Greed, Envy, and Taxes

A guest post by Mickey Ellison:

 

We have all heard of the seven deadly sins. Wikipedia breaks them down simply. Wrath, greed, sloth (lazy), lust, pride, envy, and gluttony. We could spend hours discussing each of these, but for the purpose of this writing, we will focus on two: greed and envy.

In my opinion, the state and federal income tax is possibly the greatest hindrance to economic growth. To have this conversation, some of you will have to open your mind because envy will creep in to cloud your judgment. How many times have we heard that the rich should pay more and our way of doing that is through the income tax?

The US tax code is well over 70,000 pages in length, so forgive me if I don’t have everything perfect. Check this out! According to the Small Business Association, in 2012 small businesses made up about 99.7% of U.S. employer firms. That isn’t 99.7% of employees, but rather 99.7% of those that employ people. If I read that right, .3% of actual employer firms are large businesses. Yet, only 49.2% of employees work for small businesses which means 50.8% of the employees work for large firms. Now, let’s not get caught up in the numbers, but if you want more information on the statistics, visit this site.

This is where your mind must open. Small businesses with new innovative ideas can become a real threat to large businesses. How many of us that were alive in the 1980s would have ever thought Walmart could ever squash K-Mart? That was unthinkable, but fast-forward 30 years and that is exactly what happened.

Every large business we see out there like Walmart, GE, and Microsoft started out as small businesses. Sam Walton started the largest retailing company in the world in — of all places — Bentonville, Arkansas. Do you think K-Mart was worried about this hick in nowheres-Ville becoming a real threat? Of course not, but Sam Walton did become a major threat to K-Mart non the less.

Now, if I were a large business that didn’t want to become the next K-Mart, what could I do to prevent that from happening? One way would be to continue to get better at what you do, or another would be to influence laws that make it impossible for the next Walmart to even exist. Unfortunately we can see the choice that most make is using the power of government to protect them. Influencing politicians can possibly make it easier to squash the competition privately while appearing to be on the side of the little guy. I think a 70k page tax code is proof of that! Greed!

Those evil large companies that we love to hate, along with the help of politicians, prey on another of the seven deadly sins, envy. They can get the ignorant masses in such an uproar, that the companies’ greedy scheme can be pushed by the envy of those same masses, and do it all in under the idea of fairness. Seeing how this could work will take some understanding of the tax code, and hopefully you can see how the income tax can kill the entrepreneur that could eventually threaten the behemoth that we also love to hate.

Sowell

So, let’s dive in. The average American that is an employee understands the income tax differently that the average American small business owner. Let’s look at the average American tax payer. You get your paycheck from your employer, and you have had your state and federal taxes withheld for you by your employer based on how you filled out your W-4 form when you were hired. After those withholdings are taken out, the employer also withholds the amount that you are required to pay for your benefits and what you have chosen to contribute to a 401(k) if you have one. After all of that is done, you have your take home pay. Sometime between January and April 15th, you file your taxes with the IRS, and you are told how much you will receive in a refund or if you owe more. That’s pretty much the extent of it. Stop for a moment to thank your employer for mailing that check to the IRS and state to pay your taxes. It’s an ingenious system because most people really have no idea what they really pay in taxes since they personally do not have to write the check, but that isn’t the point of this post.

Now, let’s take a look at the average American small business owner. Most of them are not your CEO that we see on television, rather they are often our next door neighbors. People like the local plumber, the local hometown restaurant owner, and back in the day the local gas station owner. Many of them have no employees or often less than 10. How does their taxes work? First they must make a profit, and that isn’t a given, but let’s assume that they do. The example that I will use is a plumber that makes $100k a year as a sole proprietor and has no employees. My first question is how many of you know what a self-employment tax is? When you get your W-2 income, your employer withholds social security and Medicare and that adds up to about 7.5%, but did you know that your employer is required to match that? Do the math! That’s about 15%. The real number for 2014 will be 15.3%. If you own a business as a sole proprietor that is an immediate 15% off of the top of your income. On $100k, he/she owes $15,000 and we haven’t even gotten to income taxes yet. After paying the $15,000, there is $85,000 left to be taxed according to our progressive tax system. Below I will do the math on that:

$0-9075 is taxed at 10% and that equals $907.50
$9076-$36,900 is at 15% that equals $4,173.75
$36,900-$89,350 is at 25%. Since he only has $85,000 that is subject to income tax, the amount due is $12,025.

