The Forbidden History of Terrible Taxes

JKB was worried that he’d hijacked an earlier thread by introducing us to Australian Topher Field’s “Forbidden” histories.  JKB needn’t have worried.  I’ve become an overnight Topher Field’s fan.

I’m including here Topher’s Forbidden History of Terrible Taxes.  You should watch his other “Forbidden” video as well, which is about free speech. As far as I can tell, he’s also working on a video about the dangers of bureaucracy, which he funded using crowd sourcing.

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  1. Robert Arvanitis says

    Charming piece on taxes, patent and obscure.

    Topher was especially astute to spot the sort of horizontal fallacy embedded in Social Security.  (The vertical fallacy in Social Security is the well known Ponzi scheme…)

    The horizontal fallacy is this — 10 guys, one poor.  The right answer is to take 10¢ from each of the nine, and give the poor guy 90¢.  But that’s too paltry a scheme for government.  Instead, government takes $1.00 from each of the nine guys, and gives EVERYONE 90¢.

    What’s the difference you ask?  We end up at the same place?

    Ah, no, we do NOT.  This dollar-swapping scam has many
      i.      First it hides the net transfer. No one recognizes that they lose a dollar but only get 90¢.
       ii.      Second, it fosters the illusion that government can actually give you something. “Here’s my government check…” But government produces nothing; it’s merely a transfer.
      iii.      Third, this destroys values of thrift and hard work. The grasshopper collects from the ant.
      iv.      Fourth, it gives politicos 10 times the money for them to misdirect. They get to decide who needs more, who deserves less, whom they subsidize, which contractors to hire…
      v.      Fifth, until now, FICA taxes were more than benefits, so politicians just “borrowed” the money for their own purpose. There was no investing of surplus.

    Take heed of this. Social Security has NO MONEY, just special IOUs from Treasury.

    Why “until now?” Because starting next year, Social Security taxes will not be enough to pay benefits. Treasury will have to start replacing those special IOUs.

    Aren’t those IOUs good? Only if Treasury can replace those IOUs with real borrowing from real lenders elsewhere. Otherwise taxes go up and benefits get cut.

    By the way, when politicians talk about our national debt, they lie and do not include the special IOUs. But that’s a debt just like any other borrowing.

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