The Tax Deal Is The Road To Serfdom

Happy New Year, the Republicans are still the stupid party.  Politically I understand why the idiot Senators voted for this bill.  In theory, and in principle, they shouldn’t have.

When are we going to stop demonizing people that are successful?

That’s what this came down to.  It wasn’t a negotiation of principles.  It was how high to set the bar to affect the least amount of constituents, or make the most amount of constituents happy.  $250,000 was too low.  But, $400,000 snares less voters.  So Republicans made a calculated move at that price.

They are still schmucks.

Spending isn’t going to go down in this country and right now we are on the Road to Serfdom.  Spending cuts are promised in the future and they total a measly $110 billion in spending cuts for two months.  I guess the Senate didn’t notice that our debt is over $16 trillion, and we hit the borrowing limit again, with the debt ceiling coming up in a couple of months.  Sure, we can raise the ceiling and the borrowing limit-but that’s not change.  It’s kicking the can down the road.

Obama used Chicago Machine politics to get his way.  Smart play on his part.  In Illinois, we don’t have a Republican party.  We have a bunch of go along to get along politicians that divide up goodies with their Democratic counterparts.  When they run out of money, they get creative.  They raise income taxes rarely. They always raise fees, and taxes you don’t notice, like water or electric.  In this deal, the Senate raised taxes on capital gains, but only if you make more than $400,000.  Well guess who pays most of the capital gains taxes in the US?  People that make more than $400,000.  To most Americans, this won’t look like a tax increase at all.

But, because of the nature of taxes-the middle class got snookered.  They will ultimately pay the higher tax rates but they won’t notice it on their tax bill.  They might see it in terms of a higher price, less service, slower service,  or in some other way that isn’t front page news.  All the little extra fees add up to a higher cost in the end-even when it’s not a headline rate increase.  This whole debate is why I am for zero deductions, and a low flat tax that affects every American the same.  We all have one man, one vote.  We ought to have the same tax policy for the same privileges and rights.

Here is how the playing field looks right now.  Interest rates are being held artificially low at 0%.  Why is that artificial?  Because it doesn’t reflect the true cost of money.  The market cost of money is significantly higher.  Try and get a loan to start a business, or figure out the real rate a private investor will charge.  It’s a lot higher. The 0% interest rate is punishing senior citizens on fixed incomes, and anyone that saves money.

Because federal programs like Medicare and Social Security are targeted towards seniors-and seniors are becoming an increasing percentage of America’s demographics, we are putting more and more people every day on “big givernment” programs.  Already, the poor are de facto serfs because of givernment programs, and so are seniors.

Meanwhile, the debt bomb is ticking.

Here are my fiscal projection for 2013.

  • The tax hikes will generate less revenue than the projection.
  • Government debt will increase at a greater marginal rate than it has in the past, and become a greater percentage of GDP.

People avoid taxes.  Hiking the cap gains tax will cause people in that income bracket to figure out other ways to move assets around.  They also won’t sell them, unless they get a higher marginal price to make up for the tax increase of 5%.  Keynesians will tell you I am incorrect-but they are always wrong.

The only two Senators with half a mind about them were Rand Paul and Marco Rubio.  They stood on principle.  The other Republican Senators forgot about principle.  They cannot be leaders in the party-or what’s left of it.

The country is headed down the Road to Serfdom at a faster rate.  It will be The Chicago Way that takes them there.

thanks for the link Instapundit.  Happy New Year to you and your readers.

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