Taxes

Airbnb to Collect Taxes from Los Angeles Users

in Economic Liberty, Liberator Online, News You Can Use, Personal Liberty, Property Rights, Taxes by Advocates HQ Comments are off

Airbnb to Collect Taxes from Los Angeles Users

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Airbnb, the short-term rental app, has recently agreed to go along with officials in Los Angeles by requiring users to collect hotel taxes from their clients. The three-year agreement was signed early this week. And according to LA city officials, money collected by Airbnb in Los Angeles would bring $5.8 million in annual revenue.

ProtestThe agreement follows the city’s efforts to regulate Airbnb and similar companies locally.

As City Council members discussed what to do with Airbnb in the past few months, the company lobbied its users to stand up against suffocating regulations in a series of emails sent out regularly.

In one of these emails, Airbnb explained that the LA City Planning Commission was considering putting a 90 day cap on the number of nights Airbnb hosts can list their space, a rule Airbnb called “restrictive and arbitrary.” City officials were also considering limiting the number of listings hosts can have, which could affect users who have more than one room to rent, and instituting a registration procedure that would render the process of hosting through Airbnb difficult and expensive.

Another rule LA city officials had considered would also force Airbnb to turn over users’ personal information to the authorities, giving them information on how many nights a host books through the site and how much money renters make. Airbnb warned its users that the city did not detail how this information could be used.

Accusing property owners of evicting tenants to turn their properties into “commercial hotel and motel businesses,” Councilman Mike Bonin was one of the first in Los Angeles to propose Airbnb regulations. But while it is true, many users have, in fact, evicted their tenants in order to list their properties on Airbnb, that alone is not an excuse to regulate Airbnb out of existence. After all, the system works because it’s still affordable.

To tourists looking for an affordable accommodation option, the extra financial burden tied to the hotel tax could mean that renting through Airbnb might not be that affordable after all. To those who use the service as renters to make ends meet, being part of Airbnb may not be as appealing if rates are high because of the new rules.

In an article for US News, Mercatus Center’s Matthew Mitchell urges regulators to “deregulate traditional industries” if their goal is to help all industries and local businesses thrive. Instead of regulating the sharing economy and stifling competition, deregulation could also make it easier for visitors to stay and spend money locally.

Airbnb’s decision to go along with Los Angeles city officials may represent the company’s willingness to compromise, but a real solution to this dilemma will only be produced when lawmakers are honest about their goals.

After all, regulation will always makes things difficult for the consumer and the businessman, no matter how you slice it.

Better Economic Prospects, Not Incarceration, Behind US Crime Decline

in Criminal Justice, Economic Liberty, Economics, Liberator Online, News You Can Use, Personal Liberty, Taxes by Advocates HQ Comments are off

Better Economic Prospects, Not Incarceration, Behind US Crime Decline

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

For the past two decades, crime in the United States has declined considerably. Compared to the crime rate of the early 1990s, US crime rates have fallen about half while violent crime has fallen by 51 percent. Between 1991 and now, property crime has fallen by 43 percent.

Sign But while many understand that better economic prospects tend to help keep the crime rate low, many tend to attribute the considerable reduction to a series of factors that, when closely reviewed, have little to do with safety.

Some of the most common arguments brought up by experts include the expansion of enforcement agencies, “tough on crime” policies, and increasing incarceration rates. Some have even gone as far as claiming that legalized abortions had helped to boost safety, ignoring the fact that abortion rates have declined over the past decades.

But according to research on the subject by New York University School of Law’s Brennan Center for Justice, socio-economic factors, not mass incarceration, has helped reduce the crime rates across the country.

According to the paper, increasing incarceration has had no effect on the drop in crime rates since 2000. When it comes to violent crime, the rate is also close to zero. States like Texas, California, Michigan, New Jersey, and New York have all seen a drop in crime as incarceration rates have also dropped.

Between 2000 and 2013, the study concludes, growth in income and decreased alcohol consumption have been the top factors responsible for the drop in crime, along with a boost in consumer confidence. Between 1990 and 1999, factors that helped to push crime rates down included decreased unemployment, growth in income, decreased alcohol consumption, and increased incarceration and police numbers.

But as the number of police officers increases, the number of low-level offenders behind bars shoots up. According to Brennan Center for Justice, the fact we have more low-level offenders in jail now than before impacts the crime reduction effect.

From the study:

“The incarceration rate jumped by more than 60 percent from 1990 to 1999, while the rate of violent crime dropped by 28 percent. In the next decade, the rate of incarceration increased by just 1 percent, while the violent crime rate fell by 27 percent.”

During a recent justice reform event organized by the grassroots organization FreedomWorks, Molly M. Gill, a former prosecutor who’s now the Director of Federal Legislative Affairs for Families Against Mandatory Minimums Foundation (FAMM), pointed out that “very few violent offenders end up in federal prisons.” Instead of violent criminals, federal prisons hold a great number of non-violent drug offenders, who account for more than 25 percent of the federal budget every year. Instead of rehabilitating them once they are inside the system, U.S. Justice Action Network Deputy Director Jenna Moll told attendees, prisons are often seen as the easy way out. During the FreedomWorks event, Moll also talked to attendees. She pointed out that a “national survey found prisoners prefer one year in prison versus five years probation,” adding that “if even prisoners know” prison is “the easy way out,” it proves that the system is not working.

In a 2000 article for the Foundation for Economic Education (FEE), economics professor Bruce Benson explained that, while few studies on the matter have been carried out, “Private security employment has accelerated since 1970,” leading him to believe that the “private security market … the second fastest growing industry in the United States” may have something to do with the drop in crime rates. To the economist, private-sector responses to crime should be studied as a major factor behind crime decline.

Pennsylvania School Bus Waste Story Nothing New

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Pennsylvania School Bus Waste Story Nothing New

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Another day, another story of government waste.

School BusEach year, Watchdog.org reports, Pennsylvania school districts spend over $54 million of taxpayer money on transportation services provided by contractors who do not have to compete for exclusive contracts with the state and local education agencies. Due to the state’s lack of rules regarding competitive bids, many are calling for an audit and a change of rules.

But would opening up the districts to a competitive bidding process alone do the trick?

