Tax Overview

The following few posts will all refer to the Federal Tax Code.  I do not claim to be a tax expert, but common sense and logic could make our tax system a lot simpler and fairer, and in this and the following posts, I will make my case to rethink the income tax, business taxes, social security and medicare taxes.

Before getting into tax specifics in following posts, I want to cover the broad strokes with this overview.  First, politicians must not be allowed to tinker with the tax code to incentivize behavior.  Every tax break in the code got there because some politician got votes or money for it.  Our tax code has become a monstrous conglomerate of tax breaks, incentives, loopholes, and political favors brokered by lobbyists and granted by politicians.

Everyone wants a favor or a tax break...and, if politicians can grant favors for votes, they will.

Rule #1      NO TAX BREAKS, NO EXEMPTIONS, NO DEDUCTIONS, NOTHING!!!

Rule #2      Lower incomes pay lower income tax rates.  Maximum income tax rate for
                  individuals is 10%.

Rule #3      All income tax brackets adjusted for inflation every year.

Rule #4      Income tax rate applies to all income, salaries, interest, capital gains,
                  social security, proceeds from home sales, company car allowances, etc.
                  No exceptions!

Rule #5      Income tax rates appy to each individual that earns income,
                  no joint incomes.

Rule #6      Save 10% of all taxes collected the first 5 years to fund a 50% rainy day
                  reserve fund, to cover emergencies such as paying off debt, financing a
                  war, or disaster relief.  Unused funds in the reserve could be loaned to
                  banks at a low interest rate to fund safe, well-qualified, home and
                  business loans.  Once the rainy day reserve is fully funded, politicians
                  can spend all of the income tax collected (less replenishment of any
                  rainy day funds spent the prior year).

One purpose of this tax program is to prevent politicians from abusing the tax system to reward benefactors and punish opponents.  Another purpose to to provide a simple, predictable, and direct method of taxation that is easy to understand and to forecast, and which would require politicians to budget their expenditures to their available income.

In case of emergency, politicians could raise tax rates only for stated, specific purposes, and only if the rainy day fund did not cover the emergency.  All increases in tax rates would have to be voted in by a 60% majority and  re-approved every two years.

 Now that the overview is done, let's go on to more specific details.

A Foolish, Unacceptable Risk

If you read newspapers or watch TV, you must have heard that Social Security is running out of money.  The fund is being depleted, there are only four workers contributing for each recipient, current revenue does not cover current benefits, in a few years the whole system will go belly-up unless drastic reforms are instituted.  At least, that's what I've heard and seen.

My question is, why, oh why, would the original stimulus program want to take funding out of this rickety system by cutting a third of the employee's payroll taxes that support the system?  Why would Obama's new stimulus package want to more than double down and eliminate HALF of the employee's AND HALF of the employer's contributions?

Where will the money to pay the benefits come from?  Are we going to borrow another gazillion dollars from China?  Are we going to print more money and pump up inflation?  Are our children and grandchildren going to pick up the tab for our foolish decisions?  Or, are we just going to cut the benefits?

I get that the conventional political wisdom is, by decreasing the FICA tax, consumer spending will increase, and that will spur the economy.  I get it, but I don't agree with it.  It didn't work with the first stimulus, but, hey, it might work this time.  The only sure thing is that we will have definitely jeopardized the funding and future of the social security system.

Where are the Republicans on this issue?  Where is the Tea Party?  Obama and the Democrats are pummeled for being the party that loves to tax, spend, borrow, and print money.  Republicans pride themselves as being the party of balanced budgets, lower debt, and a strong dollar.

Why haven't I heard a single Republican speak out on this issue?  Why have no Republican presidential candidates stepped up to protect the fiscal integrity of the social security system from further degradation? 

The silence from both political parties can only lead one to believe that both are willing to risk the sure danger to the social security system, in order to accept the political cover of a risky gamble to improve the economy and "lower taxes".  It makes politicians look like they are "doing something" about the economy and jobs, and, as long as no one questions the wisdom of what they are "doing", they get away with it.   

Unfortunately, they are not lowering your income taxes, they are lowering the FICA contributions to your retirement fund;  deciding, for you, that you should spend more now, and that you shouldn't trouble your mind about the missing contributions.  Don't worry, the money will somehow, magically arrive at the perfect time when you need it.


 

The Search for the Generic Derogatory

In the old days, there was an infinite number of insulting names and stereotypes for every racial, ethnic, religious, sexual orientation, or gender group.  If someone bugged you, you insulted them with the appropriate generalization, and they retorted with an insulting barb to you, your background, and the horse you rode in on. 

Spleens were vented, egos were inflated, dominance was asserted, respect was earned.  This macho version of "sticks and stones may break my bones, but names will never harm me" was a stylistic peacock dance designed to save face and provide both parties a chance to sound tough and avoid physical conflict.

Political correctness has re-educated this situation from an attempt to place a group stereotype on an individual to an attempt to legitimize the stereotype on the entire group.  In other words, it makes the leap from using a word that demeans a group, to accusing you of actually believing that the group fits the stereotype.

