The Tax Man is Coming, Again – VAT

The VAT is an excellent idea.  The VAT is a terrible idea.

Morphine is a wonder drug.  Morphine is a dangerous drug.

A Value Added Tax, properly constructed and applied can be both a fair and reasonable method of taxation to raise the funds to provide for NEEDED government services.  1.  It is relatively simple to apply.  When a value is added (when the chick grows to a hen and is sold to the butcher and again when the butcher prepares the bird for the table and sells it) a tax is applied to the amount of the value added.  In many European countries that is in the 15 – 20% range.  2.  It taxes production but most of that is at the point of consumption so it is almost like a consumption tax (read “sales tax”).  I like consumption taxes more than income taxes because income taxes punish productivity.

A Value Added Tax needs to be a substitute for other types of taxes.  If it can be imposed, in place of income and sales tax, it can dramatically streamline and simplify taxation.  Unfortunately, we have a huge infrastructure and lobby that would fight this.  For this reason, I cannot imagine a VAT could be used here as a substitute.  It would, almost certainly, be used as an ADDITIONAL method of taxation.  Since most special interests have paid lobbyists working to protect their tax breaks, almost all would fight any change that would deny them the special treatment that they get in the current tax code.  My guess is that closed to half the revenue of most CPA firms is based on tax preparation and tax advice.  If that is the case, you can bet the CPA lobby would frown on replacing the current system with VAT.

So what are the chances that we will get a Value Added Tax to replace either or both of Income and Sales taxes?  In a word: ZERO.  

What are the chances of seeing a VAT proposal in Congress to add another source of tax income for our government to spend?  In my opinion, it is almost 100%.  Our Members of Congress have spent every penny they have seen for years and are recently showing signs that what they have is not even close to satisfying their hunger for power/money (about a trillion dollars to supplement the last budget; a trillion dollars for “stimulus”, etc.).

Congress and the President will point to Europe as a shining example of how great a VAT is.  They will suggest that a 15% tax  on value added is far better than a much higher tax on incomes and sales.  What they don’t tell you is the huge increase in taxes paid by the people and the economic death spiral that accompanies such a tax system.  Here is what you need to know:

1.  A little over 40 years ago (1967), pre-VAT in Europe, the average tax burden for European countries was just a bit higher than in the USA:  In Europe, pre-VAT, the typical tax burden of government was 30% of the gross domestic product while in the U.S. government absorbed about 27% of the gross domestic product.  VAT invariably increase overall taxes.

2.  When the VAT started in the U.K. in 1979, the rate was 12.5%.  Today it is 17.5%.  When first instituted in Germany in 1974 (?), the VAT was 13%.  It is currently 19% and there is an active proposal in Berlin to raise it to 25%.  My point is that a VAT of even 1% is a foot in the door and it is sure to rise.

3.  Lawmakers have shown they can’t control the desire to do social engineering with tax code, even with the VAT.  Much like our convoluted income tax code that favors some types of income over others, or, our sales taxes that impose different taxes on different items, the VAT is subject to “modification” to exempt certain items and lower or raise rates on others.  As it stands in Europe, today, the VAT has near the complexity as our own IRS code.

4.  VAT is invisible.  It is built into the price of the good or service so you don’t recognize it as a tax.  Much like withholding tax that you don’t pay from money in your pocket, you hardly notice when rates are raised.  This means that there are few protests when rates are hiked.  The VAT, like income tax with mandatory withholding, becomes a magical money machine for government.

5.  Today in the U.S. our government (federal, state, and local) still takes about the same as 40+ years ago – 27% of the gross domestic product to provide services to all of us.  In Europe, where the VAT is almost universal, government now eats up over 40% of the domestic output.  European products become less competitive daily and governments have been forced (????) to step in and take over large portions of the economy (read “nationalize”).  Sound familiar?

In my opinion, our government has no intent to replace any other tax with the VAT.  The sole purpose of a VAT in the U.S. will be to take more money from the productive sector of the economy to build an even bigger and more controlling government.  It is in the interest of the governing class to take as much money and control from the productive sector as they can.  The VAT will be a formidable weapon in that battle.

Morphine can control pain and help patients recover when used as directed by a competent physician.  If used by people without will power, it can become an addictive killer.

