The Elite Are Not Paying Their Fair Share Of Taxes

Back in September at the Clinton Global Initiative conference Hillary made a speech filled with socialist speak. Politically cryptic as we all have come to expect from politicians these days. I came away with a few thought on it that I haven't heard discussed and also many wildly discussed. I will venture out on those not discussed first.

The idea of the Elite I believe is a differentiation from the so called "rich". The rich usually limited to those who have millions but generally don't have notoriety or power. At least not on a large scale. Who she is really talking about are, well at this point, people she is connected to. The super rich and powerful movers of the world. Think Warren Buffet, Bill Gates, Carlos Slim, and names less often mentioned like Prince Alwaleed, Sultan Haji Hassanal Bokkiah, or Silvio Berlusconi. I find it funny that the wealth of these so called leaders of countries are not mentioned when talking about the wealthiest people in the world. But that is a digression. Her point in my opinion is that she wants them to put their vast fortunes and influence to use in solving world problems. She is really talking right past all of us and directly to them. With an understanding that getting even 100 of these people do like Bill Gates & Buffet have done could make a difference and is much easier than trying to marshal 100's of millions of people to vote for funding these projects. If I am right, which I really think I am it doesn't sound so militant as many on discussion boards I have seen proclaim. You can tell the political speak was meant to capture the attention of the millions though. However there were many things she said that I don't think have any basis in reality and to me are very strange and potentially dangerous when they make it into the ideas of the average socialist minion. Unfortunately these type of people live in a reality that is not of this planet coupled with a morality that I can only classify as primitive. Here is where I can of put my bent on some of what has already been said.


Here is a quote from Hillary: "One of the issues I have been preaching about around the world is collecting taxes in an equitable manner, especially from the elites in every country," Clinton said. “It is a fact that around the world the elites of every country are making money. There are rich people everywhere, and yet they do not contribute to the growth of their own countries.”

A few issue with this statement I have and again this is political speak, I know and already mentioned but....When Hillary and people like her say equitable, what is their limit on equitable? Wouldn't it be nice to place a number on their equality? How much 50% of what they earn? 90%? At least you could have a number to know at what point they stop. Should 1% of the population pay 60% of the taxes 90%? Of course they will never do that reserving the right for the number to be whatever they want. Also wasn't the idea of equality, in so far as women's right or minority right meant to be they have the same rights as others? When did equality become more than or being put into a special class? 50/50 is typical equality from what I understand it. When I try to get my kids to share the chore load, I try to get them to do equal amounts of work. Not one get the benefits and the other do all the work. What kind of equality is it when, according to the congressional budget office, the top 20% pay 67.9% of ALL taxes and the bottom 20% pay .3% of all taxes. In what world does that mean equality? Especially if you consider that the bottom 20% receive the vast amount of the government assistance. Rich people don't go on welfare, food stamps, and endless other programs. My point isn't even to say these people don't need or shouldn't get anything. But at what point do you say we can't build a society where 20% of the population works so 20% doesn't have to. The food stamp program has over 47 million recipients. There were 600,000 more added in September 2012 alone. The statement that the elite make money everyday is like saying the sun came up and is only meant to inspire fear and envy. The rich are the new boogie man. They don't contribute is just illogical. I mean they are everywhere making money how can they not help but contribute to the economy? We already mention that they pay the lions share of the taxes, right there is a huge contribution. When they buy a 120,000 BMW doesn't that contribute? The multi million dollar mansion is built by working class people. The maintenance of that house is done by average folks. That statement is again political speak that resonates with some but can only be called an out and out lie and demonstrates little understanding of common sense. The last bit of her speech that was mentioned was equally stupid. She said the elite don't pay for schools or hospitals. Where then does she think that money comes from? When on earth are people going to call these morons out on these very simple and easy ways to prove that either, people like Hillary are just plain stupid or trying to intentionally incite the masses to act in ways that are unproductive to themselves or the country. This type of talk just makes those who are having a hard time believe that they should just vote for outright confiscation of the wealth of the successful.