According to late free market economist Milton Friedman, there are at least 4 ways money can be spent. “You can spend your own money” on things and services you consider important to yourself, trying to “get the most for your money.” You may also spend your money on somebody else, forcing yourself to look for something that will be meaningful or useful to the recipient while remaining mindful “about the cost.” Or you can either spend somebody else’s money on yourself or others.

According to Friedman, when you spend money earned by somebody else on other people, you’re not “concerned about how much it is,” and that, he concluded, is what government does.

While the waste promoted by Pennsylvania school districts is nothing unheard of, media outlets seldom discuss the lack of incentives in keeping a budget among government officials, whether they are local, state, or federal employees.

If bureaucrats are not concerned about the source of resources, they won’t be concerned with how much they spend. Opening the state’s districts to a competitive process might be of help, but it still won’t solve the government’s money spending problem.

In an article for the Mises Institute, Ryan McMaken makes the case that government is never able to allocate tax money efficiently.

He justifies his argument by claiming that once money is taken from an owner through taxation, the coercive nature of the transaction keeps those allocating it from learning just how valuable roads, law enforcement, and even public education truly are to those paying for them. He also argues that, when government spending is not limited by tax revenues alone, government officials have an endless source of revenue, either in the form of cheap money coming from a central bank or a federal government grant. And that alone is enough incentive to keep government employees from acting responsibly.

Without a free and unrestricted market in business transactions between service providers and consumers, transactions are imposed by the government, not sought after by the individual. Therefore, government cannot assess just how much those services are worth if they do not have a way to gauge demand.

If lawmakers and officials want what’s best for Pennsylvania’s children and their taxpaying parents, the only way to give them what they need—and want—is to remove perverse incentives from the equation, allowing parents to act on their ability to choose what’s best, and most valuable, to their children.

City Uses Pot Taxes to Help the Homeless

in Business and Economy, Drugs, Economic Liberty, Liberator Online, Personal Liberty, Taxes by Advocates HQ Comments are off

City Uses Pot Taxes to Help the Homeless

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Drug legalization continues to be an important topic. And as local governments look to marijuana taxes as a reliable way to boost their revenue, more Americans now see a greater number of practical reasons to lobby their states to liberate access to cannabis and other prohibited substances.

HomelessIn Colorado, where sales and consumption of recreational marijuana is legal, legalization of pot helped to boost the economy, injecting about $2 million into the local economy during the first month of legalization alone. Over time, the flood of cash coming from pot sales also helped the state’s education system. Now, the Colorado city of Aurora is also putting the legal cannabis money to what many believe to be a top priority project.

According to the Huffington Post, Aurora has recently announced that it will be allocating $1.5 million in recreational marijuana tax revenue for programs that focus on the city’s homeless population.

Due to this program, a local nonprofit group known as the Colfax Community Network should receive $200,000 from this special fund, while other organizations will be provided with vans to be used for homeless outreach. All paid by taxes tied to marijuana sales.

Toward the end of the year, the city of Aurora is projected to raise $5.4 million in marijuana tax revenue, a figure that could prompt legislators across the country to take the idea of the legalization of recreational marijuana seriously.

But what about other recreational drugs?

In March of 2016, a group of 22 top medical experts called for the decriminalization of all nonviolent drug use and possession. According to the group of doctors brought together by Johns Hopkins University and The Lancet, the global war on drugs was and still is a failure. Instead of maintaining these failed policies in place, these experts urged countries to “move gradually toward regulated drug markets and apply the scientific method to their assessment.”

Mentioning torture, abuse, and a dramatic downward change in life expectancy in Mexico since the country’s government decided to militarize its response to the drug trade in 2006, these doctors also cited use of incarceration as a drug control measure, which has destroyed the lives of many nonviolent drug users. Resorting to incarceration as opposed to treatment, these experts concluded, is the “biggest contribution” to the HIV and Hepatitis C epidemics among drug users.

When discussing domestic policy, the same group also concluded that prohibitionist laws in the United States have contributed to “stark racial disparities” when it comes to drug law enforcement.

While the debate surrounding drug use and commerce may naturally lead to a taxation debate, current laws keeping consumers from having access to their drug of choice continue to hurt more than help. Especially in poor areas of the country.

As libertarians all know, the free trade of goods and services is all consumers need to have access to so they may prosper and self-regulate, but if the pot taxation argument helps us bring more drug warriors to our side, we shouldn’t be ashamed of using it.

The damage done by the drug war calls for a drastic change.

How will ending the income tax help the poor?

in Ask Dr. Ruwart, Economic Liberty, Liberator Online, Taxes by Mary Ruwart Comments are off

How will ending the income tax help the poor?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Question:

I was unable to persuade a liberal friend that the income tax is evil because it is essentially forced labor through coercion, or that we could largely pay for the elimination of the income tax simply by halting our overseas empire (it seemed best to use a liberal priority in this instance). He maintained that eliminating the income tax would benefit only the wealthy. Could you help me show that eliminating the income tax is in everyone’s best interest?

TaxesAnswer:

Ultimately, the poor are hurt most by income taxes and government spending of any kind.

When government spends, it must tax or run a deficit. Both harm the poor. Deficit spending results in inflation. People on a fixed income, low income, or no income at all are hurt most by inflation. The little money that they have buys even less than before.

When government taxes middle or upper income individuals, money is diverted from consumer spending, spending which otherwise would create jobs that might lift some of the poor out of poverty.

Instead, the tax dollars go to government spending, which delivers half the service at twice the price of the private sector. Gross domestic product (GDP), a measure of wealth creation, goes down as government spending goes up (for details, see Chapter 12 of my book, “Healing Our World,” available as a free download [1992 edition] at www.ruwart.com or [greatly expanded and footnoted 2003 edition] for purchase from The Advocates).

Less wealth creation means that goods and services are more expensive than they otherwise would be. The poor are hurt the most when prices rise or do not fall as they otherwise would.

Thus, when government spends, GDP falls and inflation grows, middle and high income individuals cut back on discretionary spending, like vacations; the poor, however, must cut back on necessities, such as food, safe housing, and preventative medicine.

On the other hand, when government spending slows, inflation slows too and jobs increase. Some of the poor move into the workforce and become more affluent.

Income taxes are bad for everyone, but the poor are hurt the most. The hidden negatives are often overlooked, and those who are trying to help the poor often hurt them out of ignorance.

