Category Archives: Taxes

The Brain Standard, Part Two, by Robert Gore

Three steps forward, two steps back; so humanity advances.

Part One

Ideas are the foundation of the brain standard, one of which is that only individuals have rights. This cuts through the collectivist dreck that passes for thought among most of the world’s so-called intellectuals. The variations of collectivism all disguise nothing more than brute force hiding behind propaganda. Their inevitable failures stem from their essential flaw: those that control the collective claim rights that negate those of the individual.

There are grounds for hope. From the ruins of impending collapse there will be some who reject collectivism and are committed to rebuilding on a foundation of individual rights. How they will protect those rights and whatever territories they stake out are what theoretical physicists sometimes call “engineering problems.” One advantage they’ll have, though, as the brain standard constituency—they’ll be smarter than their adversaries. Attention, imagination, and intelligence will be keenly focused on building from the ruins and protecting what they’ve built.

Here’s a thought experiment. Imagine someone invents a cheap, portable device that defends its bearer and his or her property from all violence from all sources, but has no offensive capability. The device is so cheap that virtually everyone can buy it, and charities are set up to donate it to those who can’t. The device is universally available and creates a world without violence.

How would such a world function? People would have to produce to survive, but absent mutual agreement no one would have an enforceable claim on anyone else’s production. There would be no coercive transfers of money or property. Disputes would be settled by negotiation and mediation. A body of civil law similar to English common law would develop. Surely such a society would figure out a way to deal with nonviolent crime.

The negation of violence would eliminate government’s nominal rationale: protecting citizens from violence. In the absence of government (and its violence), individuals and society as a whole would be free to advance as far as their capabilities will take them.

This extreme hypothetical offers a stark contrast with the absence of anything resembling freedom anywhere in the world today. Government and collectivism are top-down codependents based on violence and coercion. Their current manifestations are replaying the dreary and what should be the common knowledge lesson of history: they inevitably fail, often after a great deal of bloodshed.

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In the current jockeying among collectivist governments for the things over which they jockey, Russia’s and China’s are doing a better job than the U.S.’s. The former are the co-leaders of the Eurasian alliance and represent substantial politic and economic power. The latter is bankrupt, embroiled in yet another war it won’t win, and stands accused of sabotaging its most important European ally’s oil pipelines. At home, the U.S. government and its fellow travelers are in thrall to brain-dead ideologies that hasten the country’s disintegration.

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California Dreaming—State Metaphor for a Failing Nation, by Matthew Piepenburg

As California goes, so goes the nation? From Matthew Piepenburg at goldswitzerland.com:

Below we consider the State of California as the metaphor of a failed state as well as the failing state of the American Union, which is anything but a dream.

Metaphors

For those already familiar with my articles, interviews or even daily banter, I have an admitted affinity for metaphors and analogies, as they help draw the simple from the complex.

Toward that end, I’ve 1) compared policy makers to failed generals, 2) debt and currency bubbles to Titanics, 3) macro investing to polo matches, 4) monetary policy to drug addiction and 5) the love of bloated bond markets to toxic romances.

As for politicians and political issues, there is always the risk of partisan bias and offending those who cling to only one perspective.

Fortunately, my take on the left or the right of current politics is fairly agnostic, as I view nearly all politicos as crooked as a dog’s hind leg.

Thus, as I turn my lens toward the state of California and its failed governor, I hope readers of the left or right can dispense with politics and just stick to math so that we can all get past the swamp of red vs. blue opinions and respect the objective facts of red vs. black balance sheets.

And when it comes to the State of California, she’s deeply in the red, and serves, ironically, as yet another broader yet applicable metaphor of the world economy in general and the United States in particular.

So, let’s dig in.

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How a Country Goes Bankrupt, In 10 Steps, by John Rubino

The Japanese are giving a pretty good demonstration, to be followed by Europe and the U.S. From John Rubino at rubino.substack.com:

Gradually then suddenly (2024?)

The past few decades of unnaturally easy money have created a world of “moral hazard” in which a ridiculous number of people borrowed far more than they should have. Now, with money getting tighter, not just businesses and individuals but some governments are staring at the “suddenly” part of that old saying about bankruptcy.

Japan is the poster child for this slow walk towards – then quick rush over – a financial cliff. Here’s how it works for a government, in 10 steps.

Step 1: Build up massive debt. A bursting real estate bubble in the 1990s confronted the Japanese government with a choice between accepting a brutal recession in which most of that debt was eliminated through default, or simply bailing out all the zombie banks and construction companies and hoping for the best. They chose bailouts, and federal debt rose from 40% of GDP in 1991 to 100% of GDP by 2000.  

Step 2: Lower interest rates to minimize interest expense. Paying 6% on debt equaling 100% of GDP would be ruinously expensive, so the Bank of Japanpushed interest rates down as debt rose, thus keeping the government’s interest cost at tolerable levels.

