Category Archives: Taxes

The War between Public Pensioners and Tax Donkeys Is Heating Up, by Charles Hugh Smith

The tax donkeys win this battle by withdrawing from it, a la Atlas Shrugged. From Charles Hugh Smith at oftwominds.com:

The migration is only beginning, but that’s only half the story.

You know it’s serious when the newspaper of record finally reports it: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash (New York Times).

It’s a long article but the summary is brief: corrupt politicos promised the moon to public employees, and now the fiscal chickens of insolvency are coming home to roost.

Public pension obligations are rising so fast that even repeated tax increases can’t keep up.

This is setting up a second front in the war between entitled Baby Boomersand younger taxpayers who pay most of the federal and local taxes. Public pensioners are a subset of the entitled Baby Boomers, but their pensions can’t be paid with borrowed money like Social Security and Medicare; public pension obligations come out of local and state taxes, and as those obligations soar then public services must be slashed and taxes jacked up by annual double-digit increases.

So there is a war brewing between public pensioners and the Tax Donkeys: the Unprotected who pay local property taxes on their homes, state and local taxes on their incomes, sales taxes on their purchases, junk fees on local government services, and so on.

Corrupt politicos created the war by over-promising benefits to public employees and ignoring fiscal realities. By the time the bill comes due, the politicos who rubber-stamped the unaffordable promises are themselves gorging at the public-pension retiree trough.

Not every public employee is receiving gold-plated pensions and benefits, of course, but that doesn’t negate the reality that nationally, public pensions are increasing faster than government revenues and the returns earned by the pension programs.

If the stock and bond markets suffer multi-year declines, even modest declines, the pension war will move from skirmishes to open political combat.The 2008-09 Global Financial Meltdown was a taste of the reality facing public pension programs: once annual returns slip from +7% annually to -7% annually, the pension plans are soon insolvent.

Like virtually all wars, there are asymmetries between the two combatants: in the war between public pensioners and the Tax Donkeys, the pensioners can’t switch pension programs, but the Tax Donkeys can move to lower-tax states.

To continue reading: The War between Public Pensioners and Tax Donkeys Is Heating Up

 

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Crimes of a Monster: Your Tax Dollars at Work, by John W. Whitehead

What an appropriate article for the day our taxes are due. From John W. Whitehead at rutherford.org:

Let us not mince words.

We are living in an age of war profiteers.

We are living in an age of scoundrels, liars, brutes and thugs. Many of them work for the U.S. government.

We are living in an age of monsters.

Ask Donald Trump. He knows all about monsters.

Any government that leaves “mothers and fathers, infants and children, thrashing in pain and gasping for air” is evil and despicable, said President Trump, justifying his blatantly unconstitutional decision (in the absence of congressional approval or a declaration of war) to launch airstrikes against Syria based on dubious allegations that it had carried out chemical weapons attacks on its own people. “They are crimes of a monster.”

If the Syrian government is a monster for killing innocent civilians, including women and children, the U.S. government must be a monster, too.

In Afghanistan, ten civilians were killed—including three children, one an infant in his mother’s arms—when U.S. warplanes targeted a truck in broad daylight on an open road with women and children riding in the exposed truck bed.

In Syria, at least 80 civilians, including 30 children, were killed when U.S.-led air strikes bombed a school and a packed marketplace.

Then there was a Doctors without Borders hospital in Kunduz that had 12 of its medical staff and 10 of its patients, including three children, killed when a U.S. AC-130 gunship fired on it repeatedly. Some of the patients were burned alive in their hospital beds.

Yes, on this point, President Trump is exactly right: these are, indeed, the crimes of a monster.

Unfortunately, this monster—this hundred-headed gorgon that is the U.S. government and its long line of political puppets (Donald Trump and before him Obama, Bush, Clinton, etc.), who dance to the tune of the military industrial complex—is being funded by you and me.

It is our tax dollars at work here, after all.

Unfortunately, we have no real say in how the government runs, or how our taxpayer funds are used.