And, if you happen to live in a state that has an income tax, he has that to pay as well. For this example let’s use 5%. In many states it’s higher, but this works for the example.
On $85,000 that comes up to $4250. For those of you being technical now, I know you can write off the state taxes against your federal taxes, but play nicely.

Now let’s add them all together:
$15,000
$907.50
$4173.75
$12,025
$4250

________
$40,605.50 is your grand total, leaving him $59,394.50.

What would he do with that $40k if he could keep it? That’s anyone’s guess, but let’s look at some possibilities. First, he might simply spend it. Maybe he buys a car. Buying that car pays the salesperson a commission, the car lot makes a profit, and the manufacturer can make another car to replace that. They pay the assembly line worker, the mechanic, the company that produces the upholstery. The upholstery company makes a profit, and they have to employ someone to make the upholstery, but because $40k in taxes were withheld, none of this business takes place.

What if he hired another employee and paid them the 40k. The business may grow faster, creating more profit, and that results in more money being spent or maybe even another employee that could help the company grow even more. The employee will spend the money on something. Let’s say food at the supermarket, that can pay the cashier, the butcher, the baker, the truck driver, the packaging plant, the farmer, the seller of fertilizer, and the list goes on and on. None of this takes place because the government plundered the business owner for over 40% of his profits.

When income taxes are raised, these are the people that get hurt. Not Warren Buffett or Bill Gates! Not Walmart or Costco! What it does do is prevent some entrepreneur from creating something better than Walmart or at least makes it more difficult. In the end, the large companies are more likely to absorb these taxes by passing them on to the employees, but what really happens if the small business owner is priced right out of business. This discussion doesn’t even take into account the numerous regulations and rules that hinder economic growth.

If there is one thing to remember from this article, I would say think beyond the rhetoric of politicians and large mega-corporations. Think about the small business owner when you get caught up in the emotion that politicians use against us. The next time you or I complain about having to go to Walmart and we wonder where the local dime store went, hopefully you are starting to know now. Almost every new tax law or regulation will have the opposite effect than what is being sold. This is why the Walmarts can get larger, and this is why the too big to fail banks have gotten even bigger. The American dream of owning one’s own business will become a fantasy because we allowed greedy politicians and business men to cause us to commit one of the seven deadly sins, and that is ENVY.

by Mickey Ellison

Envy and the egalitarians

I have written on the evil of Envy before and it is one of the seven deadly sins according to the Roman Catholic Church. Envy is when someone lacks another’s quality, achievements, or possessions and wished that the other lacked them also. Not only is the envious person rendered unhappy by his envy, but they also wish to inflict misfortune on others. Envy is a malicious force in human society and is well worthy of being one of the seven deadly sins.

I have found that all sorts of collectivists, leftists and progressives are driven by envy and this makes them extraordinarily difficult to reason with since they are caught in an emotional state of mind that is resistant to all reason. It leads to all sorts of double standards, like the leftists who think a pop singer making 50 million a year is perfectly fine while hating a CEO for making even ten percent of that figure.

We see all sorts of left-wing political thought were the main idea is to level the wealth of everyone in society regardless of the individual’s contributions, talents, dedication, work ethic, or value to society. History says that any attempt to equalize income or wealth by governmental forced redistribution always ends up in destroying wealth as a consequence. Henry Hazlitt once passed on a great mid-eighteenth century quote from Samuel Johnson, “Your levellers wish to level down as far as themselves; but they cannot bear levelling up to themselves.” He also passed along the thoughts of left-wing US Supreme Court Justice Holmes who wrote “I have no respect for the passion for equality, which seems to me merely idealizing envy.”

