Victor Davis Hanson hits it out of the park with his post explaining why higher taxes are not the answer.  Some of his twelve reasons are better than others, but all are worthy of your consideration.  This is my favorite of the twelve, but I think you’ll like them all:

2) Inequality?

Liberals reply that income inequality is worse than ever. (Note here in their own lives they have no problem with other “merit”-based inequality: e.g., Why can’t Johnny Depp turn down a couple of roles so other less fortunate actors could star? Why doesn’t Cornel West at last break up his endowed mega-salaried professorship into three or four lectureships for the struggling part-timers? Why doesn’t Maureen Dowd go down to one column every other week to allow less compensated New York Times op-ed writers a chance to catch up? In other words, why not back off from the trough and let others have a go?) But back to income inequality: some of those figures are not just attributable to the proliferation of $200,000 orthodontists, but to factoring in the mega-fortunes of a Johnny Depp ($50 million last year in income alone) or a Warren Buffett. The onset of a globalized market allowed a new top bracket to make tens of millions of dollars, a world away from the lesser professional. There is no aggregate homogenous group of “the wealthy.” My big-farming near neighbor (500 acres in vineyard plus), who probably nets $300,000 on a rare good raisin year like this one, is a world away from the late Steve Jobs or the thousands of million-dollar-plus incomes in Silicon Valley. This incongruence is not a rhetorical point or special pleading, but evident through the president’s own rhetoric: “Millionaires and billionaires” is a deliberate attempt to weld two disparate groups together — one making 1000 times the other (if the president is talking of annual income), or one worth 1000 times more than the other (if the president is talking about net worth). But is the Menlo Park bungalow owner who teaches at Foothill College and might be “worth” $1 million (given housing inflation) really comparable to Meg Whitman? Mr. Obama knows that there is not enough of the 1% of the 1% to come up with enough revenue to cover his new $4 trillion in debt, but does he think that by going after the top 5% or 10%, well, there just may be?

I’m actually sensitive to this comparison issue, because Marin skews things. In most other parts of America (other than the other rich liberal enclaves scattered about America), we’d be rich. In Marin, we’re squarely in the middle. Because prices here are so ridiculously high, we live in a middle house, drive middle cars, shop at middle stores, and send our kids to public schools. If we had the same income in Kansas or Texas, we’d be much more comfortably situated — and in Texas, we wouldn’t be turning more than 50% of our money over to the government (state, federal and local).

Of course, we could move, but I like it here:  our house is near my aged mother who is too old to be relocated; the temperate climate suits me, because I’m a wuss; and our neighborhood is unique by any standards, providing a truly perfect backdrop to raising decent, honest, nice children.

Sadie got this in an email and posted it as a comment.  It’s too good, though, not to get wider play.  The beer theory of taxes explains just about everything that’s wrong with a system that drives away the wealth:

THE TAX SYSTEM EXPLAINED IN BEER

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100…

If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.
“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20″. Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.  But what about the other six men? How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill  by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,”but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than  me!”

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.
The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too  much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

The whole thing is also a ready-made argument for flat taxes, isn’t it? Things seem more fair when everyone pays an equal percentage.

Incidentally, at lunch today, Don Quixote pointed out that with the American rich getting visibly richer, and those who are not rich feeling as if they’re falling behind, it would behoove the rich to put back into the system.  Even if the poor’s perception of their poverty is historically incorrect (insofar as the American poor enjoy a higher standard of living than the poor in other parts of the world or other times in history), we know from past experience (the French, Chinese and Russian Revolutions spring to mind), that if the people feel the chasm is too deep, a small cadre of Leftists can manipulate them into startling acts of violence and tyranny.

The problem is that the OWS crowd, and Leftists generally, want the rich to be forced to put back into the system by having the government grab money from their pockets, a tactic that only drives them away.  (See beer example, above.) If it were up to me, I would rejigger our system so that there are fewer barriers to the rich investing their money in America.  I would lower government hurdles that currently make it ridiculously difficult to build factories, hire workers, construct roads, and bring products to market.  That would make India and China look a whole lot less enticing, keeping wealth within America, so that there’s more to spread around.

