Fair Tax or Flat Tax?

American public discourse, particularly on the Internet, includes a reliable population that is perpetually honked off, offended, and eager to unleash the awesome power of ALL CAPS against any idea, no matter how commonsensical.

But for all the hullabaloo around the IRS of late, with some claiming complaints against the agency are overwrought, and others going so far as to question the motives, intelligence and parentage of those of us who have called for its abolition, there has not emerged any kind of reasoned argument in favor of keeping the tax authority just the way it is.

What has come to the fore, however, is a healthy competition between two credible, if not complementary, alternatives to America’s current tax system. That is, should we move to a Fair Tax or a Flat Tax?

Simply put, would a consumption tax on goods and services (Fair Tax), or a single, small rate of tax on income (Flat Tax) be a better way to fund our government? The short answer is that either would be preferable to the Byzantine, corrupt tax system America has now.

Folks are fond of saying you can’t replace something with nothing. This is, of course, complete rhubarb, and if the US government could learn to replace something with nothing, it would go a long way toward solving its monumental debt and deficit problems. But in this case, we do need to pay for our public sector somehow, and since it would defeat the purpose to replace something with two things, it behooves us to consider which of these worthy ideas would work best.

First, the Fair Tax: There is legislative support for this approach, as the Fair Tax Act of 2013 works its way through Congress, sponsored by Rep. Rob Woodall of Georgia as H.R.25 in the House, and by Sen. Saxby Chambliss, also of Georgia, as S.122 in the Senate.

The gist of the plan is to phase out the IRS over three years, replacing income taxes with a sales tax on new goods and services, excluding necessities, of 23 percent. This figure is reached by combining the 15% income tax bracket with 7.65% employee payroll taxes, both of which would be eliminated. As to that last, fairtax.org stresses that their plan eliminates the payroll tax, and this is not an insignificant feature.

Many workers, particularly those with lower earnings, feel the bite of payroll taxes when they collect their paychecks, even if they do not end up with a federal income tax liability for the year. If we mean what we say about simplifying the tax code, then whatever system and rates we settle on ought to be straightforward and clear, and should account for whatever effect, if any, payroll and Social Security taxes will have on take-home wages.

A Flat Tax of, say, 10 percent should mean exactly that – not 10 percent, plus additional levies for retirees, unemployment, etc., that are not normally part of the income tax conversation.

If that can be accomplished, there is much to be said for the simplicity and transparency of a Flat Tax. Sen. Ted Cruz of Texas and The Heritage Foundation are among those calling for this approach. Americans spend billions of hours and hundreds of billions of dollars trying to comply with the country’s impossibly complex tax code. The opportunity cost to the productive economy is extraordinary.

Something that is often lost in discussions of income tax is that these rates also apply to small businesses, which create two-thirds of the new jobs in America, and almost all of which file at individual rates. If a Flat Tax can eliminate the expensive and time-consuming task of tax preparation, not only for individuals but for job-creators as well, that would be a boon to America’s beleaguered employment market.

As to revenues, economists of all stripes have looked through this glass onion, trying to make that dove-tail joint, and you will find very intelligent people convinced that a Fair Tax or a Flat Tax cannot replace the revenue raised by the current system; conversely, you will find wicked smart proponents of these ideas who say we cannot afford not to adopt them. Whom to believe?

Concepts like dynamic scoring – meaning, tax policy alters behavior, which should be considered in estimating revenues – are sensible. But, since not everyone acknowledges these factors, let us cleave to the concept of reasonableness. Would either plan get us in the ballpark of where we need to be?

Certainly, they can, and if the political climate that enables either of these policies to be enacted also facilitates spending cuts, more’s the better. The last two presidents, aided by
Congresses led by both parties, have each added a trillion dollars (and counting) to the federal budget over the past dozen years.

Despite this sharp increase in spending, recent silly-bears surrounding the sequester remind us that many insist the current level of government expenditure, no matter how high, is a sacred, serene, steady state, such that even one penny cut might mean Joe Biden has to peel his own grapes.

As a Republic, we can take that risk. So, if a Fair Tax or Flat Tax can get us close enough to the revenue we need, even if it requires pruning the Tsarist lifestyles of our so-called public servants, so be it.

Mission creep will also be an issue, with either a Fair Tax or a Flat Tax. Lest we forget, when the income tax started in 1913, the top marginal rate was a whopping 7 percent, applicable only to a relative few people. Politicians, present and future, will be eager to expand and increase the scope of the new system, and taxpayers must remain vigilant.

Questions linger, such as whether a Fair Tax would inhibit productivity, or spawn underground markets, and just what “necessities” would be excluded? Likewise, what would become of charitable or mortgage interest deductions under a Flat Tax? Each of these merits debate, but they are soluble. Considering our current system has the IRS shelling out $50 million for its agents to learn line dancing at sleep-away camp, even imperfect replacements represent serious improvement.

