax is the best we can do now, although it's still a socialist system that redistributes wealth. The problem with switching to a flat tax is that for some people the taxes will be lower, and for some they will be higher. And the real political problem is that they will slightly increase for a lot more people (voters), so no one will agree to it. No matter what political affiliation they have, no one will give up this Marxist progressive redistribution.

From an economic standpoint, the flat tax should be calculated by dividing current total tax receipts to the number of taxpayers. This is just a starting point, and the calculation is empyrical. The fact is that a flat tax would probably boost tax revenues, as a result of increased GDP. The decrease in taxes for the high earners acts as a supply-side stimulus, which has a pretty high multiplying effect (even according to previous papers by Christina Romer, currently Obama's economic adviser). The increase in taxes for low earners has a more Keynesian effect (in reverse), which has a lower multiplier. So overall, switching to a flat tax would boost tax revenues and the economy, making it possible to further reduce the tax rate.

As I said, this looks politically unfeasible. The only way it would work would be if the taxes would be lowered for more people than will see the tax increase. And this will result in significantly lower tax revenues, which probably can't be covered even by drastic spending reduction. So far, I didn't offer any solutions, I was just critiqueing the current tax systems... But I'm a blogger, not a political adviser. But if I were to suggest a way to cut spending, I'd advocate for zero-based budgeting for one year. This means that instead of adjusting budgets from year-to-year, by deciding which programs to cut (not many) and what to add (a lot), to start from scratch. Start with the so-called mandatory spending, and add only strictly necessary programs.

Regarding mandatory spending, in 2008 that was $1.8 trillions, 62% of the $2.9 trillion federal budget, and is made of Social Security, Medicare, Medicaid, unemployment, welfare and interest on the national debt. As you can see, most of this (amounting to 52% of the total budget) are social programs. The fact that we call them mandatory shows how hard would be to remove any kind of new entitlement (including national healthcare). Once you start an entitlement program, there's no going back. It was never the Constitutional duty of our Government to take from the rich and give to the poor. This is the result of mainly two movement, FDR's New Deal and LBJ's Great Society. They created most of this spending, and we're paying more and more for them. And it's interesting to see how these socialist programs shadowed major worldwide socialist events, by about 20 years: the creation of the Marxist state in USSR, and the spread of communism through the world, post-WW2. 20 years is what the establishment intelligentsia needed to digest the new policies, and feed them to the uninformed public.

But back to zero-based budgeting. We can't get rid of "mandatory spending", maybe just trim it, although it wouldn't be by much. Apart from this, you have to provide for National Defense, since this is a Constitutional duty of the Government to its citizens, and then everything starts from scratch. Social programs and defense amounted for $2.3 trillions in 2008, and everything that's on top of that (600 billions) would be cut, under zero-based budgeting. Every program that needs to be funded by the Federal government will be studied, and decided if it's worth spending the taxpayer dollars. I'm sure you could get away with spending just $100-200 billions more above the mandatory spending. This would've meant for 2008 about $2.5 trillions, with a budget surplus of about $160 billions.

Now back to the tax system. A flat tax punishes people who got a better job. The current progressive taxes punishes them even harder, to the point where, when looking at the tax share of various percentiles, it becomes confiscatory. Switching to a flat tax would be a very hard political move. But it's been done in many Eastern European counties, and it's considered the reason why those ailing economies are finally starting to move and try to catch up with Western Europe. For a politician, it would be dangerous to advocate for a flat tax, but they don't want to sound economically illiterate, they shouldn't strongly advocate against it. They have to admit that the proportional tax is better, they jsut can't do it.

Great Speeches of Our Enlightened Leader, BH Obama

Everybody knows by now that Obama is the best speaker of our lifetime. His words always inspire us, even if nobody can remember what he said.

Here is a selection of some of his best speeches, 100 days into his glorious Presidency:

Another Idiot Dem: Waxman Thinks North Pole Will Evaporate and Become a Tundra

Now really, what drugs was Henry Waxman (Dem - California) on?? Just read what he said:

We’re seeing the reality of a lot of the North Pole starting to evaporate, and we could get to a tipping point. Because if it evaporates to a certain point - they have lanes now where ships can go that couldn’t ever sail through before. And if it gets to a point where it evaporates too much, there’s a lot of tundra that’s being held down by that ice cap.

The North Pole evaporating?? A tundra underneath??
Where is this guy coming from? Special education? Did his parents drop him on the head too many times?

(thanks to CWA for pointing this out)

Obama Talking to the Teleprompter

Check out the idiot in the White House talking to the teleprompter, asking it to move faster.

Obama Smiling While Humiliated by Hugo Chavez

This is picture should be scary in itself, as Obama seems to be smiling and shaking hands with communist dictator and renowned anti-American Hugo Chavez. What's worse is that Chavez came to Obama to give him an anti-American book as a gift, and Obama smiled like the idiot he is, because there was no teleprompter to show him "act like you're humiliated".

