Happy Anniversary

Why my in-laws chose to get married on Tax Day I will never understand---although it's nice having a positive to balance out the negatives of today. I'm filing my return electronically and hoping that Gov. Schwarzenegger can find enough money to send me my refund.


Off to a Tea Party in front of the San Jose IRS building so no time today for an essay. I must admit I am feeling a bit odd about protesting. I don't think it's enough just to go wave a sign (mine will say "Liberty--the only stimulus we need")--but for the first time in my life, I think waving the sign is important too. I have done much more than stomp my feet and complain so it's far more than a simply having Tea Tantrum.

Here's some good reading for you to enjoy while I am off putting my body where my mind has been, so to speak.

Taxpayers Get Really Tea-ed Off Investor's Business Daily Editorial

Tax Day becomes Protest Day Glenn H Reynolds WSJ

Tax Injustice Day: Altruism vs. Americanism by Ed Locke

Tax Cuts and the "Trickle Down" Economics Straw Man by Thomas Sowell

Taxes and Prosperity Lost by Walter Williams

A Wage Earner Against the Estate Tax by George Reisman

Politicians Love the Tax Code We Hate by Steven Malanga

And for your viewing pleasure:


(HT Carpe Diem for several of these links.)
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Yesterday was Tax Freedom Day- sort of

What is Tax Freedom Day?

Below is the brief explanation from the Tax Foundation, the organization which calculates it. (A more detailed explanation can be found here.)

How Tax Freedom Day Is Calculated

Tax Freedom Day answers the basic question, "What price is the nation paying for government?" An official government figure for total tax collections is divided by the nation's total income. The answer this year is that taxes will amount to 28.2 percent of our income, and the stretch of 103 days from January 1 to April 13 is 28.2 percent of the year. Income and tax data are then parsed out to the states, yielding 50 state-specific Tax Freedom Days.

This year's Tax Freedom Day comes a little earlier than last few years, but only because of the downturn in the economy. Not all states are equal however. I happen to live in the state with the 4th highest tax rate, so my Tax Freedom Day doesn't come until April 20th.

A more complete view of the tax burden government places on us is the Tax Freedom Day which includes the budget deficit----which is in fact simply a deferred tax burden and should be figured in. With the new deficit projections, we won't stop working for government and start working for ourselves until May 29. This is the latest date for "tax freedom" since similar levels were achieved at the height of WWII. The graph below only goes back to 1967, but the current trend is still impressive.



I found it interesting to note that the above dates are set by counting 103 days from January 1st, including weekends and holidays. If you just count Monday through Friday, the days you actually spend working, we don't starting working for ourselves until May 28th-- or if you include the deficit, not until July 28th!

Another very important aspect of these calculations is that these figures reflect the average tax burden. Since 40% of Americans don't pay income taxes, your individual tax freedom day will come much later. As Ari Fletcher points out, "A very small number of taxpayers -- the 10% of the country that makes more than $92,400 a year -- pay 72.4% of the nation's income taxes." As we approach the day when over 50% of the population do not pay income taxes, we come ever closer to the majority of voters receiving benefits from the government for which they do not pay. Talk about moral hazards!

"A government which robs Peter to pay Paul can always depend on the support of Paul."
-- George Bernard Shaw

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Markets work--Use markets

Another good find by Kendall posted at simply Capitalism: Austrian Economists on the Crisis.

On Bloggingheads.tv, Arnold Kling and Russ Roberts, two economists with approaches heavily influenced by the Austrian School of economics, discuss key contributing factors to the current economic crisis along with the rationale behind many of the responses by government.

I have thoroughly enjoyed Russ Robert and Arnold Kling's contributions to the discussion on EconTalk and elsewhere. Both are informed, appear to be honestly curious and critical, and make attempts to engage the other side in a respectful manner.

This clip has many worthwhile take-home points, but perhaps my favorite is Kling's summary of the various approaches to government's role in the economy. As he put it:

The Chicago School (monetarists) say: "Markets work--use markets."

Keynesians say: "Markets fail--use government."

Economists from George Mason University (heavy Austrian influence) say "Markets fail--use markets."

Pithy, but not quite accurate. First off, monetarists are only partial advocates of the free market. Milton Friedman (and many others) believe in the market for goods and services, but support the government's role in the market for money through Federal Reserve manipulation of the money supply. Some in the Austrian School might say that markets fail, but that is because of how they are defining failure. If "failure" means that mistakes will occur, then all human activities (not just markets) are failures because humans are neither omniscient nor infallible--and never will be. Such a definition equates human life with failure!

I think the following formulation is more accurate and more helpful:

Markets work (as a discovery process.)
Governments fail in markets (by disrupting market discovery.)
Use markets.

