Monthly Archives: June 2011

The Debt Ceiling, The Budget and The Deficit

In April I spoke about taxing the rich.  Basically, you can’t tax ’em enough.

But for fun, let’s try; the highlights:

  • The deficit is $1.5 trillion.
  • People making more than $200,000 a year paid $5.3 billion.
  • Back out those taxes and the deficit is about $2 trillion.
  • People making more than $200,000 a year made, in total, $2.4 trillion.

If you tax the people making more than $200,000 a year at a rate of 100%, you cover the deficit and have $400 billion left over.

You would have to tax every single dime those people made.

At what point would taxing the rich reach the point at which the Leftist would be willing to cut Social Security?  Medicaid?  Medicare?  Unemployment?

If it were me, I’d compromise.  I’d offer $1 in tax raises for each $10 in spending cuts.

“Raise taxes on airplanes?”  Fair enough, cut spending 10 times that much.

Actions Have Consequences

I really enjoy chess.  Well, actually, I wish I really enjoyed chess.  In reality, I’m a horrible chess player; and I know why.

I think the reason I’m such a poor player is that I’m a “selfish” or “arrogant” player.  That is, I assume my opponent will play as I would.  Therefore, when I create my strategy and begin to implement it, I fail to take into account that as the board changes, my opponent is going to react and change his behavior.

I’ve never overcome this failing of mine.  So I lose.

And because I lose, I rarely play.

I can take heart that others face the same challenges.  However, that comfort can also cause great concern.

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Baseball And Hopscotch Are More Fun

It’s no secret, the hard makes the great.

This is true in sports, in business and in baseball.

That it wouldn’t be equally so in governing is silly.  Look, do I want people to do the right thing?  Of course.  Do I want money to flow from those that have to those that need?  Yes.  Is it hard to manage a group of people into doing that right thing?  Without a doubt.  Would it be easier to just pass a law? For sure.

But there can be little doubt that a group of people voting that property be transferred from one to another is as tyrannical as a feudal king simply taking it.

Liberty is tough; but the tough is what makes it great.  Demonstrated here via


Ahh…to be 20 again, right?  And do all that crazy shit that people in their 20s do?

Remember all the things that you thought were true back then?

“Adults” didn’t “get it”.  They weren’t hip.  The new generation was gonna change, ’cause everything was changin’.

And then you kinda grew up.

I know, I did it.  I used to be that long haired hippie dude with the ear-ring.  I used to go down to Mexico and build homes for immigrants trying to cross the border.  I used to support legalizing pot.

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Greece: How Long Until You Visit Our Shores?

Greece is in trouble.

Big trouble.

Of course, this is what happens when you tax and tax and tax all the while believing that government won’t spend and spend and spend.

In the end, people don’t see the expenditures as a method to deal with a short-term crisis or as a stimulus; they see it as an entitlement.  These people literally feel it is their ‘effin birthright to be be born, work a little while, and then retire to a life of luxury at the ripe old age of 52.

Vacations and wine for everyone!

Well, when the excess of the Leftist rears its ugly hangover, this is what you get:

(Reuters) – Greek riot police with teargas and batons fought hooded youths near parliament on Tuesday as violence broke out at a rally against anti-austerity measures international lenders have demanded from the Athens government.

With Greece on the edge of bankruptcy, parliament is due to vote this week on a package of spending cuts, tax increases and privatizations agreed as part of a massive bailout aimed at averting the euro zone’s first default.

In the face of massive default, they can’t let go the concept that they don’t own what they didn’t earn.

Lord help us!

Income Mobility

I’ve done some work on the Middle Class.  One of the things I’ve learned is that “The Middle Class” isn’t what people think it is.  Virtually everyone feels they are middle class.  Literally, virtually everyone thinks that.

How can that be?

I think it’s because we tend to think of the middle class as a state of mind rather than a set group of people.  A mindset rather than a demographic.

I think we see and think of the rich as those folks who are “stoopid rich”.  People that are able to afford jet planes and mansions.  People who have yachts and commercials and just have $MONEY$!

We see middle class as having the ability to continue to climb the income ladder.  Especially important in this classification is the ability to allow your children to have it better than you do.

So, if you’re not “stoopid rich” AND you continue to gather wealth, you are middle class.

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I Have No Words

How To Break A Monopoly

We hate monopolies.

People fear ’em and the government works to find and destroy ’em.

They’re bad and they’re evil; scourges  on civilization.

I mostly agree.  I think monopolies would be able to take advantage of markets and prices and demand and supply to benefit themselves without being subject to normal natural checks and balances.

With that said, I do not, do NOT, believe that a monopoly can exits in an open market without the aid of government.

