Category Archives: Tax System

Libertarianism, Logic & Reason, Science & Skepticism, Tax System

Would you mind electrocuting this person real quick? Why People Support Overtaxation.

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Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

In July of 1961, Yale University psychiatrist Stanley Milgram began an experiment that ended with shocking results—literally! It is now simply known as the Milgram Experiment—his most famous work.

Stanley Milgram
Stanley Milgram

Milgram was troubled with the excuses provided by Nazis in the wake of World War II for the atrocities they had committed. Obviously, they engaged in overly heinous acts toward their fellow man, so horrid in nature it makes one wonder how Hitler got his followers to do them. Yet their responses to the question of why were often the same; they were just following orders.

Milgram was skeptical that people would do something at the direction of an authority figure that they would not in good conscience do on their own. He devised an experiment whereby he would instruct participants to shock other participants they would never meet who were located behind a wall. The shocker was real but was unaware that the shockee was an actor. This actor would fain pain by screaming in agony, and the intent was to see if the shocker would continue to shock the shockee solely because an authority figure told them to, regardless of how dangerous or painful it seemed to be for the person on the other side.

The video below shows what happened. If you’ve never heard of this experiment before, check it out. It is certainly a fascinating study into the human psyche with very surprising results. His experiment showed people were willing to do horrific things to one another if an authority figure told them it was OK to do so, confirming the idea that many Nazis were indeed telling the truth about their motives.

As I think about this experiment, I can’t help but draw what I believe is a very exact parallel to modern-day tax policies.

There were potentially a number of reasons Obama and many Democrats scored victories in the last election, but there can be no doubt that class envy was one of the common motivating factors. The “tax the rich” mantra was a winning campaign strategy, but let’s think about it deeper.

Bill Gates
Bill Gates

Imagine I put a random democrat-voter currently receiving or requesting government assistance in front of Bill Gates or Warren Buffett and asked them to perform one simple task: look Bill or Warren in the eye and explain fairly and logically why you think they owe you something. I suspect most of them would be speechless and embarrassed, I know I would. But then again, I have a conscience and I am a libertarian.

Some may be brazen enough to look Gates and Buffett in the eye and argue that they’re simply too rich and have no right to all that money, but most would know there’s no rational argument to present and would simply accept that any effort to make such an argument would show that they were the ones being greedy by demanding what someone else had worked for, Bill and Warren are merely wanting to control what they’ve earned after all.

I specify “control” versus “keep” because they often donate a lot of their earnings to charities. But, when they give their money away, they choose instead of government choosing for them, who gets what they worked so hard for, and risked so much to obtain.

However, if voters can hide behind the wall of government just like Milgram’s participants hid behind a wall, and an authority figure like a politician tells them it’s OK to harm the wealthiest among us, the Milgram Experiment mentality takes over and people who wouldn’t have the gumption to demand the earnings of someone else in person all of a sudden wave the “tax the rich” banner like it’s part of their religion. If Obama says it’s OK, it must be, right?

What’s the solution? I don’t rightly know. But the first step in fixing a problem is understanding it. I don’t know that too many people have applied Milgram’s findings to politics, but there is no doubt in my mind that this an “apples to apples” comparison. The answer to how we get people to begin to grasp the concept that they are cowardly asking government to do something they would likely never have the hubris to ask for themselves is elusive, and likely always will be.

Capitalism, Labor Unions, Libertarianism, Logic & Reason, Tax System

Job Emigration – Place Blame Where It Belongs

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Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

This past election, Barrack Obama and the DNC-loyals were attacking Mitt Romney and other business people for shipping jobs overseas. Like most patriotic Americans, it upsets me to see jobs leave the United States as well. But was this really a fair criticism of business owners?

No FartingAs a former entrepreneur myself, let me give you an analogy. This criticism is akin to farting while sitting next to me, then getting upset when I leave because you’ve made the room smell like three-month-old milk and despair.

If we were a statist nation like former Russia, China, Cuba, etc., businesses would exist to serve the state; something many on the left seem to wish were the case here—you know, the people who supported millionaire capitalist Michael Moore by attending his movies bashing capitalism yet fail to see the hypocrisy in that?