Last night was back-to-school night at my daughter’s new high school.  I was deeply impressed.  The facility is beautiful; the classrooms are clean, bright and well-maintained; the teachers are engaging; the test scores are over-the-top; and the expensive extras (fancy computers, lab equipment, etc.) are all in place.  My daughter loves her new school.  All the other kids I know who attend the school, or have attended the school, love it too.

Throughout the evening, administrator after administrator, teacher after teacher, and parent volunteer after parent volunteer drummed into us a single message:  This November, Vote Yes on B, to renew the school district’s parcel tax:

A Tamalpais Union High School District parcel tax, Measure B ballot question is on the November 8, 2011 ballot for voters in the Tamalpais Union High School District in Marin County.

The measure, if it is approved, will renew the district’s existing parcel tax of $238.78 and increase it to $245.94 starting in July 2012, with a 3% annual increase every year thereafter for 10 years.

The existing parcel tax was first approved in 1989. It was renewed in 1997 and 2004. The tax generates approximately $8.5 million a year for the school district, or about 16% of the district’s annual school budget of $52 million.

You all know how much I hate taxes and big government. But you know what? I’m going to vote yes on Measure B, because it is a perfect example of the way in which government should work.

When I vote Yes on B, I will get a direct and immediate benefit from my vote:  My child’s school will continue to function at its same incredibly high level.

Of course, if only current parents vote “yes,” the tax measure, which requires a 2/3 supermajority vote to pass will go nowhere fast.  There are others who should be interested too, though.  People whose children are rising up through the school district should vote yes, as I did back in 2004.  People whose children benefited in the past from the school district, and have since moved on, should be inclined to vote yes as a gift to up and coming generations.  And people who have no children, or who feel no gratitude to a district that served their children well, should also vote yes, because Marin County’s high quality schools add tens of thousands of dollars to the value of their homes.  It’s not just the temperate climate that makes home prices ridiculous here — it’s the public schools.

My money, my benefit.  A vote Measure B is also the voters’ chance to advance their community values.  Another community might put a premium on sports facilities or on sewage upgrades or on enticing factories into town.  What’s important is the connection between the voter and the expenditure.  We express our values, and we get to see immediately whether our government is doing the work it should to implement our values vote.

This is all quite different from federal government taxation.  Somewhere in a small town in Georgia, someone is paying taxes to fund a terrible, wasteful, green energy initiative in California that is doomed to failure.  There’s no benefit to the Georgia voter, who had no say in the matter anyway.  And more importantly, there’s no benefit to anyone.  This was a political boondoggle of the type that inevitably happens when the federal government exceeds its mandate (to maintain a coherent country with good transportation and strong national security) and begins to meddle in the marketplace and in local matters. Local government has a harder time getting away with those shenanigans, because people get to see the money being spent.

I assume that some people at this point will argue that I’m spoiled, because I live in a rich community.  Huge federal and state governments need to be there, they would say, to ensure that poor people have good schools too.  After all, the taxpayers in Detroit cannot afford to do what the taxpayers in Marin can do.  I’ve got a few counter arguments, though:  First, all of the federal money pouring into Detroit doesn’t seem to be making a difference.  Not only does Detroit lack the bells and whistles that characterize my fancy Marin public school, it’s a failed school system.

Second, as the recession has shown, the fact that we have fewer rich people does not mean we have fewer poor people.  Leftist thinkers subscribe to the belief that “the rich get richer and the poor get poorer.”  They therefore assume that the opposite must be true:  “If the rich get poorer, the poor get richer.”  After all, the rich have “stolen” money from the system.  What the current recession proves is that, in America, which is still a semi-capitalist marketplace, when the rich get poorer, so do the poor.  Take money out of the marketplace and no one has it.  The federal government, by regularly increasing taxes so that Joe Shmo in Georgia provides ever more support to failed federally-funded school districts in Detroit and Chicago and Los Angeles, simply sucks wealth out of the economy.  With no money, it’s impossible for people to make their own choices about school district funding (science lab or football field?).  It’s even worse when you consider that poor Joe Shmo is also funding Yale, which has a $16 billion portfolio.

