Why is it so Hard to Understand Taxes?

I recently read some comments on Rand Paul's speech at CPAC about his proposal to institute a 17% flat tax.  One commenter raised the issue of a single mother making $7.25 an hour minimum wage just barely squeaking by getting her tax rate unfairly raised to 17%.

I've discussed this before in Tax Primer, intending to address it further.  Well after the wonderful sequester hysteria and now these comments from Rand Paul at CPAC stirring more misinformation out there, it's time to get to it.

The reality is that with this example of a single mother, her payroll taxes alone already add up to 15% (7.5% direct withholding and matching 7.5% the employer pays).  So out of her $7.25, she pays approximately $1.08 in tax ($.54 from her paycheck and $.54 from her employer).  Some will undoubtedly argue that her taxes are only half that and the employer pays the other half, but that still makes the $7.25 an hour of which the employee takes home $6.71 after her payroll tax is deducted cost $7.79 (rounded) an hour to the employer, possibly inhibiting him from paying her more or hiring more workers.  Those taxes are part of the total labor costs that get added into the retail price of whatever she produces, so she's effectively taxed double for buying the very thing she makes at a retail outlet.

For example, say she makes 1 coffee pot in an 8 hour day @ 7.25 an hour.  She gets paid $58 gross minus $4.35 (7.5%) deducted for payroll taxes for a total of $53.65  That total $58 she made before taxes were taken out is part of the retail price of that coffee pot at the store as well as the $4.35 the employer paid to match her payroll taxes.  So just for her part of the production chain, the effect of the payroll tax alone, it would cost her $62.35 for the labor associated part of the retail price to buy something she made for what she only received $53.65, meaning she not only paid those payroll taxes upfront in the production chain, but will have to pay that $8.70 a second time for an "effective" tax rate of 30% just because of the payroll tax alone.

Now that doesn't mean that the government gets 2x as much revenue. That extra $8.70 just pays herself and her employer back for what the government took from them up front.  It simply has the 2x the effect on her cash flow.

That's what helps make US made products that much more prohibitively expensive in that these taxes can often exceed transportation costs of importing similar products made halfway around the world with cheaper labor.

Those problems will also be a part of Paul's proposal for most income/payroll taxes have the effect of hitting you 2x, when you get it and when you spend it.  It gets even worse when sales taxes are added on top, adding insult to injury that you're now paying a tax on a (hidden) tax. 

That's why I do believe a single consumption or sales tax on all goods and services and getting rid of all income taxes, while certainly not perfect, may be a much better solution for it makes it that much harder for them to hide real tax rates and it would add the same imposed cost of our bloated government to the price of competing foreign products.  It will also help shift some of the burden to the underground markets when untaxed income of such activities as prostitution or drugs is used to purchase goods and services in the regulated markets.

While I'm at it, let me touch upon the dreaded Mitt Romney's comments on the 47% who supposedly get a free ride.  The truth is that income taxes that are imposed on the 53% who do pay them only add up to 42% of federal revenues.  Another 40% of the federal revenues come from payroll taxes.  About 9% comes in from corporate taxes, which of course, we all pay for whenever we buy any product or service from those taxed corporations.  And that's only federal taxes.

Citizens for Tax Justice put out this analysis which IMHO is woefully short on identifying anything close to the true tax burden, but is does somewhat illustrate that everyone pays taxes.  As I described above, it fails to capture hidden taxes and the fact that a portion of sales taxes amount to a tax on a tax.  It also fails to consider thousands of user and license fees and other ingenious vehicles for taking money from citizens are taxes, such as those for hunting/fishing licenses, department of motor vehicle fees, tolls, fines, forfeitures, court fees, regulatory burdens, the all too rarely discussed inflation tax and, yes, even the minimum wage is effectively a tax - imagine that.

The current tax code is a ingenious trap used by the predators to divide the herd as it seeks out victims upon which to feast.  They use it to divide and conquer to keep their bellies full.  It will never change unless we wake up and understand it for what it is and stop pointing fingers at each other claiming we pay too much and it's everyone else who is skating.

Please add your 2¢ if you see anything I missed or disagree with any points or have questions in the comments section below.  :)

McCain's Bumbling Blunders

While opening his mouth in anger without any critical thinking or forethought in an attempt to deride Sen Rand Paul's filibuster, Sen John McCain claimed Paul's actions were not only silly and worthless, but harmful to the preservation of the Senate's filibuster rules.  However, in his emotional ferver, McCain actually unwittingly acknowledged Paul's performance was successful by admitting Congressional failures over the last 12 years.