LA County Wants to Spend $425 Million Just to Connect Bike Paths (Not Build Them)

in Economic Liberty, Liberator Online, News You Can Use, Taxes by Alice Salles Comments are off

LA County Wants to Spend $425 Million Just to Connect Bike Paths (Not Build Them)

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

In November, Los Angeles County residents will be asked to vote on a new half-cent sales tax increase that would add $120 billion to the county’s public transit fund. The hike would extend the current sales tax for 18 years and raise its rate for four decades. Just the type of tax hike Californians do not need right now.

bikepathlaWhile the proposal was met with enthusiasm by the LA River Revitalization Corporation, a group that hopes to see an “unbroken 51-mile river spine, giving Los Angeles a ‘linear central park,’” the idea of using $425 million of that money to simply connect existing bicycle paths and provide access to the river—which is often mocked over the absence of water—is somewhat hard to process, even for some of the most pro-big government members of California’s media.

While the goal of the proposal is to use the $120 billion to double LA’s existing rail network, LA Weekly focused on the proposal’s goal of linking the bike paths and questioned county officials, asking whether these bike paths would “be paved with gold,” “[l]ined with tuxedo-wearing attendants serving riders hot cocoa,” or perhaps “speakers carefully hidden behind the shrubbery” will be made to play soft jazz throughout the day and that’s why the plan is so expensive.

In an official statement, Metro spokeswoman Pauletta Tonilas responded to the concerns claiming that since the LA river is “constrained by urban development,” and its roads, freeways, and rail provide a great deal of over-crossings, “bike path requires heavy civil construction.”

According to Tonilas, a complete “LA River Bike Path” will function “as the backbone of biking and walking infrastructure for densest parts of” the county.

Even bicycle activists like Joe Linton, who serves as the editor of StreetsblogLA, believe that the county is spending too much on the project. After all, LA Weekly reports, the goal is to “connect the existing paths,” not build new ones.

According to research from 2013, bike paths cost an average $133,000 per mile. The most costly paths can cost about $537,000 per mile. With those figures in mind, LA Weekly claims that the construction of an entirely new, 51-mile bike path should cost Angelenos anything between $7 million and $27 million. So why is the proposal’s estimated cost so high?

While the answer to that question may not be that easy to answer, this is not the first time we hear about bike path proposals carrying hefty price tags. In 2012, New York Governor Andrew Cuomo planned to spend $400 million on a 3-mile bike lane that would have realistically cost about $40 million.

At the federal level, the US government is often targeted by its own watchdog agency, the Government Accountability Office, for wasting billions in improper payments. In 2008 alone, GAO reports, the federal government wasted $72 billion on improper payments. While this particular report is associated with a series of agencies and doesn’t touch on transportation expenditure, it’s a great example of how easy it is for governments to misuse taxpayer money.

In an article for Heritage Foundation, Brian M. Riedl provides us with 50 examples of government waste. And while bike paths haven’t made the list then, it would be incredible to see the overblown expenses tied to the LA County’s bike bath plan getting audited. But first, Angelenos must agree with the proposal in the November ballot.

What House of Cards Gets (Very) Wrong

in Economic Liberty, Liberator Online, News You Can Use, Taxes, Trade & Tarrifs by Alice Salles Comments are off

What House of Cards Gets (Very) Wrong

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Sandy Ikeda, a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism, wrote about why everyone’s favorite TV show is wrong on its portrayal of an economic crisis. In his article for the Foundation for Economic Education, Ikeda argues that, while House of Cards is a major hit among political animals, whether they are progressive, conservative, or libertarian, its portrayal of welfare policies and shortages is extremely unrealistically.

Gas CrisisIn the third season of House of Cards, ficticious president Frank Underwood proposed a major policy program known as “America Works,” a policy that intended to “create” millions of jobs. Despite the superhuman goals tied to the policy, the real-world consequences of such endeavor were never even questioned, leaving a lot to the imagination.

But as Americans binge-watch season four, Ikeda points out to another faulty portrayal of public policy and its consequences. This time around, the show’s writers failed to grasp what a gas crisis actually looks like.

During the fourth season, the show introduces the audience to Underwood’s America, where an ongoing oil crisis threatens Underwood’s popularity among voters. The audience is told to believe that gas prices have soared, nearing the $7 a gallon mark. Yet any “astute first-year econ student” will tell you that this is very unlikely, at least in a country in which price controls haven’t been enacted—yet.

According to Ikeda, if buyers and sellers are free to adjust prices, gas stations all selling gas for $7 a gallon is a fabrication. “In the absence of price controls,” Ikeda writes, “the quantity demanded and supplied will tend to be equal.” That means that markets won’t have any unexpected inventory accumulation, since most of the oil will be sold, but it will also suffer no shortages, since consumers who are scared by the high prices will simply walk away, empty-handed.

To Ikeda, the scenes depicting long lines of angry drivers waiting at gas stations while these same stations are shown running out of gas are completely unlikely to occur in a real world scenario.

Ikeda adds that, the only thing that could actually cause America to experience something similar is the implementation of a price ceiling, making it illegal for gas stations to sell gas above a certain price.

In the 1970s, the Organization of the Petroleum Exporting Countries (OPEC) flexed their monopolistic muscle by pushing oil prices up dramatically. The long lines and rationing in America that followed OPEC’s actions weren’t caused by the artificial price increase. Instead, price control policies that affected gasoline and diesel fuel prices led to the consequences often tied to what we now call the “oil crisis.” Many ignore the fact that President Richard Nixon had imposed wage and price controls on the American economy prior to the incident, and what followed was chronic shortage everywhere, not only at the pump.

While Underwood’s line about the government having “all the men with guns” may be of great inspiration to liberty advocates everywhere, the show’s ignorant remarks on economics may disappoint some viewers.

Why didn’t Netflix use an economic consultant?

White House Sacks the Treasury in the Name of Corporate Welfare

in Economic Liberty, Healthcare, Liberator Online, News You Can Use, Taxes by Alice Salles Comments are off

White House Sacks the Treasury in the Name of Corporate Welfare

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Friday, one day before the President’s day holiday weekend, the Barack Obama Administration announced that $7.7 billion of taxpayer dollars would be allocated to Affordable Care Act insurers through the law’s reinsurance program.

From the Americans for Tax Reform website:

“For 2015 Obamacare reinsurance, the administration will pay out $6 billion raised from a fee on private health insurance and an additional $1.7 billion that under federal law belongs to the Treasury department.”