The reason I believe this idea is so ridiculous, is because despite my requests, not one of these people can name a statist nation whose people don’t live in absolute squalor. Note that Russia’s GDP has nearly quadrupled in the last 12 years, and they’re budding ideas on capitalism are still being ironed out. So I’ll be happy to consider statism a practical system of governance for maintaining quality of life and basic human rights when a successful example arises.

In our capitalist system however, businesses are the product of a risk an entrepreneur takes to offer a good or service to the public to make a living for themselves, as opposed to working at the behest of someone else. We all know that the greater the risk, the greater possibility for reward. This carrot on a stick is what makes entrepreneurs take such a risk.

Carrot On A StickSo to explain my flatulence analogy; America has the third highest corporate tax rate  on the planet. We also have one of the most intrusive regulatory networks as well, thanks to NHTSA, OSHA, the EPA, and other federal and local legislations and regulators. Add labor unions to that, which infect businesses like a cancer feeding off the host until the Hostess dies. All these roadblocks make America a very expensive place to do business. So how is it fair to blame people who leave America when we make it such an inhospitable place to do business?

Let’s ignore all the ideology for a moment and think about this skeptically and empathetically. What are some of the issues of doing business outside the United States?:

  • There are regulatory issues of your home country and the one you’re doing business in, requiring you to hire a plethora of compliance lawyers and staff just to make sure what you are doing is even legal.
  • Language barriers exist for nations that do not have English as their primary language.
  • Shipping, tariffs, and customs expenses increase.
  • Massive expenses in building a new facility and moving operations from a U.S. based plant to a foreign one.
  • Travel expenses increase for those headquartered in the United States that have to often visit overseas facilities.
  • Loss in quality assurances due to lack of direct oversight.

These are but a few issues I can think of off the top of my head; certainly there are many more. So if all these issues exist, why even do it? Because doing it is still more profitable than doing business here in the United States. Stop and think about that for a minute—let it fester in any liberty-minded bones you have in your body. If you’re like me, it should offend you to the core.

Because we are one of the richest nations in the world, American workers are not going to work for the pennies a day that some third world nations consider a reasonable salary, so if we intend to compete in the world market, you’d like to think our legislators would make every effort to overcome our higher wage demands by keeping corporate taxes and regulations as unobtrusive as possible so we can be competitive. Greater expenses make it more expensive to the consumer. Yet, during the election, the people like Mitt Romney were vilified as heartless rich bastards for attempting to rectify this.

I propose we start calling out those who want to bash the rich, playing the hero while doing it. This pure ignorance of economics, history, and logic is offensive. Our economy depends on people with money investing in American products and workers. But why would they when we treat them like dirt, tax them to hell and back, and regulate them like a dog on a choker chain dying to run ahead of its master?

Dog Pulling ON LeashIf you’ve ever been in the middle of a productive task and had someone interrupt to “help” you, only to slow you down and make matters worse, then you should inherently understand what government does to entrepreneurship every single day.

Unless we vote for liberty minded candidates, entrepreneurs will observe the basic physics principle of taking the path of least resistance. We have no one to blame but ourselves for electing and re-electing those who are content to push them away to pass “feel-good” legislation that is a product of jealousy as opposed to evidence based hypotheses. When emotion trumps logic, we all lose.

 
Poll, Tax System

What Tax System Would You Support?

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Once you’ve taken the poll, please retweet, share on Facebook, or post on some other media sharing medium of your choosing. As always, the more voters in a poll, the more accurate it is likely to be. Thanks for participating!

Libertarianism, Tax System

Taxes should be a fee for services rendered, not a penalty for success.

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Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

With the hullabaloo about the fiscal cliff and April 15th on its way, it’s time again to think about taxes. I know you would rather slide down a fire pole covered in razor blades and battery acid than think about Uncle Sam’s yearly dues, but we can be the instruments of change. If liberty minded people can inject a little logic and reason into the somewhat socialist-minded which currently dominate our media, Senate, White House, and any number of voting blocks, change can happen.Uncle Sam

So with that in mind, let’s talk first about what taxes are for. The government is an extension of the people here in the United States. Everything our government does should be a service that you and I have elected them to do at our behest. We pay these folks for services rendered through taxes levied.