Let's take a closer look, shall we?

Well, Mr President, I watched some of that quote debate unquote yesterday.  I saw colleagues of mine who know better come to the floor and voice this same concern, which is totally unfounded.  I must say that the use of Jane Fonda's name does evoke certain memories with me.  And I must say that she is not my favorite American, but I also believe as odious as it was, Ms Fonda acted within her Constitutional rights.

Oh really?  She was cavorting with the enemy, John.  She wasn't just holding a sign in a protest exercising her right to speak her mind, but she was there on the battlefield, even sitting on active enemy ADA making believe she was shooting down our pilots, providing them specific aid in the form of propaganda photo ops to demoralize our troops.  North Vietnam was a country, a nation state that we were in open hostilities with at the time.  Within her Constitutional rights?  Are you mad?  And what if she did what she did with al Qaeda instead of the North Vietnamese...?  Would that be similarly within her Constitutional rights?  Funny, but today, that would bring a drone attack raining down on her head.

You know you wanted to kill her, John.  Deep down where your heart used to be, you wanted to see her burn in napalm.  But we all know to say so isn't conducive to continuing a Senate career which is well past its prime.

There is no such thing as a war against terrorism.  Terrorism is a tactic.  You declare war on countries or other nation/states that support terrorists, just like the war against the Taliban and their control over Afghanistan for refusing to comply with an ultimatum to turn over bin Laden. 

There is no world-wide battlefield. 

You went to war with the Taliban and drove them out of power and bin Laden out of Afghanistan.  You drove bin Laden into Pakistan.  But you would not, could not declare war on Pakistan, could you?  Oh, you sure wanted to.  You know you did, but you see, they have THE bomb.  Is it any wonder that Iran might like to have one with all the posturing you keep doing to attack them? 

The perception of a war against terrorism is no different than the war on tobacco, the war on drugs, the war on illiteracy, the war on... whatever you politicians want to declare a fictitious war on, it's only to further your agenda to exert control over the populace and whittle away citizens' rights.

And not only did he deride Sen Paul, but all those others like Sen Mitch McConnell who "know better".  Pffft.

He drones on...

And to somehow say anyone who disagrees with American policy and even may demonstrate against it is somehow a member of an organization who makes that individual an enemy combatant is simply false.  It is simply false! 

And how do we know that?  Al Awlaki was not part of al Qaeda, at least not until you pushed him.  After 9/11, he was preaching that terrorism was wrong and the attack on the WTC and Pentagon were wrong and that Americans should NOT be targeted by Muslims.  And what about his son?  All we know about his assassination is a snide remark by the WH press secretary, Robert Gibbs, suggesting that he "should have a far more responsible father." 

Sen McCain certainly has a lot of loiter time and more ammunition to expend.  And here is where it gets good.  As you will see in his own words, Sen McCain ADMITS Congressional failure to address EXACTLY what Sen Paul was, IMHO, actually trying to get them to address by asking President Obama a simple, limited scope question. 

Now, Mr President, I believe we need to visit this whole issue of the use of drones; who uses them; whether the CIA should become they're own Air Force; what the oversight is; what the legal and political foundations for this kind of conflict needs to be reviewed.  And the foundations rest mostly on laws designed for another task, that government lawyers have interpreted without public scrutiny to meet new challenges outside the surveillance context.   

Congress, as a body, has not debated the means or ends of secret warfare.  Because secret surveillance and targeted strikes rather than US military detention are central to the new warfare.  We need they know viable plaintiffs to test the government's authorities in court.   

In short, executive branch decisions since 2001 have led the nation to a new type of war against new enemies on a new battlefield without enough focused national debate, deliberate Congressional approval, or real judiciary review.  We probably need a new framework statute akin to the National Security Act of 1947 or the series of intelligent reforms made after Watergate or even the 2001 Authorization of Force to describe the... to define the scope of the new war, the authorities and limitations on presidential power, and forms of review of the president's actions. 

That's exactly what Rand Paul wanted, for you to admit your failures and you fell right into the trap as many soldiers did into North Vietnamese punji stick pits.  It had nothing to do with drones.  The kill list could be accomplished with guns, knives, piano wire, poison, sticks, or whatever... 