We have no real say, but we’re being forced to pay through the nose, anyhow, for endless wars that do more to fund the military industrial complex than protect us, pork barrel projects that produce little to nothing, and a police state that serves only to imprison us within its walls.

To continue reading: Crimes of a Monster: Your Tax Dollars at Work

Freedom and Income Taxation Are Opposites, by Jacob G. Hornberger

The title should be a noncontroversial statement, but it’s not. From Jacob. G. Hornberger at fff.org:

As the April 17 deadline for filing income tax returns and paying federal income taxes approaches, it is important that we all remind ourselves of an important point: Income taxation and the Internal Revenue Service are irreconcilable with the principles of a free society.

Another way to put it is this: If you’re living in a society in which the government wields the power to seize the fruits of your earnings, you are not living in a free society, no matter how convinced you are.

Americans lived without income taxation for more than a century. They also lived in a society in which there was no welfare state and no warfare state. No Social Security, Medicare, Medicaid, farm subsidies, welfare, food stamps, public housing, drug laws, immigration controls, public schooling, Pentagon, military-industrial complex, CIA, NSA, FBI, EPA, DEA, SEC, Homeland Security, ICE, or most of the other myriad agencies of the welfare-warfare state.

It was that way of life that defined an American. That’s what Americans defined as freedom. That’s what made the United States the most unusual society in history (notwithstanding the horrible exception of slavery).

Succeeding generations of Americans give it all up in favor of socialism, interventionism, and imperialism.

They embraced and adopted the variation of socialism known as the welfare state.

They embraced and adopted the totalitarian structure known as a national-security state.

They embraced and adopted drug laws, which are the hallmark of tyrannical regimes.

They embraced and adopted the regulated, controlled, and managed economy.

They embraced foreign wars, foreign interventionism, partnerships with dictators, coups, assassinations, torture, and other practices long employed by dictatorial regimes.

And of course they embraced and adopted the means by which all of this statism is funded — income taxation and, also, to large extent, the Federal Reserve System, which fraudulently taxes people’s income and wealth through inflation.

To continue reading: Freedom and Income Taxation Are Opposites

 

Californians fed up with housing costs and taxes are fleeing state in big numbers, by Jeff Daniels

It takes a monumental effort to screw up a state with all the advantages California has. However, it looks like they are doing their best. From Jeff Daniels at cnbc.com:

  • More Californians are moving from the Golden State, particularly lower-income residents, although even middle-class residents are saying goodbye.
  • The trend is a symptom of the state’s housing crunch and, for some, high taxes.
  • Census Bureau data show California lost just over 138,000 people to domestic migration in the 12 months ended in July 2017.
  • Lower-cost states such as Arizona, Texas and Nevada are popular destinations for relocating Californians.
Californians fed up with housing costs and taxes are fleeing state in big numbers

Californians fed up with housing costs and taxes are fleeing state in big numbers  

Californians may still love the beautiful weather and beaches, but more and more they are fed up with the high housing costs and taxes and deciding to flee to lower-cost states such as Nevada, Arizona and Texas.

“There’s nowhere in the United States that you can find better weather than here,” said Dave Senser, who lives on a fixed income near San Luis Obispo, California, and now plans to move to Las Vegas. “Rents here are crazy, if you can find a place, and they’re going to tax us to death. That’s what it feels like. At least in Nevada they don’t have a state income tax. And every little bit helps.”

Senser, 65, who previously lived in the east San Francisco Bay region, said housing costs and gas prices are “significantly lower in Las Vegas. The government in the state of California isn’t helping people like myself. That’s why people are running out of this state now.”

Housing problem

Based on the U.S. Census Bureau’s American Community Survey data, “lower income Californians are the ones who are leaving, not higher income,” said Christopher Thornberg, founding partner of research and consulting firm Beacon Economics in Los Angeles.

He said housing is the chief reason people are leaving California, pointing out there are frequently bidding wars for what limited inventory of homes is available.

