Where is modern civilization heading?

As a society are we heading in the same direction as the ancient Romans? If so the question becomes.......

Are our leaders fiddling while civilization burns?

While we ponder the question I will post my personal thoughts on this blog. Often I will focus on current events that catch my interest, however I am not and do not pretend to be a news organization. I'm simply a guy with his own thoughts on issues that I believe affect our country and society.

Be forewarned, I have been accused of being a right wing thinker and if that is offensive please move on. Remember, this is my blog and my opinions, and unlike many facets of our already over-governed modern society they are not being forced on anyone.

However, please feel free to leave your comments, good, bad or indifferent, after all this is a free society we live in (at least for now).

Thursday, January 26, 2012

When it comes to taxes , we all need a little perspective.

With the United States currently in the midst of the Republican primaries and the Presidential election coming this fall one topic that is being hotly debated and makes headlines virtually every day is taxation. More to the point, the rates of taxation.

The spark that ignited this fire is ever increasing government debt and no foreseeable end to budget deficits. Obviously the wisest solution would be to curtail reckless spending and live within budget, unfortunately that would entail making some hard choices, something that most politicians try to avoid at all costs. Apparently those in power have another route in mind, one that they view as having a lot less potential to cost them votes, simply increase revenues. From their perspective high atop the mountain they feel they have discovered an untapped "national resource" in the form of increasing taxation rates to higher income earners.

Nowhere was this message more clear than in President Obama's recent state of the union speech. Never one to miss an opportunity Obama used the State of the Union address to kick off his campaign for re-election. Here's a quote from his speech (the bolded text was highlighted by myself)

"We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules."

In the above couple of short sentences Obama is clearly insinuating two things, first a very small group of individuals is prospering, while the majority suffer, and secondly this small group accomplishes this by not playing fairly or adhering to the rules. In simple terms, they win because they cheat! It amazes me that a President of the United States would pit Americans against Americans in an effort to garner more revenue to cover his own governments overspending. This tactic of inciting "Class Warfare" is right out of the Marxist handbook.....shame on you Mr Obama.

Now think about it, in recent history (very recent) we have seen a growing movement to vilify the wealthier segment of the American population (recognize the phrase "the 1%" promoted so heavily by the Occupy Drones) combined with a continuing trend by politicians to classify citizens into groups, basically the "haves" and the "have nots"  (upper class, middle class, etc.). The reasoning behind this is very straight forward, in any society the wealthy will always be in the minority (the 1%) and generally by a great deal, this in turn means that most of the votes lie with those that fall outside of this group. So as any good politician knows you pen your message to the group who will provide the most votes. In Obama's case I suspect he views this as a win/win, show the majority that you are a man of the people and will stand up to those who don't play fair, and by doing so reach deeper into the pockets of those "cheaters" and increase your revenue. Remember, he has never been a man to let a good crisis go to waste.

There is only one fly in this ointment. The whole premiss that the top earners are not "paying their share" is false to say the very least, and to be more accurate an outright lie. The basis for this premiss is the most blatant case of manipulating statistics and number to serve a personal agenda that I can ever recall witnessing.

But Frustrated Joe, everyone knows the wealthy don't pay their share to support government and provide much needed social and entitlement programs?
Whoa....who exactly are you referring to when you say "everyone", if you are a regular reader of this blog you know that the "wealthy" already pay far more than their share, if you want the actual numbers Read This

So what am I referring to when I uses the phrase "manipulating statistics and numbers"?
Well lets take a case that has made the headlines recently, Warren Buffet, a gentleman that is amongst the richest on the planet. Mr Buffet has been quoted numerous times on his statement that his personal secretary pays more federal income tax than he does. This statement is being used as a "call to action" by President Obama who has even coined the phrase the "Buffet Rule" , an act which would require the wealthiest Americans to pay a tax rate at least as high as the middle class (ahh Mr Obama, once again with the "classes").

Unfortunately Mr Buffets statement has been taken entirely out of context (intentionally I assume). I have no doubt that Mr Buffet's secretary pays a higher percentage (rate) of her income than Mr Buffet himself does. However, in actual dollars Mr Buffets annual taxes are almost certainly enough to meet the budget (and then some) of most small cities, where as his secretaries tax contribution in dollars (not percentage) would be miniscule in comparison.

A more recent example is Mitt Romney, a contender for the Republican Presidential Nomination. Mr Romney recently released his personal income tax filing for the previous year showing that he paid $3.2 Million in taxes on $22 Million in income, or about 15%. While the percentage rate is as low or lower than most Americans pay his personal contribution (in actual dollars and cents) is more than a 100 fold of that of the average man on the street. On top of his taxes Mr Romney donated another $7 Million to charity over a period of two years

Lets think about that, here is a man that paid $3.2 Million in taxes in a single year and donated $7 Million to charity over the course of two years and is not only being attacked for it, but is being used as an example of an individual who is not contributing his share. The whole scenario would be laughable if it were not such a sad commentary of the low point society has reached.

Now for the sake of any Liberal thinking individuals reading this post lets just for a moment set the dollar figures aside and address the percentage rates, and why Mitt Romney's rate is as low or lower than the average American pays. In simple terms it is because we are comparing "apples to oranges". Mr Romney, like many wealthier individuals is not earning a wage, his income is derived from investments. Investments where he may have placed his money at risk in hope of a return and when and if such a return is realized it is not categorized as Earnings Income but rather as a Capital Gain. Capital gains are subject to a taxation rate of 15%, this same rate is applicable on Capital Gains for every American. In fact most take advantage of it when they make a profit on selling their home. The reason for the 15% rate on Capital Gains is simple, to encourage investment, which in turn creates jobs, jobs that in turn contributes taxes. As well it is important to keep in mind that most often the money invested to earn a capital gain (the principal) has already been taxed as income (at a higher rate generally) or was the result of a previous Capital Gain which would have been subject to a previous Capital Gain tax. So would the government have money taxed two, three, four or more times? My guess is they would like nothing better.

So in summary, the numbers are manipulated by individuals like Mr Obama by using some sleight of hand and keeping everyone's attention focused on the percentage rates, rather than the actual real dollars contributed. What is often neglected is the reality that the government operates on real dollars, NOT percentages, meaning that Mr Romneys $3.2 Million goes a lot further to keeping the lights on in Washington, than does the $15 Thousand contributed by the guy down the street.

So hopefully we now have a little perspective on the situation.


  1. Hey Joe,
    My buddy and I butt heads all the time on this one. He figures the more an individual has the more the government should take, although he prefers to use the word "contribute"(as if a taxpayer is given a choice). His belief is that this is only "fair". Fair to who? Probably my buddy and his family as they are not big "contributors".

    I am fondly hoping that one day he makes it big, I would be interested to see if once he has wealth if he would be so eager to "contribute".

    Keep up the good work, I love reading your posts.

  2. Anonymous,
    Thanks for the comment and I am pleased to hear you are enjoying my posts.

    I too have acquaintances that see no issue in simply taking more from those that they perceive as being wealthy. I have discussed with them the downside to that train of thought until I am blue in the face, no success.

    The problem with the government is not too little revenue, it is too much spending. Until that issue is addressed I suspect that over time they could strip every cent of wealth out of the pockets of Canadians and they would still fall short.

    At the end of the day the wealthy are just too easy a target to vilify and the government simply see's then as "low lying fruit" ready to pick.


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