Why having higher taxes is actually good

Taxes are both a helpful thing for a country and a bane to its people. None of us want to pay a large amount in taxes, but we all want to use the benefits that come from it. We all want to drive on roads. All of us want our children to be educated in good schools. And all of us want to be able to count on the fire department of the police to show up at our doors when we need them. We Americans love our social services, but we hate paying for them. Why is this? Furthermore, why is there this believe that it is actually a good thing to cut the taxes?

Let's start by simply looking at what taxes do. Simply put, they keep our government running. From the water, to the roads, to the salt trucks, taxes keep everything running smoothly and great. Sure, there might be some corruption every now and then, but generally, at least in America, we are getting exactly what we paid for. Taxes are the only reason that we have a functioning government, and they are one of the things that keeps our country strong. Without taxes, we would be a land dominated by monopolies, which, while they can be good, are usually bad to the average person.

No person can argue that taxes are a bad thing; the thing that we argue about is how much is too much. Sure, it is one thing to create a Communist nation, with each giving as they can. That is bullshit, and will not work in real life. On the other end, however, is the perfect capitalism, with dog-eat-dog. Again, that is bullshit, and will quickly result in a Hobbsian anarchy. The middle ground is the taxes, and that is where the argument is. Should we pay for a lot (health care, education, libraries, etc.) or just the needed (government, military, function)? This is where everything falls apart.

Well, I want to make this a very simple argument. If we can show that it is better for the economy (which, we can assume means that it is better for the country) to tax higher or lower, then we can show that that means that it is better to tax or not. We can ignore all other arguments, as they, simply, are of opinion and are not falsifiable.

So, is it better to tax or not to tax?

Now, basic logic would seem to dictate that the less money that you take out of a system (tax) then the more money is in the system to be spent and moved around. Basically, the lower the taxes, the higher the GDP. However, looking at this graph, you notice that the stereotypical lower taxes times (Reagan, Bush, Bush) are actually on average far lower in GDP change then during the high tax times (Carer, Clinton, JFK). Are these graphs wrong, or is common sense wrong?

Here, it seems, common sense is wrong.

Instead, think of it like this. Where does the tax money go, and what is it being taken from?

What is it from - Tax money is taken from profits, either a persons or a companies. When my company makes 100,000$ in profit, they tax it. If I go even, or lose money, it is not taxed. Same with people. Basically, the needs are already in the economy, so we can ignore them.

Where does it go - Tax money goes right back into the economy, guaranteeing an input of the profit made, even if the person wasn't going to spend it already. This guarantees that the economy will get more income then just straight up no taxing.

When you think about it like that, one quickly notices that the economy is actually better off with taxes, provided they are reasonable. As long as taxes allow the needed items, and leaves some for extra (growth), then the economy is much, much better under taxes.

Unless the two Bushes are major outliers, we will see in the next 4-8 years, that a higher taxing, larger spending, and big budgeted country has a higher GDP.

But does this work for Ohio?

Can one really assume that this same pattern will work for Ohio? Well, I suppose that if it works nationally, it should work within each and every location. Sure, various variables have been changed, but the overall concept is the same. However, the problem with Ohio is that it is a much smaller scale, which means that we would not have the same income level as the national scene. This, though, shouldn't make a problem in this equation.

The problem here, however, is the fact that the economies in one state are not tied only to that state. Not only does the national government effect it, but the actions out of state (say by Ford in MI) greatly effect it as well. Unless Ohio were to become isolated, I do not believe that we can use this model to show that taxes help or harm this state.

If you have graphs of Ohio's Tax rates and GDP, please send them to me (get my info in the contacts section). I would love to be able to talk about this sometime.

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A Response To "Republicans: It’s time to hang it up"... About The Right Splitting

Before I start, I would like to show you a quotation from my entry endorsing Obama for President. In this quote, I show you exactly what I think of third parties. Keep this in mind when you start reading my response to The Ohio Republic:

" To start this off, I would like to first talk briefly about third party candidates. Both Ralph Nader and Bob Barr and the who string of other candidates have no overall chance of winning this election. At most, third parties will pull in 5% or so ALL TOGETHER. This means that a vote for a third party is not only a wasted vote, it is a vote AGAINST your favorite mainstream candidate. That said, lets chat briefly about what third parties actually do. Third parties usually are very similar to a mainstream party, just they have one big difference. When that difference (their campaign base) gets enough attention and support, it jumps to the mainstream parties. Basically, third parties are vetting parties for new and interesting ideas. They should be allowed to get local power, but never national."

