Sunday, January 29, 2012

The Un-Taxed Mind – Democratic, Republican or Independent

Who could have believed it? Taxes emerging as a substantive national political issue, and is and will be centerpiece of the Presidential primaries and soon the main campaign. Now on the Republican side the tax issue threads as expectable seem to be lowering tax rates (but across the board for everyone equally because that is the only fair approach) and insuring that capital gains rates are maintained or even reduced because they will create jobs. The Democratic position is to reduce the tax rates for 98% of the public and raise it for millionaires; and to guarantee that everyone pays their fair-share. With such a small distinction you might think that it would be hard for this to be a truly significant and pivotal issue. But don’t misjudge the minor difference, it resonates well within the minds of the public particularly because it is so poorly understood or discussed; and simple and meaningless proclamations often comfort those frightened by what they do not understand.

The public faction(s) that will decide between the presidential candidates - The Independents, are thus the group to which this issue has to be leveraged. Now this presents a problem for the candidates since the Independents’ take on taxes is both unclear and disparate. They are neither represented by an unified organization or any organization for that matter, nor do they have a conformist party line agenda that is to be adhered to. The parties’ response to both their respective core groups and to the essential and important group of Independents is to date lacking any substantial value.

In their standard knee-jerk reaction, the policy wonks are casting out various tax baits to see if they can find something that lures voters to bite. This explains the plethora of tax credit proposals flung upon the media waters. Tax credits in all shapes, sizes and flavors are being mass-marketed in hopes of finding that ‘killer’ tax credit that will seize the public’s ‘must-have’ solution, the popular pandering item of the moment. Clearly whoever can put the first tax-credit app on the i-phone will dominate the election, if for no other reason than it will distract the public’s attention from seeking to actually understand the issue.

The public will be energized and mobilized by this issue because it affects everyone’s life directly and personally. And as everyone knows, if you get the tax rate right then America will be magically restored to it vibrant and vital self. Everything in America will be fine again. The world will have returned to its proper balance with America atop the financial pyramid of nations. But of course this is a politician’s shell game, a fiscal flight of fancy, and a completely disingenuous attempt at electorate deception. The tax structure will only assist America in achieving its economic goals if it is based on sound and intelligent concepts. If we rely upon the politicians, we are all lost.

So why do the politicians and the parties perpetuate their participation in this phony pandering? Because politicians know that people feel their own taxes are too high and that others are getting unfair tax breaks. The reason for this is that they believe the tax code is designed to be intentionally complex, arcane and bureaucratic to prevent the average person from comprehending it. And yes the tax-code is arcane, complex and convoluted but the larger problem is that people don’t understand even the basics of the tax structure. How then are they to comprehend the significance and value of the positions, policies and arguments that politicians are making about their respective approaches to taxes; if they don’t understand the basics. More importantly, how are they going to figure out that just understanding the structure and processes doesn’t explain how that tax system is being actively used against them?

The politicians probably don’t understand so they can’t explain it. They don’t apparently know enough to even appreciate how the tax system can be used productively to attain the very goals that they advocate. Doesn’t matter which party or orientation: Democrat or Republican; Conservative, Liberal, or realist; Left or Right; young, adult or elderly; or even well educated or ill-educated.

The tax system is a man-made process for accomplishing exactly what it was intended to do; it raises the funds required for government. But it has been tweaked, twisted and transformed into a system that does much more than that. Now it protects some interests differently than others. It assumes that old principles have been correct and are still effective when they are neither. It assumes that the crafters of the tax code (politicians and their able aides) actually understood the consequences of their decisions when they did not; and it assumes that their intentions were for the benefit of the nation and the public when there is little reason to believe that was the case.