Further to that, while we remember that this discussion was brought about by scandals at the IRS, including hassling of groups seeking tax-exempt status, along with audits and harassment of people who donated to political candidates or raised their voices in the public square, the issue should not be consumed by politics or prosecutions.

Odious as Douglas Shulman, Steven Miller and Lois Lerner may be, they and the rest of the IRS squadron of winged monkeys that descended on Congress recently are beside the point. When you create an unaccountable, bloated bureaucracy, these are the sort of people who show up to run it. They and their ilk are not unique to history, nor are they helpful in solving the problem.

So again, which should we choose, a Fair Tax or a Flat Tax? The answer is: whichever one can gain traction.
The primary question of whether to abolish the IRS having been answered in the affirmative by both sides, disagreement between Fair Tax and Flat Tax proponents is akin to the quarrels of the Yooks and the Zooks in Dr. Seuss’ Butter Battle Book(to whatever extent Seuss intended the tome as a moral relativist metaphor for the Cold War, it was misbegotten – but it actually works here). In that tale, both sides enjoy toast, but are at loggerheads as to whether it should be buttered on the top or the bottom. The applicable lesson here is, having agreed on the big issue, residual differences can be worked out over breakfast.

And so they should be, with the American people as arbiter (though if everyone’s coming to the breakfast, making a reservation seems sage). Politics being the art of the possible, if there is an appetite in the land for a Fair Tax, and political leadership able to make it happen, Flat Tax folks should sign on, perhaps keeping personal lists of I-told-you-so’s, in case the system falters. Likewise, if the Flat Tax finds a market and effective champions, Fair Taxers should offer support.

Whichever option prevails, let us seize this opportunity to reform America’s tax system and change the country for the better.

Theo Caldwell, host of TV’s Global Command Centre, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at at theo@theocaldwell.com

 

How to Answer the IRS

“I have not done anything wrong. I have not broken any laws. I have not violated IRS rules and regulations.” –Lois Lerner

Herewith, the former director of the Internal Revenue Service’s Exempt Organizations division, now enjoying fully paid administrative leave at taxpayer expense, provided the perfect template for responding to her erstwhile agency. To wit, the next time the IRS contacts you with questions, just quote Lois Lerner.

This was, of course, part of the abortive account Ms. Lerner gave to Rep. Darrell Issa’s committee as it investigated abusive and improper treatment of conservative groups by the IRS. But in saying little, Ms. Lerner spoke volumes.

It is a funny thing, the urgency and insistence with which the IRS demands particulars of citizens. We are expected to respond promptly to them – yet they decline to answer to taxpayers. The richest bit of all, of course, is they work for us, despite their misapprehensions to the contrary.

Ms. Lerner’s testimony – to the extent her self-serving opening statement, followed by a contemptible refusal to answer questions, can be classified as such – was only one part of the parade of horribles that has passed before Congress. Former IRS Commissioners Douglas Shulman and Steven Miller were utterly reptilian in their committee appearances and, for America, the spectacle should be instructive.

Have a look at these people, all of them. See their smug, superior expressions, witness their imperious attitude, hear their unctuous words. These are individuals drunk on administrative authority no one voted them, intoxicated by petty power, and made to feel invincible by bureaucratic anonymity. In short, this is your tax department at work.

And perfectly consistent with the new administrative state, those who fail or misbehave are rewarded. Beyond Ms. Lerner’s paid, indefinite vacation, Sarah Hall Ingram, who was commissioner for the IRS’ tax-exempt division while it targeted Tea Party groups, has received over $100,000 in bonuses and placed in charge of Obamacare enforcement.

Put another way, the well-paid, unelected, formerly unknown bureaucrat who, despite working in the tax department, somehow became the arbiter of free speech, will now be in charge of scrutinizing your health care. Incidentally, if you think you can guess what such a person would look like, you’re right.

This column has advocated abolishing the IRS and, thanks to this recent imbroglio, one no longer requires a tri-corner hat and Gadsen Flag to advance this policy position. This may be, as many have suggested, the most damaging of the scandals currently facing the Obama administration. But Obama will never face the voters again. What is much more significant is that politically uninvolved people, who heretofore had only a vague notion of the IRS as a necessary evil or a punch line, are coming to comprehend that the system is rotten and should be changed.

A shift is occurring. People can see that a necessary evil might be just evil, or at least illegitimate, such that its demands do not carry their previous heft. If and when I hear from the IRS, will it be because I published this column? Or you, gentle reader, will you receive an unpleasant missive because you read or circulated it? We cannot know, and therein lay the insoluble problem of legitimacy.

