A Really Bad Idea That Sounds Wonderful

Andrew Yang is running for President in 2020.  One issue in his platform is what he calls the Freedom Dividend.

Andrew Yang’s website describes the Freedom Dividend as follows:

Andrew would implement a Universal Basic Income, ‘the Freedom Dividend,’ of $1,000/month, $12,000 a year for every American adult over the age of 18. This is independent of one’s work status or any other factor. This would enable all Americans to pay their bills, educate themselves, start businesses, be more creative, stay healthy, relocate for work, spend time with their children, take care of loved ones, and have a real stake in the future.

Any change to the Freedom Dividend would require a constitutional amendment.

It will be illegal to lend or borrow against one’s Dividend.

A Universal Basic Income at this level would permanently grow the economy by 12.56 to 13.10 percent—or about $2.5 trillion by 2025—and it would increase the labor force by 4.5 to 4.7 million people.  Putting money into people’s hands and keeping it there would be a perpetual boost and support to job growth and the economy.

This proposal reminds me of 1972 Democratic presidential nominee George McGovern’s proposal to write a $1,000 check to every American. That sounded good to me, so I voted for George McGovern. I have learned a little since that time.

The obvious question is, “Where would the money come from?” Mr. Yang’s answer is that it would come from a value added tax that would add equity to the American tax system. Last year Amazon paid no federal tax on its $11 billion profit. A Value Added Tax (VAT) would change that. Other companies that paid no tax last year were Delta, Chevron, IBM, Netflix, General Motors, and John Deere. I am not criticizing those companies–they simply took advantage of the tax laws the way they are written. That is good business practice, and there is nothing illegal about it. However, there is a concept being omitted in this discussion–corporations don’t pay taxes–their customers do.

A value added tax levied on these companies would be passed on to the consumer in the form of higher prices for the goods or services involved. Every taxpayer might get his $1,000 Freedom Dividend, but it would be spent to cover the increases of the cost of the goods the VAT was levied on. Most countries do have VATs, but I am not sure adding any additional tax to American companies is a good idea. In the end, the consumer suffers and the cost of paperwork soars.

Have We Truly Lost A Government Where All Men Are Equal?

Victor Davis Hanson posted on article at American Greatness yesterday which illustrates what has happened in America over the past decade or so.

The article begins with an interesting scenario:

Imagine the following: The IRS sends you, John Q. Citizen, a letter alleging you have not complied with U.S. tax law. In the next paragraph, the tax agency then informs you that it needs a series of personal and business documents. Indeed, it will be sending agents out to discuss your dilemma and collect the necessary records.

But when the IRS agents arrive, you explain to them that you cannot find about 50 percent of the documents requested, and have no idea whether they even exist. You sigh that both hard copies of pertinent information have unfortunately disappeared and hard drives were mysteriously lost.

You nonchalantly add that you smashed your phone, tablet, and computer with a hammer. You volunteer that, of those documents you do have, you had to cut out, blacken or render unreadable about 30 percent of the contents. After all, you have judged that the redacted material either pertains to superfluous and personal matters such as weddings and yoga, or is of such a sensitive nature that its release would endanger your company or business or perhaps even the country at large.

You also keep silent that you have a number of pertinent documents locked up in a safe hidden in your attic unknown to the IRS. Let them find it, you muse. And when the agents question your unilateral decisions over hours of interrogatories, you remark to them on 245 occasions that you have no memory of your acts—or you simply do not have an answer for them.

Anyone reading this scenario realizes that after doing all this, they would be sitting in a jail cell hoping someone would bake them a cake with a file in it.

The article goes on to list the various misdeeds of government officials in the past two or three years. It’s a well-known list–you can follow the link to the article to read it. But somehow no one is in jail.

The article concludes:

To this day, we have no idea which officials in government leaked the unmasked names of surveilled Americans to the media, or leaked the transcripts of a conversation between the Russian Ambassador and Gen. Michael Flynn. I say we have no idea, because no one in government has any interest in finding out, because for the few, who might, to do so would earn them media and partisan venom.