None of the above formulations, however, address the other crucial aspect of markets vs. government. Free markets are based on voluntary exchange; government is based on coercion. Not only does government intervention into the market disrupt proper market functioning, but the way that it does so is to violate its primary raison d'etre: the protection of individual rights. One more, and perhaps the primary, reason to "use markets."

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Tyranny vs. The Rule of Law

Great post at simply Capitalism on the current trend of increasing arbitrary use of government power. The author aptly points out that following the "forms of law" is not equivalent to "the rule of law." The essence of tyranny is unrestrained, arbitrary power. In passing a law which unilaterally changes the terms of a contract crosses the line from rule of law into the "rule by men." In so doing, Congress has violated its constitutionally limited mandate.

No Bill of Attainder or ex post facto Law shall be passed.

--Constitution of the United States, Article I, Section 9.3

Government: The ex post facto “Investor”
by Kendall Justiniano


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Blogging is not enough

The daily assaults to our freedoms have become almost overwhelming. My response has been to stay abreast of events as best I can, to study the history and functioning of our banks and the Federal Reserve, and to spend what time I can communicating what I learn to others. I've written to my congressmen---and received back mass-produced form letters, which make it painfully obvious no one actually read what I wrote. But to do nothing is to stand on the track with the train headed toward me. Here are two projects I am supporting to help counter the attacks on capitalism, the only system which will provide us with lasting peace and prosperity.

Speaking Up through Books

Atlas Shrugged is a story of high drama, depicting the consequences of a society that consistently acts on the anti-life premises of altruism and collectivism. One law and regulation at a time progressively denies individuals the fruits of their labor, simultaneously strangling and exploiting the ability of the productive to create wealth and value. The evolving economic dictatorship is both actively and passively enabled by the productive themselves as long as they continue to accept the moral premises which deny a man the right to exist for his own sake.

This story is today writ large. For a chilling example, watch this clip of bankers statements following a meeting with President Obama in which he warned them:

“Be careful how you make those statements, gentlemen. The public isn’t buying that.”
“My administration,” the president added, “is the only thing between you and the pitchforks.”

These are the kind of comments I would expect from a Mafioso, not my country's president--and yet they are completely consistent with the premise that individuals and the businesses they create must purchase from others their right to exist. Our politicians are all too willing to act as the "Public's" henchmen, demanding and accepting sacrifices under the auspices of The Greater Good. Originally written to restrain government intrusion into the private affairs of men, our Constitution has been reinterpreted in ways that severely weaken its ability to protect our inalienable individual rights. The story of Atlas Shrugged can help alert critical thinkers to the dangers we face right now as all three branches of our government steadily increase statist controls of both the socialist and fascist variety.* The trend toward bigger government and greater controls will not reverse until the consequences of the loss of liberty are grasped by the general population and that understanding is clearly communicated to our elected officials.


The second project I would like to showcase is an example of the kind of action which is open to us all.

From what I can tell, the originator took an idea, created a website and a means to collect contributions in order to fund his idea, and now is spreading the ideas of liberty one kit at a time. Here is his mission in his own words:

The Lucidicus Project is an independent educational initiative designed to encourage medical students to think about the foundations of individual rights, and consider what a social system built on the consistent defense of such rights would mean for medicine and healthcare.

Our mission is to provide the Medical Intellectual's Self-Defense Kit to medical students in the United States and around the world. The kit contains books and other resources that define and clarify the meaning of important concepts such as rights and capitalism, and demonstrate how they relate to medicine and healthcare. Every few weeks, we also publish editorials that comment on current issues.

This project exists and grows thanks to the voluntary donations of its supporters. Kits are distributed free to qualified medical students, and there are no membership fees or registration. If the preservation of individual rights is important to you, and if you support the work we do, then please consider contributing to The Lucidicus Project today.

The website also allows contributors to see where their money is going. Beginning with the first recipient in 2005, a brief paragraph introduces each student who has received the kit, dispelling the anonymity which helps preserve a disconnect between our ideas their real-life consequences. Each law and regulation passed that restricts or controls the ability of physicians to offer their best advice and judgment to their private patients (a.k.a. us) acts as a damper on the minds and spirits you see depicted in these bright, young and optimistic faces.

There is much to admire in this project. It's grassroots nature. It's promotion of exposure to ideas. The inclusion of recipients who agree, disagree and are not quite sure. The demonstration of the effectiveness possible by targeting a specific audience with a clearly delimited and focused goal. The example of benevolence in action, both in the tone of its text, as well as through its coordination of voluntary interactions on multiple levels: the contributors, the recipients, and the creators of the materials.

I hope you will help these projects grow.

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*"Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically."--The Concise Encyclopedia of Economics