It’s not even a matter of being high-profile or important (you very well may be, though I most certainly am not). An automated system or assigned civil servant (to the extent there is a difference nowadays) could easily track and store information on inconvenient people, matching names for audits and inquiries. Considering the revelations of the past several weeks, does such a process seem far-fetched?

So again, let us abolish the IRS. The institution was never liked, but plainly it cannot be trusted, either, and one is desolate to conceive of a scenario in which its legitimacy is regained.

No matter how straightforward and sensible an idea, any idea, there are always cranks and contrarians who find some reason to be opposed (Chuck Schumer, please call your office).

In this case, it would be interesting to hear from disinterested defenders of the status quo. Is there anyone out there who can seriously contend that the United States, ostensibly the greatest nation on Earth, cannot come up with a better system to fund its government?

This is a legitimate question. Do you really believe the IRS is the best we can do, and will you defend its continued existence? You are cordially invited to respond.

Meanwhile, if the IRS comes calling, just tell them what Lois Lerner said.

Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at at theo@theocaldwell.com

 

Abolish the IRS

As Congressman Dave Camp has observed, the tax code of the United States is now ten times as long as the Bible, with none of the good news.

It is also exponentially more difficult to comply with, as there have been some 5,000 revisions made in the last dozen years. Even ancient scriptures, while challenging to willing spirits and weak flesh, can be counted on for constancy.

It is axiomatic that in a free society, a law that renders comprehension and compliance impossible cannot be considered legitimate. No matter how eager citizens may be to contribute to the common purse, rendering unto Caesar what is Caesar’s, they can attain no certainty they have done so to Caesar’s satisfaction – and his dissatisfaction carries a severe cost.

Recent news that the Internal Revenue Service has been enforcing its already inscrutable doctrine with caprice and venom – directed at conservative groups, Republican donors, and supporters of Israel, among others – confirms the worst suspicions of many Americans, of all political affiliations.

There is a lot of talk in Washington, and across the country, of a desire to reach bipartisan accord and accomplish great things. Here is an opportunity for just that.

Over the course of several election cycles, what was once a fringe notion advanced by long-shot candidates (Mike Huckabee and Ron Paul, please call your offices – or call each other, or call me, as you wish) has crept closer to the mainstream. To wit, it is time to abolish the IRS.

The very title, “Internal Revenue Service” contains multiple falsehoods. First off, the IRS is not solely concerned with revenues that are “Internal.” Anomalous among the nations of the world, America’s tax authority assumes for itself power over citizens, their families, and “US persons” living abroad, requiring them to file and pay taxes at US rates, even if they have not set foot on American soil in decades – or ever. “Taxation without representation,” indeed.

Wherever in the world your eyes find these words, the IRS very likely believes it has business with you. If you are married or related to an American, or in business with one, or if you have held US residency or even a visa at some time, the IRS can compel your financial institution to provide information on your assets and activities, threatening overwhelming sanctions for non-compliance.

Really, should the “Land of the Free” allow this mendacious and predatory agency to infect other nations in such a manner?

Second, the IRS has long since expanded beyond the concerns of mere “Revenue” to become the arbiter of almost every aspect of American life: free speech, charitable giving – even, Saints preserve us, health care.

The recent imbroglio, involving the slow-walking and hard-questioning on applications by right-of-center policy groups for tax-advantaged status, reminds us that America’s marketplace of ideas is overseen by government collectors. As columnist George Will notes, “Remember, all campaign ‘reform’ proposals regulate political speech. And all involve the IRS in allocating speech rights.”

Finally, the notion that the IRS offers a “Service” constitutes an absurdity of government-speak that would make Orwell guffaw, if there were any historical evidence that he was capable of doing so.

This fiction is usually exploded when an average citizen first hears from the IRS regarding questions they have or an audit they plan to conduct (and if you have not heard from the IRS, with the onset of Obamacare, buckle up).

That first contact will almost certainly be undersigned by a “Mr. Gossage” or a “Mrs. Vardebedian,” with no Christian name in sight, like a teacher writing their name on the blackboard on the first day of school. This introductory dynamic could only seem like a good idea to lifetime government hangers-on, benighted to the fact that in the real world, adults trust one another with their first names.

The effect is just silly, like a small child donning his father’s suit and shoes, shuffling around the house and demanding to be called “Mr.” before he’ll help tidy the rumpus room. But the intended message is unmistakable: We are in authority over you. Some “Service,” that.

And it is precisely that overbearing, ham-handed institutional culture that is evinced by this latest and growing scandal. The IRS initially claimed it was all the work of low-level employees in its Cincinnati office, undertaken without direction from senior staff or the Obama administration. This was obviously a lie from the first, if only because it presupposed professional initiative taken by career civil servants.

