Here's another trick. In places where judges are elected, get the local bar
association's rating sheet of candidates and vote them in reverse order. For
example, a judge that all the lawyers like is probably a bad hat.
Good point. I meant to factor it in and forgot to do so. Actually, it is
about 150 million increase...about double. Which means the feds are doing
*much* better than I originally stated...they are only spending 5 times as
much, not 10.
Add in local and state increases and I bet it is back up to 10X overall.
I still remember standing in my hobby shop and listening to the owner
bitch about taxes and how federal, state, and local consumed 35%-37%
Particular emphasis was placed on the amount of hidden taxes placed on
a loaf of bread.
The year was 1947-48 time frame and HST was president..
More than 60 years later, federal, state, and local taxes still
consume 35%-37% of GDP.
11 presidents later, nothing much has changed.
Government is how we choose to regulate our society.
It has a cost which is less than the cost of anarchy.
This reminds me of the old parable that bears repeating (maybe sending
it to Washington??)
Your Taxes Explained!
Suppose that every day, ten men go out for beer and the bill for all
ten comes to $100. If they paid their bill the way we pay our taxes,
it would go something like this:
- The first four men (the poorest) would pay nothing.
- The fifth would pay $1.
- The sixth would pay $3.
- The seventh would pay $7.
- The eighth would pay $12.
- The ninth would pay $18.
- The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the
arrangement, until on day, the owner threw them a curve. "Since you
are all such good customers," he said, "I'm going to reduce the cost
of your daily beer by $20."Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free.
But what about the other six men --- the paying customers? How could
they divide the $20 windfall so that everyone would get his 'fair
share?' They realized that $20 divided by six is $3.33. But if they
subtracted that from everybody's share, then the fifth man and the
sixth man would each end up being paid to drink his beer.So, the bar
owner suggested that it would be fair to reduce each man's bill by
roughly the same amount, and he proceeded to work out the amounts each
should pay. And so:
- The fifth man, like the first four, now paid nothing (100%
- The sixth now paid $2 instead of $3 (33%savings).
- The seventh now pay $5 instead of $7 (28%savings).
- The eighth now paid $9 instead of $12 (25% savings).
- The ninth now paid $14 instead of $18 (22% savings).
- The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings. "I only got a dollar out of the
$20,"declared the sixth man. He pointed to the tenth man," but he got
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar,
too. It's unfair that he got ten times more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back
when I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up. The next night the
tenth man didn't show up for drinks, so the nine sat down and had
beers without him. But when it came time to pay the bill, they
discovered something important. They didn't have enough money between
all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how
our tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up anymore. In fact, they
might start drinking overseas where the atmosphere is somewhat
For those who understand, no explanation is needed. For those who do
not understand, no explanation is possible.
You mean like the 50+% of the Federal budget spent on:
- People refusing to take responsibility to save for their
retirement, medical care, and wellbeing in old age?
- People repeatedly making bad personal choices and then demanding
the everyone else pay to remediate the consequences?
- People having far more children than they can afford and expecting
us all to pay for their cost of care?
The government consumes what it does because FDR and his minions have
repeatedly, aggressively, and blatantly ignored the doctrine of enumerated
powers and arrogated power to the Federal government it does not have.
They do this to support the culture of mooching that elects them.
Tim Daneliuk firstname.lastname@example.org
But the administration is TRYING to reduce the deficit. On Jan 1st, 2011 the
following tax increases will take place:
* Top bracket goes from 35% to 39.6%
* The 25 percent tax bracket will revert to 28 percent;
* The 28 percent bracket will increase to 31 percent
* The 33 percent bracket will increase to 36 percent.
(If you have $50,000 of adjusted gross income, your tax goes up by $1,500
(3%). It's for the children.)
* The special 10 percent bracket is eliminated
* The tax on dividends will rise from 15% to 39.6%
* Capital gains from 15% to 20%
* The estate tax will rise from 0% to (as much as) 45%, perhaps
retroactively for 2010
* The Alternative Minimum Tax will latch in at $45,000 (joint return)
* The state sales tax exemption will no longer be available
* $250 tax credit for teachers expires
* College tuition deduction of $4,000 disappears
* The first $2,400 of unemployment compensation will be taxed (it's not now)
* Standard deduction for property taxes vanishes.
