Thursday, June 28, 2012

Tax the Lucky and Reward the Politicians - A Great Tax Plan for Finishing Off the American Empire

Brad Delong of the NY Times wrote an article in the economics section titled, "Tax luck, not thrift."  He goes on to talk about the fairness of progressive taxation while recognizing current drawbacks about offshore tax shelters and toting the benefits of a substantial social insurance.  You might think that in light of the long list of government failures more skepticism is warranted.  However, Brad enjoys speaking in sophomoric generalities and assumes that services rendered by the state are both positive and desirable.  He also ignores the implications of what he deems as lucky moves in the market.

What this statist must have missed in Economics 101 at Harvard is the basic function of an entrepreneur.  An entrepreneur is someone who forecasts future market conditions, such as a consumer's demand for a certain product or service, and then goes about allocating production resources in order to meet that demand.  If he is "lucky" he earns a profit and if he is wrong he earns a loss.  Interestingly enough Brad does not detail at all how luck is to be taxed but instead he focuses on taxing consumption which apparently in his mind is the equivalent of luck? Perhaps the NY Times just assumes that the once ruggedly independent and shrewd Americans are now only a horde of drooling zombies who are incapable of the basic lines of fundamental logic.  Perhaps it is this disdain for the general public by the NY Times that is driving readers to the wider world of information and to smaller independent venues of news which don't start with the assumption that their readers are complete idiots.

Regardless of the reasons, if we take this headline literally we see instantly that taxing luck translates to taxing success.  If we take his unrelated explanation at face value we see that Brad actually wants to tax consumption.  While a consumption tax would be preferred to an income tax, the fact still remains that in whatever form we pay politicians they will surely only use it to acquire more power and wealth for themselves.  And however the taxes are collected, I don't think that the NY Times will be analyzing the larger issue of what the role of government should be in a free society.

Despite their "reasoning" for such a mindless article, I will emphasize my own point with the following list of failed socialist programs where the politicians posed that we trust them with our money for our own benefit.  Perhaps in another article I will go into greater detail about these few failures in American government's long history of failures.

Social Security
War on Poverty
War on Drugs
Post Office
Fannie Mae and Freddie Mac
Public Education
Federal Reserve Bank

Need we say more?  Why not?  The very idea that I would ever pay someone to follow me around and extort me for money as a means to discourage me from doing things which are contrary to my self interest from the perspective of a politician is ludicrous.  And yet apparently I pay the local police to perform this task.  How could it be argued that it is in my own self interest to pay someone (IRS) to threaten me with violence if I don't give them money, some of which will go to the post office so I can then go to and pay again if I want a letter mailed?  Why is it so unreasonable for us to expect that there are in fact other companies who would love to deliver our mail with no guns involved in the transaction?  Instead, violence is actually used against those who would even attempt to perform this function (Fed Ex) without violence and extortion.

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