taxes

 

DirectorBlue has provided a summary of the CBO report and its implications for this country. Sorry, there is no good news to be extracted, even from this ostensibly (but not really) independent monitoring agency. Their forecasts are almost always optimistic, if you can call this route to bankruptcy they have produced as optimistic. It will be compared to the roll out of the actual numbers.

Yesterday, January 31st 9:21pm

Jim Pethokoukis points us to a just-released report from the Congressional Budget Office (PDF) that includes some extremely troubling graphs.

Catastrophic budget deficits and unemployment levels (purposefully understated by the Bureau of Labor Statistics) as far as the eye can see. The good news? By 2022 the economy will have collapsed been “fundamentally transformed” under soaring interest rates and unpayable debts.

Obama can blame Bush, Martin Van Buren, or Mary Tyler Moore — but the facts are simple: those last four bars are owned 100% by the Democrat Party. The Stimulus package, which I like to call “the most audacious armed robbery in world history” continues to be spent every year as it is built into the baseline budget. Which somehow seems to escape legacy media’s attention as they discuss taxing “the rich”, “oil companies”, “doctors who charge $30,000 for an amputation“, and anyone else who tries to make an honest living.

…. Read the full report here.

 

 

To think that civilizations always progress is a sign of ignorance, if not stupidity.

Ludwig von Mises emphasized how proper institutions and incentives were necessary for progress. He knew that progress neither constant nor guaranteed. If institutions and incentives are damaged or destroyed, progress will cease and retrogression will set in.

Henry Hazlitt

History is replete with examples of how societies and civilizations revert to less prosperous times and conditons, often accompanied by rebellion and civil unrest. The Roman empire died from within. Oh, they were overrun but only after their empire had exhausted itself and its resources.

Mises used the phrase “time will run back” to describe the process of losing ground or retrogressing. Henry Hazlitt wrote a fictional novel using Mises’ phrase as the title in which changes in institutions, laws, incentives and freedom all combine to impoverish a previously prosperous and civil society.

Victor Davis Hanson details below how this process is already well underway in his home state. It is not limited to California. The same retrogression is underway in Michigan, Illinois and a number of other states. Inner cities in parts of the country have sections that are too dangerous to visit. The retrogression is underway and the regulatory apparatus and insolvency of Washington is destroying incentives. This process will not stop until the craziness that we call government is stopped.

Civilization in Reverse

In Greek mythology, the prophetess Cassandra was doomed both to tell the truth and to be ignored. Our modern version is a bankrupt Greece that we seem to discount.

News accounts abound now of impoverished Athens residents scrounging pharmacies for scarce aspirin — as Greece is squeezed to make interest payments to the supposedly euro-pinching German banks.

Such accounts may be exaggerations, but they should warn us that yearly progress is never assured. Instead, history offers plenty of examples of life becoming far worse than it had been centuries earlier. The biographer Plutarch, writing 500 years after the glories of classical Greece, lamented that in his time weeds grew amid the empty colonnades of the once-impressive Greek city-states. In America, most would prefer to live in the Detroit of 1941 than the Detroit of 2011. The quality of today’s air travel has regressed to the climate of yesterday’s bus service.

In 2000, Greeks apparently assumed that they had struck it rich with their newfound money-laden European Union lenders — even though they certainly had not earned their new riches through increased productivity, the discovery of more natural resources, or greater collective investment and savings.

The brief euro mirage has vanished. Life in Athens is zooming backward to the pre-EU days of the 1970s. Then, most imported goods were too expensive to buy, medical care was often premodern, and the city resembled more a Turkish Istanbul than a European Munich.

The United States should pay heed to the modern Greek Cassandra, since our own rendezvous with reality is rapidly approaching. The costs of servicing a growing national debt of more than $15 trillion are starting to squeeze out other budget expenditures. Americans are no longer affluent enough to borrow hundreds of billions of dollars to import oil, while we snub our noses at vast new oil and gas deposits beneath our own soil and seas.

In my state, Californians for 40 years have hiked taxes; grown their government; vastly expanded entitlements; put farmland, timberland, and oil and gas lands off limits; and opened their borders to millions of illegal aliens. They apparently assumed that they had inherited so much wealth from prior generations and that their state was so naturally rich, that a continually better life was their natural birthright.

It wasn’t. Now, as in Greece, the veneer of civilization is proving pretty thin in California. Hospitals no longer have the money to offer sophisticated long-term medical care to the indigent. Cities no longer have the funds to self-insure themselves from the accustomed barrage of monthly lawsuits. When thieves rip copper wire out of street lights, the streets stay dark. Most state residents would rather go to the dentist these days than queue up and take a number at the Department of Motor Vehicles. Hospital emergency rooms neither have room nor act as if there’s much of an emergency.