All of the above will take place unless the Democrats in control of the
government vote to reduce taxes or the sun suddenly expires.
Back in those '50s, the top tax bracket was 90% or so and corporate taxes
made up more of the governments income than personal income taxes. In
spite of those tax rates, the economy flourished. Go figure :-).
Intelligence is an experiment that failed - G. B. Shaw
You do realize that very few people paid at that 90% rate don't you? Only
those who happened to suddenly come into wealth without a good tax lawyer
paid that rate. During those years, the rich had numerous loopholes and tax
shelters. Taxing at 90% sounds like a great idea to someone who goes for
the class-envy card, but the reality is that no one with a lick of sense is
going to expend the time and effort required to make that kind of money only
to get 10% of the fruits of their labor.
What the Kennedy tax cuts and later Reagan tax cuts did was make it
worthwhile again for people to succeed and not have to hide their money in
tax shelters that did little for growing the economy.
There is never a situation where having more rounds is a disadvantage
There is another side to this issue that I experienced personally.
During the late 70's, and until Reagan came into office in the early
80's, the amount of money available for investing in entrepreneurial
enterprises - money looking for investments in businesses to take
advantage of tax deductions for things like IDC's (intangible drilling
costs), depletion allowances, and other business ventures - was amazing
Folks in those higher tax brackets would had much rather legitimately
invested in an enterprise, that money which would have otherwise gone to
taxes if they did not.
The net result of that period of high tax rates, coupled with tax code
incentives, was a plentiful supply of money for the entrepreneur and new
businesses, some otherwise too risky (like drilling for oil/gas) without
the choice of being used to pay taxes, or of investing.
Immediately upon Reagan taking office, that money literally vanished
from the table ... I remember around '82, that it was like someone
turning off a faucet.
Like I say, I lived this, intimately and to my detriment as a
businessman ... AAMOF, were it not for that money drying up, my dreamed
of 30 well drilling program in SE Colorado (of which only three
"geologic successes, but hydrocarbon failures" were drilled before this
money dried up) may well have succeeded in finding another Sorrento
Field, making us that much less dependent upon foreign oil, and I would
be typing this from the French Riviera instead of waiting for the rain
to stop so I can go to the shop to finish a chicken coop (of all
things), or not. :)
IOW, it was, prior to Reagan, the HIGHER individual tax rate, and the
tax code, not lower taxes, that indeed drove investment in small business.
Just something for the proponents of Reaganomics to consider ... there
is ALWAYS unintended consequence to the best of intentions.
True, but that money only went to the VERY few small business ventures
that could take advantage of tax deductions that exceeded cash
invested (like oil drilling with depletion allowances that could
exceed costs incurred). They were buying losses to take tax deductions
that exceeded the losses. A rational approach is to encourage
investment in businesses designed to actually make money, not designed
to make tax deductions.
A rational taxing system is one where all decisions are made for
business purposes, not tax purposes - I do not know of any country
with such a rational system, though :-(
Your words, not mine ...
Depletion allowances allow either a statutory or cost method of
sheltering only some of the income from producing wells from _gross_
income derived from the sale of product.
IDC's are those expenses deductible up front from drilling expenses,
whether the drilling was sucessful or not, and not designed as "tax
deductions that exceeded cash invested", but used instead to subsidize
the "risk" involved. Not all ventures carry the same risk ... however,
it is generally accepted that the greater the risk, the greater the reward.
Nonetheless, that was not my point ... the point was a reduction in the
availability of investment funds brought about by a reduction in
selected tax rates, irrespective of the type of venture. The O&G
business was not the only sector to suffer this phenomenon.
However, and sadly, the state of affairs mentioned in the original post
was one of the biggest factors in killing domestic exploration in this
country, to the detriment of our energy policies, and to all to this day.
Yeah, I remember those provisions of the tax code.
I was invited to buy into a sand pit. The money worked as follows:
* As the sand was sold, you took a depletion allowance on the diminishing
resource (the sand).
* Ultimately, you had one big honkin' hole in the ground. You then charged
people to dump stuff in the hole (trees, concrete, etc.). As the hole
filled, you got another depletion allowance as the resource diminished (the
* When the hole filled up, you covered the site with top soil and sold the
ten acres for low-cost housing.
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