Dale's Blog on the Dale F. Ogden network

7/31/2008: Who bears the tax burden in the U.S.?

Soak the rich" is a popular concept among some groups. Raise taxes on the wealthiest among us, and we'll raise revenue and be rolling in surplus cash, right? Everyone's got a story about some bazillionaire who picks his teeth with hundred dollar bills and never pays a red cent in taxes. But setting anecdotes and politics aside, a quick look at the facts will tell you, the notion that the U.S. can tax its way to prosperity is all wrong.

Now that the 2006 IRS figures are out, we know that almost all taxes that were collected were paid by people labeled as "the rich." Supporters of tax cuts have been claiming for years that it is the rich who pay the lion's share of taxes. But this time, the news is even more telling. Thanks to President Bush's 2003 tax cuts, total tax payments by the rich have never been higher… and not because of inflation.

According to the Treasury Department, the number of millionaires in the U.S. nearly doubled between 2003 and 2006, from 181,000 to 354,000. Part of the reason for that increase is that favorable capital gains rates encouraged Americans to invest more, and corporations that pay lower tax rates are more able to pay dividends. But also, history shows that when taxpayers feel tax rates are fair, they are less likely to invest in tax shelters or to simply hide income, and more likely to report what they actually earned. John Kennedy and Ronald Reagan both knew and proved that theory.

President Kennedy said, "It is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise revenues in the long run is to cut rates now." Under his administration, the top tax rate was cut from a high of over 90 percent to 70 percent causing many naysayers to swoon. The result? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent. During this time, the rich saw their share of taxes increase from 11.6 percent to 15.1 percent. Under Ronald Reagan, tax revenues in the 80s climbed 99.4 percent. For the top 1 percent of taxpayers, their share of total tax rose from 17.6 percent in 1981 to 27.5 percent in 1988.

In 2003, millionaire households paid $136 billion in taxes, or 19 percent of all taxes. Then tax rates were cut, and naysayers including those in the Congressional Budget Office and the Tax Policy Center woefully predicted that a trillion dollars in lost revenue would result. Instead, in 2006, millionaire households paid $274 billion in taxes, about 40 percent of all taxes. In the same period, the deficit as a percentage of GDP fell from 3.5 percent in 2003 to 1.9 percent in 2006.

The same naysayers that wrongly predicted a trillion dollar loss didn't learn from their error. Now they predict that if the Bush tax cuts are repealed, the federal coffers will rake in a cool extra trillion.

Time will tell, but if history is an indicator, the naysayers will not be laughing all the way to the bank, but the ones who qualify as "rich," that is, with incomes of at least $108,904, will be hocking their jewels to pay their own tax bills, if they aren't too busy hunting for tax shelters.

Here's how the figures break down.

The top 1 percent of taxpayers (those with incomes of at least $388,806) earn 22 percent of all U.S. income, but pay 40 percent of the total tax.
The top 5 percent of taxpayers (with income of at least $153,542) earn 37 percent of all U.S. income, but pay 60 percent of all tax.
The top 10 percent of taxpayers (those with incomes of at least $108,904) earn 47 percentof all U.S. income, but pay 71 percent of the total tax.
The top 50 percent of taxpayers (those with incomes of at least $31,987) earn 87 percent of all U.S. income, but pay 97.1 percent of the total tax.

The lower 50 percent of earners in the U.S. (those making below $31,987) earn less than 13 percent of all U.S. income, collectively pay only 2.9 percent of the total tax. Because of refundable credits like the Earned Income Credit, many pay nothing yet get refunds. In 2006, taxpayers who earned less than $32,001 and had at least one child or those who did not have children, earned less than $12,120 and met other criteria were eligible for the EIC. The IRS reports that in 2006, $43.7 billion was paid out in Earned Income Credits.

Sources:

Internal Revenue Servide: Individual Statistical Tables by Tax Rate and Income Percentile
Internal Revenue Service: Earned Income Tax Credit Statistics
The Heritage Foundation: The Historical Lessons of Lower Tax Rates
The National Taxpayers Union: Who Pays Income Taxes?

