When Liberals unwittingly apply conservative economic principles . . .

The principles of capitalism work and have raised more people from poverty than Communists and Socialists ever dreamed of.  And even though Liberals literally fail at basic economics, every now and then they accidentally get one right. See Official: NY tax breaks would apply to ‘Tonight’:

The bill expected to be voted into law in coming days would provide a 30 percent tax credit for a “relocated television production.” Past and current tax credits have gone to new productions starting in New York, such as “Law & Order.”

Hmmm . . . so if you lower taxes, a business will be more likely to come to your location. Shocking.  And it stands to reason that if you raise taxes then more will leave.

Are the NY officials being irrational by offering the tax break?  No, because they realize that luring the Tonight Show will have all sorts of other benefits.  Too bad they don’t apply that across the board.

When you consider how the same behavior applies to countries you can see why jobs get outsourced (it isn’t just the wages).

“I tip my urologist” and other tax philosophies

Dwight Schrute, from The Office: [After he didn’t tip the sandwich delivery boy] Why tip someone for a job I’m capable of doing myself? I can deliver food. I can drive a taxi. I can, and do, cut my own hair. I did however, tip my urologist, because I am unable to pulverize my own kidney stones.

That theme fits in well with the tax philosophy regarding what we “need” taxes for.  I can’t — or it would be wildly inefficient for me — to defend the country, put out a house fire, etc.  But I don’t need the government to get involved in everything in my life.  More specifically, I want the right part of government doing the right job.  We do not need the Federal Government involved in education at all.  Even the smallest states are big enough to run things themselves, and could easily leverage the successful ideas (read: not California’s) of other states.

And note that the government doesn’t really do many of the things attributed to them.  They don’t build roads.  They collect our money to pay others to build roads.  This is probably the best way to do it, even though the politicians often get kickbacks when handing out contracts.

 

Good overview of Cain’s 9-9-9 plan

Herman Cain

Image via Wikipedia

See Is Herman Cain’s 9-9-9 plan revenue neutral? Does it tax the poor more?  I’m a big fan of the simplicity of flat taxes.  If you’ve ever worked in the finance area of corporate America you know how many business decisions are reverse-engineered to optimize the insane complexities of our tax code.

The whole purpose of a flat tax, à la 9-9-9, is to lower marginal tax rates and simplify the tax code. With lower marginal tax rates (and boy will marginal tax rates be lower with the 9-9-9 plan), both the demand for and the supply of labor and capital will increase. Output will soar, as will jobs. Tax revenues will also increase enormously—not because tax rates have increased, but because marginal tax rates have decreased.

By making the tax codes a lot simpler, we’d allow individuals and businesses to spend a lot less on maintaining tax records; filing taxes; hiring lawyers, accountants and tax-deferral experts; and lobbying Congress. As I wrote on this page earlier this year (“The 30-Cent Tax Premium,” April 18), for every dollar of business and personal income taxes paid, some 30 cents in out-of-pocket expenses also were paid to comply with the tax code. Under 9-9-9, these expenses would plummet without a penny being lost to the U.S. Treasury. It’s a win-win.

Here are three facts about Cain’s plan:

  • Fact #1: People below the poverty line are exempt from ALL the taxes.

  • Fact #2: It is a stupid objection to say that the tax rate can be raised.ALL taxes can be raised, and Cain has already said that his plan would require a 2/3rds majority to raise the tax rates.

  • Fact #3: This plan has nothing to do with state income taxes or state sales taxes or state corporate taxes – his plan only reforms federal taxes. State tax laws are outside of the jurisdiction of the President.

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Straw man of the year: The “So you say you hate taxes?” list

As if we needed more evidence that Liberals literally fail at basic economics, this anti-Tea Party piece is floating around Facebook as if it actually proves something: So you say you hate taxes? … well here is the solution.  Here’s a sample of the 102 items listed (they really put a lot of work into this logical fallacy!):

1. Do not use Medicare.

2. Do not use Social Security

3. Do not become a member of the US military, who are paid with tax dollars.

4. Do not ask the National Guard to help you after a disaster.

5. Do not call 911 when you get hurt.

I imagine that most of you will quickly spot the straw man fallacy: The Tea Party never claimed to want taxes to be zero.  Never.  They even used the “backronym” of Taxed Enough Already.  Therefore, the “but taxes pay for good things” argument is meaningless.  It proves nothing.  It was just an extended-play, petty vehicle to demonize one’s ideological opponents.