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The Inflation and Tax Assault on the American People, by Ron Paul

Much more tax extortion coming for the American people, mostly ordinary working stiffs. From Ron Paul at ronpaulinstitute.org:

According to the January report of the Consumer Price Index, price inflation increased by 0.5 percent last month. This follows a 0.1 percent increase in December. The total increase over the last 12 months is 6.4 percent. The official government statistics, which are manipulated to understate the true rate of price inflation, show even greater increases in some costs. Over the last 12 months, food prices increased by 10.1 percent, energy prices increased by 8.7 percent, and shelter costs rose by 7.9 percent.

The government’s figures also record a 0.2 percent decline in real wages in January and a 1.8 percent decline from a year earlier. Keep in mind that actual real wages losses have been larger because the government’s real wage numbers are calculated using the government’s understated price inflation numbers. The Federal Reserve-caused decline in purchasing power disproportionally harms middle- and lower-income Americans, many of whom were already living paycheck to paycheck before the Federal Reserve’s unprecedented money creation caused especially large increases in price inflation.

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Bombshells, Landmines, and Nemesis, by Victor Davis Hanson

The Republicans are going after the Democrats with the same tactics that were employed against them. The difference is that things like Twitter censorship and the bombing of the Nord Stream pipelines are real, not some made up horseshit like Russiagate. From Victor Davis Hanson at amgreatness.com:

Ironically Joe Biden, the media, and the old House majority have provided Republicans the same tools to discover the truth that the Left had once used to destroy it.

For much of 2017 through 2021, Americans suffered the “bombshell” and “walls are closing” mythologies first of Russian collusion, then of supposedly vast Russian social media investments to sabotage the election. From there we moved on to the Alfa Bank ping-pong fable, the supposed Putin bounties on U.S. soldiers in Afghanistan that Trump was said to have ignored and, of course, the idea that Hunter’s laptop was just “Russian disinformation.” 

These were journalistic sins of commission, warping the news cycle to advance ideological agendas and win elections. There emerged, however, other real landmines of omission—things the media deliberately ignores, but have the potential to go off and blow up a presidency. 

Taxes Paid by Mr. 10 Percent?

Representative Alexandra Ocasio-Cortez (D-N.Y.) mocks the Hunter Biden laptop scandal of a “half-fake” laptop. Yet such puerile flippancy only confirmed her own trademark arrogance and ignorance. Is she claiming the laptop was, was not, or is just sorta not genuine? Hunter’s lawyers are suing to stop the dissemination of his “half-property”? 

Hunter, who never in the past has denied ownership of the laptop, has now confirmed it really was his. A revisionist Hunter should have first conferred with his dad, since, on the presidential debate stage in 2020, Joe Biden swore to the American people the laptop was a product of Russian disinformation. He cited as support “50 former intelligence officials” who signed a statement claiming as much—all organized to deceive the pre-election electorate by former CIA Directors James Clapper and John Brennan. Both previously were best known for admitting to lying under oath to Congress. 

Any fair examination of the laptop’s contents would conclude that Joe Biden received percentage payments from the various quid pro quo enterprises for the merchandising of his name and status as a senator and then vice president. So it should be a simple task for the IRS to compare his reported income over those years with his net worth and yearly likely expenditures, to determine whether he paid taxes on his alleged 10 percent cut, or whether any of the Biden family paid gift taxes on their various cash interchanges with one another. 

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So Much For Billionaires: Joe Biden’s IRS Is Now Coming For Waiters And Waitresses’ Tips, by Tyler Durden

What use to be the party of the so-called little guy is going after the many little guys and gals who are waiters or waitresses. From Tyler Durden at zerohedge.com:

The Biden administration’s lip service about new IRS enforcement only being targeted toward the country’s wealthiest appears to be just that: lip service.

Instead, while we have been distracted with rhetoric about billionaires paying their fair share, the Biden Administration’s IRS is actually looking to stock its coffers with the tips of waiters and waitresses across the country. This newly planned targeting of middle-class Americans was proposed this week.

Earlier this week the IRS proposed a new procedure to “improve tip reporting compliance”, as they so brilliantly put it. Fox News reported:

As part of the program, which wouldn’t go into effect until after a multi-month public comment period, the IRS could withdraw liability protection related to “rules that define tips as part of an employee’s pay” from employers that don’t cooperate.

The program can’t go into effect until it makes it through a multi-month comment period, Fox News reported.

Rep. Mike Kelly, R-Pa., the chairman of the Ways and Means Subcommittee on Tax, told Fox this week: “Washington has a spending problem, not a revenue problem. Now, the IRS is going after middle-income families and working moms and dads who are just trying to make ends meet and put food on the table.” 

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Why People Move from Blue States: It’s Not Just High Taxes, by Charles Hugh Smith

People move from blue states because a lot of blue state cities have become shitty places to live for everyone but the uppermost economic strata. From Charles Hugh Smith at oftwominds.com:

Simply put, people are moving not just to escape unaffordable housing and high taxes. They’re moving to escape fiscally irresponsible, ineffective, unaccountable governance.

