Category Archives: Business

Business, Economics, Media Criticism, Political Commentary, Social Commentary

The Future Of Tax Rates

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They can’t go up much more, despite the delusions of the class warriors:

…we’re pretty quickly going to have to start exploring tax increases on people who make less than $250,000 a year . . . or exploring serious spending cuts. Or looking to limit deductions (including yes, the sacred deductions for charitable deductions and state and local income taxes, and the tax-free status of municipal bonds).

Probably, we are going to have to do all three. The era of “Don’t tax you–don’t tax me–tax that fellow behind the tree!” is coming to a close, not because we’re any more in touch with reality than we were five years ago, but because pretty soon, reality is going to get in touch with us.

Yes. As Frank J. says, math is coming:

Obama wants Math locked completely out of the fiscal cliff talks and instead wants unlimited power to raise the debt ceiling and then tax the rich because of the demands of Fairness — Fairness being the left’s favorite imaginary friend. Math won’t stop laughing at Obama’s plan to pay for everything by taxing the rich, so Obama just won’t work with it at all.

The Republicans at least acknowledge that Math exists but are only trying to compromise with it. We’re broke, and Obama wants to buy a Ferrari we can’t afford, and they’re trying to argue him down to a BMW we can’t afford. I guess they think if they make some changes to entitlements, Math will just relent and allow 2 + 2 to equal 5 so the rest will add up.

Our children and grandchildren will curse all this selfishness and irrationality.

Business, Economics, Media Criticism, Political Commentary, Social Commentary

The Battle Of The Narrative

How private citizens can fight ObamaCare:

…we should not let the government escape responsibility for problems they’ve created. This will becoming increasingly important as more ObamaCare problems emerge, such as patients being denied treatments by government-spawned “Accountable Care Organizations” (ACOs) or by government bureaucracies such as the Independent Payment Advisory Board (IPAB) and the US Preventive Services Task Force (USPSTF).

If we let the government shift responsibility for ObamaCare’s problems onto the residual private sector, those problems will eventually be used to justify a government-run “single payer” system. On the other hand, if Americans hold the government appropriately responsible, we stand a chance at adopting genuine free-market health reforms.

Of course, single payer was always the goal for these “liberal” fascists. It’s the usual drill of the Left; pass a law that effs things up, blame the eff up on “deregulation,” and then pass more laws to “fix” it (Dodd-Frank being an excellent example of the genre). Don’t let them get away with it.

Business, Space

The SS2 Drop Test

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As Clark Lindsey reports, there was a drop test of SpaceShipTwo, that had some, but apparently not all of the propulsion system installed. I wonder if it was carrying fuel? One of the issues I discuss in my book is its ability to abort with a failed ignition, because while it can dump the oxidizer, it’s not possible to get rid of the rubber slug. Steve Isakowitz told me that it is designed to land with a fuel load, from a CG/weight standpoint, so it would be interesting to see if they demonstrated that ability.

Business, Economics, Media Criticism, Political Commentary

Taxpayers Aren’t Stationary Targets

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The lesson of Gérard Depardieu:

Economists as far back at J. B. Say and Gustave de Molinari in the 19th century understood this. As Molinari wrote in his 1899 book, The Society of To-morrow, “The laws of fiscal equilibrium set a strict limit to the degree within which it is possible to impose new taxes, or to increase the rates of those already in force. The relative productivity of taxes soon shows when this point has been overstepped, for then returns not only cease to rise, but immediately begin to fall.”

Things can work in the other direction too. Other things being equal, cutting tax rates can prompt revenues to rise. This is not to say rising revenue is a good thing. As Milton Friedman once said, if a tax-rate cut brings in more revenue, the rates weren’t cut enough. Hear, hear!

Nevertheless, revenues can increase after a rate cut. Case in point: the rate cuts of 2001 and 2003, the so-called Bush tax cuts, which President Obama (until yesterday) had been hoping would expire for the top 2 percent of earners. According to the Congressional Budget Office, revenues increased from $1.9 billion in 2003—when all the cuts kicked in—to $2.3 billion in 2008 (in constant 2005 dollars). At that point the Great Recession hit and of course revenues then fell. Tax revenues always fall in a recession because when people lose their jobs they stop paying the income tax. Companies also pay less as economic activity slows down. When would-be tax raisers today complain that revenues are a smaller percentage of GDP than in previous years, that is the reason. It’s not that the tax rates are too low.

It’s not about revenue. It’s about “fairness.” That is, it’s ultimately about “need” and “ability,” i.e., Marxism.

Related: “The truth is, politicians are telling lies.”

This is not an ideological argument about the moral advantages of a smaller state: it is simple economic necessity. As the man said, there’s no money left. And the only ways that anybody can think of for the state to get more of it are either futile (taxing the “rich”) or destructive of any possibility of recovery (more borrowing). What began as a banking collapse has turned into a crisis of democratic politics. Is this what we have to look forward to? The process of campaigning and voting will be an irrelevance: all parties will tell pretty much the same lies. Whichever one is marginally more credible than the others will gain power (probably in coalition with another bunch of liars), and then have to do what needs to be done in whatever desperate, underhand ways it can devise. Nobody will feel that he got what he voted for, because what he voted for was impossible.

And low-information voters believe them, which is how Obama and other Democrats got reelected. But the piper will be paid. As Glenn says:

Something that can’t go on forever, won’t. Debt that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.

But as with any bubble, the issue isn’t if, but when.