Seal According to pro-taxpayer organization, at least $1.7 billion of the $7.7 being used to cover insurers is being funneled illegally.

Doug Badger of the Galen Institute explains that ACA’s reinsurance program works by silently taxing every individual in America with health insurance. In 2015 and 2016, each individual with insurance is being allegedly taxed a total of $107. According to Badger, the program is designed to “prop up insurers that have agreed to sell Obamacare policies in the individual market.”

While the administration continues to claim that ACA is working, insurers that participate are losing money. But since the reinsurance program exists to cover the losses of the insurers, the administration seems to think keeping corporations happy with the deal is more important than following the law.

With the failure of the system, and with a growing number of consumers referring to alternative methods to have access to care, the administration is having to get creative.

According to the New York Post, not one dollar out of the $7.7 billion being promised to insurers should be taken from the Treasury under ACA law.

From the New York Post:

“The law states a fixed share ‘shall be deposited into the general fund of the Treasury of the United States and may not be used’ to offset insurance companies’ losses.

But the administration gave all of it to the insurance companies last year, and got away with that heist. So now they’re trying it again.”

While the administration projected it would be raising $12 billion for the ACA reinsurance program in 2014, it was $2 billion short. In order to handle the situation, the administration decided to keep the money from the Treasury, using it instead to hand it over to the participating companies.

The administration isn’t a stranger to this type of move. According to the House Energy and Commerce Committee, at least $8.5 billion in taxpayer money has already been illegally funneled to ACA’s corporate welfare programs.

Another initiative designed to shield insurers enshrined in ACA also seeks to secure the investment of insurers. The initiative is known as the Risk Corridor program, and it has also been tied to scandals in the past.

In 2014, insurers requested $2.87 billion in “risk corridors” payments, but the administration only offered 12.6 percent of that value.

The risk corridor program works by redistributing funds from insurers that make money with the Obamacare exchange to insurers that don’t. Not knowing how sick their customers were going to be due to the new healthcare law and its mandates, insurers were not being able to set premiums realistically, making it hard for companies to turn a profit.

Despite falling short on the risk corridor payments, the administration decided to bail out insurers that weren’t making money off the exchanges last year. ACA chief Andy Slavitt, who’s also the former Vice-President for United Health, made the announcement in December of 2015, saying the federal government was going to bail out insurers and offer them the amount they had previously asked. Later, however, Congress blocked the $2.5 billion “risk corridor” payment. The effort was championed by several conservative and libertarian organizations that came together to urge Congress to act.

If nothing is done this time around, taxpayers will have to foot the bill and cover the $7.7 billion the administration has vowed

New Jersey’s Takeover of Camden Proves Freedom is Better Than Taxpayer-Backed Revitalization Projects

in Economic Liberty, Liberator Online, News You Can Use, Personal Liberty, Taxes by Alice Salles Comments are off

New Jersey’s Takeover of Camden Proves Freedom is Better Than Taxpayer-Backed Revitalization Projects

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Governor Chris Christie has recently announced that the state will take control of Atlantic City’s finances. As the city’s huge debt looms over its residents and the state vows to take over, critics and experts take a closer look at a previous major takeover of the city of Camden. And since many argue that state intervention ended up failing some of Camden’s most vulnerable residents, the promise of a better Atlantic City after intervention seems somewhat unrealistic.

In 2002, the state of New Jersey poured millions of taxpayer dollars into one of the largest takeover projects in US history. At least one law school, an aquarium, and a hospital were updated. But despite the taxpayer-backed incentives, the lives of residents did not improve. Instead, poverty and crime rates in the city remain high.

Camden

Despite the interventionist failures since 2002, the state announced in 2013 that it had decided to take over the education in Camden. As you will see, the results were equally disappointing.

According to a report from 2009, the initial revitalization campaign in the city counted with $175 million in bonds and loans and a one-time $7.5 million appropriation from the state budget. Shortly after, the then-Governor Jim McGreevey appointed a chief operating officer to take over the local government and the school board. The plan was to create jobs, bring in new businesses, fix the schools and the sewers, and demolish unsafe vacant businesses.

But as the takeover came to an end in 2010, Camden remained one of the most dangerous cities in New Jersey. And despite the state’s repeating efforts to reform the education system in the city, Camden school districts remain problematic.

The New Jersey government has been responsible for running the Paterson, Newark, and Jersey City school districts for more than 20 years. In 2013, it took over Camden’s as well. During the first years under state control, Camden failed to meet performance requirements in at least five areas.

While Paterson, Newark, and Jersey City report that their graduation rates had improved, local educational leaders claim that the improvement is due to the work members of the community have been doing in partnership with educational groups.

According to Paterson Education Fund’s executive director Rosie Grant, the state takeover meant little to the community.

“The gains that we have made,” she told The Record, “have been for the most part despite the state takeover.” Instead, Grant believes that the city’s decision to break the region’s largest high schools to form smaller academies is what made Paterson great.

But not all is lost in Camden.

When it comes to education, the real revolution arrived in the form of school choice.

According to a 2015 video by Jim Epstein, school choice gave local families in Camden the ability to choose. Instead of relying solely on state-run schools that continue to fail Camden’s children to this day, the implementation of charter schools has given residents the opportunity to enroll their children in institutions where children actually learn, despite their economic background.

If the state’s intervention in Camden has anything to teach other cities across the country is that pouring taxpayer money into an issue won’t make it better. Boosting choice—and freedom—on the other hand, usually works.

If the current administration is serious about saving Atlantic City, it will avoid pouring money into the problems the city is facing. Opening its doors for businesses and competition, however, may just do the trick.

Aluminum Industry Wants Tax Deal, but Nobody Wants to Cut the Red Tape

in Economic Liberty, Economics, Liberator Online, News You Can Use, Taxes by Alice Salles Comments are off

Aluminum Industry Wants Tax Deal, but Nobody Wants to Cut the Red Tape

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Many think of crony capitalism as the source of all problems we face as a nation. They are not entirely wrong.

Take the domestic aluminum industry for instance. Despite the taxpayer investment, producers are losing their share of the market. Without freedom to compete, members of the industry take part in political games, using their influence with state governments and Washington politicians to beg for privileges that no other aluminum producers enjoy. The result? Major trouble for the consumer, employer, and worker.