So if taxes are important to the public in this election then the public needs to demand of politicians that they provide more than small unimportant words bytes that sound like something but which are nothing more than the blanket from a crib that comforts the frightened and insecure child. Politicians worthy of your vote should be explaining how the tax system they endorse treats everyone fairly, and why that treatment produces results. If you think they have or are doing that, then you don’t have a clue. And if politicians do present their ‘plan’, then all they need to do is put it out there and then be ready to answer the questions that follow. When the unexpected insight into their plan is brought to light then they will have to admit that they just didn’t understand.
Taxes are not really hard to structure fairly, they are just hard to be honest about. And it is not difficult to use taxes to restore America’s economic vitality, but you have to actually know what you are doing; and that is not easy.

Thursday, January 19, 2012

Should Politicians Know What They Are Talking About?

Recently a state governor announced a tax-cut plan proposed for their state. The plan is to be a 10% cut on earned income spread over three years, and will be an across the board cut; that is, the 10% reduction will apply to all income levels equally. This last qualifier “equally” is very important because using that term conveys an underlying American sense of fairness and, well, equal treatment. Politicians use such terms quite often since people usually like to hear things that sound so American-centric. As is true in most dealings with politicians the public tends to believe rather than think.
But in this case there is surely no way that the governor could be misleading the public, right? After all, 10% for everyone is 10% for everyone. And if you are satisfied with that then yes it must be fair.

If however, I posited the following alternative tell me if it doesn’t sound fair also. The state will give back an equal amount of money to every tax payer. Everyone gets the exact same amount of money from the state’s current income tax revenues. It is equal certainly. But it is not the same as the proposal. Can both be fair? I know perhaps you think that giving everyone the same amount isn’t fair since some may not have even paid that much. So let’s modify the plan slightly, in case this beneficent largess makes you uncomfortable, suppose we only allowed tax payers to get back up to the amount that they paid and then the rest of the tax payers got an equal share of the remaining funds. By having removed the offending over-generous gift to those who can’t afford to pay more in taxes, do we not create a fair proposal?

Now maybe you reject the equal quantity of money approach and not being the kind of equal they you consider equal. Alright, I can appreciate that. I don’t necessarily agree that your rejecting it represents any valid basis for it being unequal. You would have to explain why it is unfair and unequal. I regret to say that you would have to explain the basis of your position, because just telling me what your opinion is does not actually in any intelligent or meaningful sense explain it. But let us suppose you have an argument to place the ‘across the board’ approach at a higher equal condition than the ‘equal amount’ approach.

Then let’s try a third approach on providing an equal tax cut. Let’s reduce the tax-rate structure so that the tax revenue stream is reduced by 10% over three years. The adjustment would be to raise the level of income where the tax-rates change by an equal amount so that 10% less tax revenues result. This treats everyone equally and fairly, so why not this approach? What makes the governors approach the better equal approach?

Now this is a reason that these approaches are not equally equal, or equally fair, or consistent with American’s values on equality. Do you know which approach is the best ‘equal and fair’ way to implement the tax cut? I will give you a hint. The better approach, in fact the best approach can be derived from an understanding of the progressive tax system. You would have to understand the progressive tax system. For example, the governor proposing the tax-cut referred to the inequality of the progressive tax methodology that is applied today. Unfortunately the governor seems to have demonstrated a less than competent understanding or accurate knowledge about what a progressive tax methodology is. This is understandable since their background is in the law and politics.

If you can’t figure out why ‘raising the tax structure levels’ is the best ‘equal’ way to cut taxes then I would suggest you seek someone who can explain the progressive tax rate method correctly. Perhaps you could refer them to the governor so they could explain it to the governor also.

Sunday, January 15, 2012

I:DEA 5 - Super-PAC: Free Speech or Dark Energy

Super-PACs are exhibiting their potent influences in America’s political universe. The chaotic Republican Presidential campaigns have felt and are continuing to feel their impacts most notably in recent days. But both the Republican and Democratic parties will become the lens through which Super-PAC energies will be transmitted and received by the American public, and through which these energies will be focused to accomplish the PACs’ purposes/work.