That is government regulation creates and sustains monopolies, not free markets.

Thought experiment:  Think of one single naturally occurring monopoly in the real world.

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Words To Live By: Or Govern

New material out recently.  Even before the official body of work begins I’m impressed:

10 Golden Rules of Effective Taxation

This is gonna be good, I can just TELL!

1.  When you tax something more you get less of it, and when you tax something less you get more of it.

It is wise to keep taxes on work, savings, and investment as low as possible in order not to deter people from participating in these activities.

2.  Individuals work and produce goods and services to earn money for present or future consumption.

Workers save, but they do so for the purpose of conserving resources so they or their children can consume in the future.

3.  Taxes create a wedge between the cost of working and the rewards from working.

This is why all taxes ultimately affect people’s incentive to work and invest, though some taxes clearly have a more detrimental effect than others.

4.  An increase in tax rates will not lead to a dollar-for-dollar increase in tax revenues, and a reduction in tax rates that encourages production will lead to less than a dollar-for-dollar reduction in tax revenues.

Lower marginal tax rates reduce the tax wedge and lead to an expansion in the production base and improved resource allocation. Thus, while less tax revenue may be collected per unit of tax base, the tax base itself increases. This expansion of the tax base will, therefore, offset some (and in some cases, all) of the loss in revenues because of the now lower rates.

5.  If tax rates become too high, they may lead to a reduction in tax receipts. The relationship between tax rates and tax receipts has been described by the Laffer Curve.

…within what is referred to as the “normal range,” an increase in tax rates will lead to an increase in tax revenues. At some point, however, higher tax rates become counterproductive.  Above this point, called the “prohibitive range,” an increase in tax rates leads to a reduction in tax revenues and vice versa. Over the entire range, with a tax rate reduction, the revenues collected per dollar of tax base falls. This is the arithmetic effect. But the number of units in the tax base expands.  Lower tax rates lead to higher levels of personal income, employment, retail sales, investment, and general economic activity. This is the economic, or incentive, effect. Tax avoidance also declines.

6.  The more mobile the factors being taxed, the larger the response to a change in tax rates. The less mobile the factor, the smaller the change in the tax base for a given change in tax rates.

A study by the American Enterprise Institute  has found that high corporate income taxes at the national level are associated with lower growth in wages. Again, it appears a chain reaction occurs when corporate taxes get too high. Capital moves out of the high tax area, but wages are a function of the ratio of capital to labor, so the reduction in capital decreases the wage rate.

7.  Raising tax rates on one source of revenue may reduce the tax revenue from other sources, while reducing the tax rate on one activity may raise the taxes raised from other activities.

…an increase in the tax rate on corporate profits would be expected to lead to a diminution in the amount of corporate activity, and hence profits, within the taxing district. That alone implies less than a proportionate increase in corporate tax revenues. Such a reduction in corporate activity also implies a reduction in employment and personal income.

8.  An economically efficient tax system has a sensible, broad tax base and a low tax rate.

Ideally, the tax system of a state, city, or country will distort economic activity only minimally. High tax rates alter economic behavior. Ronald Reagan used to tell the story that he would stop making movies during his acting career once he was in the 90 percent tax bracket because the income he received was so low after taxes were taken away.

9.  Income transfer (welfare) payments also create a de facto tax on work and, thus, have a high impact on the vitality of a state’s economy.

Unemployment benefits, welfare payments, and subsidies all represent a redistribution of income. For every transfer recipient, there is an equivalent tax payment or future tax liability. Thus, income effects cancel. In many instances, these payments are given to people only in the absence of work or output.

In some high benefit states, such as Hawaii, Massachusetts, and New York, the entire package of welfare payments can pay people the equivalent of a $10 per hour job (and let us not forget: welfare benefits are not taxed, but wages and salaries are). Because these benefits shrink as income levels from work climb, welfare can impose very high marginal tax rates (60 percent or more) on low-income Americans. And those disincentives to work have a deleterious effect.

10.  If A and B are two locations, and if taxes are raised in B and lowered in A, producers and manufacturers will have a greater incentive to move from B to A.

No explanation given.

North Carolina’s Unemployment

Unemployment across the State remained basically steady.  Officially the rate moved from 9.6% in April to 9.7% in May.

I suspect that this number not moving down causes great worry in the governor’s office.  And it should; she is contributing to the rate staying so high.


A job at minimum wage over 40 hours is $7.25 x 40 = $290.00

Unemployment benefit c heck is $297.00.

The marginal benefit of working 40 hours is $7.00.

Do you think that pressure is going to add to unemployment or reduce it?

Governor Purdue, please remove your executive order restoring benefits with that Federal money.  You are making it harder to bring that number down.