Confirmed reports of targeted audits, inappropriate questions and harassment emanating from at least three other IRS offices around the country have eviscerated this laughable line of defense.

But let us suppose it were true. Should a nominally free country countenance the harassment of its citizens, at home and abroad, by Mr. or Mrs. Cough-It-Up who, having overcome the unspeakable tragedy of having no given name, nevertheless demands to know everything about you?

It has only been 100 years since the United States ratified taxation of income. That’s considerably less than half of the nation’s lifetime (and lest we forget, the Republic came into being, in large measure, out of rebellion against unfair taxation), so let’s not get our aprons over our heads about making changes now.

This column would rather light a candle than curse the darkness. Herewith, therefore, are a couple of alternatives, offered for consideration:

First, toss the entire US tax code into the ocean (though someone tell Al Gore first, lest he begin shrieking when the sea level rises). Then, establish a small agency, charged with only one task: To withhold 15 percent of earned incomes over $50,000.

Assuming this sounds too much like a flat-tax prescription that would come from one of those Tea Party groups the IRS decided to hassle and stonewall in the first place, we can play with the numbers to get bipartisan buy-in. For instance, we could have two or three rates on a progressive scale – 10, 15, and 20 percent, let’s say – but once we agree, that’s it: no deductions, no investment or estate taxes, we’re done. Donate to whomever you wish, buy whatever health care you’d like (or not), and do so without tax benefit, but without tax bother, either.

Even if, as some may suggest, this route simply replaces one dysfunctional and malign agency with another, a new collections bureau with a minimalist mandate should take at least another 100 years to become as officious and unpleasant as today’s IRS, at which time we can discuss reform anew (watch this space).

But for the truly skeptical, perhaps a consumption tax is the thing. This has variously been advanced as a Fair or Value-Added Tax, and it is simply a levy on all transactions, usually proposed at 20 to 23 percent, that replaces income taxes altogether. This is reflexively denounced as “regressive” by the Left and the experience of Great Britain is instructive; specifically, instead of using the VAT to replace tax on income, as was proposed, authorities simply slapped the VAT on top of the UK’s already punitive rates.

Even so, a VAT necessitates that the more you spend, the more you pay. That seems straightforward enough, and it ensures the burden of funding government is carried by those most able to do so.

It is perhaps Victor Hugo’s best-known sentiment that nothing is as powerful as an idea whose time has come. Hugo, who wrote timelessly and interminably on the vicissitudes of oppressive bureaucracy, included this aside in Les Miserables: “It may be said that there is one infallible thermometer of the public misery and riches— the cost of collecting the taxes.”

If that is true, and accepting Hugo’s attendant observations that such cost is inversely proportionate to overall economic health, why not make taxation simple and transparent for everyone?

One hopes he would agree that abolishing the IRS is an idea whose time has come.


Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at at theo@theocaldwell.com

 

Peter the Roman

"In extreme persecution, the seat of the Holy Roman Church will be occupied by Peter the Roman, who will feed the sheep through many tribulations, at the term of which the city of seven hills will be destroyed, and the formidable Judge will judge his people. The End." –Saint Malachy, 1139 A.D.

This cheery bit of foreknowledge comes courtesy of a 12th Century Irish Bishop, Malachy, who, while visiting Rome, had a vision of all the Popes who were yet to reign. There were 112 in total, beginning with Celestine II in 1143 and ending, in Malachy’s telling, with “Peter the Roman,” whose Papacy seems to coincide with the destruction of the church and the end of the world.

With the resignation of Pope Benedict XVI, the first Pontiff to step down in almost 600 years, Malachy’s prophecy has garnered renewed attention – not least because, on Malachy’s list, Benedict was number 111.

Which means, if you care to believe a reasonably well-substantiated prophecy that has endured almost 900 years (allowing for some generous interpretations over the centuries and Internet wackdoodlery in the modern era), Peter the Roman is on deck.

Malachy’s prediction has been juxtaposed with the vision of Pope Pius X, who served from 1903 to 1914, and who claimed to have foreseen another Pope, also named Pius, fleeing an apocalyptic scene: “What I have seen is terrifying! Will I be the one, or will it be a successor? What is certain is that the Pope will leave Rome and, in leaving the Vatican, he will have to pass over the dead bodies of his priests! Do not tell anyone this while I am alive.”

So, as we await a new leader for the largest denomination of the world’s largest religion, at least one Saint and one former Pope advise that things are about to get bumpy. If “Peter the Roman” is indeed elected, and if he chooses the name Pius (which would make him Pius XIII), watch this space.