To continue reading: Californians fed up with housing costs and taxes are fleeing state in big numbers

 

100 Years of the Income Tax, from The Burning Platform

https://www.theburningplatform.com/2018/03/08/100-years-of-the-income-tax-2/

There Will Be No Economic Boom – Part II, by Lance Roberts

Neither consumers nor corporations are going to lead the US to the land of economic booms. From Lance Roberts at realinvestmentadvice.com:

On Tuesday, I presented at the Financial Planning Association (FPA) Conference in Houston at which I discussed the issues surrounding financial planning in an environment of high valuations and low forward returns. After my presentation, a few CFP’s approached me to discuss the premise that recent “tax cuts/reforms” will lead to a resurgence of economic growth which will boost earnings and therefore negate the overvaluation problem.

This is unlikely to be the case and something that I discussed recently in “There Will Be No Economic Boom.”  However, that article focused on the impact of the passage of the 2-year “Continuing Resolution” which will lead to a surge in the national deficit as unconstrained spending negates the effect of “tax reform” on the U.S. economy.

But there is more to this story.

When the “tax cut” bill was being passed, everyone from Congress to the mainstream media, and even the CFP’s I spoke with yesterday, regurgitated the same “storyline:”

“Tax cuts will lead to an economic boom as corporations increase wages, hire and produce more and consumers have extra money in their pockets to spend.”

As I have written many times previously, this was always more “hope” than “reality.”

Let me explain.

The economy, as we currently calculate it, is roughly 70% driven by what you and I consume or “personal consumption expenditures (PCE).” The chart below shows the history of real, inflation-adjusted, PCE as a percent of real GDP.

If “tax cuts” are going to substantially increase the growth rate of the U.S. economy, as touted by the current Administration, then PCE has to be directly targeted.

However, while the majority of consumers will receive an “average” of $1182 in the form of a tax reduction, (or $98.50 a month), the increase in take-home pay has already been offset by surging health care cost, rent, energy and higher debt service payments. As shown in the table below – the biggest constituents of the “non-discretionary family budget” are rising the most.

So, since tax-cuts, by themselves, are unlikely to offset rising prices of essential goods and services it’s hard to see how they fuel a significant surge in consumer spending.

To continue reading: There Will Be No Economic Boom – Part II

Trump Threatens Europe: “We Will Tax Your Cars”, by Tyler Durden

Trump threatens to up the ante on trade restrictions after Europe announced a few of its own. From Tyler Durden at zerohedge.com:

This is how trade wars escalate: Trump hasn’t even officially announced the steel and aluminum import tariffs, expected to be formally unveiled this coming week, and the rhetoric is already one of World Trade War I doom and gloom.

Hours after Trump tweeted on Friday morning that “trade wars are good, and easy to win,” European Commission President Jean-Claude Juncker said the bloc is prepared to respond quickly and forcefully by targeting imports of Harley-Davidson motorbikes, Levi Strauss & Co. jeans and bourbon whiskey from the U.S.

According to some, the preliminary EU retaliation was targeted in a way that would maximize political pressure on American leaders: Harley-Davidson is based in House Speaker Paul Ryan’s home state of Wisconsin, while bourbon whiskey hails from the state of Senate Majority Leader Mitch McConnell. San Francisco-based Levi Strauss is headquartered in House Minority Leader’s Nancy Pelosi’s district.

As Bloomberg noted, Juncker’s threat heightened the prospects of a global free-for-all, as the World Trade Organization said the potential of escalating tensions “is real” and the International Monetary Fund warned the restrictions would likely damage the U.S. and global economy. It also prompted speculation that in light of the widespread condemnation by US trading partners and allies, that Trump might step back and reconsider the sanctions.  This in turn led to a late-day burst in the stock market.

That however appears unlikely: first, in a tweet Friday morning, Trump doubled-down and warned of more trade actions ahead, casting them as reciprocal taxes, a term he has used for imposing levies on imports from countries that charge higher duties on U.S. goods than the U.S. currently charges.

“We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!” Trump said in the tweet.

To continue reading: Trump Threatens Europe: “We Will Tax Your Cars”