In the private sector, when we hire someone to do a job, they name their price, and we pay it. However, let me provide an example of what they don’t say:

How much do you make? Oh, you make $200,000 a year? Well in that case, I’m going to charge you $10,000. I know I only charged your neighbor $5,000, but he only makes $100,000 a year. I’m sure you understand.

I know that exchange sounded ridiculous because it is. But imagine the next person you hire to perform a service for you asking how much you make before giving their estimate. If you tell me that your response would be remotely different from, “none of your damn business” I’m going to call you a liar. Yet this is exactly how our tax system works, and we tolerate it year after year.

We the people must demand a complete overhaul to our tax system based on consumption, not income. Income taxes, property taxes, estate taxes, and capital gains taxes should be constitutionally abolished via an amendment, and all taxes should be attained by only two methods. A fee for services, such as when we buy license plates, or a consumption tax on commerce. Since the government provides infrastructure and protection so that we can conduct such commerce; that’s a more fair method.

The reasons this makes far more logical sense are numerous, so I’ll do my best to enumerate a few:

First, an income tax is a penalty for success, whereas a consumption tax is a fee for services rendered. In America, the land of opportunity, we shouldn’t be penalizing people for being successful, we should be encouraging it.

The Fair Tax is probably the most comprehensive proposal along these lines, but I haven’t read it all completely and am not necessarily endorsing it; however, it certainly seems better than the monstrosity we have now.fairtax[1]

Those who feel it would raise taxes on the poor may not be aware that they proposed a prebate to cover the taxes that would be applied to the basic needs of every American, so that in effect, your first $3,500 in taxes for instance (A made up number for purposes of this debate) would be paid for you up front. If you decide to spend more, those taxes are your responsibility.

I think we’ve all seen examples of wasteful spending from those who shouldn’t be doing so. Have you seen someone who has $2,000 wheels and a $5,000 stereo in a $500 car, yet never seems to have a money for the things that matter. I had one such example ask me for $5 at a convenience store.Random Hoopty

Second, those with money would still pay a higher tax rate because they buy more goods and conduct more commerce. It would effectively be a progressive system as it is currently; except now, there wouldn’t be write-offs and loopholes to take advantage of. Businesses would pay taxes on the products they buy, as well as consumers. Everyone benefiting from government services, is now contributing their equitable share, without anyone getting taxed twice.

Third, The IRS is massively reduced as a result, no more stress of getting your taxes done before tax day and what you might owe, and no more worrying about when and how you have to pay taxes.

For instance, if a family member helps you financially by giving you money, you won’t have to worry about reporting that. If someone is gifted or wins an expensive item like a car or a home makeover, they no longer have to sell that car or home just to pay the income taxes on it. Sadly, these beneficiaries of goodwill and fortune often end up losing all they have won or been given because of the income taxes owed. I’d like to think that reasonable people find this appalling.

Plue, there are many instances were you are expected to know what and when to pay that many are either ignorant of, or purposefully don’t report, in order to cheat.

Fourth, Imagine getting all of your paycheck instead of the 1/2 – 2/3 you get now, and then you decide what you’ll pay in taxes by how much you spend on goods and services out of that paycheck. If it was a bad week, you only buy the essentials, and thus you pay no tax, presuming we wouldn’t levy food and water.

The last point I’d like to make, which could be the most important of all—no more freeloaders. We all know that there are citizens and non-citizens who often work under the table or are involved in criminal enterprise and thus pay no income taxes. All of a sudden, the people gaming the system and not putting their two cents in (literally), will be compelled to pay their share for the services the government provides them too.

Sadly Republicans and Democrats alike seem to dismiss such a system. Libertarianism is catching on in the United States though, and this was part of their platform. Sharing this story and information about the Fair Tax on Twitter, Facebook, et al., will hopefully help to get a consumption and fee based tax system to take hold in the marketplace of ideas; furthering the national discussion. This should not be a partisan issue since the rate and prebates can be set at whatever number the current legislature decides.

However, it is a radical change; thus, a tough row to hoe. But if we passed the radical overhaul to our healthcare system, known as the Affordable Care Act (Obamacare), we can certainly achieve change as logical as a consumption tax if clear thinking Americans make some noise.