The VAT, as a replacement for other taxes, shows promise to simplify taxation.  When added on to other taxes it has proven to be very dangerous, building ever-larger government bureaucracies and killing economies.  The European experience has proven that lawmakers cannot resist the power and money brought to them by a VAT.  The last thing we need is for our government to add on another way to tax our productivity.

7%

My sister in Australia sent this to me today.  It is not political.  It is well worth reading.  Think how the world would be if our politicians read and understood this.  I can’t seem to get the formatting right so this runs way down the page.  Again, I apologize for my lack of blogging skills.

Written By Regina Brett, 90 years old, of The Plain Dealer, Cleveland , Ohio

“To celebrate growing older, I once wrote the 45 lessons life taught me. It is the
most-requested column I’ve ever written.”

My odometer rolled over to 90 in August, so here is the column once more:

1. Life isn’t fair, but it’s still good.

2. When in doubt, just take the next small step.

3. Life is too short to waste time hating anyone.

4. Your job won’t take care of you when you are sick. Your friends and parents
will. Stay in touch.

5. Pay off your credit cards every month.

6. You don’t have to win every argument. Agree to disagree.

7. Cry with someone. It’s more healing than crying alone.

8. It’s OK to get angry with God. He can take it.

9. Save for retirement starting with your first paycheck.

10. When it comes to chocolate, resistance is futile.

11. Make peace with your past so it won’t screw up the present.

12. It’s OK to let your children see you cry.

13. Don’t compare your life to others. You have no idea what their journey
is all about.

14. If a relationship has to be a secret, you shouldn’t be in it.

15. Everything can change in the blink of an eye. But don’t worry; God
never blinks.

16. Take a deep breath. It calms the mind.

17. Get rid of anything that isn’t useful, beautiful or joyful.

18. Whatever doesn’t kill you really does make you stronger.

19. It’s never too late to have a happy childhood. But the second one
is up to you and no one else.

20. When it comes to going after what you love in life, don’t take no
for an answer.

21. Burn the candles, use the nice sheets, wear the fancy lingerie. Don’t
save it for a special occasion. Today is special.

22. Over prepare, then go with the flow.

23. Be eccentric now. Don’t wait for old age to wear purple.

24. The most important sex organ is the brain.

25. No one is in charge of your happiness but you.

26. Frame every so-called disaster with these words ‘In five years, will
this matter?’

27. Always choose life.

28. Forgive everyone everything.

29. What other people think of you is none of your business.

30. Time heals almost everything. Give time time.

31. However good or bad a situation is, it will change.

32. Don’t take yourself so seriously. No one else does.

33. Believe in miracles.

34. God loves you because of who God is, not because of anything
you did or didn’t do.

35. Don’t audit life. Show up and make the most of it now.

36. Growing old beats the alternative — dying young.

37. Your children get only one childhood.

38. All that truly matters in the end is that you loved.

39. Get outside every day. Miracles are waiting everywhere.

40. If we all threw our problems in a pile and saw everyone else’s,
we’d grab ours back.

41. Envy is a waste of time. You already have all you need.

42. The best is yet to come.

43. No matter how you feel, get up, dress up and show up.

44. Yield.

45. Life isn’t tied with a bow, but it’s still a gift.”

Its estimated 93% won’t forward this. If you are one of the 7%
who will, forward this with the title ‘7%’.

I’m in the 7%.

Remember that I will always share my spoon with you!

Friends are the family that we choose for ourselves.

 

 

Will Sotomayor make a good Associate Justice?

Sonia Sotomayor has been nominated by President Barack Obama to replace David Souter on the Supreme Court.  I hope we will all learn a great deal about her from the press over the next few weeks.  I also hope that the clip below is not representative of her true views.  If it is, I think our Court is in more trouble than it is today.  Her statement that the Supreme Court and the Appeals Courts are where “policy is made” should disqualify her for the office to which she has now been nominated.  

Clip of Sotomayor  

She has also made some unwise statements that make her look like a racist, for example, in a University of California Speech in 2001, she said, “I would hope that a wise Latina woman with the richness of her experience would more often than not reach a better conclusion than a white male who hasn’t lived that life.”