Third, as always, there’s a moral component.  If the federal government steps in, local people check out.  Schools should be intensely personal but, if people have no skin in the game, they have no incentive to care.  Instead of being places of education, schools become giant babysitting facilities.  There’s no pride, no commitment, no ownership.

I have a hard time imagining myself ever supporting a federal tax.  I’d like to see less federal spending on just about every federal program but for the military.  As it’s engaged in two hot wars and myriad cold wars, it deserves maximum support.  I strongly belief that, if our federal taxes go down, we’ll have more money to make decisions about our own communities and fund them as the local majority believes they ought to be funded.

Zombie begins to take seriously those who call for radical changes to our taxation system:  Why not let those who demand ever higher taxes, especially for themselves (Buffet, Trump, etc.), have the opportunity to do precisely that?  You should read Zombie’s entire post but, in the meantime, you can enjoy the revised Form 1040 that Zombie envisions (reprinted with permission):

One of life’s truisms is that, on the whole, renters don’t take care of property as well as owners do.   Why should they?  They have no investment in the structure.  If they don’t mind the aesthetics of a scuffed baseboard, stained carpet or dirty walls, it doesn’t matter.  When they leave the property, they leave scuffs, stains and dirt behind.

An owner, on the other hand, has a monetary incentive to keep things nice. Even if the owner doesn’t mind living surrounded by wear-and-tear, when he or she wants to sell, those signs of cosmetic or structural decay will affect the price the owner ultimately receives for the property.  One of the things I learned during many years of house hunting (we were picky) is that the new carpet that the owner installed for $10,000 results in a sale price that’s $20,000 higher than it would have been with the old carpet.

I was thinking about that today when I read somewhere that approximately 50% of Americans don’t pay federal taxes.  This means that approximately 50% of Americans are renters in this country.  They have no ownership interest.  If the thing falls apart, so what?  Their money isn’t involved.

This post is not a plea for higher taxes.  I will be furious at the Republicans if they agree to Obama’s demand that they raise taxes.  It’s insane to take money from the functional private sector and put it into the dysfunctional, bloated, corrupt, slow-reacting, bureaucratic, labor-controlled federal government.  I’m just saying that those 50% who don’t pay any taxes now should pay taxes, even if it’s only a nominal amount.  They need an ownership stake in this country, and making them dependents of the federal government is not the way to do that.

The administration’s newest scheme to slow the recovery and, just coincidentally I’m sure, to put monitoring ankle bracelets on all citizens:  Make all possible roads toll roads, and mandate that drivers have toll reading devices on their cars (which are, after all, tracking devices):

The White House last week began circulating its legislative proposal for transportation reauthorization that included provisions to add toll booths to existing freeways and impose a tax for every mile driven. The “Transportation Opportunities Act” for the first time gave the Obama administration’s full approval to the concept of an added charge on drivers for the use of roads throughout the country, including on existing, untolled freeways in major metropolitan areas.

“This section [2217] amends existing law to include two new options that provide more flexibility to finance new construction or capacity, and manage congestion, through the imposition of tolls,” states the proposal’s official summary. “The first option focuses on metropolitan congestion reduction and permits state and local governments to impose tolls on existing interstate and non-interstate facilities for the purposes of improving or reducing congestion in metropolitan areas with populations over one million people. Under this option, tolls may be imposed on specific lanes, whole facilities, or a network of facilities within the metropolitan area.”

The plan would require that commuters be charged higher rates during peak morning and evening periods and that the revenue generated be used for capital improvement projects near the toll facility. A second “interstate system improvement” plan would allow tolling in smaller areas so long as the project included new capacity. Electronic transponders would be required for toll collection on the new lanes.

I actually have a toll device on my car for the Bay Area Bridges — but I put it there voluntarily, because of the convenience factor.  It was a CHOICE, a concept that seems remarkably alien to this administration.

Is our democracy germinating the seeds of its own destruction?

Alexis de Toqueville warned, “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” That day has come. It is not yet gone.

Democracy  in ancient Athens lasted about 250 years. We in the United States are at about that same point in our history today. In Europe, alas, democracy came but as a short, brief whimper in time. Now, post-Lisbon, it is gone…at a national scale and, very soon, at the local level, too.  EUro democracy – so ancien regime! In EUrope, the new aristocracy is already taking form, with power centered in Brussels and Strasbourg. In America, our own Washington, DC-centered aristocrat wannabees remain diffuse and riven by competing factions, but they are there and waiting.