And no, John.  Warfare hasn't changed.  Terrorism hasn't changed.  No matter how you try to mold and transmogrify them into something new to suit your delusions of how to best to wield such deadly power.

There is some more in there which he again derides Sen Paul, but let's cut to the chase of the REAL source of Sen McCain's ire...

I'd also like to add an additional note, Mr President.    About 42%, as I'm told, of the members of this Senate are here for six years or less.  Everytime a majority party is in power, they become frustrated with the exercise of the minority or their rights here in the Senate.  And back some years ago, there was gonna be...  we were gonna eliminate...  when Republicans this side of the aisle was in the majority, we were gonna eliminate the ability to call for 60 votes for judges.  We... uh... confirmation of judges.  We were able to put that aside. 

There was another effort, just at the beginning of this Senate to do away with 60 votes and back down to 51, which in my view would have destroyed the Senate.  A lot of us work...  A group of us worked very hard for a long time to come up with some compromises that would allow the Senate to move more rapidly, but at the same time..., and efficiently, but at the same time preserve the 60 vote majority requirement on some pieces of legislation.  What we saw yesterday is going to give ammunition to those critics who say that the rules of the Senate are being abused.  I hope my colleagues on this side of the aisle will take that into consideration. 

That's it.  A dozen years of Congress failing to do it's job to address the scope of presidential powers w/ respect to targeted killings along with the last five years of them failing to even produce a budget while starting off this new session with a full scale assault on our individual rights to bear arms to protect our lives, families, and property...  Is Mr McCain worried about any of that? 

Mr McCain is most worried that an upstart freshman actually had the gall to use the precious rules of the Senate to demand an answer from the President on how he percieves he can act in total absence of Congress DOING IT'S DAMN JOB.  And what do you do?  You come unglued.

Thank you, Sen McCain.  You should be ashamed of yourself.

Rand Paul's Monumental Filibuster

I still see some people out there discounting this effort by bashing Paul about his actions on the Kerry and Hagel nominations. 

I believe this is the turning point many of us have all been waiting for and it's going to be remembered in history as a monumental national level discussion against governmental tyranny that's long overdue.

To the naysayers on Paul's effectiveness, all I can say is - Get over what you perceive to be weakness.  You can't fight a war wasting ammunition firing at everything that moves for random effect.

That's the reason to fight to our last breath all these efforts to infringe on our right to bear arms by limiting what type of weapons we can own and how much ammunition we can carry.

Whenever I see the #TheyDeserveaVote PSYOP from @BarackObama, I see images of a smiling crowd at a lynching. 

Basic human rights of self-defense should NEVER be allowed to be put up to the tyranny of the majority.  Minorities and individuals always lose.

It's too bad that it took fear of being attacked by drones that started waking some people up when our friends and neighbors have been executed for years by growth in use of swat team raids across the country.  Perhaps after this, that's a battle for another day.

For now - Go Rand!!!

Raw Milk: What's the Big Deal?

In this Bloomberg article about a farmer acquitted in a raw milk trial, the Centers for Disease Control and Prevention (CDC) claims raw milk products were responsible for at least 93 disease outbreaks from 1998-2009, causing 1,837 illnesses, 195 hospitalizations, and two deaths.

Ummm, ok?  And where's the cost/benefit analysis?  Do you think the CDC might have one?  Well, I couldn't find one, but here is their scare page.  //Warning:  extremely graphic like President Obama's dire predictions of the certain armageddon of sequester - Ensure you have medical emergency devices handy to treat shock or possible cardiac events and access to call 911 for emergency services before clicking either link//

Looking at the new "report" they just issued, "Non-Pasteurized Dairy Products, Disease Outbreaks, and State Laws-United States, 1993-2006", it claims "We found 121 outbreaks for which the product’s pasteurization status was known; among these, 73 (60%) involved nonpasteurized products and resulted in 1,571 cases, 202 hospitalizations, and 2 deaths."  Of course the same report shows that those 60% of outbreaks attributed to non-pasteurized products caused only 36% of the total reported cases of illness, meaning that pasteurized products caused 64% of the reported cases of illness in a lower number of outbreaks. 

Further on, it claims 4/48 outbreaks from pasteurized products "probably resulted" from post-pasteurization contamination by infected food handlers. 

It goes on to attribute another 3/48 pasteurized outbreaks to "probable" failure of consumers to store the products at the appropriate temperature.  Hmmm...  WTF is that?!?  That may apply to individual cases of an illness or two in a family, but for an entire outbreak traced back to a specific food batch? 