If these two items are taken out of context, and I hope they are, she needs to set the record straight.   I also want the press to do a thorough job of vetting her.  I believe neither is taken out of context and I also think the press will, only reluctantly, hounded by bloggers and talk radio, do their job and inform us of her qualifications or lack thereof.

Memorial Day – Fly the Flag and be Thankful

Today, every American should stop, think and say a prayer for the men and women who have given their lives that we might be free.  Whether the World War two hero or the 18 year old who died while standing guard at a base in some far flung outpost in Afghanistan, all veterans should be remembered for their service to our country.

It gives me pause to think that our great nation was built by men and women working in a free and secure environment, one secured by our veterans.  No other nation in the world has contributed as much to improve the lot of man.  This has happened because our people have been free to realize their potential like no other people before them.

I hope our leaders will respect the efforts of our fallen heros.  I hope they have the wisdom to help preserve our hard-earned freedoms.

“Global Warming” or Global WARNING?

 

First, I need to tell you where I stand on the issue of Global Warming or Global Climate Change or whatever is today’s politically correct term.

I find most Global Warming faithful to be very closed minded about the subject.  If you mention anything that does not fit their belief set, most ‘warmists’ will attack you as stupid or ‘right wing nutcase’ or similar.  I think name-calling usually masks their fear that something in which they are so invested may not be exactly as they have been led to believe.  Most seem afraid to let in any data that may not fit their world view.

I think that anyone who intentionally spoils his surroundings is stupid.  I think that anyone, given a choice between two options should choose the one that has the fewer negative impacts. We should look at our environment with a prejudice toward helping, not hindering natural balance.  In medical school, young doctors are taught “first,do no harm.”  Wikipedia states that “another way to state it is that ‘given an existing problem, it may be better to do nothing than to do something that risks causing more harm than good.'”  We need to consider the possible harm of our actions.

We also need to weigh the costs of the actions we take.  To accept Global Warming Theory and take all the actions recommended by Mr. Gore, is, in my view, acting without consideration of the costs or the facts (as often opposed to the current pop-science).  I think we need to strike a balance.  If we continue to pollute the earth, we will destroy much of what has sustained us for centuries/millennia.  If we destroy our economies to protect nature we will have no extra funds with which to protect nature.  It’s Catch 22.

Now, the question:  Is it Global Warming or should we see this as a Global Warning?  I will write more on this at a later date but thought the following links had some interesting data that you don’t see often in the press:

The missing sunspots: Is this the big chill? –  ““This is the quietest Sun we’ve seen in almost a century,” says NASA solar scientist David Hathaway. But this is not just a scientific curiosity. It could affect everyone on Earth and force what for many is the unthinkable: a reappraisal of the science behind recent global warming.”

The Artic  – concludes that “Global Warming” is not Global but Regional

Ice at the North Pole – Not So Thick  –  shows photos of thin ice at the north pole over the past 50 years (like the one at the top taken at the North Pole in 1959) .

I also thought this was interesting.  –  

The monthly Weather Review reported [http://docs.lib.noaa.gov/rescue/mwr/050/mwr-050-11-0589a.pdf]: “The arctic seems to be warming up. Reports from fishermen, seal hunters, and explorers who sail the seas about Spitzbergen and the eastern Arctic, all point to a radical change in climatic conditions , and hitherto unheard-of high temperatures in that part of the earth’s surface. … Ice conditions were exceptional. In fact, so little ice has never before been noted. … In Arctic Norway… where formerly great masses of ice were found, there are now often moraines, accumulations of earth and stones. At many points where glaciers formerly extended far into the sea they have entirely disappeared.” But the year was 1922:

 My guess is that most of us think what we want to think and filter what we hear so that our beliefs are rarely challenged.  The severity of the reaction of most “Warmists” to anything that challenges their world view continues to make me believe their minds are closed more than those they accuse of “ignoring the facts.”  I would be much more comfortable if more people were open to the possibility that what we are now told is “Global Warming” might be a cycle over which we have little or no control.  Maybe we could all use this as a warning that regardless of “Warming” or not that we should “first, do no harm.”

This was written on April 27 for posting on May 13.  It was not posted until May 21.

Government Spending – Jan. 21 Fears Realized

On January 21st, I posted a blog on government spending.  Today, I look at that post and am convinced that my worst fears have already been realized, in less that four months.  