Over on The Ohio Republic, Harold has a post about the potential split in the Republican party that he sees occurring soon. I am going to be quoting his entry, so that I can respond below, and per the terms on the bottom of his blog, I need to include this:

"Permission is granted to use contents of this blog (except feeds copyrighted by their originators), provided that this copyright notice appears with the item used, and the use is not for profit."

"The paleoconservatives, of which I consider myself one, have consistently advocated limited government, particularly at the Federal level, balanced budgets, a strong national defense but avoidance of foreign wars; and social and economic freedom. Examples of paleoconservative Presidents are Herbert Hoover and Dwight Eisenhower (with the qualification that President Eisenhower was unable to balance his budgets – partly due to World War II debt and partly due to a Democratic Congress through most of his administration)."

Claiming Hoover as an example of your party, or your own position, is probably not a good thing to do. That said, I agree that the old-school republicans, of which I do respect and enjoy, are more socially liberal and fiscally conservative. The main point of a paleoconservative is mostly laze-fare in both social and business aspects. Furthermore, they should only care about the countries well being, making sure that we do not run into debt and that we are ready to defend ourselves. A true paleoconservative will only wish to go to war when either our country is attacked or if there is clear evidence that we NEED to go to war to protect ourselves. This is the position a lot of our founding fathers were, and this is a decent/good position.

"Neoconservatives have consistently advocated the use of the military to expand American interests throughout the world, economic freedom, and a more proactive approach to the regulation of business. Since 1980, neoconservatives have advanced a social agenda reflected in the preferences of the Religious Right, They have been outspoken for Second Amendment rights, and have tended to expand Federal powers affecting secrecy and individual rights. Early examples of neoconservatives (before the term came into use) are Theodore Roosevelt and Richard Nixon. More recent examples of neoconservative Presidents are Ronald Reagan, and our current incumbent. "

While I would not place Roosevelt, or even Nixon, with Reagan or Bush, I agree that the same fiscal sense as the paleoconservatives, while an invasion into the personal sphere, is the trademark of this group. To me, neoconservativisim is not a good position to be in, as it forces your believes (usually religious) upon the country. Additionally, the odds of being able to get our message around the world without going into debt (the fiscal republican part) is very unlikely. How can we have a war without a huge waste of money? Basically, I contend that their secondary goal, makes the neoconservatives lose their primary goal.

"The bipolar shifts have confused Republicans to the point where many wonder whether the Party has a philosophy at all; and it has alienated the general public to the extent that a recovery in four years may not even be possible. "

The Republicans have weathered worse storms then this. When Lincoln left the party, they still were able to reform shortly there-after. I can not see that the party will fall due to only this issue. Frankly, at the start of the election season, I agreed that they would, but at the end, I thought the Democrats would.

"Therefore, I would like to offer a not-so-modest proposal. For now, America would be best served by a vibrant three-party system.
The Democrats would remain as is, less a few conservatives who would be more attracted to one of the other parties, since neither now would be called “Republican”. The Democrats would continue to represent the liberal tradition of governmental activism both at home and abroad. "

The Democratic party is splitting more than the Republicans are. Frankly, I see both extremes breaking off, and a new 'moderate' party forming with 20% from both camps. The old-school democrats are getting more and more alienated from their party as the far-left (huffpo, moveon, etc.) become the mainstay of the party. That said, as the Democrat party is the oldest party in US politics, I see this party as being stable and continuous.

"A Populist Party would represent the paleoconservative tradition, best represented today by Ron Paul. It would seek a return to Constitutional limitations on Federal power, would emphasize both social and economic freedom, and support a strong national defense – but for defense only. "

I sure as hell hope that Ron Paul will never get his own party. While I like the idea of this populist party, it is clear that this is simple old school republicans. Frankly, this is how the party was before Reagan, and this is what I think it should return to. Due to its previous existence for decades (right after the fall of the Whigs, until Reagan), this party would probably still be very stable. Hell, I would be a republican if it went back to this system.

That said, Rob Paul would not be the leader of this; Paul is in no way a supporter of social freedoms. Additionally, he is not for a strong national defense, nor does he have good economic plans. For more on Ron Paul, refer to my entry regarding him.