Aluminum

In America, there are three companies that produce primary aluminum. Alcoa is the largest producer, operating multiple primary plants in New York, Washington, Indiana, and Texas.

In early November 2015, Alcoa announced that it would have to permanently close its Massena West smelter in New York. At the time, town supervisor Joe Gray said that the jobs Alcoa would take away if the smelter closed would be “next to impossible to replace,” considering the aluminum giant has been the major employer in the region for quite some time.

By late November, however, a deal was reached and the upstate New York smelting plant was saved. What happened? New York Governor Andrew Cuomo unveiled a $69 million incentive package that benefited Alcoa. At least 600 jobs were saved.

The plan was backed by Cuomo and Sen. Charles Schumer (D-NY), who made the announcement at the Alcoa plant in Massena. As union bosses celebrated the special relationship between the New York government and industry leaders, the incentives weren’t widely criticized, mainly because tax incentives aren’t seen as handouts by many. Instead, people often believe that tax incentives are good.

During the announcement event, Cuomo claimed that the incentives plan “is the state’s way of stepping up.” Yet none of those present were able to criticize the existing red tape that makes it so hard for companies to function in America in the first place.

If the cost of doing business in the country was not an obstacle, more competitors would fill up the gap, and cheap aluminum coming from China would have a hard time staying relevant. Instead of working to remove red tape and help all entrepreneurs and existing businesses to flourish, the state decided to give one group access to privileges that others in the same industry simply do not enjoy.

But as Alcoa enjoys the $30 million it got from the New York incentive package, things continue to look bad for the aluminum producers and its employees. Except now, the issue is not New York, it’s Indiana.

According to IndyStar.com, southwestern Indiana residents are now concerned that the Alcoa smelter in their state will shut down, shedding 600 jobs in the process. Early in January 2016, Alcoa announced it would be closing its Warrick Operations smelter by the end of March. This is a “major economic event,” said Warrick County Chamber of Commerce director Shari Sherman. But to Alcoa, the shutdown makes sense because the Indiana facility is not “competitive.” Meaning the cost of keeping it open is a burden.

The facility has been operating in Indiana for the past 55 years. As the smelter closes, multiple families brace for the impact. As workers struggle, so do companies that are finding it much harder to compete. The issue? They have a hard time covering the costs of doing business in America.

If workers and consumers are serious about seeing fewer job losses in their states and more prosperity, they’d be urging lawmakers to cut the red tape, not backroom deals.

Use “Venture Buyers” to Show the Hidden Dangers of Government Spending

in Liberator Online, Monetary Policy, One Minute Liberty Tip, Taxes by Sharon Harris Comments are off

Use “Venture Buyers” to Show the Hidden Dangers of Government Spending

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

You’re probably familiar with venture capitalists. But what about “venture buyers”?

I encountered that term this week in an excellent short article entitled “Federal Spending: Now for the Really Bad News” by Forbes Political Economy Editor John Tamny.

“Venture buyers” is a nifty phrase and concept that can be very helpful when you’re trying to persuade skeptics that government spending has terrible consequences.

Traian_vuia_flying_machine

In his article Tamny points out that government spending is not just ridiculously wasteful, bad as that is. It also deprives the people who earned that money of the ability to spend it themselves, on the things they consider most important. And this not only deprives them, it harms the rest of us — in unexpected ways.
One of those ways is that “venture buyers” don’t get to spend their money on new, innovative, risky, expensive and important items.
What are “venture buyers?”

“We sometimes hear them described as ‘first adopters,” Tamny explains. “These are the people with the means to experiment on what is new, frequently expensive, and possibly even life-threatening. Their buying habits tell businesses what consumers want, how they want it, and [by] doing that signal to entrepreneurs where the profits will be if they can turn what is frequently a rare luxury into a common good. But with government so aggressively spending the resources we’ve created… there’s much less ‘easy money’ in our pockets that would reveal our preferences for what is [currently] expensive and largely unknown.”

Venture buyers, then, are the people who are the first to buy new, promising, risky and costly goods and services, try them out, and bring them to the attention of the rest of us. As we watch them using and playing with their new products and toys and benefiting from exciting new services, the rest of us start clamoring for them as well. And businesses are motivated to discover how to quickly lower prices so the rest of us can enjoy them, too.
Venture buyers thus play a huge role in bringing life-changing new products and services to
society.

Think of all the things we commonly use today that began life as expensive and/or startlingly different products only used by those on the bleeding edge. Cars were once crazily expensive and dangerous, as were airplanes. Portable phones were luxuries for the rich. Home computers, VHS players, fax machines, Uber, Airbnb… it’s an endless list.

And an important note: it’s not just fun and seemingly frivolous products that venture buyers popularize. Take health and medicine.

Writes Tamny:

” [C]onsider the health implications of our free spending government. … Thinking about cancer, how much experimentation has never taken place over the last 80 years thanks to government spending having greatly shrunk the total availability of resources necessary for it? Was a cure (or many cures) lost as politicians falsely promised growth through spending on the proverbial bridges, grants, and yes, medical studies to nowhere?”

The more government spends, the less venture buyers have to spend. And that means far less experimenting with new and innovative products and services — including critical and life-saving ones. And that in turn means businesses and entrepreneurs receive far less information about society’s greatest needs and desires — and the best ways to fulfill them.

Of course, we never see the inventions, the cures, the innovations, the services that don’t come into being. We don’t know what we are missing. But we can understand that we are far poorer because of it.

This is a powerful and persuasive indictment of government spending. (There are many others, of course.) I love the catchy, intriguing phrase “venture buyers” and how using it helps explain the little-understood but crucial role early adopters play in raising living standards for everyone.
Share it, and open minds to overlooked dangers of massive government spending.

Do Libertarian Ideas Go Too Far?

in Ask Dr. Ruwart, Communicating Liberty, Economic Liberty, Liberator Online, Libertarianism, Taxes by Mary Ruwart Comments are off

Do Libertarian Ideas Go Too Far?

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Question:

Ron SwansonI am coming around to libertarian ideas, but so many libertarian policies, while moving in the right direction, seem to go way too far. For instance, the idea of no taxation, only user fees, seems great. But it seems that some taxation would be necessary to pay government workers, maintain ambassadors and embassies to other nations, host state visits from other nations, and (a necessary evil) pay lawyers to defend the government against lawsuits, as well as a host of other little things that there couldn’t be a user fee for. Can zero taxation really stand up to reason?