My last point is simply to say under what moral or ethical teaching does one person have the right to demand money from another person? This kind of thinking probably goes back to the dark ages or before even. In an moral and just society you don't vote to have more money taken from people than spit on them, because many do. With no second thoughts. And when the money is gone they come back for more, no thanks or anything. They imagine the money came from where? I just don't get it. Are they more "American" because they are poor? Is the whole purpose of the modern day state just to extract wealth from those who have to make the poor and downtrodden happy? Starting to seem that way to me.

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What Is The Federal Reserve Doing?

I firmly believe that the federal reserve is using all kinds of shenanigans to manipulate the economy, primarily for the benefit of the banks and the federal government. The ways in which this manifests itself are plenty. In this blog I will explore one that actually is actually a flash back to another era.

In the 1920's, american corporations were flush with cash on their balance sheets and were not big users of bank credit. The federal reserve and it's member banks did not like this fact. From 1922 through 1928 the amount of corporate loans, as a percentage of their inventories fell from 17% to 8%. So they acted by lower the interest rate to encourage corporation into taking out more loans instead of using cash from operations for expansion, as was becoming the norm. The mechanics of how they did this, the effects, and results on corporate lending have been detailed thoroughly by Milton Friedman,  Murray Rothbard, and others. The bottom line is the decade long angst the large banks felt was reversed shortly there after.

Today it seems the same thing is replaying itself. The federal reserve bank seems to be again using this lever of low interest rates to encourage corporations to borrow. The corporate indebtedness is dropping as a percentage of GDP and with only the federal government providing debt for banks to finance. Even with the spread on the borrowing, banks are still having problems with their margins. They need this type of borrowing to increase their profit margins.

This is far from a solid theory but given the influence banks have on the fed, and the extent that they go to accommodate them, I would venture to say it is a large influence. There are many reasons that point to the federal reserve increasing rates, and this may be one of many that explain why they don't. Ultimately with rates at .25 basis points, it is hard imagine how more can be done.

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US Fiscal Cliff

Democrats & Republicans Face Off

As republicans and democrats continue to haggle over the fiscal cliff, I think most people don't understand what it means or even represents. The 2012 presidential election took focus off the subject for the better part of a month, only really referenced by name and some vague idea of what it was during the campaign. So my guess would be that unless you follow political news closely, you are left with only the idea that taxes will go up and so spending will go down.

I think starting the discussion with how did this "problem" that seems to be bearing down on us come about? Unless you have been living under a rock, most people know that the US has been running HUGE deficits for a number of years. A couple of ways to look at it are: the US government is spending 50% more than it actually takes in or the US government borrowing about 8% of the entire annual spending of the US economy. No matter how you look at it, that amount is enormous. That is like earning 100K a year and spending 150K. No private company or individual could borrow that much for very long before serious problems occurred  So I don't understand why this is not a more serious issue to Washington. I know they talk about it, but really nothing is being done.

The national deficit is now at 16.3 trillion dollars and has risen by 6 trillion since 2008. That ought to make more people worried I would think. The median household income is just over 50,000, based on the debt numbers, all the income of every man, woman, and child would not even come close to covering the national debt. This is to add some depth to the discussion, and give you an understanding of where exactly we are.

Back to the US fiscal cliff. Part of the fiscal cliff comes from the expiration of the 2001 Bush tax cuts.The other part comes from when they actually tried to get serious about the debt and deficit. In 2011 the stuck a compromise that would help to solve the longer term deficit by allowing the government to spend more for a couple years, then make some cuts. The deal raised the debt ceiling and calmed the rating agencies so they would lay off of another ratings cut. Now that the time has come to actually make the cuts, no one wants to actually do it. What will stop them from doing the same here? The answer is nothing. The politicians in Washington cannot be trusted to keep a promise. It is a foreign word to them. There will be no deal that involves spending to be LESS in any year than any previous year.

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