The message from the Clinton email scandal, the Mueller investigation, and the careers of Brennan, Clapper, Comey, and McCabe seems to be that if the government wishes a document then do not provide it. If you are finally forced to surrender it, either erase or destroy what you can reasonably get away with hiding. Or barring that, insist that it be heavily redacted, according to your own judgment, for the sake of America. If asked to explain such behavior or allegations of leaking information to the press, either deny or claim faulty memory.

Do all of that and be of the correct political persuasion and of Washington repute, and there is little chance of criminal exposure.

Such exemption so far is the message that we’ve learned from the behavior of high officials of the Obama Justice Department, CIA, FBI and National Security Council. Or put another way, our illustrious government officials are reminding us Americans, “We are better than you.”

We will not have equal justice under the law until all lawbreakers are prosecuted, regardless of their political standing.

The Rules Should Apply Equally To Everyone

On Wednesday, the Washington Examiner reported that Internal Revenue Service (IRS) employees who cheated on their taxes were promoted–not punished.

The article reports on the finding of the Treasury Inspector General for Tax Administration:

Nearly one-third of the employees from 2008 to 2013 caught cheating on their taxes received at least one bonus or raise within a year of being disciplined, investigators reported. These rewards include nearly $145,000 in bonuses, almost 900 hours of time-off awards and 30 temporary and permanent promotions.

…”Some employees had significant and sometimes repeated tax noncompliance issues, and a history of other conduct issues,” the report said. “Moreover, management had concluded that the employees were not credible. Nonetheless, the proposed terminations were mitigated by the IRS Commissioner.”

Federal law requires that IRS employees guilty of intentional tax law violations must be terminated, unless mitigated by the IRS commissioner. Since the IRS doesn’t have a policy to document the reason why intentional tax violators aren’t fired, it was unclear why the employees received lesser discipline.

It is time for Congress to come up with a tax code that abolishes the IRS. Aside from becoming political, which it was never supposed to be, it has also lost any moral bearing it might have had.

As You Hear The Debate On Raising Taxes…

As we approach the fiscal cliff put into place by Congress and the President, we will hear a lot about the need to increase taxes to balance the budget. We will also hear that the ‘rich’ are not paying their fair share.

First of all, this is how the tax code currently works (2009 numbers) according to the National Taxpayers Union:

Who Pays Income Taxes and How Much?

Tax Year 2009 

Percentiles Ranked by AGI

AGI Threshold on Percentiles

Percentage of Federal Personal Income Tax Paid

Top 1%

$343,927

36.73

Top 5%

$154,643

58.66

Top 10%

$112,124

70.47

Top 25%

$66,193

87.30

Top 50%

$32,396

97.75

Bottom 50%

<$32,396

2.25

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

Secondly, watch the first minute of this video taken from the 2008 Democrat Presidential Primary debate:

Ask yourself, “What is this debate really about, and why is President Obama so determined to ‘tax the rich’ when it has been proven that doing so will not increase revenue to reduce the deficit?”

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The Tax Changes In Obamacare

On Friday the Weekly Standard posted an article about the impact of Obamacare on the Tax Code. The article quotes a Treasury Department that describes Obamacare as “represents the largest set of tax law changes in more than 20 years and affects millions of taxpayers.” The report further states that Obamacare’s “new taxes, fees, and penalties account for approximately $438 billion.” 

That is a conservative estimate.

The article reports:

…that $438 billion in new taxes, fees, and penalties on Americans and American businesses is just the tally through 2019 — at which point Obamacare would really have been in effect for only six years (2014-19), not the ten years that are the norm for government scoring.  On an annual basis, Obamacare’s taxes, fees, and penalties (according to that same official estimate) would increase from $48 billion in 2014 to $88 billion in 2019, rising between 9 and 26 percent per year (depending upon the year) — with no end in sight.

The article points out that the only job creation due to Obamacare is in the IRS.

I would like to remind everyone at this point that Obamacare was passed without one single Republican vote. The Republicans were given no input into the bill at all. Had the Obamacare bill included such things as tort reform and portability of insurance across state lines, we might not be anxiously awaiting the Supreme Court’s ruling on the current monstrosity.

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