One wonders, however, if there is an appetite for more prophesied destruction these days. In early 2013, our view of dire predictions is particularly jaundiced, as we expected to be clawing through the rubble of the colossal, millennia-old “oops” that was the Mayan Apocalypse right about now.

After 9/11, people flocked to the prophecies of Nostradamus, supposing the 16th Century French seer had somehow presaged the tragedy. The closest he came was: “In the year 1999 and seven months, the great King of Terror will come from the sky. He will bring back the Khan of the Mongols. Before and after Mars rules happily” (Century X, Quatrain LXXII). As you can clearly see, apart from getting the date, names and actual events wrong, Nostradamus called it perfectly.

Having read every word published by Nostradamus, and watched every History Channel show about him (which invariably amount to lengthy interviews with that one Nostradamus expert who looks just like him, complete with cornered hat and long beard, apparently having foreseen an age when that ensemble is back in fashion), I regretfully conclude that he predicted nothing whatsoever – at least, not in any form that is of practical value in the present.

As always with these things, one has to squint and tilt one’s head, stand on one foot, re-arrange the letters, and read it backward by the light of a full moon while gargling with yak’s blood for it to seem as though the prediction came to pass. Oh – and it only ever works in hindsight. After the fact, people fall all over themselves to cram ancient gibberish into the news of the day.
It’s not that I don’t believe in prophecy. I do. But most of us suck at it (President Romney, please call your Oval Office).

This is likely because most people’s predictions amount to their utterly human, deeply flawed best guess, informed by some measure of wishful thinking. The prophet Jeremiah warned of those who make predictions without proper sourcing: "They speak a vision of their own imagination, not from the mouth of the Lord” (Jer. 23:16).

And how often, really, does God speak specifically to one person, divulging the future, for the edification of all mankind? Yes, yes, God speaks to each of us all the time in subtle ways, but this is different. We are talking about the Creator of the Universe addressing one of his billions of children, saying, “This will happen at such-and-such a place, at such-and-such a time – be sure to dress accordingly.”

Perhaps St. Malachy was the recipient of such a divine word. My bias is that if God were selecting a vessel for a lengthy tale, he’d choose an Irishman. Even so, if the word is true, what good does it do us? Will we listen? Are we even able to comprehend its true meaning?

Over the centuries, prophets of every religion have been ignored, mistreated, and killed in nasty ways straight from the ballad of Brave Sir Robin. And when their message does eke through, people are swift and relentless in locking prophetic words into their own vision of how the world ought to be, as though celestial knowledge were bestowed for the sole reason of validating their personal opinion.

Indeed, the astounding lack of humility with which signs and wonders are interpreted by both secular and religious people makes reasoned debate all but impossible.

On the secular side, consider the venom of environmentalists, academics and various politically correct commissars toward anyone who hesitates to swallow the scroll of their “climate change” prophecies, for just one example.

As to religious interpreters, take your pick. Apart from the unpleasantness throughout the Middle East, in some measure predicated by differing views of dusty auguries, more benign examples can be gleaned from Christians who are convinced that their narrow reading of scripture is the one, true version. In my lifetime, I have heard public figures from Ronald Reagan to the Pope to Maury Povich proposed as candidates for the Antichrist.

In the books of Daniel and Revelation – the Bible’s foremost sections regarding the End of Days – and throughout the Gospels, one sentiment is repeated in numerous forms. To paraphrase: “You don’t know when the end is coming, so don’t even bother trying to guess.”

Jesus put it more succinctly: “But concerning that day or that hour, no one knows, not even the angels in heaven, nor the Son, but only the Father” (Mark 13:32) and “Therefore, stay awake, for you do not know on what day your Lord is coming” (Matthew 24:42), as two of many examples.

So – what, then? If true prophecy rarely happens and if, when it does, people mangle and squabble over it, and if we cannot even know when to duck, how can Malachy’s prediction be of any use?

The Cardinals who will gather to choose the next Bishop of Rome before Easter are learned men, well aware of the prophecy of St. Malachy. Since I do not seem to be invited to the Conclave this time, I shall have to wait and watch for the white smoke like everyone else. My guess, made without any claim to otherworldly insight, and without a hint of self-interest (since I am not in the running – though if the Cardinals opt for a Presbyterian Pope, I’m up for it), is that they will choose either Cardinal Tarcisio Pietro Bertone of Italy or Cardinal Peter Appiah Turkson of Ghana.

But whoever is elevated, and whether he calls himself Pius the Thirteenth or Hank the First, he will face challenges in piloting the bark of St. Peter. In this, the sentiment of St. Malachy’s prediction is surely true but unremarkable. If, however, Malachy’s vision bears out more fully and an existential crisis is imminent, the church, and the world, will require a leader inspired by God. Let us pray that the Cardinals, and the Pope they elect, will be granted such wisdom.