"The neoconservative home might be called the “Christian Conservative” Party, because it would represent the desires of the Religious Right regarding homosexuality and abortion, favor military interventions abroad, and be less committed to decentralism than the Populists. Sarah Palin might be a good example of a Christian Conservative. "

To me, this party would be one of the worst things that we could have in the American political system. After all, why would we want a party that specifically aims to violate the Constitution. Don't we already have the Constitution Party for that? My biggest question to this party would be how they could justify a pro-life social policy, but an anti-life foreign policy, policy? Unlike the previous two parties, I can not see the neoconservatives as being a stable party. After all, any small party that is targeting only one specific area, will become redundant and thus loose votes. By doing this, the CC would regulate themselves to tiny-party status.

...

"I do not expect such a system to be permanent – American history teaches that sooner or later the parties will again become only two – but while it lasts, it would give the American people an opportunity to see issues more clearly and to decide for themselves just what this nation is about. "

The reason that more than two parties do not last is the way that our system is set up. With a winner take all system, it is best to try and keep your party stable, and thus not on the fringes. Any third party is on the fringes, and when it becomes mainstream, it gets taken by one of the two players. This works very well as it allows vetting, and socializing, of the more "extreme" ideas before they come to the center.

Overall, I do agree that the religious right (neoconservatives) will be splitting from the Republican party sooner or later. I do not think that they will form their own group, but that they will promptly align themselves with already existing groups. The Constitution Party, and other third parties, would be a good fit for these former Republicans.

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'Fair Tax' Supporters

Post 5:


*NEWS*
I have had this blog for a whole one and a half weeks now and am already at three hundred unique views. I am already read worldwide and want to keep growing. Please send links to your friends, DIGG me, facebook me, anything to get the word out. The more people this reaches the more people who can comment and create a better site. This site is here for you, and I want you all to be a part of it. This is a map of all the unique locations I have so far been viewed from.



There is also a new poll located on the side of this blog, please respond to it (will be put up soon as blogger lets me)
*ENDING OF THE NEWS*



Have you figured out what the theme that I am circling around is? Only a few more posts and that theme itself becomes the blog entry.

From our countries humble beginnings to the present we have always had thousands of people who have issues with taxes. They have issues with taxes in any forms; from property taxes to income taxes to sales tax. These objectors have usually kept their protests to vocal forms, but have, at times, erupted in violence - for example, the Whiskey Rebellion. Seeing as one of the major events leading up to the Revolutionary War was the Boston Tea Party we have a long history in this country of not liking taxes. But, in reality, taxes are essential for any society to function, as something is needed to protect the persons and the country as a whole. The issue really comes down to arguing how much is too much, and how much is needed. However, when the issue of where the tax comes from is brought up we, as a country, have vastly different angles and views. Most people, however, seem to accept our current system, that is, income tax subsidized by sales tax and the like. There is, however, a very vocal group of people who think that the idea of income tax is wrong (or even unconstitutional), and feel that all taxes should be done via sales tax, a flat one at that: Fair Taxers, What Really Grinds My Gigantic Notched Wheels.

Nobody likes taxes. We all have issues with spending money out of our checks and pocketbooks for seemingly pointless things. Do we all agree with what the taxes are spent on? Of course not. However, most of us agree that roads, fire fighters, police, schools, libraries, the Internet, etc. are worth the money. So when people start trying to change the way that our tax system works you need to start wondering how they are planning on taking care of said issues. It is hard to accept a new system when we are afraid that what we need to be a running functioning society is on the line. When fair taxers supporters start recommending and talking about their great discovery and idea four main things stick out as a sore thumb - They argue that the income tax is unconstitutional - they use faulty math - they do not explain how this tax will handle inflation or how it handles third-party used transfers (basically, the feasibility of it) - they do not address how regressive this tax actually is.

They argue that the income tax is unconstitutional
Most 'fair tax' supporters will start of their argument by saying that our system needs to change. Now, some will (logically) argue that there are inherent flaws with the IRS and income tax, most will simply argue that the income tax is unconstitutional. Now, last time I checked if something is specifically allowed in the Constitution it is Constitutional. Well, apparently the 'fair taxers' and tax evaders have never heard of the 16th Amendment. Now, even if the 16th had never happened income tax would still be Constitutional. Most will say that the decision Bowers V. Kerbaugh-Empire Co. clearly said that the 16th did not give any new taxing powers by quoting this part of the decision:
“It was not the purpose or effect of that amendment to bring any new subject within the taxing power.”
The problem with this is that they clearly ignore the next line which says:
“Congress already had power to tax all incomes.”
If congress already had this power than there is no way to argue that the Income tax is Unconstitutional.

