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|WARNING: THIS SITE FEATURES ORIGINAL THINKING...Jim Croce once sang Don't tug on Superman's cape..., which seems like reasonable advice should we not wish to anger the supreme powers. We do have this duality in our culture: the Superman that is the state collective, the leftist call to a politics of meaning managed by the state, the deification of "we're from the government and we'll take care of you" - versus the Superman that celebrates individual freedom, private property, freedom of conscience, free enterprise, and limited government. We humbly take on the latter's mantle and, eschewing the feeble tug, we dare to PULL, in hope of seeing freedom's rescue from the encroaching nanny state. We invite you, dear reader, to come and pull as well... Additionally, if you assume that means that we are unflinching, unquestioning GOP zombies, that would be incorrect. We reject statism in any form and call on individuals in our country to return to the original, classical liberalism of our founders. (We're also passionate about art, photography, cooking, technology, Judeo/Christian values, and satire as unique, individual pursuits of happiness to celebrate.)|
Superman's product of the century (so far):
Obama speechwriter voting for McCain.
It's not just Joe the Plumber and his question - it's the mocking of 'just Joe' Americans by the elitist campaign that is dashing party unity.
Centrist Democrats - are you thinking about the gulf of difference between Obama and Hillary Clinton? Realizing that Obama stands to the left of the Democratic party?
Your party has moved. Time to move on.
UPDATE: Will Bower, PUMA spokesman is on On the Record with Greta Van Susteren.
There has been some dispute between the campaigns about promises to take public financing and changing course and about past participation in creating the public financing mechanism in the first place.
But it seems that perhaps there's something more that could be done.
Given that Obama's campaign has raised some $600 million dollars and McCain's campaign can only utilize some $84 million, it seems that, just to avoid appearing as a capitalistic juggernaut, the veritable oil company of the presidential campaign, the Obama campaign should be forced to take one third of its proceeds and give them to the McCain campaign.
This isn't to penalize the Obama campaign for their success, it's just the patriotic thing to do, just a matter of simple fairness.
You know, spread the wealth, so to speak.
Gallup Pollster: I see dead people.
Answer: Go West.
Question: What do wabbits do when they get tired of wunning awound?
Are Americans investing their time reading pro 'Blue' books or pro 'Red' books?
Amazon exposes it's sales data. Pretty interesting to notice the recent trend and the comparison to 2004.
Of course, it's difficult to determine if this is a measure of voter sentiment or a measure of literacy.
CEO --Chief Embezzlement Officer.
CFO-- Corporate Fraud Officer.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
BROKER -- What my broker has made me.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy whose phone has been disconnected.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW-- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for $240 per share.
WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.
H/T OlderM :)
In the last 12 days since I started this, we have seen continued intervention by the government in the markets coupled with the largest market declines in history. And while I agree that correlation is not causality, it is instructive to take rhetorical consideration:
If, instead of injecting massive liquidity - the Fed and Treasury perhaps committing in the last few months as much as an entire year of federal tax revenues - had the Congress somehow become possessed with the imponderable temerity to act with correctness and passed the FairTax legislation - i.e. abolished the progressive income tax, payroll tax, capital gains tax, death tax - all federal taxes, and replaced them with a voluntary consumption tax, would the markets have behaved any differently?
Let's see, instead of encouraging a debtor nation - encourage a saving nation, instead of banishing tax haven capital, encourage the trillions and trillions of ex-pat offshore dollars to come home, instead of motivating businesses to export jobs out of the country with the backbreaking tax code, encouraging them to employ in country, and instead of making our products too costly for overseas consumption, making it possible to export competitively again - just to name a few benefits that would result.
Do you think the markets might find such news favorable?
Even if you take the point of view that enacting the FairTax legislation might not meet expectations, is it not reasonable to assume that any miscalculation about its implementation would pale in comparison to the various bailout, finger-in-the-dike, activities that we've observed recently?
Can it be more clear that economic stimulus, not intervention, is the direction to take? Will we shuffle along for years before we collectively realize it? Or will our markets crash in short order under the pall of interventionist action?
Let me move to the key issue for this post which I referred to obliquely in Part 1: Compliance.
Compliance with the federal tax code is a part of the embedded cost of the goods and services that we all consume. Economists that have attempted to analyze these costs have estimated that individuals and businesses spend somewhere between $300 billion and $500 billion annually to comply with the tax code. Yes, that's $300 billion to $500 billion.
Comprising some 67,000+ pages, and featuring some 16,000+ changes in the last twenty years, the tax code is so complicated that a recent study demonstrated that if you contact the IRS with a question, you are guaranteed to get a wrong answer about 60% of the time.
Candidates and pundits regularly throw around ideas about tax cuts and acts of stimulus for the economy. How many of them would result in a cost reduction to the economy of $3 trillion to $5 trillion over ten years? No? That's what removing compliance with the tax code would deliver.