We have watched the entire communist experiment that was said to level the society from top to bottom so that all would be equal. Much like in Animal Farm, it was soon found that some were “more equal than others”. In country after county during the 20th century the evils of communism drove the people straight into poverty. The old USSR could not even produce a decent car and the people had a joke: “They pretend to pay us, and we pretend to work”.

The entire egalitarian movement, in all its forms, is based on envy. Mostly they are envious of those who have it better than themselves, regardless of the reason, but there are some who are well off and have a deep fear of envy in those less fortunate which they seek to appease: hence the American “limousine liberal”. But those who wish to appease envy don’t understand that no one is ever completely satisfied with their place in the world relative to other people, and trying to level the status of all to one thing is a fool’s errand at best. Concessions to envy merely whet the appetite for even more concessions.

There is a large divide between jealousy and envy. According to Helmut Schoek, in his book, Envy: A Theory of Social Behaviour, the jealous man does not normally become a spontaneous, primary aggressor since the jealous man only seeks to protect what is rightfully his from the hands of those striving to take it; so a jealous man can be at peace when he is confident that he is not going to be looted or cheated by others. But the envious man expresses a much more hostile set of emotions and  the envious man wants something that is not rightfully his. The envious man has a heart filled with spite and nothing will set his mind to rest. Not even the total destruction of the object of his envy can satisfy the envious man.  The Roman Catholic Church and Helmut Schoek agreed that the jealous man wants to keep his own possession while the envious man wants the possessions that someone else rightfully owns.

It is envy or the fear of the envy in others that motivates the drive for redistribution of wealth and calls to loot the rich are always based on the evil of envy. Even a national income that is growing for practically everyone in the society will be deplored by the left because it is making the rich richer! But the leftists do not just emphasizes equality more than abundance; they seek to promote equality at the expense of abundance. This is one of the things that keep the poor in their condition since it is a rising total wealth of the society that makes it possible for all to do much better.

The actual effect of progressive income taxes, confiscatory inheritance taxes, sky-high property rates, and other confiscatory schemes by the state end up hurting the poor much more than the rich as it discourages the capital formation needed to fuel job formation and national productivity. The funds looted from the economy then go to fund the war-making machine, the CIA, NSA, and other agencies and programs that are an abomination to human rights and life. The looted wealth, besides funding wholesale murder, keep the productivity and job formation of the economy at a much lower rate than it would be otherwise and guess what … that always hurts the poor the most.

The long-run effect of these tax rates, regulations, redistribution policies, and other governmental interventions is to leave the working poor worse off than they would otherwise have been. The effect of the welfare state itself is the destruction of the family unit. So, we have the specter of the State yet again delivering misery while promising the opposite.

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Unending national emergencies and the nature of the state

The unending national emergencies of the present age are the natural outcome of the doctrine that the President has near-dictatorial powers during and emergency. Even the U.S. Supreme Court recognized the danger of using emergences to give tyrannical power to the Executive and the court derided Lincoln’s theory of supposedly constitutional dictatorship by saying in Ex Parte Milligan (1866):

“The constitution of the United States is a law for rulers and people, equally in war and peace, and it covers with its shield of protection all classes of men, at all times and under all circumstances.  No doctrine involving more pernicious consequences was ever invented by the wit of men that any of its great provisions can be suspended during any of the great exigencies of Government.”

Even the Supreme Court in those days understood that if politicians can get away with declaring themselves dictators under the guise of a “national emergency” then there would be a never ending series of such emergencies. And what emergency is greater than war? Thus we have in the present day a never ending “war on terror” along with a series of other “wars” like the one the plant food CO2, the one on people using whatever drug they choose, and government’s new war on privacy.