Theo Caldwell is the author of Finn the half-Great. You can reach him at theo@theocaldwell.com

 

Rules, Britannia

“I’m British, I know how to queue.” –Arthur Dent, The Hitchhiker’s Guide to the Galaxy

LONDON – The England of Shakespeare, Newton and Churchill has become a country more concerned with compliance than accomplishment. There is little that evinces this decline so clearly as the conduct of the British tax department and the general attitude of servility toward the nation’s public sector.

Last week, Britain’s coalition government conceded that their plan for closing the budget deficit will not be completed by 2015, as promised. Among the remedies proposed by Chancellor of the Exchequer George Osborne and others is the standby of sticky-fingered government-types the world over: ensuring taxpayers pony up their “fair share.”

There is no way an intelligent man like Osborne believes that wringing yet more money out of people who often find themselves forking over 60 percent of their income to the government is a practical solution. In fairness, he has also proposed spending cuts and a reduction in borrowing. Even so, the fixation of the nation’s governing class on squeezing every ha’penny they feel they are owed from citizens is animated by the modern British fetish for control and compliance.

Along with new measures to raid Britons’ bank accounts in other countries, London’s Telegraph newspaper carried a front-page report that “tax hitmen” will be deployed to pore over citizens’ spending records, to assess whether their purchasing seems consistent with the tax they have reported. Proponents of such Kafkaesque silly-bears suggest the measure could raise as much as 10 billion pounds.

Now, in the time it takes to say 10 billion pounds, a welfare state like Britain can easily spend 10 billion pounds. And that assumes the figure is net: Will the snoops of HM Revenue and Customs be working on this file for free? If not, be assured that their corpulent enforcement mechanism can gobble down the expected returns at a rate that would put Monty Python’s Mr. Creosote to shame.

Recently, a British family known to me, having just paid a tax installment of over a quarter-million pounds, were found to be a few days behind on a separate, tiny tax bill amounting to a few hundred quid. The result was a stream of government vehicles, filled like clown cars with collection agents, pulling up to their front door.

“Ooh, this is a lovely place, i’nt it?” one sneered to the lady of the house, scrutinizing her home with that combination of urgency and self-satisfaction peculiar to public sector scolds. She responded that there was no arithmetic whereby the petrol, paperwork and professional hours consumed by the squadron of snotty civil servants pawing about her yard was justified by the piddling amount they came to collect.

But again, it wasn’t about the money, it was about the rules. And when rules are the priority, government enforcers will descend on a suburban family about a matter of a couple hundred bob as though they had cornered Al Capone for tax evasion.

The reality is that Britain’s fiscal troubles are not caused by people paying too little in taxes. Its overgrown government apparatus simply spends too much and has been temporarily spared the economic collapse seen elsewhere in Europe by the grace of God and the retained ability to print its own currency. But it is utterly anathema to the nation’s politicians and civil service that liberating the private sector, urging Britons to spend, invest and hire, is the path to prosperity.

Oscar Wilde once quipped, “The bureaucracy is expanding to meet the needs of the expanding bureaucracy.” How interesting that an Irishman who spent time in an English prison should encapsulate the British condition so neatly.

And the bureaucracy’s growth is guarded and abetted by agents of HMRC, who behave as though they are in a trans-Atlantic rivalry with the IRS to see who can be more officious and obnoxious. For them, rules must be upheld, even if they do no bloody good.

This prioritization of compliance is complemented by a culture of surveillance, both figurative and literal. London has more closed-circuit security cameras than any city in the world, such that a person going about one’s business in the British capital is filmed 300 times per day. Meanwhile, inspectors creep around residential areas on behalf of the BBC, checking whether people are watching television without paying a licensing fee to support the public broadcaster.

Not to be outdone, the tax department has recruited schoolchildren to its spy ranks. This past summer, it was reported that HMRC was encouraging pupils as young as 11 to tell their teachers of “anyone in their local area who is not paying their fair share of tax.” Again, we must assume such an initiative is philosophical, born of a need to monitor and control, rather than practical – unless one actually believes the budget deficit could be closed by sending the nation’s youth about like the Village of the Damned kids with calculators.

Britain, which bravely stood up to dictators time and again through the centuries, including no more than a couple generations ago, now shrugs blithely as Big Nanny shoves her stout fingers into every aspect of citizens’ lives. It’s not so much that the state does all this – it has always been the impulse of governments to render individuals legible and accountable – it’s that today’s Britons don’t seem to mind.

Some say this modern, docile mindset is born of Britain’s shame over its imperial past. Whatever the cause, a people who used to rule two-fifths of the globe willingly line up to be counted, scrutinized, taxed and accused. A nation once famous for its will to conquer now prefers simply to queue.

Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at theo@theocaldwell.com

 

Good luck, America (you’ll need it)

"I've said it before and I'll say it again: Democracy simply doesn't work."
– Kent Brockman

And here I believed that Obamacare, chronic 8 percent unemployment, stagnant economic growth, crippling spending and the potential for more would sink a sitting president. Boy howdy, was I ever wrong. I take small comfort that people far smarter than I am were much more mistaken than I was – Michael Barone and George Will among them – but even so, I and my fellow crestfallen conservatives must ask ourselves just why we were so far off the mark.

My friend David Frum (also smarter than I am) has for years been urging Republicans to moderate if, in David’s parlance, they wish to orchestrate a “Comeback” in national politics. With a monsoon of respect for David’s intellect, I disagree with that notion.

Our previous nominee, John McCain, was as moderate as they come – even downright lefty on some issues – and he got trounced. Mitt Romney, meanwhile, despite apparently successful efforts to paint him as a corporate pirate, swinging in from the hard right with a dagger in his mouth and a briefcase full of pink slips in his free hand, is and was a moderate, too.

This may seem like utter rhubarb to those who have been fed a steady diet of Romney’s supposed radicalism, but here is a man who spoke of tax cuts as “spending,” enacted gender quotas (see also, “binders”), and, not for nothing, constructed the state-level prototype for Obamacare.

Moderate or not, we have seen that GOP presidential candidates are painted as extreme. With that in mind, can Republicans reconcile their core beliefs with an electorate that thinks in completely different terms? For example, we believe that a simpler tax system with lower rates increases tax revenue, while causing the wealthy to pay a greater share, and we can prove it by citing presidencies all the way back to Calvin Coolidge (as economist Thomas Sowell has done). But what good does that do when the reflex of every journalist, politician and undecided voter is to refer to tax cuts as something you “pay for”?

On social issues, Republican candidates will always be asked the most difficult, gut-wrenching questions, regardless of whether they choose to campaign on such matters. In a way, this is a good thing, as it forces us to scrutinize our views. But Todd Akin and Richard Mourdock ought to have known that, sure as God made little green apples, Republicans running for office will be asked about abortion in the cases of rape, incest or the life of the mother. If the best you can do is make Leviticus sound like a Planned Parenthood pamphlet, let someone else run.

To be sure, Democrats will almost never be asked to defend partial-birth abortion (or “late-term” abortion, as they insist it be called, along with attendant euphemisms like “evacuating the cranial cavity”), nor will they be asked just why an infant who survives an abortion should be denied medical care and left to die – as was Barack Obama’s policy as a member of the Illinois legislature.

But that’s just life on the right. There are many such unfair double standards; it’s why Republican Sharron Angle is supposedly too obtuse for the US Senate, yet a Democratic loony tune like Debbie “I can feel global warming when I fly” Stabenow cruises to re-election.

Republicans knew much of this going into the election, though. So again, why were we wrong and can we win without compromising our beliefs?

Columnist Andrew Klavan notes, “The smartest political writers in the country, all of whom are conservative, will now be addressing those questions.” But is it even a question of who is smarter than whom? For example, is Charles Krauthammer smarter than Paul Krugman? (Answer: Oh, yes). That said, Krugman was closer to calling this election than Krauthammer was.

Barone has been typically gentlemanly and philosophical in defeat: “So I was wrong. I take some pleasure in finding I have been wrong, because it’s an opportunity to learn more. As I prowl through the 2012 election statistics I will have an opportunity to learn much more about America and where we are today…Lots to learn for all of us.”

And perhaps therein lay the answer. Maybe we were so far off because the United States simply isn’t the country we thought it was.

As an American immigrant, I idealized this nation’s embodiment of liberty. Bit by bit, I have had to let go of those illusions. The Land of the Free locks people up at a rate 13 times faster than its population growth, and holds more prisoners than any other country on Earth. Its tax department treats citizens and their families as US government property, regardless of where they live in the world. And now that same IRS will be the arbiter of whether your health care meets the requirements of the federal government that ordered you to buy it.

Two years ago, I wrote that Americans would not stand for the excesses of a depraved organization like the TSA. And yet, polls show widespread support for that literal manifestation of government overreach, even as its perversions have spread beyond airports. Citizens born into freedom obediently line up to be molested and manhandled by government employees in the name of “safety.” No one wants to break from the herd. In truth, Americans would rather belong than be free.

Actually, it seems Americans rather like being told what to do. And that is what modern liberalism is all about – telling you what you can say, what you can eat, what kind of car you can drive, and whether you must wear a helmet while talking, eating or driving. The late William F. Buckley described a liberal as, “someone who wants to reach into your shower and adjust the temperature of the water.” Americans have voted for just that kind of official officiousness.