Answer:

Yes!

Government workers would be paid by those individuals or groups that made their employment necessary. Lawyers defending the government in lawsuits, for example, would be paid for by the guilty party. Since government officials would not enjoy sovereign immunity in a libertarian society, they could be liable for attorney fees and damages for any wrongdoing. In other answers posted on the Web site, I’ve detailed the mechanism by which restitution could be made.

Since a libertarian government would not be restricting trade between nations, establishing embargoes, setting tariffs, handing out taxpayer guaranteed loans, etc., our top officials would not be wining and dining dignitaries from other countries as they do today. Naturally, heads of state from other countries could visit the U.S. at their own expense. Without the ability to pick the U.S. taxpayer’s pocket, however, few would bother.

If embassies were maintained in foreign nations, they would be supported by fees from travelers or others who might utilize their services.

Today, those who are too poor to travel pay taxes to support services for people who can afford to see the world. Taxes are one way in which government makes the poor poorer and the rich richer.


Editor’s Note: As former Advocates President Sharon Harris notes in this article from a past edition of the Liberator Online, making the case for ending the income tax is not a difficult task. One thing to consider when discussing libertarian ideas is the concept of the Overton window, which can be raised with a little help from this post from that same issue.

 

Surprise! The IRS Audited Campaign Donors

in Liberator Online, News You Can Use, Taxes by Jackson Jones Comments are off

Surprise! The IRS Audited Campaign Donors

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

By now, just about everyone knows the Internal Revenue Service targeted Tea Party and other right-leaning nonprofit groups because of their ideological beliefs. But the latest wrinkle in the story, one that hasn’t been widely reported, is the IRS audited donors to right-leaning nonprofits based on the reports they submitted.

IRSAccording to documents obtained by Judicial Watch, in 2010, then-Senate Finance Committee Chair Max Baucus, D-MT, urged the IRS to “survey major 501(c)(4), (c)(5) and (c)(6) organizations .” The IRS complied, in 2011.

“In 2010, after receiving Baucus’s letter, the IRS considered the issue of auditing donors to 501(c)(4) organizations, alleging that a 35 percent gift tax would be due on donations in excess of $13,000. The documents show that the IRS wanted to cross-check donor lists from 501(c)(4) organizations against gift tax filings and commence audits against taxpayers based on this information,” Judicial Watch explained. “A gift tax on contributions to 501(c)(4)’s was considered by most to be a dead letter since the IRS had never enforced the rule after the Supreme Court ruled that such taxes violated the First Amendment. The documents show that the IRS had not enforced the gift tax since 1982.”

“But then, in February 2011, at least five donors of an unnamed organization were audited,” Judicial Watch adds.

One of the groups specifically mentioned as targets by the IRS was Crossroads GPS, which was founded by Karl Rove. The U.S. Chamber of Commerce was also mentioned as an organization that could be subject to scrutiny. Lois Lerner, the disgraced former IRS official who became the subject of congressional inquiries into the IRS’s targeting of Tea Party groups, approved of the gift tax auditing scheme.

“These documents that we had to force out of the IRS prove that the agency used donor lists to audit supporters of organizations engaged in First Amendment-protected lawful political speech,” Tom Fitton, president of Judicial Watch, said in a press release. “And the snarky comments about the U.S. Chamber of Commerce and the obsession with Karl Rove’s Crossroads GPS show that the IRS was targeting critics of the Obama administration.”

“President Obama may want to continue to lie about his IRS scandal,” he said. “These documents tell the truth – his IRS hated conservatives and was willing to illegally tax and audit citizens to shut down opposition to Barack Obama’s policies and reelection.”

The IRS is, perhaps, the most corrupt agency in the federal government – and that’s saying something. The Tea Party scandal and the documents uncovered by Judicial Watch only skim the surface of recent problems. If there’s one federal agency that deserves to be torn apart, brick-by-brick, it’s this one, folks.

Your Favorite Distilled Beverage May Get a Little Cheaper

in Economic Liberty, Liberator Online, News You Can Use, Taxes by Jackson Jones Comments are off

Your Favorite Distilled Beverage May Get a Little Cheaper

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

A bipartisan bill was introduced recently that would lower the per gallon excise tax on distilled drinks, including whiskey and rum.

The Distillery Innovation and Excise Tax Reform Act, introduced by Rep. Todd Young (R-Ind.), would relieve distilleries, especially newer ones, of some of the burdens they face when bringing products to market.

Currently, distilled drinks are taxed at $13.50 per proof gallon. Young’s bill seeks to lower the tax to $2.70 per proof gallon on the first 100,000 gallons produced by a distillery and $9 per proof thereafter.

Barrel

Rep. John Yarmuth (R-Ky.) has cosponsored the bill, which was referred to the House Ways and Means Committee on May 21. Rep. Paul Ryan (R-Wis.) chairs the powerful tax-writing committee.

“All around southern Indiana, many new craft distilleries are popping up, creating jobs and adding to the tax base,” Young said in a release on Wednesday. “But there’s a lot of red tape involved in getting a new distillery off the ground, and this bill helps reduce that burden. In addition, we have many large, established distilleries in our region of the country, and this bill will help them, too.”

The bill has support from the Distilled Spirits Council of the United States (DISCUS) and the American Craft Spirits Association (ACSA). “It is significant that the distillers of all sizes are united behind this important hospitality industry legislation,” Peter Cressy, CEO of DISCUS, said in a joint release with ACSA. “We thank the sponsors for recognizing the economic impact passage of this bill will have for our industry.”

Sen. Gary Peters (D-Mich.) introduced a companion bill in the Senate. Sens. Dan Sullivan (R-Alaska) and Kirsten Gillibrand (D-N.Y.) have signed on as cosponsors of the bill. Although the members represent states with a number of distilleries, the popularity of craft spirits has risen significantly and virtually every state now has distillery.

For the producers, the savings can mean expansion of their operations and more jobs for local communities.

“I started my distillery eight years ago to support Michigan jobs and prove that high quality spirits could be made right here in Michigan,” Rifino Valentine, founder of Valentine Distilling, said in a press release from Peters’ office. “While I’m proud to say we are expanding our facility, so many small distilleries are at a unique disadvantage as a result of the high federal excise tax.”

The bill may be common sense, but similar efforts to lower the excise tax on distilled spirits didn’t move out of committee in the previous Congress.