What went wrong? I propose that the primary seed of our destruction lies in our own human nature. It is the “tragedy of the commons” writ large. The tragedy of the commons, formulated by ecologist Garrett Hardin in the 1960s, describes the dynamic whereby individuals and other animals, when confronted with limited resources, have a self-interest in expropriating the maximum amount of those resource for themselves while they can, thereby hastening the resource’s destruction. The tragedy of the commons is neatly summarized by Illinois’ de facto state motto, “where’s mine?” (with a respectful hat tip to Chicago Tribune editorialist John Kass).

I suspect that, deep down, many serious people in America’s contending factions (Left, conservative, Democrat, Republican, Libertarian) believe that we are now in the end game and that we are thus witnessing a mad, vicious scramble by traditional Democrat constituencies (e.g., public sector unions) to secure to themselves as much wealth and political power as possible before the inevitable financial collapse. The primal screams and vile demagoguery harmonized by the howling mobs of Wisconsin, Greece, France and Britain (or from our Commander in Chief, for that matter) are but the beginning of this process. Change can be ugly when people lose hope!

“Where’s mine?”

It still remains incredible for me to contemplate how we in the West, endowed with the richest standards of living every conceived in human history, still could not find satisfaction from living within our means. The wails and tribulations of the Left notwithstanding, all groups in America are living far better material standards of living than they did 25, 50 or 100 years ago or than the vast majority of our world enjoys today. How could we not find it within ourselves to be grateful for and respectful of what our forebears built and accumulated as their legacy for us. Indeed, our unparalleled wealth and quality of life appears only to have fueled resentment of “the other” in tandem with an exponential growth in our appetites and expectations. Thus have we now come to the point of destroying ourselves and our inheritors through impossible debt obligations, gained in our quest for ever more lucre and comfort gained on other peoples’ dimes.

“Where’s mine?”

So today, confronted with hard choices on whether to cut back on our expectations and regenerate the wealth that we have lost on one hand (the Paul Ryan plan) and a mad scramble to secure our own selfish claims upon the commons before its dissolution, our country confronts the fork in the road that, as Yogi Berra put it, must be taken.

Why do I suspect that earlier in our democracy, when government was not expected to fulfill everyone’s economic and social needs, a national belt-tightening to confront an existential crisis would hardly have been considered controversial. A split electorate today, unfortunately, does not bode well for constructive solutions. From my limited perspective, I suspect that 25% of our population seems committed to the conviction that the government’s largesse can continue forever and another 25% (public employee unions, Liberals, Democrat politicians) cynically manipulates events to amass all it can before the inevitable collapse.

“Where’s mine?”

I propose, however, that these manipulators on the Left and their followers are fundamentally mistaken in the following ways:

One is to believe that whatever political and financial power they accumulate in these days will translate into power and wealth in the future. I don’t think so. You can’t, for example, pay pensions on the back of a collapsed market economy. You can’t fund ObamaCare promises through foreign largesse. Princely union boss salaries will be worthless when union members inevitably catch on to their betrayal and they, too, ultimately depend upon a healthy private sector economy.

Two, we can never really predict the future.  Revolutions lead to unpredictable ends and often end-up eating their own. Anarchists and Democrats can try to collapse the system, perhaps, but nobody can know what will replace it.

Three, the real threat to our society today is not our debt but the destruction of our debt capacity. Debt capacity refers to our ability to absorb more debt in response to crises: for me, for example, debt capacity is represented by my home equity line of credit, to be drawn upon in emergencies. We can be guaranteed that our Western civilization will face serious crises that will threaten our very existence. With our home equity line exhausted, from whence will we find the capital resources to fund our survival? How will we build back from the rubble?

When FDR embarked on his wildly irresponsible debt-financed financial adventures, our country’s ability to absorb debt was still great by the time WWII arrived. We survived and, as a result, thrived. I am not so certain that we could do so today. Not to veer too far off path, but does anyone else get the sense that the ineffectual flounderings of the U.S. and our NATO allies in Libya, a misbegotten economic and military backwater of 6.5 million people, hardly reflect the actions of robust democracies?