Traffic flows no better on most of the state’s freeways than it did 40 years ago — and often much worse, given the crumbling infrastructure and increased traffic. Once-excellent K–12 public schools now score near the bottom in nationwide tests. The California state-university system keeps adding administrators to the point where they have almost matched the number of faculty, though half of the students who enter CSU need remedial reading and math. Despite millions of dollars in tutoring, half the students still don’t graduate. The taxpayer is blamed in constant harangues for not ponying up more money, rather than administrators being faulted for a lack of reform.

In 1960, there were far fewer government officials, far fewer prisons, far fewer laws, and far fewer lawyers — and yet the state was a far safer place than it is a half-century later. Technological progress — whether iPhones or Xboxes — can often accompany moral regress. There are not yet weeds in our cities, but those too may be coming.

The average Californian, like the average Greek, forgot that civilization is fragile. Its continuance requires respect for the law, tough-minded education, collective thrift, private investment, individual self-reliance, and common codes of behavior and civility — and exempts no one from those rules. Such knowledge and patterns of civilized behavior, slowly accrued over centuries, can be lost in a single generation.

A keen visitor to Athens — or Los Angeles — during the last decade not only could have seen that things were not quite right, but also could have concluded that they could not go on as they were. And so they are not.

Washington, please take heed.

— Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and the author of the just-released The End of Sparta. You can reach him by e-mailing author@victorhanson.com.

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Capital Flight

Some people believe that banging your head against a wall is therapeutic because it feels so good when you stop. Even if one believes that, how long should one engage in such behavior? Is there an optimal time for best results?

An analogy to this head-banging in the business world is putting up with oppressive governmental rules and regulations. There is certainly pain associated with them, but no way to control when or if the pain stops. A different form of pain is picking up and leaving the jurisdiction where the pain is being inflicted. The costs and dislocation effects of doing so involve additional pain, but it is a way to stop banging your head against the wall. That is exactly the thought process that is under consideration (if not already underway) in thousands of businesses in the US.

Different industries in different locations suffer different levels of pain from regulations. Their relocation costs also differ. Heavily capitalized industries with highly skilled workers face greater relocation costs than other industries. As the regulatory burden increases, even the most expensive relocation moves eventually become “profitable.” At some point companies and individuals decide their pain threshold has been exceeded and do something about it. They flee from the oppression and costs of unreasonable government to locations where they are treated better. They stop banging their heads against the wall.

This process is known as “capital flight.” It includes human, monetary and physical capital. And it is underway in the US and has been for several years. It takes place both within the US, by moving operations from high regulation states to those with less regulation. It also takes place by moving operations outside the country.

People Leaving LA County http://blog.american.com/2010/06/america-as-texas-vs-california-who%E2%80%99s-moving-where-edition/

Within the country the move is from high-tax, high regulatory states to lower ones. It is businesses voting with their feet. Let’s call it the California effect or the New York effect. These states are not business friendly and losing jobs and businesses. Companies leave these states and move to the Sunbelt or overseas. Neither move is made for climate or health purposes as evidence shows the few low tax/regulation states in northern climate are gaining as well.

Businesses don’t have to be pushed to losses to make relocation decisions. They have an obligation to their shareholders to move well before that point. As reported by Mish in an article from the Orange County Register:

“The decision by Waste Connections to relocate, despite the 17 percent revenue increase and the $18 million cost to move to Texas, illustrates that businesses will endure short-term costs to ensure long-term prosperity,” wrote state Sen. Mimi Walters, R-Laguna Niguel, in response to Steinberg’s message. Walters quotes business-relocation expert Joe Vranich of Irvine, who notes that businesses typically save 40 percent in costs by leaving California because of lower taxes and more manageable regulations found elsewhere.

Mish discusses conditions in California and Illinois with regard to their experience with business flight.

The same “voting with one’s feet” occurs with people who choose to leave the United States. Many renounce citizenship as a way to get away from the long arm of the Internal Revenue Service who believes all income, regardless of where earned, is subject to US taxation.

“Voting with one’s pocketbook” is also becoming popular. More citizens are placing money abroad. This is portfolio diversification rather than tax avoidance. Currency devaluation or possible confiscation are issues today whereas they were not in the past. As the practice becomes more prevalent, desperate government will likely impose strict capital controls to prevent citizens from protecting themselves.

 

 

 

Dec 292011
 

The hypocrisy of these legislators is obvious in this video from The Daily Caller. Enjoy watching the slime balls squirm. I hope the interviewer took a shower after her exposure to these frauds.

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