Free the Hops: Sin Taxes Drive Up the Cost of Beer

in Economic Liberty, Liberator Online, News You Can Use, Personal Liberty, Taxes by Jackson Jones Comments are off

Free the Hops: Sin Taxes Drive Up the Cost of Beer

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Your favorite frothy adult beverage would be a little cheaper if sin taxes were not part of the equation, according to a new report from the Tax Foundation, a nonpartisan policy research center.

Each state taxes beer by the gallon, with the costs ranging from just 2 cents in Wyoming to $1.29 in Tennessee.

“State and local governments use a variety of formulas to tax beer,” Scott Drenkard writes at the Tax Foundation. “The rates can include fixed per-volume taxes; wholesale taxes that are often a percentage of a product’s wholesale price; distributor taxes (sometimes structured as license fees as a percentage of revenues); case or bottle fees (which can vary based on size of container); and additional sales taxes (note that this measure does not include general sales tax, only those in excess of the general rate).”

There is a trend to be found in the rates, as well. States in the Southeast tend to have the highest beer taxes. Seven of the top 10 states with the highest beer taxes are located in the area of the country known as the “Bible belt.” Northeastern states tend to have lower beer taxes.

Beer Tax

Beer Tax

The Beer Institute estimates that consumers pay $5.6 billion in federal and state excise taxes annually. “Surprisingly, taxes are the single most expensive ingredient in beer,” the beer centric think tank notes, “costing more than the labor and raw materials combined.”

Although the Tax Foundation report does not touch on the cost of federal and state regulation of beer, which adds to the cost of production, particular of micro-breweries and small craft beer producers.

In a June 2014 editorial at US News, Matthew Mitchell and Christopher Koopman, both research fellows at the Mercatus Center, explained that the excessive regulations, which are just another form of taxation, create burdensome barrier to entry for small brewers looking to take their product to market.

“Once in business, brewers face more hurdles. Among the least efficient regulations are the ‘franchise laws’ that restrict their ability to sell beer directly to consumers, instead mandating that they sell through distributors. These rules can even dictate how brewers may contract with distributors,” wrote Mitchell and Koopman. “For example, some grant distributors exclusive territories, and others limit the ability of a brewer to choose to work with someone else. A recent survey found that in most cases, these rules make consumers worse off.”

Beer taxes may be an easy target for lawmakers looking to raise revenue for big government programs and regulation may be a convenient way to protect big beer brewers, but these policies are keeping Americans from the frothy goodness that is their favorite brew. Raise a glass and tell your lawmakers to “free the hops!”

Supposedly Sick Coast Guard Members Took Taxpayer-Funded Trips to Vacation Hot Spots

in Economic Liberty, Issues, Liberator Online, News You Can Use, Taxes by Jackson Jones Comments are off

Supposedly Sick Coast Guard Members Took Taxpayer-Funded Trips to Vacation Hot Spots

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Every fall, Sen. Tom Coburn (R-Okla.) publishes an annual report, known as the Wastebook, highlighting dozens of the worst examples of wasteful spending by federal agencies.

Some of the items in the report may sound unbelievable, but this is the federal government, and one should never underestimate bureaucrats with tax dollars at their disposal. More ridiculous examples from the 2014 version of the report include the $387,000 the National Institutes of Health spent on Swedish massages for rabbits (yes, seriously) and the $200,000 the Department of Agriculture spent to help a New York-based brewer build a beer farm.

Coburn, who earned a reputation as a hardcore fiscal hawk, resigned from Congress last year after a second cancer diagnosis, leaving a need for transparency in federal spending. Sen. Rand Paul (R-Ky.) is stepping up to fill the void left by Coburn’s departure.

On Wednesday, Paul rolled out a new feature on his official Senate homepage, dubbed The Waste Report. According to a press statement, the periodical report “will identify egregious examples of wasteful spending throughout the U.S. government.”

The inaugural edition of The Waste Report focuses on medical waste, specifically a little-known U.S. Coast Guard program that costs taxpayers $1.2 million each year. The Travel to Obtain Health Care Program pays for Coast Guard members stationed in locations where there are no providers to seek medical care elsewhere. The program is available to members in Alaska, Hawaii, and Puerto Rico, though the latter two account for 7 percent of cases.

The Inspector General (IG) of the Department of Homeland Security released an audit in February detailing the inefficiency and lack of oversight in the Travel to Obtain Health Care Program, which costs taxpayers $1.2 million annually.

“[T]he IG uncovered trips from Alaska to Vail, Colorado; Orlando, FL; Scottsdale, AZ; and Savannah, GA,” Paul’s report notes.

“Though a doctor’s referral is supposed to be required before travel is approved, only twelve percent of records had such notes. “

“In total, 94 percent of all records were missing key elements including travel requests, approval forms, cost estimates, and/or doctor’s notes,” the report continues. “This lack of basic documentation prevented the IG from substantiating whistleblower claims that trips – even to Anchorage – were more for shopping than medical care, while also preventing the IG from affirming the need for accompanying spouses (who also traveled at taxpayer expense) to assist patients.”

The Inspector General made three recommendations aimed at improving accountability and oversight in the program, including greater documentation requirements and training. But as The Waste Report explains, “one should not need special training to know that taxpayer funded medical travel should not be approved without a doctor’s note, especially if that travel is for couples’ trips to vacation hot spots.”

Grover Norquist: The Future Looks Libertarian

in Economic Liberty, Liberator Online, Taxes by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 16 of the Liberator Online. Subscribe here!)

One of America’s most influential Republican leaders says that libertarians are winning big victories, creating new coalitions, and seem to be the wave of the future.

Grover Norquist: The Future Looks LibertarianGrover Norquist is the founder and president of Americans for Tax Reform (ATR). His article “Beyond Rand Paul: The Libertarians Are Coming” at OZY.com begins this way:

“They’re no longer on the fringes. The libertarians are now officially mainstream. Proof? The New York Times Magazine [in its August article " Has the ‘Libertarian Moment’ Finally Arrived?"] cites the popularity of Republican Sen. Rand Paul and opposition to American ‘boots on the ground’ in Syria and Iraq.

“But it’s much more than a moment. It’s the culmination of a powerful narrative building over the past 30 years in American politics. This is a movement — and it doesn’t live or die on the shoulders of one policy or one individual.