Use the wrong word, and you're racist, or sexist, or homophobic.  This takes all the fun out of the argument.  It's not easy defending yourself from the accusation that you're attacking a group of innocent people, when all you wanted to do was insult the person you're arguing with.

So, I propose we designate a noun as the official "Generic Derogatory".  A debator would immediately recognize the usefulness of a powerful word to denigrate your opponent without opening you up to charges that you stereotype race, religion, ethnicity, sexual orientation, or gender.

"Loser" is such a word, except that it kind of implies that winners can't be jerks, and we all know that can't be true.  "Jerk" could be a good word, except it isn't a really strong enough word to provide the visceral high of the perfect epithet.

I propose "Asshole".  We all know an Asshole when we see or hear one.  Anyone can be an Asshole at any given time.  If you accuse someone of being an Asshole, they would be tacitly admitting their guilt by accusing you of insulting all the other Assholes.

Plus, an infinite number of adjectives would apply.  For example, a kinder, gentler, "a little bit of an A-hole".  Then, there could be a "Perfect Asshole" (perhaps a perfectionist), or, a "Dangerous Asshole" (a terrorist or a political opponent), leading up to the "Colossal Asshole" (a politician, Wall Street banker, union boss, lawyer, professor, or ex-spouse, take your choice).

I'm sure if you give this much thought, you may come up with a "Generic Derogatory" of your own.  It's a free country.  Everyone has the right to their opinion.  But only an Asshole would disagree with me.







      
   

The Most Over-Rated Quality

An intelligence test measures how facile you are with words, mathematics, and, to some extent, concepts.

It probably is a good measure of how well you have done in school and is a good predictor of your capability to continue your education.  It may be a good indicator of your capability to perform well in certain, highly technical careers.

But intelligence is no indicator of how well you will do in living your life.  It is far from an indicator of the type of person you will become.

Every corrupt dictator has thousands of highly intelligent people working behind the scenes, facilitating the regime.  Someone has to design the gas chambers.  Someone has to use the language to obfuscate the true purpose of the plans.

Without the wisdom to choose a proper purpose and a proper course, intelligence is foolish and can be dangerous.  To be wise is to understand when, where, and how to use intelligence.  Intelligent people are common...wise people are rare.

Without the courage to stand up for a proper purpose, intelligence is wasted.  Without compassion, persistence, and drive, intelligence alone will not often win others to your side.

Ego and arrogance often go with high intelligence.  Everyone has seen instances of extremely intelligent people making amazingly foolish decisions.  Business, banking, and political scandals constantly occur,  in spite of the intelligence of  the people involved.

They weren't stupid (well, at least not all of them).  They were just arrogant enough to think that they could get away with it, or they were too weak to stand up for what was right, or they just didn't care how many people got hurt, as long as they got theirs.  Intelligence does not trump character flaws.

Actually, intelligence can be dangerous when applied towards improper, short-sighted, or selfish goals.

Don't get me wrong.  We should all do as well in school as we can.  We should all strive to do well enough on tests to pursue our education and careers as far as our minds will take us.

I just want you to put intelligence in perspective.  How smart you are is not as important as the character you have.

The smarter you are, the more you should listen to others and learn from their perspective.

The smarter you are, the more you should consider the uses to which you are putting your talents, and the causes for which you are working.

The smarter you are, the more you should realize that you don't (and can't) have all the answers.

Intelligence is not what life is about.  Intelligence is a tool you can use to help you discover what life is about.  Just as a hammer can be used to build a house, or to crack a skull, intelligence is no better than the purpose to which it is put to use.

Beware the intelligent mind being put to a nefarious purpose.

A Lesson From Larry

Many years ago, Larry and two women worked for a large corporation.  They were all married to their respective spouses, but they remained workplace friends.  Over the years, they changed employers and careers, and contact became infrequent.

One woman became divorced, and I was the lucky one who latched on to and married her.

The second woman also divorced, and Larry's wife passed on.  Years later, Larry and the second woman reconnected, dated, and became engaged.

A few years ago, I met Larry for the first time at the first ever, semi-annual dinner and catch-up session arranged by the women, and we continued to meet throughout the years.

I liked Larry a lot.  He was experienced, intelligent, and successful in the business world.  He had run his own consulting service, and had been CEO of a small business.  I found him serious and sometimes funny.

We all discussed business, a little politics, families, and any other issues that came up.  He was the only CEO I've ever known that was more interested in the opinions of the others at the table than in his own.  I know, it's hard to believe.  The man was a saint.

And then he died, quickly and unexpectedly.  At his funeral, there was no mention of his business success or that he was CEO of a profitable company.

Instead, his brother recounted their days together and how they never had a cross word for each other.  His long-time friend recounted their pranks together and Larry's irreverent sense of humor.

The sister of his fiancee recounted a driving trip throughout New England, where Larry drove the two sisters and their mother.  Never once did he complain or rush them as the three women stopped and shopped at every store along the road.  That's when I realized that Larry was a way better man than I.  I think I already told you the man was a saint.