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary.” ~ H.L. Mencken

i-believe-that-all-government-is-evil

The main hobgoblin of our present time is no longer the “evil empire” of the USSR as it was in my youth, but rather the “evil” Muslim and his so-called “desire to destroy America” (as if we were not already doing a bang-up job of it). Or at least that is what we are told over and over by the State and its minions. I am told that Disney World in Orlando, Florida would be ashes if it were not for our military killing innocent men, women and children in far away lands. Yes indeed, they would mount camels that can swim and cross the Atlantic and invade the USA. Horrors!

Government today has grown far too strong, interventionist, and invasive to be remotely safe for the people. There are no longer any citizens in the modern world, rather, it seems that there are only subjects to be ordered about, looted, and brutalized. The state consists of a gang of men and women exactly like you and me except they live by looting those who can produce to give to those who are parasites while taking a healthy cut themselves.

The most dangerous man to the US government is the one who is able to think things out for himself, like Edward Snowden did. These people can put aside the current myths and taboos to think rationally and then they inevitably come to the conclusion that the State is a gang of thieves writ large just as Murray Rothbard said years ago. These men will try to change the situation if they have the temperament and guts for that sort of thing, or they will try to spread discontent among those who do have that temperament. Either way, the discontent is growing and the state will fall before long. Ed Snowden and his NSA revelations did more to undermine the legitimacy of the State than most anyone in memory.

Modern Americans tend to regard the State as a quasi-divine, selfless organization from which all good things in life flow. The State by its very nature can not give you loving care as it was build to use force, fraud, and intimidation to loot the masses for the benefit of the few. It is know for demagogic appeals to the masses to frighten them for votes. Many individuals do need guidance from experts, but going to the state is like seeking advice from your wife’s lawyer in a nasty divorce case — it will always lead to a bad end.

It is absurd how many people think they are served by a coercive, demagogic apparatus when it exists to further its own. The ruling elite and their loyal minions will use fear, an endless series of imaginary hobgoblins, propaganda, and myth to keep you in line. The murder of millions and millions of innocent men, women, and children in country after country just to keep you subservient is the nature of the state.

You may test the hypothesis that the State is largely interested in protecting itself rather than its subjects in a manner first suggested by Murray Rothbard. Do this by asking: which category of crimes does the State pursue and punish most intensely—those against private citizens or those against itself? It is obvious that the state punishes crimes against itself far more often and far more harshly than crimes against mere people.

It is time to withdraw your consent to be governed by such an evil entity as the state.

American mercantilism?

We often hear the ignorant refer to the present American economic system as free market capitalism or mostly just “capitalism” where they mean free markets, and yet the American system has been heavily controlled, regulated, and interfered with by government for over a century with no free markets to be seen anywhere. Some say that the political control of the economy started from the very beginning of the Republic and the citizen’s right to do as he pleases as long as he harms no one else was violated with increasing frequency as time went by.

It matters little if you call the American system fascism, corporatism, crony-capitalism, “the third way”, a mixed economy, socialism, or even the more archaic term “mercantilism”. There is a spectrum that runs from laissez-faire free-markets (with no government intervention at all) to the fully government controlled economies of a North Korea or the old USSR. History and the Austrian School of Economics have shown over and over that any government intervention always makes the situation worse and normally makes it much worse for the poorest people. After all, as Groucho Marx observed “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”

Murray N. Rothbard wrote about mercantilism in Conceived in Liberty (1975), volume 1, chapter 32: “Mercantilism, Merchants, and Class Conflict.” He observed:

The economic policy dominant in the Europe of the 17th and 18th centuries, and christened “mercantilism” by later writers, at bottom assumed that detailed intervention in economic affairs was a proper function of government. Government was to control, regulate, subsidize, and penalize commerce and production. What the content of these regulations should be depended on what groups managed to control the state apparatus. Such control is particularly rewarding when much is at stake, and a great deal is at stake when government is “strong” and interventionist. In contrast, when government powers are minimal, the question of who runs the state becomes relatively trivial. But when government is strong and the power struggle keen, groups in control of the state can and do constantly shift, coalesce, or fall out over the spoils. While the ouster of one tyrannical ruling group might mean the virtual end of tyranny, it often means simply its replacement by another ruling group employing other forms of despotism.