They use faulty math
If you are new to the concept of the 'fair tax' or want to gets a quick refresher and are wondering what the fair tax is here you go. It is a sales tax that would increase all sales to 30% (they claim 23%, but I will show how fuzzy their math is shortly) and eliminate all income tax. Furthermore, it would give a 'prebate’ that is supposed to cover the cost of living for the year (pays you back the sales tax used that year for ‘needed’ things). Now, let us address the issue of faulty math. Those who present the math on the site believe that sales tax is inclusive (they use the logic that it would be the same type as the current income tax system). Sales tax however, is an exclusive tax, so it is calculated after the final cost, not the initial. That said, here is how it is calculated according to the website:
Final product is $130.00
Tax was $30.00
30 is 23% of 130, ergo 23% sales tax
Common logic shows that $30 is 30% of $100, not the 23% that the ‘fair tax’ group says. The fact that they claim one statistic, and then don’t mention to tell you that that claim is false automatically makes me suspicious of the group.

They do not explain how the tax will handle inflation or how it handles third-party used transfers (basically, the feasibility of it)
While we are on the topic of fuzzy math, let us discuss exactly how we can fund the government with the ‘fair tax’. Currently, the Federal Budget is 2.8 trillion dollars. Our countries current GNP is 11059.3 billion dollars. If we use the 30% tax (the real amount they are taxing), we can see that we only get 3317.79 billion, or 3.31779 trillion. For now, that looks like it is the perfect amount needed to fund our current budget, but what happens if either our government spends more (they are increasing on average .2 trillion a year (meaning 4 years until this is not enough money)) or our country spends less as a people. The current proposal leaves no area for adjustment, and, as it is a Constitutional Amendment will not be able to change it before we go into a deeper debt.

One of the main problems with problems with the fair tax is that it is only a tax on taxable stores and new FULLY PRODUCED items. That said, is it not actually easier to circumvent this system than the current one? Sites like Ebay and Amazon and the like will need to be shut down, as they create a system that circumnavigates the governments income. Suddenly, we start buying used items because they are cheaper. Now, even though the GNP stays roughly the same, the government is making less money because there is no more sales tax. Soon, the government will need to crack down on these “black markets”; they will need to shut down drug rings, flea markets, half-priced books, and renegade sub shops. Soon, the government will need to be spending more money (something we already showed they will not have) to make the money. So, they stop the finished products black market, but why would I buy a full product? If labor is not taxed and unfinished products are not taxed why do I not just buy the parts and pay somebody to put it together. This would probably save me compared to the 30% add on. It becomes quite clear that the fair tax has no way to handle this, and our government would get into far more debt than we already have.

They do not address how regressive this tax is
My last issue with the ‘fair tax’ is what it does exactly. If we charge every person 30% on all items the poor will be charged more than the rest. While the supporters claim that the prebates should take care of this, we all know that will not happen. Already the rebates which are supposed to help those below the poverty level do not provide enough for the family, so why would the rebate. Furthermore, because you would need to deal with inflation and different locations, just to figure out who gets how much in a prebate would be a nightmare and cost more than the IRS does now. That said, this tax is clearly regressive. By having the poor pay roughly 30% of their paycheck on this tax while the rich pay 1% shows the clear disregard for the lower classes that this tax has. Clearly, this tax is not designed to help the lower classes, despite that being one of their main claims.

In the end, I feel that the 'fair tax' is nothing more than a cleverly designed ploy, a Trojan Horse if you will, to get those who have money more, and make those who are poor poorer. This is clearly not a fair tax, in any attempt at defining the word, and it is clearly an example of doublespeak which is intended to make others support it without reason. In the end, any group that specifically lies is worthy of intense scrutiny, and under that gaze, the ‘fair tax’ falls short. While the Income Tax is not the best system, until we get another that can replace it and replace it well, we need to work on fixing it up.


As always, please leave any comments, no matter how large or how small about the contents of this blog post. Also, please leave any comments/suggestions about this site/post as a whole. Thanks

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Ron Paulites

Post 4:

So, you might notice that there is a theme in these last few posts; that same theme continues in this post and will for the next few, until a culmination in one post in the not so distant future. Can you guess what the theme is?

I am a regular on gaiaonline under the screenname Agrab0ekim. On there I regular the politics forums (among many other I am often on) and run into many people who claim to be well versed in politics, taxes, the IRS, the Constitution, and the like. They will start by talking about the Founding Fathers, about the degeneration of America, and about the robbing of the rich to give to the poor. They will talk about how America is now facist, how the IRS is illegal and Unconstitutional (the previous link has this same info), how the big companies are running the world (yet at the same time saying that companies should have more rights), and how the World will soon be under a New Order. Some will even say that 9/11 was an inside job. While some political supporters really annoy me and make little to no sense, there are no stopping - RON PAULITES: What Really Grind My Gigantic Notched Wheels.

