Sunday, April 18, 2010

Red Flag Warning: Getting Something for Nothing

The Watchman has live most of his life under the old saying you can't get something for nothing. Similarly the 1960s trumpeting of 'there is no such thing as a free lunch' also seems to have been a slogan frequently impacting life of the Watchman. But Atlas I was wrong. Terribly wrong. I was sold a bill of goods and like so many, many others believed it was imperative for one to work hard to get ahead, to make something of my self, and, well, to use that work to get 'something'. I now wonder how much happier I would have been had I understood these two supposed fundamental principles were wrong? Indeed you can get something for nothing and there is a free lunch. Let me explain. ran an article explaining just how nearly 50% of Americans got something for nothing. Elizabeth Factor and Mallory Factor authored an article entitled, "Guess Who Didn't Pay Taxes on Tax Day?" They reported almost 50% of Americans did not actually, in the end, pay any tax at all to the U.S. Federal Government.

"The Tax Policy Center projects that 47 percent of all U.S. households will pay no federal income tax for 2009. And, the bottom 40 percent of income earners actually receive a cash payment from the government at tax time. This cash payment is styled as a “refund” but it is actually a net cash transfer from the government--not a refund of taxes actually withheld on income. And for many Americans, this cash transfer from Uncle Sam actually exceeds all federal, state and local taxes that they pay in any form during the year including sales taxes and social security taxes." (

To be fair to President Obama's oft quoted response to Joe the Plumber about redistributing the wealth, this tax system has been well in place for decades providing something for nothing to millions. What is so different today is the percentage of non-paying taxpayers is increasing to a point that endangers the fundamental freedoms of our nation. When nearly 50% of those who benefit from the blessings of our nation without appreciating the cost, then it is most easy to see they will continue to vote for their own self interests, i.e. elect representatives who will keep the free lunches coming.

So what do the freeloaders, an apt description as they place a load on the system that supports them and they get to reap the benefits for free, get? Besides cash pay-outs as described in the referenced article, they receive: national security, clean air and water, national parks and forests playgrounds, superhighways, air traffic control, coast guard, police and fire protection as subsidized by the federal government, Pell grants for education, civil rights, weather service, disaster aid, flood protections, public health services, banking and savings protections (FDIC), transportation safety, homeland security, food and drug protection, agricultural product protections, and the list can go on and on. All these somethings for nothing.

The problem as pointed out in the article will come as any good economist knows is when the "price" pressure exceeds the customer's ability to pay that goods and services will either have to be discounted, (get cheaper or poorer quality) or the goods and services are no longer available for sale. As the present effort to redistribute wealth increases, those who do pay the price for the goods and services of government, are going to look else where to invest and earn income that is not taxable. Some may even opt for the idea of doing a 1960's "dropping out" of the work sector altogether, legitimately asking why should they be the ones to foot the bill? The consequences of this attitude is to ultimately stagnate the American dream for all. What will happen when tax revenue isn't sufficient to pay out for the free lunches?

The Watchman believes we will painfully soon find out. Already our nation is in debt so deep our grandchildren will be still paying interest on it when they are old. When revenue doesn't keep up with the need of government, our government prints more dollars. In turn, eventually, our society will pay a terrible price in rising inflation. And who is hurt worst by inflation? The very people who are getting the free lunch today. The lower income earners, minorities, and those on fixed incomes such as retirees. Make no mistake, there will come a time of consequence for our liberal excesses of today.

So if you are one of the 50% who paid zero tax this year, yet benefited from those who did, consider sending Uncle Obama, $1.00 for each person in your family. Pay for at least one lunch this year. Make it a Happy Meal to go.

Monday, April 12, 2010

Red Flag Warning: It is time for Easy Flat Tax

Greetings...The Watchman has finished preparing two tax returns. One for my family and one for my mother. Let me say right off, government does require funds to operate the necessary functions of national defense, public safety, and operation of its various administrative aspects. So this isn't a anti-tax rant. However the methodology by which taxes are computed and then collected is indeed worthy of a good rant, one that I wish our leaders would hear.