Also notice that in the report, such speculations of post-farm production contaminations in the retail/food handling chain or consumer handling procedures are strangely absent for the non-pasteurized products.

Also interesting is that all 73 outbreaks from the non-pasteurized products (milk and cheese) were determined to be due to bacteria, yet 13/30 (44%) (which is kind of strange in itself, since there were 48 total outbreaks from pasteurized products, so apparently they have no idea what the cause was in 18 of them?!?) of the pasteurized product caused outbreaks were due to norovirus.  Is it safe for us to now assume that norovirus infections from non-pasteurized products are non-existant?  Of course not.  In layman's terms, what that indicates is that the CDC has not produced a real report, but rather a piece of propaganda with crappy/limited data. 

Just look at the following graph of their data:

 

Hmmmm....  What's with the years 93-97?  Are we to believe that milk related outbreaks were practically non-existant 20 years ago and all this disease is a new phenomenon or there is only a more recent pandemic developing?  Or perhaps they can convince us that the seemingly exploding number of cases may be attributable to global warming?  Naaaaaaaahhh...  Again, chalk it up to crappy data.

 

 

Imagine: What if?

 

For perspective, I always like to compare dissimilar things...  For if you look at just the situation like that with raw milk by itself, the effects may look like they warrant government action.  However, think about government incursions into other market sectors and you'll see they're spending a lot of money acting rashly for little, if any, effect.

 

So imagine, if you will, the government applying this same process they are using to attack raw milk producers to something like motorcycles.  I'd bet there are a lot more deaths attributable to motorcycles in a single month than in what we saw them report over 13 years of raw milk consumption.  What if they attacked that industry in favor of only allowing people to drive around in four wheel cages because they are so much more safe?   "But, but, but... wait a minute.  Motorcycles are much more cost efficient and burn less fossil fuels", you might say.  Similar to the war on raw milk producers, "Big deal, it will save on deaths, period.  So suck it up" is their answer.

 

Let's get even more drastic and say they ban automobiles too and force you to take trains or buses without regard to inconveniences or limitations on personal mobility.  Well, that's essentially what they are doing with raw milk.  There is absolutely no cost/benefit analysis at all, just half-assed "studies" and "reports" that highlight scary things and downplay or even just plain hide the not-so-scary facts and the personal benefits.  In effect, they're making a minor problem seem so much bigger and scarier than it really is.

 

Of course it will be hard for them to take on the motorcycle or automobile manufacturing giants.  But it sure isn't hard for the CDC, FDA and state health agencies to gang up and destroy small family farmers living on meager sales of raw milk products.  Just look at what they did to Joe and Denise Dixon from Morningland Dairy.

 

So what's the bottomline here?

 

Well, according to the data sets in that most recent report from the CDC, a total of 3 people died and a few thousand more got sick allegedly from consuming both raw and pasteurized milk products over a 13 year period.  Considering the hundreds of millions of people in the US who might drink milk and eat cheese every day, those numbers prove the overall risks to be quite miniscule. 

 

If you start looking for the number of court cases involving these small family farm raw milk producers, you'll see they're mostly farmers fighting big government, not product liability claims.  The CDC and health agencies are spending considerable resources attacking the smaller raw milk producers and trying to put them out of business apparently only because they have been associated with more outbreaks (and they also have less deep pockets to fight back), but those producers also service smaller pools of consumers.  So the effect of outbreaks attributable to them would be much more limited than those associated with the larger factory farm producers who do pasteurize their products.  They are therefore expending scarce resources attacking those who put less people at risk of major large-scale outbreaks which could probably be better used elsewhere for real problems, not these imaginary ones.

 

So, as always, believe half of what you see and none of what you hear.  Always question everything.  Especially question it if it comes from a government agency, because their sole reason for existance is a perceived problem (whether one exists or not).  So if there are no problems, you can be sure they're certainly working hard to create the appearance of one.

 

They came for our cigarettes.  Then they came for our water wasting toilets and gave us ones you have to flush more to get rid of number 2's.  Then they came for our incandescent light bulbs and gave us more toxic ones.  Now they're coming for our raw milk and even our guns.  When will it end?  Or more importantly, how will it end?

 

(Update:  5 Mar 13)

 

This "Scary Drink" May Resolve Your Troubling Health Issues, 1 Jan 12 - According to Dr Mercola the CDC may be misrepresenting those two deaths they linked to raw milk and they may be attributable to a specific type of cheese, Queso Fresco, that is illegal under FDA regulations. 