I stated, ” I fear, however, that Mr. Obama will be like Congress and see no problem that can’t be fixed by Government Spending.  If he finances his new government programs (read Universal Health Care) by increasing taxes on the productive sector of our economy, we will all suffer for it in the long run.”  

Not only has the Obama Administration and Congress agreed that there is no problem that can’t be fixed by Government Spending, but, they have created new solutions where there are no problems, to wit:  funding ACORN to the tune of 100’s of millions of dollars to carry out non-specific tasks to strengthen inner cities, nearly a Million dollars for a disc golf course, etc.  Just read the stimulus bill (as few Members of Congress did before the vote, and you will be appalled at all the ways your money (and that of your grandchildren) is being spent.

Very depressing….

 

WRITTEN APRIL 27 AND PLANNED FOR POSTING ON 5/13 – POSTED 5/21

Note to Mr. Obama – Apologists are Losers

(Note – this was written in April for posting on May 6 but didn’t post due to my failings as a blogger for which I apologize)

Quick.  Name the five most famous apologists.  Now list their accomplishments.

Not as easy as one would think, is it?   Let’s start with what an Apologist is.   The English word apology is derived from the Greek word apologia, however, its meaning has changed from a “speech  in defense of something” to today, where its primary sense is a plea for forgiveness for a wrong act.  Central to the meaning of an apology  is an admission of guilt. 

Here’s my quick list:

1.  Neville Chamberlain – He apologized for interfering in Germany’s internal affairs and allowed Hitler the space he needed to build his army  to conquer the world. 

2.  America’s Academic Left – For 40+ years they have proclaimed that the United States was the bigger threat to civilization than, first the Soviet Union, and now Radical Islam.  Neither claim has validity but, using the power of the ivory tower, they influenced both public opinion and government action to appease some of the greatest abuses of human rights on record.

3.  Leadership of the United Nations since Dag Hammarskjold – In general they have been elected as compromises that were inoffensive to all sides.  With rare exception, their efforts consisted of apologizing for the evils of the Americans and the Colonial Europeans.  The positive things that have been accomplished by the U.N. are far outweighed by the negatives.  The U.N. rarely leads in anything it does.

4.  Jimmy Carter – Since leaving the office of the Presidency, he has traveled the globe to apologize for the insensitivity of his fellow Americans.  He has consistently gone places and made statements that have limited U.S. options in international affairs.  His work has often been counterproductive.

5.  Barack Obama – His consistent and persistent apologies to the World for all of the sins of America have done nothing to stabilize the world and nothing to strengthen the country he was elected to lead.  It is interesting to note that most of Mr. Obama’s apologies are for things done by others.  He is quick to say that Harry Truman was wrong to drop the bomb.  He has spent most of the past year apologizing to any foreigner who will listen for the crimes of Mr. Bush and his administration.

Leaders apologize for their own improper behavior and actions.  

Losers blame (apologize) for others.  In my opinion, Mr. Obama is laying the foundation for his demise as a leader.

Where is Will Rogers When We Need Him?

It was my intent to post this on May 3.

 

Things can get a bit serious and can even turn an Optimist into a Pessimist.  A new Will Rogers would help to put things in perspective.  Here are some of my favorite Will Rogers quotes to do just that.

“An economist’s guess is liable to be as good as anybody else’s. ”   seems to sum up what’s going on with the Secretary of the Treasury and the Chairman of the Fed…

“About all I can say for the United States Senate is that it opens with a prayer and closes with an investigation.” and “Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?     it does make you wonder…

“Last year we said, ‘Things can’t go on like this’, and they didn’t, they got worse. ”  yep…

“Don’t let yesterday use up too much of today.”  tough advice to follow…

“I bet after seeing us, George Washington would sue us for calling him “father.”” and he would have good reason…

“If I studied all my life, I couldn’t think up half the number of funny things passed in one session of congress. ”  it would take longer than that…

“Instead of giving money to found colleges to promote learning, why don’t they pass a constitutional amendment prohibiting anybody from learning anything? If it works as good as the Prohibition one did, why, in five years we would have the smartest race of people on earth.”

“It’s easy being a humorist when you’ve got the whole government working for you.”  yep…

“Be thankful we’re not getting all the government we’re paying for. ”  you bet I am…