For good or ill, the Super-PACs (and to lesser extent their little cousins just plain ordinary PACs) will provide the motive forces to move opinions toward their objective’s center of gravity. It is after all the very reason for their existence: pulling the public into their sphere of influence. The important thing for the electorate to learn is the underlying laws of physics for Super-PAC. We must study and acquire an understanding of the cause and effect relationships between what causes the Super-PAC to spend its money in its hopes of producing the effects that serve the PACs’ interests. That PACs have an interest to be reached is not disputed, nor is it surprising that they would only spend money to achieve those goals. What may be surprising is how little anyone knows what those goals are.

Now the processes and methods used by Super-PACs is not really anything new; sure the technology involved differs from one generation to the next but technology affects how not why.  Super-PACs are intent on their respective whys and appear willing to use any hows that serve their purpose. In examining our past we see that Americans have engaged in similar activities when contending over the political issues of the day. And what we find in these political debates are various factions using distortions, facts, lies, principles, evasions, illuminations, and revelations since before there was a United States. In the founding of our nation, we see that it was not created based on what the Founding Fathers wanted or what the public universally agreed with; but rather our government was a compromise, an incomplete and unfinished work, and an imperfect and flawed system; and perhaps a fortuitous implementation of fear of its leaders. And during the haggling over the structure of our government, and its ratification and acceptance by the nation there were the PACs of their day pressing for their views, their interests and their ambitions.

And just like today, those PACs had folks who exceeded the veracity of their claims, facts and understandings. They did learn that demonization of their opposition is a tried and true approach that often works. We may never know if today’s adherents of negative ads are less or more immoral than their historic counterparts; but we can be assured that they degrade and impoverish America values and principles as surely as cancer destroys the body.

Now are all Super-PACs or PACs cut from the same fabric? No, it is not a given fact that all PACs are harmful any more than it would be true that none are a political cancer needing to be cut out. So America’s challenge is to distinguish between those PACs that earnestly attempt to present accurate and complete information that informs the public about an issue or position from those that disseminate informational content intentionally biased, distorted, manufactured, or suppressed.   

The test to judge one from the other is a difficult one no doubt, and it is not a simple problem for which an easy solution can be offered. Perhaps we must content ourselves to starting with asking if it is predominately a negatively toned and stated transmission. We do know that it is more informative to explain what you advocate and why than to offer what you don’t and why not. The quantity of negative energy of the Super-PAC may be one of its salient natural properties. We may not be as attracted to the gravitational lure of such Super-PACs if we recognized their intrinsic danger to America’s interests.

An additional test we could expect from Super-PACs/PACs is a contributor disclosure analysis. This analysis would require the Super-PAC/PAC to publish “to date” contribution amounts, number of contributors and number of largest contributors who account for 90% of the “to date” contributions. Whether the Super-PAC/PAC makes available who their contributors are in a timely manner is in and of itself a measure of the Super-PAC’s/PAC’s views on public transparency.

If you’re an Independent (or even a Republican or Democrat), you should communicate to any political party or candidate that seeks your vote, contributions or support that you want their explicit concurrence with or repudiation of a Super-PACs positions or ads.

Saturday, January 7, 2012

Senatorial Courtesy – What a Term for Incompetence

Senator Robert Menendez (D-N.J.) has elected to use his home state senate position to administratively block the consideration of an appointment to the U.S. Court of Appeals. This is not new or atypical; it has a long history in America’s governmental politics. But it reflects yet another bad Congressional abuse of power in that it places the judgment of one individual above that of the entire Congress. It may be beneficial to the individual Senator and the Senate may be willing to support and continue this quid pro quo arrangement so that each politician can serve their personal interests within their own political domain.

Now Menendez says that this is not personal, he truly and faithfully believes that the nominee is not qualified. Thus given his individual perspective, judgment and understanding he is confident that his colleagues would not approve the nomination anyway; so he is acting to curtail his peers from needing to assess the nominee (and his assessment).

If he is correct, that the nominee is not qualified for the appointment, we might all expect that he would do what any competent, honorable and intelligent politician would do. (Yes, I know that competent, honorable and intelligent politicians are an endangered species but he could at least strive to ascend to near-competence, near-honorable, and near-intelligent behavior.)