And there were pictures of him dressed up silly with the kids, or at family occasions or ceremonies. The things that make a life memorable.  The laughter, the kindnesses, the love.

I once went to a funeral where no one in the family had any good thing to say about the deceased.  It was the saddest funeral I've ever attended.

I liked and respected Larry, but I really regret that I didn't get the chance to know him long enough and well enough to love and cherish him as his family and long-time friends did.  To watch the celebration of Larry's life was to watch the reward for a good man's life, well lived.

We all miss you, Larry.  You've set the mark for us all.

I Am

Theologians, scholars, lawyers and politicians, armed with words, do battle with foes and dragons, like human gnats flitting about God's shoulders.  In their wake, truth, justice, honor lie trampled beneath their vain, lofty dreams and schemes.

Descartes was wrong when he observed "I think, therefore I am".  It should be "I am, and I have the ability to think".

I am.  I exist.  I have the right to choose my own path, as long as I don't force others to choose my path.  I have the ability to think, to plan, to decide how I wish to live my life, as long as I accept the consequences of my decisions.  The quality of my thinking determines the quality of my life.

I accept that as part of being human we are all capable of great heroism and honor and we are also all vulnerable to weakness, vanity, and greed.  We are all flawed, and if we grant too much power to individuals, our flaws lead to corruption or worse.

Recently, in Norway, someone convinced himself that it was OK to bomb and shoot innocent Norwegians in order to convince them of the greater good of keeping Muslims out of Europe.

And then there are the radical Muslims who feel it's OK to kill innocent civilians (including Muslims) to reach the greater good of political power and a Caliphate.

Then there were the Crusades, aimed at killing Muslims for the greater good of promoting Christianity.

And there were Statists.  Hitler, Stalin, Mao, the National Socialists, the Communists, all for the greater good of the worker, and responsible for the deaths of millions.

How about kings and dictators?  How many have died under the banner of divine right of kings or dictators?

Over the history of the world, how many times have these governments worked out well for Mankind?  Why would anyone think they will get it right the next time?  The only function they perform well is as a mechanism to transfer power to the very few to control the lives of the many.
  
Only once in the history of Man, has a government been designed to limit the power of government to abuse the individual.  How can a thinking person not see the genius of the founders?  How can a thinking person not see the track record of the other types of governments, regardless of good intentions they pay lip service to?

A government that promises to do everything for you WILL reach the point of taking everything from you, but will NEVER get to the point of doing everything for you.  There is never enough to deliver what politicians will promise, in their search for power and control.

Kings, dictators, Theocracies, Socialism, Communism all fail eventually because there are no perfect people to staff their governments.  If only the people living under these governments did not suffer so terribly, waiting for the government to fall would not be a problem...and, even when it falls, it may be replaced by an equally repugnant government.

Only a limited central government can curb the appetite of its despots and bureaucracies, and prevent them from feeding on its citizens.

Growing up in the United States has been a rare, rare privilege in a world that has historically been been a venue of repression, fear, violence and destruction on a scale that most Americans can not even imagine.  Even today, the worst of our problems are far better than those that are faced by millions in Africa, Asia, and Latin America.    

Never give up your freedom for a false security...the utopia promised by despots and "isms" is meaningless and empty, serving only to deliver you into dependance on them.  What they give is far less than what they take.

A Case for the Draft

It's a simple case.  If an individual receives benefits and protections provided by the society, the individual should be obliged to protect the society.  The question is, how much of an obligation is there?

To staff our military only with volunteers provides us with a military composed of the brave, the patriotic, and the economically disadvantaged.  It offers a complete pass to the cowardly, the greedy, the lazy, the indifferent, and the elitists.

While one could make a case that the military is better off without such a bunch of misfits, our country is not better off by allowing the majority of our citizens to ignore their responsibility to our society.


All citizens do not have to serve in the military.  All citizens should face the equal chance of serving in the military.  Volunteers should compose a maximum of 75% of the military.  At least 25% of the military should be drafted randomly.

Both young men and women should be drafted, in proportion to their ratio in the voluntary military.  For example, if the volunteer military is made up of 80% men, then the draft should go for 80% men and 20% women.  Rich and poor should be drafted...a senator's child or a professor's child should face the same odds of being drafted as any other citizen.

At its heart, the issue of the draft is a moral issue.  Those who may benefit most from the liberty provided by most open and free society in the history of the world must be willing to defend that society.

The vast majority of citizens would still not serve in the military.  But it is important that all citizens accept the risks of protecting their country.  They must be willing to serve if their number comes up.

Those who are called can forever be proud they were willing to risk all for their country. 

The draft falls within the parameters of the 80/20 philosophy.  Far less than 20% of the pool composed of those of draft age will ever be drafted, unless we become involved in a major war.


And, if the draft were for 2 years active duty and 2 years active reserve, even a draftee's commitment would be for around 5% of an average lifespan.

If one wished to compensate a draftee for this loss of time, veteran benefits for education and home purchase should be extended, as well as preferential treatment in employment after leaving the service.