AccountingWEB.com Jul-31-2008

7/30/2008: Environmental Solutions Emerging Privately

"Governmental inaction is prompting environmental groups and big business to cut unprecedented deals to promote energy exploration and other development in return for major conservation initiatives. The agreements preserve large amounts of undeveloped land, impose stricter environmental practices than required by law and generate big investments in alternative energy. The deals also clear the way for oil drilling, new power plants and large residential developments. Experts say the move to private agreements reflects a loss of faith in the government's ability to handle some of the USA's most pressing environmental disputes." (USA Today, Wednesday) Imagine that. People doing things without the government.

FEE Timely Classic "Saving the Environment for a Profit, Victorian-Style" by Pierre Desrochers

7/16-17/2008: THIS IS NOT A DRILL by Ann Coulter

Speaker of the House Nancy Pelosi, or as she is called on the Big Dogs blog, "the worst speaker in the history of Congress," explained the cause of high oil prices back in 2006: "We have two oilmen in the White House. The logical follow-up from that is $3-a-gallon gasoline. It is no accident. It is a cause and effect. A cause and effect."

Yes, that would explain why the price of oral sex, cigars and Hustler magazine skyrocketed during the Clinton years. Also, I note that Speaker Pelosi is a hotelier ... and the price of a hotel room in New York is $1,000 a night! I think she might be onto something.

Is that why a barrel of oil costs mere pennies in all those other countries in the world that are not run by "oilmen"? Wait -- it doesn't cost pennies to them? That's weird.

In response to the 2003 blackout throughout the Northeast U.S. and parts of Canada, Pelosi blamed: "President Bush and Rep. Tom DeLay's oil-company interests." The blackout was a failure of humans operating electric power; it had nothing to do with oil. And I'm not even "an oilman."

But yes -- good point: What a disaster having people in government who haven't spent their entire lives in politics! That explains everything. A government official with relevant experience or knowledge about an issue is obviously a crisis of gargantuan proportions.

This must be why the Democrats are nominating B. Hussein Obama, who finished middle school three days ago and has less experience than a person one might choose at random from the audience of "American Idol."

Announcing the Democrats' bold new "plan" on energy last week, Pelosi said breaking into the Strategic Petroleum Reserve "is one alternative." That's not an energy plan. It's using what we already have -- much like "conservation," which is also part of the Democrats' plan.

Conservation, efficiency and using oil we hold in reserve for emergencies does not get us more energy. It's as if we were running out of food and the Democrats were telling us: "Just eat a little less every day." Great! We'll die a little more slowly. That's not what we call a "plan." We need more energy, not a plan for a slower death.

But there's more! Pelosi announced that the Democrats also plan to push for "an historic investment in biofuels, efficiency, conservation and the rest." The "rest" is apparently what she called our "important and essential" investment in alternative energy.

That certainly would be historic: We would make history by throwing our money away on unproven energy boondoggles that have eaten up untold billions since the 1960s without producing a single net kilowatt of power while we all starve to death.

The proposal to use energy sources that don't yet produce any energy is like the old New Yorker cartoon with Obama in Muslim garb -- no wait, that was a different cartoon. The cartoon is: A scientist has written out his extremely complicated theory on a blackboard and is showing it to another scientist. The theory consists of numbers and characters and takes up the entire blackboard. About two-thirds of the way across, reading left to right, appear the words, "then a miracle happens," followed by more numbers and characters.

That's the Democrats' plan to run cars on biofuels, solar and wind power: Then a miracle happens. The current Democratic mantra on energy is: "We can't drill our way out of this problem." Apparently their plan is to talk our way out of this problem.

Democrats are also alleging that the oil companies are sitting on millions of acres of oil but are refusing to drill -- presumably because oil company executives hate the American people and perversely don't want to make money. Manifestly, those acres are being explored for oil or have already come up dry.

If the Democrats really wanted oil companies to find more oil, they'd allow oil companies to drill offshore and to drill in ANWR, which we happen to know is bursting with oil.

