Tax the Poor

Originally published in the February, 2014 Sturbridge Times Magazine.

The fiscal cliff has come and gone and no doubt will come again.  As always, a deal was done, and the figurative can was kicked down the road.

A constant drumbeat during the run-up to the agreement was that if the exchequer could just put its hands in the pockets of the rich, why nirvana would ensue.  To cliché it, the tax the rich meme went viral.

I’m from a working class family and as resentful of my betters as the next guy.  The pitchfork is by the door and ready at a moments notice to storm the Bastille with me, at least rhetorically.

Certain segments of the wealthy should be fair game.  The ongoing crisis that began in 2008 had its origin in large banking institutions that are “Too Big To Fail” otherwise known as TBTF.  What that means is, as is said, that if they are allowed to sink, they crash civilization. 

In the recent presidential election, neither candidate addressed the too big to fail issue.  The incumbent never said that he had been working on the problem and the solution was in hand, because he hadn’t.  The challenger never suggested it would be a priority of his administration because he would have gargled razor blades rather than touch it had the votes had been counted in his favor.

We had a measure in place that kept the banks from getting TBTF.  It was called Glass-Steagall.  The Glass-Steagall Act of 1933, passed in a previous era of economic turmoil, prohibited Commercial Banks from engaging in the investment business.  What the act meant was succinctly put by economist and author of the book, Currency Wars.  James Rickards.  Rickards wrote on August 27, 2012 for US News and World Report, that under Glass-Steagall, “Banks would be allowed to take deposits and make loans.  Brokers would be allowed to underwrite and sell securities.  But no firm could do both due to conflicts of interest and risks to insured deposits.  From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the panic of 2008.  The law worked exactly as intended.”

If life was not horrible under Glass-Steagall, why was it thrown overboard?  This can be explained by the nature of our party structure.  An anonymous Republican congressional staffer is credited with saying, “In America we have a two-party system.  There is the stupid party, and the evil party.  I am proud to be a member of the stupid party” The man then said, “Periodically, the two parties get together and do something that is both stupid and evil.  This is called bipartisanship.” 

Deep-sixing Glass-Steagall was bipartisanship at its most stupidly evil.  The people had not risen up and called for repeal.  Almost none of them had ever heard of it.  That’s what happens in a nation with a surfeit of laws.  No, it was the world of finance that used their influence to get what they wanted.  When they had sucked as much as they could out of the system, and it all started to go south, they went crying to the government for succor.  The bankers were all for profits staying privatized, but supported a healthy socialism when it came to losses.

So, a class of people did some looting on a vast scale and got away with it.  The cry has gone up, “Make them pay their fair share.”  To paraphrase the old western horse operas, “Taxing is too good for them.”  Unfortunately, they had gamed the system so that apparently the law, if not the force, is with them.  Of course, The SEC and the Department of Justice have been desultory at best in pursuing the wrongdoers.   There have been a few wrist slaps to pretend action, but nothing substantial.  We can’t even sentence them to having to listen non-stop to ABBA piped into jail cells for a few hours.  Okay, that is going overboard.

Taxing a class sounds like a fantastic idea.  Not all the rich were bankers and many provide honest employment for their fellow citizens.  Still, there is an argument that adjusting the tax rates upwards is a good thing.  The problem is, it is no panacea.  Most economists have admitted it can’t work magic. 

Taxing the rich inevitably reaches down into the pockets of the middle-class.  Don’t think so?  I have three letters for you, AMT.  They stand for Alternative Minimum Tax.  I don’t remember if it was Chet Huntley or John Chancellor or another newsreader in the 60s intoning in a serious talking head voice about an injustice.  The evil rich were getting away with murder.

By investing in municipal bonds, wealthy members of society were able to avoid federal taxes on the interest.  In doing this, they received a lower interest rate allowing governmental units to finance schools or bridges or other projects.  That did not matter.  Something had to be done.

What was done was the Alternative Minimum Tax.  In the early 1990s, the law was changed so the AMT could also tax people with lower incomes.  Our compassionate solons, troubled by the injustice, yearly “patch” it so most, but not all, of the middle class escapes.  Nothing permanent is ever done, though.

Adjusting the tax on the rich may raise a few dollars and make us feel good, but won’t solve the problem.  Taxing the middle-class other than the status quo is considered bad form.  What’s left?  Why of course, doing what has been done most consistently throughout history, taxing the poor. 

Unconscionable you say.  Balderdash.  We already tax the poor horribly, and couch it in terms of doing it for their own good.  The cigarette tax falls disproportionately on the shoulders of folks in the lower income bracket.  I have never heard a non-smoking fellow citizen decry this as an injustice though it raises the price of a small pleasure several times.  Taxes on alcohol are not light, but see how far you get proposing an excise that triples the cost of single malt out of compassion for the health of the wealthy.

Throughout history societies sooner or later get around to taxing the poor.  This can be fraught with danger.  Take the French aristocracy who had their heads handed to them.  No, a federal tax on the downtrodden will have to be done shrewdly.

Fortunately, there is a way to do it that, if not loved, will be embraced with enthusiasm.  In this the states have shown the way.  Many of us have stood in line waiting to pay for gas or coffee at a convenience store.  Often there is someone ahead of us taking what seems years to make several choices.  To the more highly evolved, they are wasting time, but to that man or woman, it is a momentous choice.  With each new day, it is the most important decision of their life.  If their choice of scratch ticket or lottery numbers is correct, the drudge job they hate is history, at least till the money runs out.