In the 17th century the regulating groups were, broadly, feudal landlords and privileged merchants, with a royal bureaucracy pursuing as a superfeudal overlord the interest of the Crown. An established church meant royal appointment and control of the churches as well. The peasantry and the urban laborers and artisans were never able to control the state apparatus, and were therefore at the bottom of the state-organized pyramid and exploited by the ruling groups. Other religious groups were, of course, separated from or opposed to the ruling state. And religious groups in control of the state, or sharing in that control, might well pursue not only strictly economic “interest” but also ideological or spiritual ones, as in the case of the Puritans’ imposing a compulsory code of behavior on all of society.

murray-rothbard-enemy-state

If those people who say that the USA has a system of modern fascism are correct then “fascism” does not differ all that much from the above described mercantilism. I suppose that is to be expected since the father of fascism, Benito Mussolini, modeled his system along the lines of strict government control just as the mercantilists of Britain did years before him.

It is obvious that the state controls the economic activities of all entities with laws, regulations, and the like, but what is not so obvious is that the modern US government even controls the entry of individuals into various occupations and professions. Not only can you not become a Doctor without the state’s permission, you may not even cut someone’s hair without the proper licenser. Try to become a cab driver without the approval of the state and see what happens to you. Like under “mercantilism”, the present government seeks to control, regulate, subsidize, and penalize commerce and production in all areas of American life. What has changed? The regulating groups have changed. The church is no longer part of the mix and the special interest groups seeking political power and handouts are different; but nothing has changed in reality.

As long as we allow the federal government to control the economic activities of the people then we can expect lower standards of living than we would have otherwise, especially for the poor. With modern mercantiliism can not expect liberty or freedom but rather we can expect dependency, slavery, and serfdom. We will be endlessly subjected to arbitrary and punitive rules and regulations. The state and all its minions seek to dominate you in all areas of your life and it finds dominating you in your economic activities is the easiest way to enslave you.

The most dangerous man to any government is the man who is able to think things out for himself and to discover the true nature of government. Think of men like Edward Snowden who found out what the government’s NSA was doing and told the world about what he found. He told the world without any regard to the prevailing superstition that there were terrorists under every bed. If we ignore the propaganda, superstitions, taboos and utter heifer dust that we were taught in the government schools, we would discover that we must come to the conclusion that the government we live under is dishonest, insane, and intolerable. Like H. L. Mencken, I believe that all government is evil and that trying to improve it is mostly a waste of time and is often counter productive.

The only way to maximize prosperity and peace is to stop practicing the American mercantilist system and to move to laissez-faire free markets, and the only way to have no government intervention in the market is to have no government at all. The Irish did that for perhaps 9,000 years.

Like many people this time of year, I wish for peace among men throughout the world. I know that the only way to have peace, prosperity, freedom, and happiness is for mankind to throw off the evil of the state that enslaves us. In the coming year we should all endeavor in anyway that we can to end the state and live in a voluntary world. We must teach people to withdraw their consent to be governed just at the people did in the old USSR. The good of all mankind does not depend on you recycling your trash, conserving gasoline, or having the grocery store put your purchase in re-usable bags. The good of mankind depends on you helping to overthrow the great evil that is the state. Do your part whenever you can.

Ron Paul’s run for nomination in retrospect

A twitter exchange among several fellows that went on for days made me decide to interrupt my schedule a bit and do a retrospective on Ron Paul’s run for the presidential nomination in the GOP. This is just answering a few of the complaints that were raised, as a real and in-depth look at Ron Paul awaits a historian someday.

ron-paul-revolutionI can recall that many people said that Ron Paul could not be any good for the liberty movement since he was running for the Republican nomination. What? Did these people think the Democrat Party is any better for liberty? Besides, there was a sitting president on the Democratic side while the Republican side was wide open. Oh, he could have run third party you say? He did that once. You can not be heard in the USA at all running as a third party candidate except in ultra rare circumstances and no third party candidate is invited to the presidential debates.