And you’ll probably realize that just because we need taxes for some things — and the Tea Partiers agree that some taxes are necessary — it doesn’t mean:

  • That taxes should be raised
  • That the current tax proceeds are being used efficiently and effectively
  • The tax proceeds are being spent in Constitutionally correct ways
  • That increasing tax rates will increase revenues.  For example, lowering the corporate tax rates would keep more jobs here, resulting in more personal income and Social Security tax receipts.

Side note: The commenters on the Facebook page included the typical “tea bagger” pejorative.  It occurred to me that the anti-Tea Party people must be real homophobes.  After all, why would they consider it to be such an effective insult to refer to Tea Partiers by a term describing a gay sex act?

With friends like these . . .

Reading How Obama’s plan to raise the minimum wage will hurt young black men reminded me of how counterproductive so many Liberal policies are for blacks.

The abortion rate is three times higher for blacks than whites, and Liberal dreams of taxpayer-funded abortions will deliberately take that higher.  Yet they are the ones claiming to have the long term best interests of blacks at heart?  Planned Parenthood kills more blacks in a week than the evil KKK did since their inception (and ironically enough, the KKK is pro-life).

They support teacher’s unions without fail and oppose charter schools, yet they are the ones claiming to have the long term best interests of blacks at heart?

They assume that poor blacks will always be poor and set up the welfare to perpetuate that, yet they are the ones claiming to have the long term best interests of blacks at heart?

Now here’s part of the post about how minimum wage increases hurt young black men.  I encourage you to read it all.

Moderate economist Gregory Mankiw of Harvard University lists the policies that are accepted by virtually all economists.

Here’s Greg’s list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)
All this makes the race-baiting of false teachers like Chuck “Jesus is not the only way” Currie and the Leftist media so galling.  Tea Party members love people like Herman Cain because his ideas are so superior to those on the Left.  Yet they are the ones claiming to have the long term best interests of blacks at heart and that Tea Partiers are racist?  Leftists like that have no shame.

Why “soaking the rich” doesn’t work

They are remarkably waterproof.  Game the rules all you like and they will find ways around them, or just move their capital to an environment that isn’t so hostile to it.  Politicians endlessly create and exploit loopholes but arrogantly assume that no one else is as clever as they are and will do the same.

Driven by a combination of bad planning, a lack of understanding of  basic economics and plain old coveting*, California is now doomed to fail.

See Californians flee to red states at Haemet.

In the five-year period from 2005 to 2009, 870,000 people left California.  Most of them went to red states, like Arizona and Texas, wherein jobs are more plentiful, taxes are lower, and housing prices are lower.

Problematically for California, the type of people who leave a failing state are the ones that a state most needs.  The educated, the wealthy, and the ambitious are the ones who will pack up and move, taking their human capital, their assets, and their earning capacity to other states.  Most of the people who stay are the ones who need the strong and able to carry them.  California is on its way to a death spiral, wherein everything it will need to do will only exacerbate its problems.

This why we need simplified tax structures.  Yes, some will take advantage of them, but they always will.  Having a tax code multiple times the size of the Bible is doomed to fail.  It just increases bureaucracy and wastes money.  We also need to get rid of public-sector unions and radically cut back the welfare state.

* Remember that one?  It made the top 10 list.

Dear Illinois, Do you think you can keep raising taxes with no ill effects? Think again.

See Governor Christie is actively courting Illinois businesses to move to New Jersey (and he is not the only Governor to take advantage of Pat Quinn’s chronic stupidity) – Ah, the free market at work!  That pesky law of unintended consequences will get you every time.  Make your state difficult to do business with and people and companies will leave.

This works on the national level as well.  If you raise taxes and raise barriers to effective commerce, capital funds will go elsewhere and take their jobs with them.  And that lowers tax bases that further erode employment, and the spiral continues.

These are basic economic principles that a 7th grade Junior Achievement student can grasp yet these highly paid politicians cannot.  Like horrible chess players, they can’t think one simple move ahead.  And more and more people will suffer for their ignorance.