But they don't. They don't want drilling. They don't want more oil. They want humans to ride bicycles and then to die. We deserve it: We were mean to the polar bears.

It's good to know that in the middle of a crisis, the Democrats are still liars. As long as we're fantasizing about "alternative" energy sources, what we really need is a car that runs on Democrats' lies.

7/14/2008: The Pope took a couple of days off to visit the mountains of Alaska for some sight-seeing. He was cruising along the campground in the Pope-mobile when there was a frantic commotion just at the edge of the woods.

A helpless Democrat, wearing sandals, shorts, a 'Save the Whales' hat, and a 'To Hell with Bush' T-shirt, was screaming while struggling frantically, thrashing around trying to free himself from the grasp of a 10 foot grizzly bear.

As the Pope watched horrified, a group of Republican loggers came racing up. One quickly fired a .44 magnum into the bear's chest. The other two reached up and pulled the bleeding, semiconscious Democrat from the bear's grasp, then using long clubs, the three loggers finished off the bear and two of them threw it onto the bed of their truck while the third tenderly placed the injured Democrat in the back seat.

As they prepared to leave, the Pope summoned them to come over. 'I give you my blessing for your brave actions!' he told them. 'I heard there was a bitter hatred between Republican loggers and Democratic Environmental Activists, but now I've seen with my own eyes that this is not true.'

As the Pope drove off, one of the loggers asked his buddies 'Who was that guy?'

'It was the Pope,' another replied. 'He's in direct contact with heaven and has access to all wisdom.'

'Well,' the logger said, 'he may have access to all wisdom but he sure don't know anything about bear hunting! Is the bait holding up, or do we need to go back to Massachusetts and get another one?

7/14/2008: Fannie Mayhem: A History

Fanny Mae (and its smaller cousins) have always been about using taxpayer money to reward politicians and their friends...not to mention a huge subsidy to the real estate industry, not to homeowners. Even if you remember inflation in the 1970's, you ain't seen nothin' yet. If you want a sure thing, short the dollar.

7/8/2008: Roll Over, Bark, and Beg by Fred Reed – Fertilizer for the Pansy Bed

Oh god. There is no hope.

The other day I glanced at the web site of the Lake Chapala Society, a social club of sorts for expats around Mexico's Lake Chapala, an hour south of Guadalajara (where I live). Clicking on "Safety," I found a long list of reasons why you should never, ever use a firearm to protect your home and family. No. See, you might miss, or be scared, or the intruders might take it away and shoot you, and they might be all mad and hurt you when all they wanted was your television. No, the best thing is to let them do what they want, and then maybe they won't do anything bad to you.

This supposedly was written by a retired cop but, if so, he (or quite possible she, judging by the tone) doesn’t sound like any cop I have known, which is whole lots. Anyway, his, her, or its advice, is “Leave the guns to people who are trained and prepared to use them.” Which he says he is.

Nuts. To begin with, cops usually know little about guns. They get a bit of training in the police academy, and then once or twice a year go to the range to fire a couple of magazines. Being actually good with a pistol requires putting tens of thousands of rounds downrange. Street shooting, which is what cops do in the unlikely event that they do any shooting at all, requires training of the sort offered by IPSC [note: the "International Practical Shooting Confederation"] or, years back, Jeff Cooper and Chuck Taylor. ...

But what I dislike most about Smith's advice is his advocacy of helpless passivity. It embodies a profound change in American attitudes, which once favored self-reliance. Now it's reliance on the group. Don't take primary responsibility for your defense. No, that would be violent, or scary, or macho, and all. No, let the criminals do whatever they want with you, rely on their merciful natures, and call 911 if you survive.

This is exactly what Smith advocates. If I were a criminal, I would love this guy.

His advice is bad. He says, correctly enough, that most intruders want chiefly to steal things. Think a little. At two am, you hear a noise and turn on the lights. You find two guys with knives. You can now identify them. They have knives. Focus on this point. Knives, and you can identify them. Do you see where this leads? ...

