Posted by
Dave Perkins on Wednesday, December 17, 2008 10:25:25 PM
I'm working on the reference manual for conservative principles, as seen by the common man, the ordinary guy, ME.
Here's the first part of the manual.
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Fiscal conservatism--
1) taxation is a 'necessary evil'. We cannot run government without funding it. But the primary obligation of government is not to become as large as possible or to serve as many people as possible, it is TO TAKE AS LITTLE OF THE HARD EARNED MONEY OF A TAXPAYER AS POSSIBLE. This is a MORAL DUTY of government. Ours has failed miserably at this test of fiduciary responsibility.
This moral aspect of taxation and spending cannot be overstated;
the act of seizing the hard earned money of free citizens is morally wrong, and it is endured by them only because it is the 'least bad' way of funding government. Citizens accept it grudgingly, but do not embrace it. I can think of nobody, even a very wealthy liberal, who brags of volunteering to pay more tax than he owes. Warren Buffett famously points out that his secretary pays MORE taxes than he does.
Liberals may make noises about being proud to pay taxes and so on, but they still hire accountants to make sure they don't pay a nickel more in tax than necessary; this is a reasonable proof of the general rule that people can be depended upon to act in their own economic self interest. And that leads us to--
2) History proves that when taxes are raised, the activity which is being taxed is REDUCED, and the normal result is that the government brings in LESS revenue. People do not blindly continue to do something that costs them more and more; the risk/reward ratio is altered for the worse by increased taxes, and the higher risk and lower reward reduces the number of people who participate in the taxed activity. (
example-- the brilliant liberal idea of a 10% "luxury" tax on yachts back in the early '90s, which destroyed the yacht-building industry and cost thousands of middle class jobs but raised almost no money. Buyers simply switched to used yachts to avoid the tax, and the builders were devastated.
The liberal thinking was along the lines of 'those rich guys, they won't even notice ten percent, they can afford it, it's easy money', etc. But changes in tax cause changes in behavior, always.)
Therefore increased taxes cannot be seen simply as a method of increasing revenue, but rather as
a force that changes behavior in the market. And liberals often acknowledge this, as did Tom Brokaw in a recent Obama interview, when he suggested to Obama that taxes be raised on gasoline in order to compel people to alternative energy and alternative kinds of transportation. Punitive taxes change behavior, and liberals are quick to use this principle whenever they want to DISCOURAGE an activity. But they never acknowledge that lowering a tax on an activity can increase the activity, and thus increase the amount of earned money subject to taxing, which
increases revenue to government.
3) Liberals respond to the idea of tax cuts to increase revenue with a scoff, "
what, are you going to cut them to zero? How can you have revenue then?" But that is a specious argument of extremes. IT's like arguing that because slower driving uses less gasoline, you should stop the car and turn it off, thereby saving ALL your gasoline. It works, but you get nowhere. Stupid argument. I say stick to reality--
History proves that lower taxes increase government revenue, as a general rule, by increasing the activity that is taxed.
After the Bush tax cuts, the following five years all set records for government revenue. When you remove some of the penalty for a business activity (
like reducing cap gains from 27% to 15%), you alter the risk-reward ratio for the better, and more people thus do more business (
buying and selling stocks and assets), because they can keep more of the income. This increase in activity more than compensates for the reduction in percentage of the tax, and the overall result is an increase in government revenue.
(
aside-- recently, BHO was interviewed by Charlie Gibson, and the question was put; if increasing taxes reduces revenue, why would you want to do it? Obama's response? "it's not about revenue, it's about fairness." Obama believes the tax code exists to punish people for being too rich, apparently. There's no other way to interpret his answer.
He is willing to subject America's poor to privation in the form of less money to go around, less money to help, all in the name of bringing down the rich by increasing their tax burden. Honesty, breathtaking and appalling.)
The Irish have a 12.5% business tax as opposed to our combined rate of over 40%, and the Irish economy has boomed while others languished. This is because so many businesses moved to Ireland to take advantage of this low tax.
The Russian government recently adopted a 12% flat tax, because so many people were not PAYING the higher tax that it caused government to have a revenue crisis. This new, lower, affordable tax brought a lot of people back into 'legal' status, because they knew it was riskier to continue to dodge taxes than to simply pay the 12%. Russian government revenues have increased dramatically by LOWERING their tax rate and removing the graduated rates.
You would think these lessons would be learned and absorbed by our intrepid legislators. And you would be wrong. Or perhaps they do know these things and simply do not care; the point of tax law appears to be for government to control the actions of various groups of people.
IF liberals were serious about 'helping the poor', you would see tax cuts across the board, so that government revenue would increase and there would be more money for those poor people.
But instead, the poor stay poor, and government is in perpetual motion trying to find ways to INCREASE taxes.
(
aside- Charlie Rangel was recently asked what would happen if the rich had their taxes increased, and said he figured they'd just work harder to stay even. Nauseating disregard for the principle of ownership, disrespect for the American tradition of hard work and reward, and I'd even say he feels that earners and taxpayers are rightfully slaves to government, obligated to produce so that government can be funded.)
A recent anecdote about what happens when liberals are in charge of taxation and spending sheds light on these truths--
California faces a budget breakdown. Over the past four years California government spending increased almost 100%, faster even than federal government spending. They have, of course, been spending more than they took in for years, and are now on the edge of being broke.
Some press wonk recently wrote, without awareness of the irony, that it would be hard to raise taxes on the rich in California, as the top 1% already pay 50% of the taxes.
Nationally, the top half of earners pay more than 97% of taxes. The top 5% pay 50%. The rich pay far more than their fair share. California's ceaseless beavering at the rich, trying to get ever more of their money, is backfiring; the rich are LEAVING. The top 1% of Californians are only 150,000 people, a very small number to be responsible for half the state budget. Even a hundred or two leaving the state has a colossal impact on its future revenues.
"Tax the rich" is not the answer. The answer is to reduce taxes. It's the practical and moral thing to do. But Democrats will fight to the death to prevent this from happening.
The rich, as we know, are fleeing California. Options? Make it illegal to move out of California if your income is above a certain amount? Make a 'trailing tax' that people have to pay even after leaving California? Is there anything California can really do to increase its revenues and stop the tide of productive people flowing out of the state?
Of course. They can institute drastic reductions in taxes on small business and on individuals.
But they won't. And they will be broke, and the slack will again be taken up by the seizing of ever more of the hard earned money of those who DO make prudent, sensible decisions on finances, who DON'T buy more house than they can afford, who save and who pay taxes and who work to make a life for themselves and their families.
Our reward for acting in a financially responsible manner is to be billed for the losses of those who do not. It's true for responsible Californians, and it's true for the rest of us as well.
No wonder those Californians are heading east. But where do the rest of us go to escape federal government's rapacious, counterproductive and foolish excess taxation?
Lacking refuge to which we can flee, the only other response we can muster is the Rand response-- shrugging off our burdens, producing less, giving up our American dream of prosperity, learning how to 'barely get by' and enjoy other aspects of life.
Some are doing it now; many more will follow.
The only government response to THIS? Well, that's to make productivity 'mandatory', otherwise known as SLAVERY.
Think about it.