I sense that our Western democracies have reached a point of exhaustion. Perhaps this reflects the natural lifespan of democracies. I hope not. The Ryan blueprint presents our 50:50 nation with an existential fork in the road. We shall soon discover the true strength of our national fiber. Will we tighten our belts, retrench and expand the national and global commons as we have in the past…or will we intensify our mad struggles to secure dwindling remnants thereof to ourselves? If the latter, then our democratic experiment will truly be at an end. And that would be a tragedy.

I do not say that democracy has been more pernicious on the whole, and in the long run, than monarchy or aristocracy. Democracy has never been and never can be so durable as aristocracy or monarchy; but while it lasts, it is more bloody than either. … Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. It is in vain to say that democracy is less vain, less proud, less selfish, less ambitious, or less avaricious than aristocracy or monarchy. It is not true, in fact, and nowhere appears in history. Those passions are the same in all men, under all forms of simple government, and when unchecked, produce the same effects of fraud, violence, and cruelty. When clear prospects are opened before vanity, pride, avarice, or ambition, for their easy gratification, it is hard for the most considerate philosophers and the most conscientious moralists to resist the temptation. Individuals have conquered themselves. Nations and large bodies of men, never.

- John Adams

San Francisco is definitely up in the top five when it comes to “most Progressively governed cities in America.”  No surprise, then, that the city’s finances are in a shambles.  What is a surprise is the fact that, faced with a looming budget collapse, the City has suddenly discovered capitalist incentives:  it’s offering the big employers tax cuts to stay in the City.

This is a smart move on San Francisco’s part.  (And I can’t believe I wrote that sentence about the City that doesn’t know how.)  The Leftists may call them “the rich people” or “blood sucking corporations,” but I have another name for them:  employers.  The City has discovered that if you constantly penalize employers, they go away.

As Obama’s vicious, dishonest budget speech shows, he hasn’t yet come to that little realization.  Nor, despite his intellectual common ground with Tom Friedman, has he seemed to realize that Friedman is right about one thing:  the earth is indeed flat.  In the old days, employers had nowhere to run to and nowhere to hide.  Now, the corporations can go to all the other socialist countries that have lower corporate tax rates than the U.S., while individuals simply bid a fond adieu to their natal land.

I realized today that what makes Obama’s class warfare even more disgusting is that he makes no attempt to pretend that he’s one of the little people.  As I read in Ronald Kessler’s In the President’s Secret Service: Behind the Scenes with Agents in the Line of Fire and the Presidents They Protect, when Jimmy Carter, the last president who presided over such a disastrous economy, paraded around carrying his own suitcase, it was pure theater:  the suitcase was empty.  Nevertheless, he made the effort.

Obama, however, doesn’t bother.  Even as he demagogues about the fat cats, stopping just short of demanding their heads on pikes, he openly revels in the kind of lifestyle only the very rich can afford.  While he lectures us about heat and air-c0nditioning, he keeps his White House digs at 75 all year round; while he tells us to trade in our tried and true cars for expensive hybrids, he and his family jet all over the world on exotic vacations, traveling in gas guzzlers everywhere they go; while he “commiserates” with our belt tightening, he and his family dine on lobster, Kobe beef, and foie gras.  His arrogance is so overweening that he assumes that he is entitled to these luxuries — at our expense, of course — even as he insists that we cut back, tone done, retrench and, of course, destroy our employer class.

Putz isn’t a strong enough word, but it’s the only one I’ll use on my PG blog.

Cross-posted at Right Wing News

The Bookworm Turns : A Secret Conservative in Liberal Land,
available in e-format for $4.99 at Amazon or Smashwords.

Click here to view the embedded video.

On the “real me” facebook, a “joke” is making the rounds:

‎”A public union employee, a tea party activist, and a CEO are sitting at a table with a plate of a dozen cookies in the middle of it. The CEO takes 11 of the cookies, turns to the tea partier and says, ‘Watch out for that union guy. He wants a piece of your cookie.”

I kind of doubt that the people who laugh at that “joke” would appreciate this truly brilliant piece of political satire:

Click here to view the embedded video.