Some say that as a politician that Ron Paul is not an anarchist. Really? We can only support anarchists like ourselves? Give me a break! Very few in this country will listen to a politician who says he is an anarchist. Even worse, it would be hypocritical of a fellow who is an anarchist to run for any office. But is he a libertarian? Certainly, if one believes what I wrote here. Consider what Jeffery Tucker once wrote:

“I’m interested in only one thing: progressive reductions of the role of all government power in people’s lives all the way to zero if possible. Whatever brings that about, in whatever sector it happens, and whether it happens slowly by steps or all in one fell swoop, I’m for it. I really don’t care who or what makes a contribution to this end or how it comes about, so long as it is ethical and it actually achieves the aim of human liberation, the mother of all progress, order, and higher civilization.” ~ Jeffery Tucker

Jeffery Tucker’s statement leaves a lot of room for Ron Paul’s brand of “follow the constitution first in all matters” style of rhetoric. But is he a radical libertarian? I don’t know, but he has hung out with anarcho-capitalists of the Rothbardian persuasion for decades. Who a man hangs out with usually says a lot about him.

The question was raised, “did he do any good for libertarianism or did he do harm?” I believe that million of young folks became aware of the liberty movement and the ideas of libertarianism due to Ron Paul’s campaign. Surely we don’t want to hide our lamp under a basket do we? We have done entirely enough “fussy little seminars about municipal waste” and we have to move on to radicalizing the population.

Now some don’t like a few of Ron Paul’s stances on various issues and somehow think that only their own beliefs are “the libertarian belief”. Hogwash. Nonsense on stilts. Balderdash!

The “immigration issue” was raised and it was claimed that one issue meant Ron Paul was no libertarian and was “hurting the libertarian cause”. As Murray Rothbard pointed out on numerous occasions, private property rights answers any immigration question in a libertarian society. But we don’t live in anything resembling a libertarian society: we live under a domineering, brutal, interventionist government. Ron Paul’s immigration stance is what he thinks should be done under present circumstances. I am opposed to any national boundary lines, but I am also opposed to inviting others here just so the tax money looted from us can go to pay for their welfare and other “entitlements”. How many Democratic Party voters do you want to pay to come here anyway? Why not stop all welfare entitlements and then see how many want to come to this police state?

Can his position on immigration mean that he is not libertarian? Oh good grief. Heifer Dust! What about his wanting a non-interventionist foreign policy where we leave other countries alone and bring all our troops home to our own country? I think that is the most libertarian policy position of any politician during my lifetime. But his “end the FED” is also a real libertarian issue since the FED helps to fund the military/industrial complex as well as loot the population via planned inflation.

Ron Paul made the case for smaller government, people keeping more of their own money by lower taxation, less government intervention in health care, and all the rest. Ron Paul also was lauded by many “on the left” for his stanch defense of civil liberties in this country. Ron Paul was also against the “drug war” and his policy would reduce the prison population by a great amount. How can these messages not help our cause?

The third rail of libertarianism was mentioned on twitter. What about abortion? Did Ron Paul not come out against abortion? Why yes, the baby doctor did say that he opposed abortion and he believed that abortion should be decided at the state level or lower. But there should be no single “libertarian line” on the issue anyway. I once wrote that I disagreed with Murray Rothbard on the abortion issue. Murray was wrong on that one. It happens to us all at times.

Ron Paul’s message was one of smaller government and laissez-fair free markets. He exposed the classical liberal line that was the philosophy of the founders of the country. He did not preach anarchy; but then again, how many of you think that the average government propagandized man in the street is ready to hear radical anarchy right now? First we must get him to understand the classical liberal view and then nudge him even further.

The road from state worshiping minion to principled voluntaryist is a long one, and Ron Paul’s message put many people to walking in the right direction. How could that do anything but help?