Defenders of high state taxes like to point out that surveys find few high-net-worth households move primarily to lower their tax bills. This may be so, but it misses the point: high-income, high-net-worth households don’t move away from high tax states if they’re getting fair value for their taxes. But if services and infrastructure are crumbling around them even as their taxes keep ratcheting higher, then the benefits of moving become much more compelling.

In other words, if you’re getting good value for your high taxes, then high taxes are not sufficient motivation to move. The problem is not high taxes per se, any more than a high cost of living is the reason to move from a world-class city with great amenities: world-class cities with great amenities have always cost more than less desirable locales, even in the 1600s.

The reason blue states are losing population isn’t just high taxes; it’s a lack of fiscal discipline and accountability, and insanely unaffordable housing costs. Immense floods of tax revenues sluice into the state coffers but the outcomes of all that spending diminish rather than improve. Problems don’t seem to get solved even as the permanent “solution”–throw more money at it–fail due to the decay of fiscal discipline and accountability, and the rise of a “stakeholders” mentality where dozens of entrenched interest groups each hold a veto in every decision.

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(Sales) Taxation is Theft, by Ron Paul

If the tax system is to be reconfigured, it should be reconfigured in a way that dramatically reduces the government’s take. From Ron Paul at ronpaulinstitute.org:

A group of House Republicans is supporting legislation that would replace federal income, payroll, estate, and gift taxes with a 30 percent national sales tax. The bill also eliminates the Internal Revenue Service, giving states the responsibility to collect the sales tax and send the revenue to DC.

This deputizing of states to act as federal tax collectors violates the principles of federalism, especially since the plan forces states that have chosen not to make their residents pay sales taxes create a mechanism for collecting sales tax.

A 30 percent sales tax on all goods with no exceptions and no deductions will increase taxes imposed on millions of Americans. The sales tax legislation provides a way Americans can receive a monthly “prebate” payment to help offset the cost of the sales tax. Still, many taxpayers would be paying more under the new national sales tax system.

If the sales tax becomes law, Congress may never have to increase the rate above 30 percent. This is because it can rely on the Federal Reserve to increase the sales taxes via inflation. Consequently, this inflation tax will increase the pain inflicted by the sales tax on the American people.

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Social Security Taxes Aren’t “Your” Money, by Ryan McMaken

Legally there’s no difference the government steals from you as Social Security taxes and the money the government steals from you as income taxes. The government is free to do as it pleases with both taxes. From Ryan McMaken at mises.org:

After French protestors took the street to complain about the increase in the retirement age, I read quite a few jokes in social media about how protesting in France is the local pastime.

That may be true, but let it not be said that Americans don’t feel very, very strongly about their own national pension program. I say this because in response to my article last week on raising the Social Security age, I received more furious responses than I have for any other article in many years. Here’s one example from a man whose initials are MF:

What are you, just nuts??? Having paid in to SS for over 40 years and experiencing big gov losing my records for some of my most productive years, so my stipend has been reduced; And after my wife and I planned for retirement and saved while contributing to SS, my wife died 2 months after her 65 birthday never having received a single payment from SS after paying in for 42 years. There are no spousal survivor benefits. All the contributions she paid in are gone. Age of qualification isn’t the issue. Corruption, graft and top heavy bureaucracy, while incompetents administer at the front line are the problems. Either wise up, do your research or stay away from topics you seem totally ignorant about.

Here’s one from reader RG:

I didn’t make the promise [to pay a pension at age 65] the guvvmint did. … You are a useless f**k wasting computer ink. Get your head out of your a** and breath the gathering doom. My father fought in France in WW2 and Korea, didn’t live long enough to collect his benefits nor my mother-in-law. F**k you again.

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Decline of Empire: Parallels Between the U.S. and Rome, Part IV, by Doug Casey

Part IV of Doug Casey’s exploration of parallels between the Roman and American empires. From Casey at internationalman.com:

rome

See here for Part III

Now to gratify the Druids among you.

Soil exhaustion, deforestation, and pollution—which abetted plagues—were problems for Rome. As was lead poisoning, in that the metal was widely used for eating and drinking utensils and for cookware. None of these things could bring down the house, but neither did they improve the situation. They might be equated today with fast food, antibiotics in the food chain, and industrial pollutants. Is the U.S. agricultural base unstable because it relies on gigantic monocultures of bioengineered grains that in turn rely on heavy inputs of chemicals, pesticides, and mined fertilizers? It’s true that production per acre has gone up steeply because of these things, but that’s despite the general decrease in depth of topsoil, destruction of native worms and bacteria, and growing pesticide resistance of weeds.

Perhaps even more important, the aquifers needed for irrigation are being depleted. But these things have all been necessary to maintain the U.S. balance of trade, keep food prices down, and feed the expanding world population. It may turn out, however, to have been a bad trade-off.

I’m a technophile, but there are some reasons to believe we may have serious problems ahead. Global warming, incidentally, isn’t one of them. One of the reasons for the rise of Rome—and the contemporaneous Han in China—may be that the climate cyclically warmed considerably up to the 3rd century, then got much cooler. Which also correlates with the invasions by northern barbarians.

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