What kind of stimulus would that kind of capital injection make in our economy?
It's pretty obvious: enacting the FairTax legislation is justifiable for this reason alone.
Let me offer some of my own ideas as well. I'm not a spokesperson for the FairTax organization - I'm just a citizen volunteer. I just happen to think the the FairTax legislation is the only currently available mechanism to reverse the financial decline that we find ourselves in.
So here's my opinion on this matter: I think that the estimate of compliance costs is wrong. I don't know how much wrong, but I think it may be huge. The estimates are far too low.
Why? A couple of reasons: 1) Sarbanes-Oxley, 2) Efficiency costs - the intangible cost of the tax code.
Sarbanes-Oxley was designed to prevent the sort of corporate corruption exemplified by the likes of Enron and Worldcomm - so preventing public entities from defrauding the public (which, of course, begs the question, How could Fannie and Freddie have happened in the age of SarbOx? It's something like, "if guns are banned only criminals will have guns" I suppose). The result has been that compliance costs for public companies has soared. But that's hardly the story. The real story of SarbOx as it relates to business is that it has trickled down to small business.
You might wonder how that is possible. Here's how: the entire accounting industry has been pressed into a kind of hostage situation - part of the SarbOx regulations have to do with holding the public accounting industry to public company reporting standards. The threat is, that if a public accountant puts signature to incorrect reporting - their license to practice can be revoked. The practical application of this, is that the public accounting industry has therefore applied public company standards across the board - including the small businesses for which they practice. In terms of their work product, there is very little difference today between a compiled financial statement (which most small businesses employ) and an audited one (which public companies are required to file). A compiled financial statement is the representation of the principals of the business - and since there are typically no securities involved there are really no shareholder issues of importance, and there's no legerdemain involved in demonstrating the financial activities of a small business with a single checking account. An audited financial statement is certified by the public accountant which means they have examined pretty much every aspect of the financial matters of a firm so that they can, with reasonable certainty, certify the state of a business firm. The sad result of SarbOx for small business is that the former method of producing a financial statement has now become pretty close to the latter - and that includes the cost.
I know these things first hand. My cost of compliance with the tax code and the trickle down of SarbOx on my small business - which has caused my accountant to spend increasing, fear based billing time to do a compiled statement for my firm - has increased by over 500% in the last ten years. You read that correctly.
The US Small Business Administration determined in 2004 that small employers (less than 20 employees) had an average compliance cost of more than $1,300 per employee. Small businesses pay significantly more in compliance costs on average than they pay in actual taxes. The 'average' business taxpayer pays about $500 less per employee than small business and fairly large corporations pay only a small fraction of their tax burden in compliance costs (because they pay significantly more taxes).
So tax compliance costs are another regressive tax - small businesses are hit far harder than larger businesses by the cost of complying with the tax code.
Finally, the efficiency impact - though somewhat intangible - I believe is much larger than the compliance costs of the tax code. What's this efficiency impact? It is the fundamental distortion of business strategy and behavior because of the impact of the tax code. I've often joked over the years that after running my company for a decade I was no longer able to do much useful work because I spent most of my time with attorneys and accountants. Unfortunately, that is largely true. It is almost unimaginable how much time is spent - by small businesses and large businesses - contemplating the tax impact of choosing which things to consume and which things to invest in, how to recognize revenues, and prepare to defend such recognition, contemplate the hundreds of changes to the tax code that happen each year and make a determination how that might affect the behavior of the company. Modify operational activities in terms of time billing, expense management and reporting, etc., etc., etc.
In 2005, the Government Accountability Office (GAO) estimated that this business efficiency cost was somewhere between 2 and 5% of the GDP! That's somewhere between $250 billion to $700 billion in annual cost.
There are a number of critics of the FairTax - mostly they seem to attack the determination of what the embedded federal tax should be - and whether is should be quoted as embedded or not.
But, there is really no argument against the elimination of these compliance costs if we remove the tax system that is responsible for them. A reasonable case can be made that the annual cost of compliance is nearly half of the annual tax revenue.
Can we consider our society financially viable if we continue to live with such a dysfunctional system?
Headline for an MSN piece today:
Welcome to the compression of time dear reader. We can now project a rally in a single day.
Don't say I didn't warn you that there's a rough patch ahead...
Recently we noted another Obama connection that's been boiling in the conservative blogs for about a year.
Well, it's just on page four, and by conservative journalist Mark Hyman, but it appears that there's some notice from the mainstream media - the Washington Times - on Barack Obama's intervention in the elections in Kenya while on a brief respite from his presidential campaign a few months ago.
Hyman's succinct telling demonstrates what is at best shockingly poor judgment on Obama's part, and at worst is his possible collaboration with Islamist terrorists and a bloodthirsty grab for power.
In reference to any other personage on the planet, this story would be four inch high letters on every production of the Fourth Estate in the nation. For now, we have to settle with the fourth page somewhere.