I'm just your average citizen. One income source with a few nearly worthless IRA investments, and own a home. Nothing fancy in my fiscal life comparable to say, some rich dude like Warren Buffet or Al Gore. So why does it take over 8 hours just to do one tax submission? Every year when I am done with the agony of answering inane and complex tax questions I take the final numbers and run a little test using simple math and a 3" by 5" index card. Here is what I do:
Line 1 - Gross Income from all sources: $65,000
Line 2 - Tax Rate: x 0.1 (10%)
Line 3 - $6,500.00 (Product of multiplying Line 1 by Line 2)
Line 4 - Federal Withholding: $ 7,652.54
Line 5 - Additional Tax Due(+) or Refund (-): Line 3 - Line 4 = -$1,152.54
Line 6 - Congratulations you are done! Go to: to submit.

Usually my test is very close to the final numbers that spew out from Turbo Tax software that I paid $75 for and spent 8 hours of life working through out of fear I would hose up the filing and have the IRS sending bloodhounds looking for me. Look at how simple the effort turned out. Hard to cheat when the criteria is this straight forward and requires nothing more than a 4 function calculator.

When you look at the tax rules it is obvious the code is set up to encourage or discourage some set of predetermined social aspect. Home mortgage interest deduction is there because the lumber industry, home builders, bankers, and real estate brokers want to 'encourage' home purchases. On the other hand, all the rules about savings and investment really is a way to discourage 'excessive' unearned (meaning you didn't sweat over a blast furnace to get paid) income. Then there are a whole bunch of credits so those who don't make enough money to pay taxes, actually get a tax refund! Gosh how wonderful! From those who have to those who have not.

So the watchman says its time to enact the Easy Flat Tax if we must have an income confiscation system. At least we won't be wasting precious life minutes to pay up. Write to your new congressman on November 3rd to tell them their employers demands the Easy Flat Tax. Let me know what you think. How would you like to have your taxes done in 10 minutes tops?

Wednesday, April 7, 2010

Red Flag Warning: Are We a Free People?

The Watchman serves on the City of Fountain Planing Commission. Tonight we heard a request from a resident who's area recently was annexed into the city involuntarily. It had been in the county and the zoning allowed the existence of "fowl" or chickens on the property. The new city zoning allowed cows but not chickens. So the good citizen was asking for a conditional use to have 24 chickens that was previously allowed by the county. Our commission wisely granted the variance in the conditional use, but what struck me was how this citizen's freedom had been limited by government in the first place. My God, here was a person asking permission to have 24 chickens on his nearly 5 acres of land from his government overseers!

Are we a free people? A hundred years ago a family could move out west, buy a hunk of dirt and basically go about raising a family, planting crops or setting up a shop with out so much as a single "Mother-May-I" from any one in government authority. And for the most part there weren't the avalanche of taxes, permit fees, and licence requirements to do what you thought was best to do with your life. Today you couldn't even be allowed to live in a three room house as it wouldn't meet code. You couldn't operate your corner grocery store without special permits, zoning, and business licences as well as acting as a tax collector for government. Soon every business will be required to provide health insurance for their employees. What's next, car insurance? Life insurance? Business owners (big and small) are some of the most oppressed peoples in America owing to the heavy hand of government.

Are we a free people? How many decisions do we each make daily that isn't some how influenced by a fear of either violating a regulation or being subject to lawsuits. And how many approvals are needed to do something you want to do. If you live in a HOA you have to get the feared architect review committee to approve your house color. If you want to build on to your house you have to get approval not only from the HOA, but the city or county zoning board, a construction permit, and submit information to the assessor to pay the increase property taxes.

Are we a free people? Can you place a sign in your front yard saying the local HOA board is a bunch of nutters? Can you protect yourself or your personal property if necessary with deadly force? In times gone by, the only permit you needed to carry personal protection was the 2nd Amendment to the Constitution. Now you have to pay huge fees to receive a permit to do what you constitutionally have the God given right to do! If you need a permit, are you truly "free"?

Are we a free people? In the next few years will you be able to go get shoulder replacement surgery if you are older than 57 and even pay for it yourself? Will you be free to do so if the regional Obamacare health care review committee rules you can not have that surgery? Or will you be discriminated against because of your age and ability to pay and be told to stand at the end of the line?

