Ponderstorm My Brainstorm on Life & Politics

The National Taxpayers Union and the National Taxpayers Union Foundation prepared some easy-to-read tables entitled “Who Pays Income Taxes?” for tax years 1999-2006 using Internal Revenue Service data. According to them, the top 1% of income earners in 2006 paid 39.89% of all personal income taxes while the bottom 50% of income earners paid just 2.99% of all personal income taxes. Let me restate the obvious for 2006: 1% of Americans paid 40% of all personal income taxes while the bottom half of income earners paid just 3% of all personal income taxes. Put another way, the top half of all income earners paid 97% of all personal income taxes in 2006.

This same group analyzed “Who Doesn’t Pay Taxes” and reported the numbers for tax years 2003-2005 using Internal Revenue Service data. In 2005, there were 134.4 million tax returns filed. Of them, 90.6 million were “paying returns” and 43.8 million “non-paying returns.” The percentage of tax returns where no taxes were paid was 32.6% of all returns. That means nearly 1/3 of all Americans didn’t pay any personal federal income taxes in 2005. That figure doesn’t mean they didn’t owe additional taxes, it means they didn’t owe ANY personal income taxes at all that year.  Their federal income tax liability was zero. If they had taxes withheld, they were due a refund.

The Tax Foundation’s Fiscal Fact No. 27 reports a similar finding on the number of Americans who are “outside the income tax system” and have “zero tax liability.” In other words, they pay no personal income taxes.  The latest figures on this report show that the number of people paying no personal income taxes grew under the Bush Presidency – 31.8% of Americans paid no personal income taxes in 2003 (which was up from 25.2% in 2000 under the Clinton tax increase code). In 2003, that was equal to more than 41 million tax returns with no tax liability whatsoever.

[Note that during the Clinton years about 1/4 of all Americans paid no income taxes. Contrast that with the Bush years when even more paid no taxes -- about 1/3 of all Americans paid no income taxes. The Bush tax cuts actually increased the number of Americans who paid no personal federal income taxes and shifted a greater portion of the overall tax burden on higher income earners.]

My question is this: Read More…

Posted under Barack Obama, Campaign, Taxes

A liberal friend asked me to read an article entitled “Insanity” by DarkSyde at The Daily Kos and pointed out that he thinks it pretty much sums up how most liberals feel about the past 8 years and what this election is about.  I found the article cleverly written and coming from an unusual angle.  It made me stop and think because on a foundational level I actually agree with a some of the broad assessments made in this article even though many of them are grossly exaggerated.

Republicans are often blamed for all the nation’s problems of the past 8 years. I concur that the GOP has been part of the problem for 4 of the past 8 years; however, remember, the Senate was evenly divided when Bush was elected and then 1 GOP member switched to Independent and caucassed with the Democrats so the GOP didn’t control both houses until 2003 and then lost in 2007 after the 2006 election cycle. In fairness to Republicans though, during the 4 years of complete GOP control, Democrats have blocked and/or watered-down virtually all Republican proposed solutions to the problems this article blames them for.

However, in spite of the problems, the overall issue is bigger than simply who controls Washington. The underlying problem in Washington, as I see it, is systemic and part of human nature. It’s something our Founding Fathers were aware of and repeatedly divided government in an attempt to mitigate. It’s simply this: Power corrupts. It doesn’t take a rocket scientists to see that both parties are now corrupt. That doesn’t mean that all members in both parties are corrupt but that the system is corrupt with power. There’s a creeping loss of individual rights and personal liberty every year regardless of which party is in power.

So that brings me to my next point. Since both parties are corrupt and there’s no third party that stands a chance at winning this election cycle, what am I to do as a voter?  I feel I must take the path of less damage and that’s why I am going with the Read More…

Posted under Politics, Taxes

In this latest election cycle I’ve been frustrated by the lack of talk about core principles.  It seems that window dressing is king right now and a few buzzwords about change are shaping the political debate.  That’s bad news for people who think critically — especially for those of us who know that change for the sake of change is not necessarily a good thing. We could change from bad to worse, for example, so I want to know why we need change and where (and how) the change agent wants to change things.

While mulling over these notions, they triggered some thinking about my own core principles. I felt it was wise to put my core beliefs about government in writing (even if in a rough format) and provide some basic application of them regarding the federal government.  I am a strong believer in federalism, separation of powers, and checks and balances. As such, I feel the Constitution clearly restricts the federal government from action — particularly in domestic issues.  Similarly, in the areas where federal action is authorized, it is often severely limited. In fact, the Tenth Amendment is very specific about this:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

In a nutshell, this means the federal government is severely limited to a few (primarily national and interstate commerce) powers with the remainder left to the States and the people.  Thus, I advocate a very limited role for the federal government and argue against many social and spending programs currently found at the federal level. However, please note that I am not against all government social programs. While opposing federal programs, I will argue for more involvement at the state and local levels of governments. At these levels of government there are not the same Constitutional prohibitions. Similarly, I firmly believe that social programs are more effective from a practical and service-oriented point of view when administered at the lowest level of government possible (state, county, city, special district, etc.).

So, understanding the above, I will embark on drafting my “Key Principles of Government” as they relate to the federal government specifically, and to all governments in general. Please note that this is a work in progress — thus the short sentences, bullet format and limited explanation/supportive details.

1. Government exists to protect life and liberty and maintain an orderly society.

Government protects but does not create rights. Our government is a representative democracy (not a direct democracy). Minority rights are safeguarded from the “tyranny of the majority.” The federal government exists primarily to:

• provide national defense (foreign and domestic)
• promote national interests
• administer interstate commerce and conflicts

2. Government should be limited and restrained.

Power begins with the people and authority comes from God. Just because a problem exists doesn’t mean the government should try to solve it. A government that governs least tends to governs best. When possible, local solutions are preferred over national or state ones. The Constitution should be followed explicitly. If additional federal involvement is deemed needed then the Constitution should be amended to authorize such action.

3. Economic markets should be free.

The free enterprise system powers personal prosperity. Because government intervention disrupts the “invisible hand” (see Adam Smith) of the economy and encroaches on personal freedom, it should be rare. Also, to avoid creating special advantages and unintended consequences, government should limit its involvement in the economy as much as possible.

4. Taxes should be low.

It’s not the government’s money. Anything the government possesses it has had to first take from somebody.

5. Simple solutions are preferred over more complex alternatives.

The simplest working solution is usually the best one. The more complicated something is the more parts there are to break. Long-term costs and benefits should be considered above short-term impacts.

What do you think? Did I leave anything out? I invite your comments and suggestions.

Posted under Government, Taxes