I never would have thought it, and it flies in the face of convention to say so but, with lower tax rates, greater freedom of movement, and a more liberated view of industry and energy, Canadians are more attuned to freedom than their American cousins are (socialized medicine notwithstanding, but just wait…).

It is said that Americans will elect anyone to Congress – once (John Edwards, please call your office). Since 2008, I have wondered if the same is true of the presidency. Obama swept into his first term amid a unique confluence of events, including a financial crisis, a deeply unpopular incumbent party, and a somnambulant Republican opponent. It could have been a fluke.

And despite his liberal leanings, I thought it was possible Obama might pleasantly surprise. As I wrote at the time, “Here’s hoping that he is such a smashing success that he gets busted onto Mt. Rushmore and his face knocks Thomas Jefferson’s right off the nickel.”

But it was no fluke, and Obama was utterly unsurprising. As I said on radio after this year’s election, nothing would make me happier than to become a fan of Barack Obama. But this time, there is far less reason for hope. He has proven to be the hard-left, big-government liberal he seemed. And Americans seem to be okay with this.

I genuinely do not know if conservatism can win again, or what this will mean for the future of the nation. While others on the right have pronounced this to be the end of America, perhaps they’ll forgive me if I rage a little longer against the dying of the light.

Lord knows I have been wrong before (and recently), so I hesitate to make hard and fast predictions. Nevertheless, it seems that in re-electing Obama, the United States has ratified its own decline. Good luck, America. You’re going to need it.

Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at theo@theocaldwell.com

 

Obama, Biden and Economic Patriotism

Perhaps the clearest example that Barack Obama’s re-election campaign has abandoned all hope is their slap-dash effort at articulating an economic agenda for a second term. Specifically, in response to trillion-dollar deficits, an imminent tax cliff, and the largest debt in the history of planet Earth, the president issued an absurd little pamphlet populated with pictures of himself.

Apart from the sheer flimsiness of the document – it looks like an Order of Service for some Eco-Unitarian congregation in Culver City (though they’d probably have a paperless “app” with complete liturgies and Wiccan hymnal) – one is struck by its Stalinist title: “New Economic Patriotism.”

From the beginning, it has been the wont of this administration to equate their leftist policies with patriotism itself. In 2008, Joe Biden chided those who might dare to disagree with the wisdom of raising tax rates, saying it’s “time to be patriotic” – this from a man who gives about 400 dollars to charity annually, despite collecting a hefty government salary for 40 years. As others have noted, Mitt Romney donated 1,000 times more to charity last year alone than Biden gave in a decade. Demonstrably, Democrats do not consider personal choices like charitable giving to be as worthy as forking over money to the IRS. For statists like Obama and Biden, patriotism means government redistribution.

See how that works? If you oppose Obama and Biden, or if you simply feel that the private sector is better able than centralized government to spur economic growth, you are unpatriotic (and probably a racist).

One more word on Biden: It was an act of monumental irresponsibility for Barack Obama to place that malignant buffoon a heartbeat from the presidency. If nothing else, the fact that Biden is followed around by the backup nuclear football ought to be enough to secure a Romney vote. Since he entered the Senate in 1973, Biden has been deadly, desperately wrong on every major issue of his time – from South Vietnam to the Nuclear Freeze to the 1991 Gulf War, right up to opposing the raid that killed Osama bin Laden. But beyond Biden’s legendary bad judgment, his clearly unhinged temperament – the sort only Democrats can get away with in public – poses a greater danger. To voters who imagine his maniacal, bizarre behavior while debating Paul Ryan was somehow an aberration, take it from those of us who have watched him for years: That’s just Joe.

As for Obama himself, on June 30, 2008, he declared, “I will never question the patriotism of others in this campaign.” Three days later, he labeled President George W. Bush “unpatriotic” for adding $4 trillion to the national debt in eight years (a rate of borrowing that now seems quaint, as Obama has added $6 trillion to the debt in half that time). Democrats are always getting their aprons over their heads that their patriotism is being questioned, yet they are the ones who routinely hurl such charges in explicit terms (Nancy Pelosi, Steny Hoyer, Teresa Heinz-Kerry, please call your offices).

But back to Obama’s 20-page treatise and its totalitarian parlance: Economic patriotism is not defined by any one person or party. However, since Obama and Biden have presumed to provide their version (in short, “give us your stuff”), here is another: It is the belief in the American Dream, that tomorrow will be a bit better than today, that in this great country, it’s worth the risk and effort to build something, and to make something of yourself, free from fear that the fruit of your labor will be confiscated to satisfy someone else’s notion of fairness. If you believe that, and are willing to strive for such a goal, you are, indeed, an economic patriot.

Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at theo@theocaldwell.com