Are we a free people? When there are so many rules, regulations, and legal requirements that corral us , lemming like, to be treated as just another member of the unwashed collective. Are we a free people when we let those who are suppose to represent us in the halls of congress, ignore our protests and our outrage at a government mandated program that we can not afford.

My friends the answer, sadly, is no. No we are not a free people. And while the view of our current system doesn't look anything like the horrific dictatorships of past ages, the tyranny being foisted off on us today takes many different forms and is just as crushing. The human spirit contains a freedom shaped vacuum to paraphrase Pascal. In every age and culture, eventually the yearning desire for freedom bursts forth into a new age of release where humanity can expand its horizons and live in liberty. The question we have to ask our selves today and certainly on November 2nd, do we wish to follow the lead lemming right over the cliff of collective Marxism or do we desire again to taste the sweetness of freedom and liberty.

Thursday, April 1, 2010

RED FLAG WARNING: I'm back....Recipe for Disaster Cake

All my classes have concluded and now I'm back to bring more dire warnings of doom and pending disaster. Yes I missed out on giving stinging missives on the final show down in the halls of congress over the health care legislation. It is now the law of the land and soon we'll all be feeling lighter in our hip pockets when the 16,000 new IRS agents come knocking at our doors with one hand out for more taxes and the other holding the government 'gun' to our heads.

Our President tells us we will really like this new program once we get to know it. Nancy Pelosi told us they would have to pass the bill to know what was in the bill. And our dear bumbling, foul mouthed Vice President whispered a very honoring phrase in to the President's ear during the signing ceremony saying, "This is a big F..... deal!" Class act all around.

However, I turn now to the task of warning my friends to be preparing for the tough times ahead. Yes they are just around the bend. In the course of human events no nation has ever escaped the ravages of over spending and under production. Currently the US debt is on a scale never before seen in world history. The long term debt is now in the 12 to 14 trillion level with our nation unable even to pay the interest on the debt. It is truly gruesome to consider that we the "given" generation has indeed given our children and grandchildren a crushing national debt load that threatens our national security.

We are also under producing. We not only have given our selves a huge entitlement to go along with social security and medicare, but we're also nationally buying more stuff than we produce to sell to other countries. We don't produce steel any more, we sell services. And how many cell phone service plans can one nation sell its self. It is kind of like having an Amyway dealer on your block. They get one or two others to sell product and then before you know it everyone is selling the products to one another until the block is totally saturated and no one sells or buys.

The worst aspect of the health care law is the now confessed real reason for doing it by our democratic leaders. Senator Max Baucus, (D) Montana, recently was caught on tape telling a group of listeners the health care law was necessary to reshuffle wealth from one class to another lower class. To make having wealth more fairly distributed. This is classic Marxism, "from each according to their ability, to each according to their need".

Alan Reynolds in the March 30, 2010 Wall Street Journal observed the idea of taking more from the rich to pay for ObamaCare won't work. "Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes." He goes on to say, "It won't work. It never works." Reynolds then goes on to demonstrate how the raising and lowering of tax rates over the years has shown that when rates go up, revenues go down and just the opposite when rates decrease. He also discusses that rich folks aren't stupid. They find other ways to keep the tax man's hands off their income, again resulting in lost revenue. So who in the end gets taken to the cleaners? It is obvious, the middle class. They make up the difference in revenue shortfalls.

Lastly, I see a situation where wages will be going lower. An example will suffice: I run a company where I employ 30 people who perform a home cleaning service. I pay my employees $12.50 per hour on average. but I don't offer health care benefits. But ObamaCare now requires that I do offer it and pay part of the premium. So now my company is faced with either laying off workers to enable me to have enough cash flow to pay the added expense or I will have to ask the workers to take a cut in pay. New workers too will start out even lower to help make up the loss in company revenue. Over time the tax bite will increase when it is realized not enough tax money is coming in to pay for the programs so wages will stay depressed. If I let people go, then my business may fold for lack of workers to meet the demand. So again, who is the big looser? The middle class takes another one for Obama.

So there you have it. A recipe for disaster cake. And the icing? High Inflation....coming soon to a nation that prints money by the train load.