In the real world, criminals are not always interested only in your television. They will accept such side benefits as offer. This engenders fascinating situations. They discover your daughter of sixteen in her bedroom. "Hey, little girl, you're real cute. Let's get a better look. Take those pajamas off." You get to watch. They may or may not choose to leave witnesses.

[Read the whole essay]

7/5/2008: Contractual Independence By Mark I. Schwartz

If contracts aren't protected, is free speech next?

THE U.S. SUPREME COURT RECENTLY AFFIRMED what many Americans understood implicitly about the Second Amendment's right "to keep and bear arms." It is an individual, not a collective, right. Now is an opportune time to urge the court to resuscitate other long-suppressed individual rights. A prime example is the contracts clause of the Constitution: "No state shall...pass any law impairing the Obligation of Contracts."

The framers did not hold individual economic rights to be any less worthy of protection than other personal rights. Nevertheless, since the 1930s, the Supreme Court has narrowly construed many of the economic provisions in the Constitution, particularly the contracts clause.

[Read the entire article]

7/2/2008: McCain: Pump This! by Ann Coulter

Well, I guess we're all pretty relieved we didn't drill in the Arctic National Wildlife Refuge back in 2002. What a disaster that would have been.

The vote on ANWR was almost entirely along partisan lines, with all Republicans, except a handful of "moderates," voting for drilling, and all Democrats, except a handful of sane Democrats like Zell Miller, voting against drilling.

John McCain opposed drilling in the Arctic National Wildlife Refuge because he polled soccer moms and found out they were against drilling. They thought it sounded too much like going to the dentist. McCain wanted to ensure that he remained beloved by the two pillars of his base: "centrists" and New York Times reporters...

I guess in the world of moderate Republicans an environmental event qualifies as a religious observance.

"In premodern times, the courage of a leader often had to be physical. In the last 500 years it is more often moral. Moral courage is the ability to do what's right even when it is deeply unpopular, even dangerous. Courage is only found where there is the genuine possibility of loss -- loss of friends, reputation, status, power, possessions or, at the extremes, freedom or life."

7/2/2008: "I'd rather take my chances with criminals than with the police. For one thing, criminals usually want your property, not control over your life. --Wendy McElroy: The Thin Blue Lie" (excerpts below)

"The police" is an institution designed to enforce the law, whatever the law may be, and to process those suspected of violating it. Only if the law is just does an individual policeman stand any chance of producing justice. To a large degree, current law is designed to produce morality (e.g. enforcing victimless crimes), social ideals (affirmative action) or the protection of political power (gun control). As long as the well-intentioned policeman uses the institution's materials - the law - and complies with its procedures, he will not produce justice. All he can do is to minimize the viciousness with which unjust laws are enforced.

Gun opponents who argue "the police will protect you" are a menace to your safety. They are also flat wrong. I am not referring to the overwhelming inability of police to combat crime. Why state the obvious? I am referring to the fact that the police have no duty whatsoever to protect you against criminals. That's not in the job description of 'police officer.' The courts have recognized this fact for over a century.

In 1856, the U.S. Supreme Court (South v. Maryland) found that law enforcement officers had no duty to protect any individual. Their duty is to enforce the law in general. More recently, in 1982 (Bowers v. DeVito), the Court of Appeals, Seventh Circuit held, "...there is no Constitutional right to be protected by the state against being murdered by criminals or madmen. It is monstrous if the state fails to protect its residents... but it does not violate... the Constitution." Later court decisions concurred: the police have no duty to protect you.

Police vehicles routinely sport decals proclaiming sentiments such as "Proud to Serve!" If they aren't there to protect you, the question becomes, "Who are they serving?" The answer is clear: the police department exists to enforce the law. Policemen serve the government, not the people. And uphold the law with total disregard for whether their actions create or prevent violence. For example, if government decides that certain forms of adult consensual crimes must not be tolerated, then the police will draw their guns and barge into otherwise peaceful bedrooms. To uphold an unjust law, they will create violence and victims.

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