What do NY's Smoking Ban and NY SAFE Act Have in Common?

Simply put, they are both egregious infringements on individual rights to own and use property as seen fit.

Smokers have lived with numerous assaults on their personal decisions for years, but the smoking ban rose to another level and attacked small business owners throughout the state effectively denying them use of their personal property, that they worked hard for and built, for a specific purpose as if they were nothing more than caretakers of public property.

This is certainly not a partisan party issue.  The final votes in the Assembly and Senate were greatly mixed showing both parties infiltrated with control freaks.

Democrats:    Assembly  84 yes - 11 no  ~  Senate  20 yes - 4 no
Republicans:  Assembly 13 yes - 33 no  ~  Senate  37 yes - 0 no

Assemblyman Daniel Hooker’s comments made on the floor of the Assembly during debate on the smoking ban, Wednesday, March 26th, 2003:

I am from a rural district as well, and while we don’t have any cities, we do have a lot of restaurants, taverns, and diners, and this bill will hurt their business. We also have a lot of VFW Posts, American Legion Posts, and Marine Corps League Posts. I can’t help but think of the irony of the situation where a soldier or Marine comes home from the war, goes into a local VFW for a beer and a cigarette, and the bartender says "I’m sorry, young man, while you were overseas fighting for freedom, your State Assembly was quietly legislating it away here at home."

However, Mr. Speaker, I am chiefly opposed to this bill because it presumes that people are incapable of thinking and acting for themselves without the government telling them what to do.

At present, people are free to choose to work in an environment that is smoke free or not. A lot of waitresses who smoke choose to work in a bar specifically because it is a smoke-friendly environment. This bill would limit that freedom.

I don’t smoke but believe that others should be free to smoke if they choose to.

I am not insensitive to the health hazards of smoking. My Dad smoked, and he died of lung cancer. Cause and effect? Probably, but he died a free man who made his own choices.

My general philosophy is that our government spends way too much time telling people what to do and this seems like a good example of that practice.

I am opposed. 

Even though I wasn't from his district, I had written Mr Hooker to thank him for his stand, and he replied with a hand-written and personally signed note providing me with the full text of his speech.  All I got back from my own two representatives were form letters praising the great courageous stand they took standing with the majority to figuratively lynch a minority constituency.

 

We don't want to merely die like Dan Hooker's dad as free men, we want to live our lives as free men, unmolested by tyranny.

 

Why am I writing about this long dead issue now?  Well, first of all, it's NOT dead, it was just a lost squirmish in the never-ending battle for liberty.  And when it was a raging battle, we were severely chastized during that crusade for even insinuating that this assault on individual property rights would snowball down the slippery slope.  Yet today, we have Mayor Bloomberg assaulting individual rights nearly every day with stop and frisk and even denying your right to choose how big of a soft drink you'd like to buy.  Bloomberg rules NYC with an iron fist, but his crusades, especially against the 2nd Amendment are affecting people outside his jurisdiction.  We also have Gov Cuomo, rushing through the ill-conceived NY SAFE Act to attack another group of citizens to deny them their 2nd Amendment rights to own certain property to defend themselves, their families, and their property.

 

The assaults won't ever end until enough people wake up to just say NO!  We must honor the Constitution's legal framework that was set up to defend individual rights against usurpations of the collective and the tyrannical majority.  And just saying no once or twice here or there isn't enough.  We must demand that all such laws be reviewed and those that infringe on individual liberty must be rescinded or repealed.  A single such law makes a precedent for others to follow.

 

There's a reason for the many levels of government and the central powers are enumerated and severely limited.  Even statewide laws should be extremely limited.  Where freedom of association comes in is at the local level.  Don't like the colors your neighbor may paint his house, then join a local homeowners association and dictate away to attract like-minded people to your neighborhood sort of like what's going on in Kiryas Joel.

 

I can go on and on comparing the smoking ban and the NY SAFE Act to a myriad of social issues pertaining to individual rights such as one with the Defense of Marriage Act and the individual right of a citizen to marry whomever he or she pleases that is essential to maintain your right of free association.

As I continually stress, if you petition the government to limit the rights of any other individual to do anything you personally dislike, you empower them to come after you to limit yours.  Think long and hard about it and please ~ Help stop the madness!