If the nominee is unqualified then present your reasons, facts and positions to the members of Congress. Use the opportunity to inform the public about the importance of the position and the qualities and competencies that such a position require to serve the public interests. Don’t void the issue, don’t hide behind an institutional curtain, and don’t demonstrate through your hidden reasoning that you are afraid and unwilling to bring to light the reasons for your decision. And lastly, do not place your singular judgment above that of every other member of Congress. If your views are accepted and valued then they will vote with you.
Step up, rather than descend into the weak-assed ranks of today’s common politician.

Friday, January 6, 2012

Tax Cuts, Yes; But Which Way? – American Intelligence Test #13

Tax cuts are all the rage and evidently the salvation of pretty much everything. There isn’t a politician who doesn’t want to provide tax cuts for their constituents, or at least their contributors. Now there are two very important reasons that the idea of tax cuts are so attractive and perhaps even addictive. First who doesn’t think they would be better off if they paid less taxes; and second, tax cuts promise an absolutely simple means for fixing everything. Thus it should be no problem for everyone to answer a few simple questions. After all, the common sense of tax cuts by their very common sense nature cannot be difficult to explain.

So answer the questions that follow and confirm the common sense of your understanding. Your score is your responsibility to assess. And the act of deceiving yourself is no different than having a politician deceive you. Of course non-deception is a positive measure of your intelligence, so you are always making a trade-off. To paraphrase Lincoln:
Some of us can fool ourselves all of the time, and all of us can fool ourselves some of the time, but all of us can not fool ourselves all of the time.
Perhaps the last clause is what worries politicians the most. Prepare yourself; the opportunity to believe the politicians is at hand.

Question 1:   Let’s start easy. Tax cuts create jobs.
Yes    No    M-Maybe   U-Unpredictable   
Context:  If yes then jobs would have always increased when taxes were lower, and jobs decreased when taxes were lower. And history demonstrates this.

Question 2:  Tax credits or deductions are just another form of a tax cut.
True    False
Context: Home mortgage deductions are a tax cut?

Question 3:  Tax cuts will improve America’s financial situation.
Yes    No    I-Indeterminate
Context: With more money to spend, American’s are assured that American businesses will prosper.

Question 4:   If tax cuts for the wealthy are the only way to create jobs then there is no benefit to cutting the taxes of the middle-class.
True    False
Context: Investments by the wealthy will create jobs, concentrate more wealth and create more jobs.

Question 5:   Tax cuts would rank where in effectiveness for improving the American economy compared to the following. Answer with letters of any item(s) that are more effective.   Answer :  ___
A.      Reduced Government spending
B.      Reducing Military spending
C.      Reducing spending on Social Security
D.      Reducing spending on Medicare & Medicaid
E.       Reducing the National Debt
F.       Reducing regulation
G.     Taxing political contributions
H.      Elect politicians who are smart enough to know their skills and knowledge are not capable of solving our problems
I.        Revise tax code to tax everyone at the same rate
J.        If none are, use J to answer Tax cuts are the most effective measure

Your answers can be compared to the correct ones below.
1:  U       2:  F        3:  I         4:  T        5: E, G, H, B, D, C, F, A    

If you didn’t match the above answers, don’t worry. You can put your faith in the magical power of tax cuts, just as you are probably putting your faith in politicians being the folks who can save us, preserve our liberties, and restore America to its values and principles. But tax cuts are not guaranteed to create jobs, tax cuts are not a magic bullet to fix our economy nor a remedy for all the foolish and irresponsible actions by our politicians and ourselves.
To address America’s problems the solutions need to be very specific to the realities of the world and our society. Solutions must be based on approaches that apply fiscal, tax, economic, and social forces that are have a direct cause-effect relationship to the equation. Fixing America requires new ideas on how to run our social and national policies, programs and institutions. If you think tax cuts are a directional  force then you probably also think that a vision to restore America to its founding values and principles actually means anything.