America is at risk of taxing herself out of a democracy

Posted by Tod A. Wacker, West Salem October 09, 2008 04:56AM

In 1787, Alexander Tyler, a Scottish history professor at the University of Edinburgh, noticed a continuing pattern in the advance and decline of the world's democracies. He stated that a democracy can continue to exist until voters discover that they can vote themselves gifts from the public treasury. From that point on, the majority proceeds to vote for the candidate who promises the most benefits from that treasury. The end result is that, every single time, in a period of about 200 years, democracies collapse due to a loose fiscal policy.

He also noted that the progression of a democracy is a simple one. It transforms from bondage to spiritual faith; from spiritual faith to courage; from courage to liberty; from liberty to abundance; from abundance to complacency; from complacency to apathy; from apathy to dependence; and finally from dependence back into bondage.

As we listen to candidates campaigning, whether they are running for town council, United States president, or somewhere in between, are we voting ourselves one step closer to the bondage of socialism? Or, even more extreme, communism?

Our model of democracy has been in existence 232 years. It's our generation's turn to guard it. How far will we let it slip on our watch?

Regardless of which political party we choose to affiliate ourselves with, we are all Americans. We all have issues and agendas that are important to us. But a government is not a business. It is an organization that does not produce anything to generate an income. The only money it receives is what it takes from its people. Our government cannot and should not fund all of the issues and agendas that come its way.

Think about this: If less of our income went out in taxes, we could individually give more money to the causes, charities and organizations we feel are worthy.
Don't misunderstand my point. It is a wonderful responsibility to pay taxes. But how far can we let this go? When we go to the polls in November, let's further the words of Alexis de Tocqueville:

"The American republic will endure until politicians realize they can bribe the people with their own money."

http://blog.cleveland.com/letters/2008/10/america_is_at_risk_of_taxing_h.html

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Obama's 95% Illusion

Wall Street Journal

One of Barack Obama's most potent campaign claims is that he'll cut taxes for no less than 95% of "working families." He's even promising to cut taxes enough that the government's tax share of GDP will be no more than 18.2% -- which is lower than it is today.

It's a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he's also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of "tax cut."

For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase "tax credit." Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:

- A $500 tax credit ($1,000 a couple) to "make work pay" that phases out at income of $75,000 for individuals and $150,000 per couple.

- A $4,000 tax credit for college tuition.

- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).

- A "savings" tax credit of 50% up to $1,000.

- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.

- A child care credit of 50% up to $6,000 of expenses a year.

- A "clean car" tax credit of up to $7,000 on the purchase of certain vehicles.

Here's the political catch. All but the clean car credit would be "refundable," which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer -- a federal check -- from taxpayers to nontaxpayers. Once upon a time we called this "welfare," or in George McGovern's 1972 campaign a "Demogrant." Mr. Obama's genius is to call it a tax cut.

The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation's Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.
The total annual expenditures on refundable "tax credits" would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as "tax credits," the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.

The political left defends "refundability" on grounds that these payments help to offset the payroll tax. And that was at least plausible when the only major refundable credit was the earned-income tax credit. Taken together, however, these tax credit payments would exceed payroll levies for most low-income workers.

It is also true that John McCain proposes a refundable tax credit -- his $5,000 to help individuals buy health insurance. We've written before that we prefer a tax deduction for individual health care, rather than a credit. But the big difference with Mr. Obama is that Mr. McCain's proposal replaces the tax subsidy for employer-sponsored health insurance that individuals don't now receive if they buy on their own. It merely changes the nature of the tax subsidy; it doesn't create a new one.

There's another catch: Because Mr. Obama's tax credits are phased out as incomes rise, they impose a huge "marginal" tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income.

Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.

http://online.wsj.com/article/SB122385651698727257.html

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ACORN’s Nutty Regime for Cities

by Sol Stern

If you thought the New Left was dead in America, think again. Walk through just about any of the nation’s inner cities, and you’re likely to find an office of ACORN, bustling with young people working 12-hour days to “organize the poor” and bring about “social change.” The largest radical group in the country, ACORN has 120,000 dues-paying members, chapters in 700 poor neighborhoods in 50 cities, and 30 years’ experience. It boasts two radio stations, a housing corporation, a law office, and affiliate relationships with a host of trade-union locals. Not only big, it is effective, with some remarkable successes in getting municipalities and state legislatures to enact its radical policy goals into law.

Community organizing among the urban poor has been an honorable American tradition since Jane Addams’s famous Hull House dramatically uplifted the late-nineteenth-century Chicago slums, but ACORN and Addams are on different planets philosophically. Hull House and its many successors emphasized self-empowerment: the poor, they thought, could take control of their lives and communities through education, hard work, and personal responsibility. Not ACORN. It promotes a 1960s-bred agenda of anti-capitalism, central planning, victimology, and government handouts to the poor. As a result, not only does it harm the poor it claims to serve; it is also a serious threat to the urban future.

It is no surprise that ACORN preaches a New Left–inspired gospel, since it grew out of one of the New Left’s silliest and most destructive groups, the National Welfare Rights Organization. In the mid-sixties, founder George Wiley forged an army of tens of thousands of single minority mothers, whom he sent out to disrupt welfare offices through sit-ins and demonstrations demanding an end to the “oppressive” eligibility restrictions that kept down the welfare rolls. His aim: to flood the welfare system with so many clients that it would burst, creating a crisis that, he believed, would force a radical restructuring of America’s unjust capitalist economy.

The flooding succeeded beyond Wiley’s wildest dreams. From 1965 to 1974, the number of single-parent households on welfare soared from 4.3 million to 10.8 million, despite mostly flush economic times. By the early 1970s, one person was on the welfare rolls in New York City for every two working in the city’s private economy. Yet far from sparking a restructuring of American capitalism, this explosion of the welfare rolls only helped to create a culture of family disintegration and dependency in inner-city neighborhoods, with rampant illegitimacy, crime, school failure, drug abuse, non-work, and poverty among a fast-growing underclass.

Even Wiley came to see that cramming millions more single mothers and their kids onto the welfare rolls would not produce the desired socialist utopia. Seeking new worlds to conquer, he sent one of his young lieutenants, Wade Rathke, to Little Rock, Arkansas, to launch a new community-organizing group: ACORN. The new group was to build a broad constituency of low-income and working-class people to agitate for social change.

The little ACORN that Wiley planted in the Arkansas soil flourished. As Rathke expanded it into a national organization, the “A” in its name—Arkansas Community Organizations for Reform Now—came to stand for “Association of” instead of “Arkansas.” And as it grew, it retained the core assumptions of the old New Left but radically transformed the New Left’s methods to produce something truly original.

ACORN’s bedrock assumption remains the ultra-Left’s familiar anti-capitalist redistributionism. “We are the majority, forged from all the minorities,” reads the group’s “People’s Platform,” whose prose Orwell would have derided as pure commissar-speak. “We will continue our fight . . . until we have shared the wealth, until we have won our freedom . . . . We have nothing to show for the work of our hand, the tax of our labor”—claptrap that not only falsifies the relative comfort of the poor in America but that also is a classic example of chutzpah, given ACORN’s origins in a movement that undermined the work ethic of the poor. But never mind—ACORN claims that it “stands virtually alone in its dedication to organizing the poor and powerless.” It organizes them to push for ever more government control of the economy, as if it had learned no lessons about the free-market magic that made American cities unexampled engines of job creation for more than a century, proliferating opportunity and catapulting millions out of misery.

Full Text:

http://www.city-journal.org/html/13_2_acorns_nutty_regime.html

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