“What is notable is that regardless of whether an issue originates from the right or left, the side able to grab the mantle of liberty has advanced against all odds.

“So forget ‘moment.’ Think trend. And consider the once-impossible political shifts that have taken place over the past 30 years. The relevant dividing line is not right versus left or Republican versus Democrat but the expansion of individual liberty versus whatever and whosoever stands in the way.”

Norquist gives four examples of major libertarian policy shifts in recent years: support for freedom of choice in education, gay rights, marijuana legalization, and the right to keep and bear arms.

Concludes Norquist:

“These four radical, unthinkable expansions of individual liberty are not liberal or conservative, Republican or Democrat. All flow from the small ‘l’ libertarian, live and let live, leave us alone, ‘laissez-nous faire’ attitude. Four movements calling for increased individual liberty while their opponents explained — with hundreds if not thousands of years of tradition and history to back them up — that society should have the power to control behavior for the public good.

“One can see other issues that follow this trend. Uber against the taxi regulators. Airbnb. Lyft. Bet and invest on the side advancing liberty.

“A libertarian moment? No. A trend. A long-term trend with no obvious roadblock in sight.”

Libertarian Candidates Pledge: Abolish the Income Tax

in Drugs, Economic Liberty, Elections and Politics, Liberator Online, Libertarian Party, Libertarian Stances on Issues, Libertarianism, Military, Taxes by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 15 of the Liberator Online. Subscribe here!)

Scores of Libertarian Party candidates for federal office have pledged to downsize the Abolish The IRSbloated federal government — in these big and specific ways:

  • Eliminate the federal income tax
  • End the War on Drugs
  • Abolish the NSA
  • Cut military spending by 60%

We’ll be examining those pledges in detail below and in the next few issues, because they show that these bold-sounding proposals are not only possible, but practical and beneficial. (Of course, you can jump ahead and read about all four positions right now.)

First, eliminating the hated federal income tax. The candidates pledge: “If elected, I will sponsor legislation to eliminate the federal income tax, cut federal spending to the 1998 level ($1.65 trillion), and get the IRS off the backs of taxpayers.”

(Yes, that’s right: government has grown so rapidly in recent times that if you cut spending to 1998 levels — the Clinton era of huge government — you could eliminate the federal income tax.)

Here are the benefits of eliminating the income tax, according to the Libertarians:

  • Immediately balances the budget — without raising taxes.
  • Gives back, on average, $11,525 to each American family — every year — that they can invest, save, spend, or give away as they see fit.
  • Pours $1.4 trillion into the productive, private-sector economy, stimulating massive investment in small businesses and creating tens of millions of new private-sector jobs.
  • Stops the devaluation of the dollar and stabilizes prices, preserving American wealth.
  • Forces politicians to eliminate destructive federal programs, regulations, and bureaucracies that do more harm than good. Examples include: stifling business regulations, the prohibition of marijuana, unnecessary foreign wars, and thousands of frivolous projects best left to the private sector (e.g., promoting the Hawaiian Chocolate Festival).
  • Creates a boom in charitable giving. Trillions of dollars back in the hands of American taxpayers enables them to take care of others in need through their churches and private charities, and by giving directly to help friends, family, and community members in need.
  • Eliminates wasteful bookkeeping needed to comply with IRS tax filings and audits, saving Americans 6 billion hours of their precious time and up to $378 billion in accounting costs — every year.
  • Aborts the Democrats’ and Republicans’ plan to add another $5 trillion over the next eight years to the already perilously high $17 trillion federal government debt, sparing future generations from footing a bill they played no part in creating.
  • Frees up billions of dollars for Americans to spend on music, entertainment, crafts, and the arts, enabling talented individuals — now unemployed or working in jobs they don’t like — to do what they love for a living.
  • Forces politicians to eliminate government waste.
  • Stops the growth in the interest due on the federal debt, now at $237 billion per year. This will help minimize this expense if interest rates ever rise, which is likely.
  • Restores America’s reputation as the envy of the world, demonstrating that the American experiment of free, unfettered trade creates prosperity and alleviates poverty. This sets an example for poor countries, helping them rise from hardship to abundance.

 

Click here to read the next article from this issue.

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VIDEO: Remy’s “What are the Chances? (An IRS Love Song)”

in Liberator Online, Taxes by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 12 of the Liberator Online. Subscribe here!)

A new video by the great liberty-minded comic Remy is always a cause for celebration.

Here’s his latest: “What are the Chances? (An IRS Love Song)“.

Remy, decked out handsomely in country music duds, croons a country-flavored ode to the IRS scandal concerning alleged unjust and biased targeting of conservative and free market organizations — and the suspiciously convenient IRS hard-drive crashes and loss of electronic correspondence relevant to the case. Remy’s expressions and voice in the last 30 seconds or so are particularly hilarious.

It’s about two minutes long. Written and performed by Remy, via ReasonTV.

Watch, laugh… then share with friends.

Cost of Government Day: July 6

in Economic Liberty, Liberator Online, Taxes by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 10 of the Liberator Online. Subscribe here!)

While Americans celebrated Independence Day on July 4, we are far from being able to celebrate fiscal independence.

Indeed, according to Americans for Tax Reform (ATR), this year Cost of Government Day fell on… July 6. Ouch!

Cost of Government Day — calculated each year by ATR — marks the point during the year when the average American has finally earned enough income to pay for his or her share of the spending and regulatory burdens imposed by government at the federal, state and local levels.

2014 is the sixth consecutive year that Cost of Government Day arrived in July; prior to President Obama taking office, Cost of Government Day had never fallen after June 27.

All told, the full costs of government amount to a staggering 51 percent of GDP. Workers toil 121 days to pay for government spending alone, and 65 days to pay for regulatory costs. Americans labor in tax slavery 186 days — more than half the year — to pay off the full burden of government.

Some states like Connecticut and New Jersey must work even longer than that to pay for the costs of high spending and taxes in their states. The latest state Cost of Government Day once again occurs in Connecticut, falling on July 26 for 2014. The earliest Cost of Government Day goes to Louisiana, occurring on June 12 this year.

The days worked to pay for federal spending decreased since last year. However, federal regulatory costs have increased since 2013. While Americans worked 65 days to pay for the costs imposed by regulation in 2014, if the regulatory regime grows larger it will almost certainly mean much later Cost of Government Days in the future.

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