Let's start by looking at who Ron Paul is: He is the other Republican running for President in 2008 (against the clear nominee McCain). His claims to fame are serving for a long time in congress, being a gynecologist, and running in 1988 as a Libertarian for President. He has several controversial positions, all of which are very, um, interesting. He supports the abolishment of income tax, all federal tax, abortions, raises in congressional pay, gun control, drug laws, and the Iraq war. He supports the extension of states rights, supports banning gay marriage, and supports unregulated businesses. In short, he supports going back to ACPU. While his positions are all fine and dandy (he can think Hitler is God for all I care), his supporters take them too far. What bugs me the most boils down to a few main things: One, they think he stands for what he doesn't - Two, they believe his lies about the IRS - Three, they are contradictory in their beliefs. Please note that not all Paulites are like this, and I have met several intelligent and properly-thinking ones in my searches on these internets.

They think he stands for what he doesn't

I have yet to meet a Ron Paul supporter who gets what he stands for right. While a few Paul supporters know next to nothing about what Ron Paul supports, most know most, if not all, of his positions. Their problems, however, is the fact that they do not take the logic as far as it should go. If my position is states rights, the abolishment of the 14^th Amendment, and banning the courts from hearing any case on Marriage it sounds dandy to most Americans, and most of his supporters. But let us follow the logic. So, courts can not hear marriage cases, okay, no interracial, inter religion marriages. You still have no problem? Good, I figured you would. Lets move to the 14^th Amendment, hmmm, rights and privileges no longer protected, Hello Plessy V. Ferguson and goodbye Brown V. Board. Starting to have doubts? Good. Lets move onto state rights, hmmm, I seem to remember a Civil War about this. Not even getting into slavery, religious states, and the like, let us look at something quite simple: money. If each state were allowed to mint their own money (state rights) then we would have a problem. Always remember people, we got rid of ACPU for a reason.

They believe his lies about the IRS

Do not get me wrong, I think that there are many things wrong with the way we do taxes in this country. I think that we tax the poor to highly and the rich not enough, that we have too many loopholes, and that college kids should be exempt (more specifically, any person with my SS number). I think that we need a full overhaul. However, I do not for one second think that taxes are a bad idea, nor do I think that they are Unconstitutional. Ron Paul and other libertarians will have you believe that taxes are immoral (whole different argument), illegal, and unconstitutional. They will even go out of their way to create a movie to show it. However, they are wrong, and the Courts have shown that again and again. One of my main problems with Paulites is that they will refuse to see reason in this area. They think that court decision say one thing when two sentences later they say another. They think that the movies are 100% correct and when you show them TAX LAW they say it is not real. In short, they feel that they know the truth and we are all lying to them. I find this to be a bad sign for any politician, having an idiotic base.

Three, they are contradictory in their beliefs

Everybody is contradictory in their beliefs. I feel that we should have universal health care (or at least a plan to pay companies to provide it) but at the same time think that it is Unconstitutional. I think that we should not have quotas on businesses or schools but think that we should have regulations on them. I am hypocritical and contradictory, and so are you. That said, however, I think that Paulites take it further than most of us; they take it so far that they are in a realm all to their own. There are some who say that the corporations are running the world, some that say that corporations are the only thing that should be taxed, and some that say that corporations should not exist. They then all defend the deregulation of these companies. Do you see the problems there in. More you ask? A fair bit claim that there should be equal rights for all, a fair bit support state rights, and a fair bit support the idea of free people (seems to be their motto). They then go and support the banning of gay marriage, fight quotas and affirmative action and welfare, and argue that certain persons shouldn't be allowed to do certain things. The kicker is that they all (majority) support the ending of the 'war on drugs' with the argument “what goes into our body is our call because it is OUR BODY” and yet attack the concept of abortion. I mean, come on, what is more contradictory than that. The question comes down to this, is it worth having hundreds of thousands (I think he just passed the million mark) of crazy hard-core supporters who are wrong and don't actually support what/who you are or is it better to have millions of luke-warm supporters who actually know your positions and are mainstream? This Democrat say the latter.

As always, please leave any comments, no matter how large or how small about the contents of this blog post. Also, please leave any comments/suggestions about this site/post as a whole. Thanks

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