As a math professor once said, “The lottery is a tax on people who can’t do math.”  It is the shrewdest form of impost ever devised.  Why should not the federals use it to solve our ongoing fiscal crises?  A nightly national Powerball drawing will beat even Dancing With The Stars’ ratings.

Ah well, this may take a while to come to pass.  There are a few tricks left like a trillion dollar platinum coin so why worry.  After all the Congress saw it’s duty, came together and raised taxes on the elite, and while you were feeling good on you too, Mr. and Mrs. Two Earner Family.

Yup. The two percent increase in payroll tax will affect you more than anything that might have been done to Warren Buffett

My countrymen and women, you were like marks for a three-card monte dealer.  While the barker kept yelling beat the rich, he took your money.

Bipartisanship, ya gotta love it.

The Official Long Hill Institute Position on Global Warming

The Long Hill Institute position on Global Warming is, we don't know and you probably don't either.

The general consensus of the American bien pensant class is that it is not merely a thing, but a huge big thing that can only be cured if vast sums of moolah are thrown at it.

The Long Hill Institute has decided that unless we are willing to send a trusted staff member to become a certified climate science, we should not opine too heavily on the subject.  We did not dispatch a staff member to study the subject in depth because no one volunteered and if they did, they would not have been trusted anyway.

As the sky is falling narrative is the preferred media explanation of most everything, we leave you with a couple of alternatives to consult for the balance we cannot provide.

Richard Lindzen is an atmospheric physicist and was the Alfred P. From 1983^[1] until his retirement in 2013, he was Alfred P. Sloan Professor of Meteorology at  a post-secondary school called the Massachusetts Institute of Technology.  We aver he may not be a wild eyed nutcase as most deniers skeptics are characterized.  You can read about his views here.  He has been called a disinformer.

As to the famous 97% consensus, economist David Friedman rebuts that claim.  Is he right?  Up on Long Hill, we were lucky to get to the end of the article as we are on full dilettante mode.  If a respected academic wants to question the statistics, well there are two sides.

Below is the article that explains our position.  It appeared in the October 2009 issue of the Sturbridge Times Magazine.

WHAT DO I KNOW?

I tried to get my wife to take all the family’s money and put it into Mega-bucks tickets. My rationale was that I had always said it would be a cold day in July before I ever won any money. Well we had a lot of cold rainy July days this year. August, however turned out sultry hot.

 Still it is a summer like none that I remember. We have had rainy spells, but little as soggy as this year. The weather occasioned a debate on talk radio. The hosts generally take the position that the low temps prove global warming a hoax. Some callers will argue the other side, a few even positing the cold spell as evidence that warming is true.

 Which side is right? Beats me. My cousin in usually waterlogged Seattle tells me they are experiencing the warmest Spring and Summer ever. Well, that settles, exactly nothing. The only thing that is certain is that true believers on either side of the argument will not be swayed by anything said by the opposition.

Why not? Well why should they? What can one know? Unfortunately, not much in the modern world. The problem was best expressed by George Orwell over 60 year ago,

“Somewhere or other—I think it is in the preface to Saint Joan—Bernard Shaw remarks that we are more gullible and superstitious today than we were in the MiddleAges,and as an example of modern credulity he cites the widespread belief that the earth is round.The average man, says Shaw, can advance not a single reason for thinking that the earth is round. He merely swallows this theory because there is something about it that appeals to the twentieth-century mentality.”

Orwell then went on to prove the point that he himself had no reason to believe the world was round even though he accepted that it was. Of course we who are living now can point to pictures from space and all that, but we have to admit that few of us have made a study of it and are taking it more or less on faith. His closing paragraph sums it up:

 “It will be seen that my reasons for thinking that the earth is round are rather precarious ones. Yet this is an exceptionally elementary piece of information. On most other questions I should have to fall back on the expert much earlier, and would be less able to test his pronouncements.And much the greater part of our knowledge is at this level.It does not rest on reasoning or on experiment, but on authority.And how can it be otherwise, when the range of knowledge is so vast that the expert himself is an ignoramous as soon as he strays away from his own speciality? Most people, if asked to prove that the earth is round, would not even bother to produce the rather weak arguments I have outlined above. They would start off by saying that ’everyone knows’ the earth to be round, and if pressed further,would become angry.In a way Shaw is right. This is a credulous age, and the burden of knowledge which we now have to carry is partly responsible.”

 In truth, with my own unaided reason, I could not have figured out the Earth is round. As a child in elementary school, I did have my primitive sense of wonder piqued when Columbus was explained. Unfortunately, they explained it wrong. Columbus did not come up with something shocking in the world is round idea. Most scholars already believed it. Chris thought the circumference of the globe smaller than it was. He had made a mistake that gave us the New World.

So how does this connect to Global Warming. At a family gathering the various members were talking about the question. I won’t say discussing. Neither side answered the others’ questions other than to state a fact. My techie son asked a relative how they would explain that Mars is heating up at the same rate as the Earth. A statement was made in reply, but no answer. How do people become so doctrinaire over something even experts disagree about?

It is time to quote true experts on human nature. No, not Nietsche or Freud, but Gilbert and Sullivan:

That every boy and every gal

That's born into the world alive

Is either a little Liberal

Or else a little Conservative!

Fal, lal, la!

Yup, we’re born that way. I accept it and am waiting for my application to the Flat Earth Society to be approved. They have my solemn undertaking to agree with their official Global Warming Policy no matter what it is.