Tea Party in Freehold

Yesterday I attended one of the hundreds of tea parties all over America. I went to the one in Freehold, NJ, hosted at the Moore's Tavern by the 12th District legislators (Jen Beck, Caroline Casagrande, Declan O'Scanlon).

It was a fun event, like the tea parties were supposed to be everywhere. Although they got ignored by the mainstream media, a million people showed up across America. Oh, and when the media mentioned them, they claimed it's an extremist thing organized by Fox News. Hahaha. Yeah, maybe Sean Hannity was active in organizing the Atlanta Tea Party, but everywhere else it was spontaneous. And if we need to credit someone with the idea of Tea Parties, that is Rick Santelli of CNBC, a subsidiary of GE.

But there was very limited media presence. Remember when 10 wackos were demonstrating against Bush, and you had 50 reporters surrounding them? This time the "reporters" were gone!

Anyway, here are a few pics from the Freehold Tea Party:

Arriving at Moore's Tavern:


With Tom Apostle of the Freehold GOP:


With Sen. Jen Beck:


With Pete VanNortwick of Middletown:


With Assemblywoman Caroline Casagrande:

Privacy Rights Threatened by Obama

In an unrelated speech regarding the Somali pirates, Obama yesterday said he's "resolved to halt the rise of privacy". Are our Constitutional rights to privacy to come under attack from the Obaministration?

Here's a clip, the scary part is at about 0:45.

Obama's Brother is a Child Rapist

Barrack Obama's brother, Samson (residing in Kenya), was accused by British authorities of an attempted sex attack on a 13-year old girl. He's barred from entering UK. I wonder what is the ICE's position on this. Personally, I think he could run the Dept. of Education, since into screwing the kids.

Ted Stevens WAS a Victim of the Democratic Character Killing Machine

We all remember the well publicized scandal regarding Sen. Ted Stevens' trial and conviction. It resulted in him losing his Senate seat in a battle he shouldn't have had any problem with. And now, 5 months after the elections, it turns out the prosecutors case was a total lie. The judge dismissed the conviction and the prosecutors are under investigation.

I don't know how anybody can't be outraged about this. The democrats killed his reputation. Destroyed his political career. All to get their party closer to a filibuster-proof majority. And now that it's been proven to be a lie, nobody cares. You could barely get this news from the media.

I bet the prosecutors went to the same school that the Duke lacrosse players prosecutor did. It's the same tactic, flood the media with lies, no matter what happens. It also worked with Scooter Libby. Sometimes it can work, sometimes not, and in the best case the prosecutors end up disbarred, but only after completing their heinous mission.

Will the new Sen. Bagich quit and ask for a new election? Will democrats apologize? Will the mainstream media at least report this?? No way. It's part of the dirty political strategy that the democrats have been following for decades.

I'm just disgusted.

Obama and his Clear Path to Fascism

It's becoming more and more obvious that the Obaministration is leading America down the path to classic fascism. Here's a brief definition of FASCISM:

As an economic system, fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax. In its day (the 1920s and 1930s), fascism was seen as the happy medium between boom-and-bust-prone liberal capitalism, with its alleged class conflict, wasteful competition, and profit-oriented egoism, and revolutionary Marxism

Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”

Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically.

Under fascism, the state, through official cartels, controlled all aspects of manufacturing, commerce, finance, and agriculture.

To maintain high employment and minimize popular discontent, fascist governments also undertook massive public-works projects financed by steep taxes, borrowing, and fiat money creation.

This is to show that Obama's not heading towards pure socialism, but fascism. I think it's scary to find the similarities between the definition of fascism, and the new Government policies. Even more scarier is to follow the evolution of fascist economy in Italy, under Mussolini:

Trying to handle the crisis, the Fascist government nationalized the holdings of large banks which had accrued significant industrial securities. The government also issued new securities to provide a source of credit for the banks and began enlisting the help of various cartels.

This economic model based on a partnership between government and business was soon extended to the political sphere, in what came to be known as corporatism. Various banking and industrial companies were financially supported by the state.

The national leader] also adopted a Keynesian policy of government spending on public works to stimulate the economy. Public works spending tripled to overtake defense spending as the largest item of government expenditure.

American Spectator's Quin Hillyer argued this case by finding many similarities between Il Duce's road to fascism in Italy, and Obama's plans for the next 10 years.

Obama is the Most Divisive President in Recent History

According to the polls during the first 3 months of the presidency, Obama is the most divisive of all modern presidents. Nobody polarized the American people more than him.

As you can see in the Pew Research poll, the gap between his approval rates by Republicans and Democrats is much bigger than anything we've seen before. At 61%, it's 10% higher than Bush. It's more than double what Nixon and Carter had after 3 months. For someone who kept talking about being a unity, it's interesting to note that Carter had a positive approval among Republicans and Nixon was actually liked by Democrats.

Our Ignorant President Thinks "Austrian" is a Language

Obama has said so many stupid things during his trip to Europe (the non-teleprompter uh-ah-oh town hall being a highlight) that you could dedicate an entire new blog to it.

In a latest example or stupidity, today he thought Austrian is a language... Can you imagine if Bush would've said that??