April 17, 2015: Taking Umbrage, A Question of Ours, Fool’s Errand

The following is an exchange set off by a posting on "Facebook" by my counsin Marah Kucaj-Oseland, in which someone she has befriended on the social website took umbrage with my reaction. The exchange was as follows:

Marah Kucaj-Oseland shared Marie Osmond's photo.
It's just that time of year!

MarieOsmond'sphoto."

Joseph Camfield: Perhaps, but it means "Ours". It is money we are investing in ourselves.

Mark: A very small percentage of the money spent by the government could be considered an investment. Investment implies return. What is the return on that investment? Your outlook basically gives them a license to steal. Wouldn't you rather keep most of your money and invest it yourself?

Joseph Camfield:  Mark that is complete nonsense. Tax money goes to educating the young, building the roads, bridges and infrastructure, providing for the national defense and yes as charged by the constitution providing for the 'general welfare'. These are investments in ourselves. Take the Howard Jarvis experiment as a case in point. California had the best school system in the world until the idiot real-estate broker turned tax guru pushed through his tax limitation proposal. Today California ranks among the 10 worst school systems in the United States. What happened to California has happened to America where for the last 40 years the only serious increases in investments have been in military hardware and prisons. The rest of the public domain has either been left to wither on the vine or has been open to exploitation by corporate interests. We had a much higher tax rate 50 years ago, the rich were getting richer, the middle class was growing and the poor were being lifted out of poverty. There is nothing demonstrable in the historical record that giving massive tax breaks to those who are already well to do increases either wealth or employment for those who are creating, through their labor, the real wealth of this country.

Mark:  Spending is not investment.  Of coarse spending is necessary, but spending is spending, not investment. If spending was investment our government would be the richest entity on earth, when in fact it is the most in debt entity on earth; your type of thinking created that debt. Open you eyes and think for yourself, quit listening to liberal politicians that tell you different. Question what they say. Spending per pupil does not equal better education. Ever since the federal government got involved in our schools, their performance has declined. Schools no longer teach how to think, they teach what to think, which is called indoctrination. You use California as a case in point, so I will too. California's massive welfare program has attracted those that wish to suck off of it, and drove away those that fund it, and now California has one of the worst financial positions in the country, along with New York and Illinios; all massive "blue" states. That is not a coincidence. Willful ignorance of the meaning of words and human nature by million of people is how we got in this mess.

Joseph Camfield: Mark, your first lesson in economics was sufficient for your confusion. Everyone from Adam Smith to Karl Marx (with the exception of that idiot Milton Friedman) agrees that labor creates wealth. From this it is reasonably deduced that wealth is created not by the individual acting alone (I can invest in everything better than the society acting through government can) but by individuals acting in concert with the greater society. Wealth, if follows, is socially produced measured in social medium, i.e., money. Now there are certain things that I or you cannot invest in but must be invested for us. Roads and bridges immediately come to mind, as does education, police and fire protection etc., The Friedmanesque mantra that we are using 'someone else's money' when we tax and invest in ourselves is popular poppycock persuasive only to the improperly initiated and the unwashed.

We are the greatest debtor nation on earth it is true. We are so in large measure not because we have spent, but because as I stated before, following the Jarvis model we have refused to tax ourselves. We once had a much more progressive income tax, and were the largest creditor nation in the world. We also were at the vanguard of technological innovation and, importantly, industrial production. We had the best schools in the world, and a rising and vibrant middle class. The last half century has seen a hollowing out of the American industrial base, the exodus of both jobs and capital out of the country and the savaging of the safety net not because we have taxed ourselves but because we have made a fetish of cutting taxes, deregulating industries, and allowing the importation of foreign goods and the exportation of labor and capital, all in the name of 'free markets'.

Secondly the Federal government has long been involved in education and, even today, does not constitute the lions share of resources on education. That is left mostly to the states. To accuse the Federal government of lowering education is laughable. The problem with schools is first the growing option of privatization given a huge boost by the 'voucher' movement, and the underfunding of the public domain that results. Second is the insane mandates, mostly by the states, that require that the schools teach to mundane standardized tests. Third, the schools have always been about teaching certain facts common to our collective experience call it what you will. I would remind you that the greatest threat to 'free' thought is not the federal government but the Texas State Board of Education which determines the content of textbooks, because it uses the same textbooks throughout the state and therefore constitutes a huge market. Texas, you will recall, just edited its history books in order to misrepresent among other things the causes of the civil war, the McCarthy era, and the civil rights struggle. In any case, back in the 'good old days' there was precious little in our books and still is about the great railroad strike of 1877, the anti-abolition riots of 1837, the race riots of 1917-1919, 1943, 1964-68; nor the Pullman Strike or any of the great struggles in the labor movement. History has always been sanitized. You were, as I was, no doubt taught in our history class that we freed the Philippines from Spain and established a beneficial protectorate until that country could raise itself up and become like us. The facts are otherwise, I discovered reading Mark Twain's "The Damned Human Race". In fact the Philippines had freed themselves before Admiral Dewey steamed into Manila Harbor and snatched their newly won freedom from them. Additionally more than a million people died on the islands in the ensuing struggle by the United States to subdue the Islands. I use this as a case in point that, as Voltaire once observed, "history is the lie commonly agreed upon.", and I point this out to demonstrate that we hardly needed 'federal interference' to reduce our civics lessons to the level of our common misunderstandings. The local board of education proved quite sufficient for that purpose.


Finally, it is the so-called 'red' states, principally in America's Southeast and plains that draw most per-capita from the public trough. The 'blue' states have larger populations and, accordingly, larger budgets.


I don't gather information from the speeches of politicians, liberal or otherwise, nor have my views been formed by the likes of Faux News or MSNBC. I read, books mostly, ones that have no pictures, and have been taught through rigorous History and Political Science classes to tell the difference between authoritative sources and popular nonsense. If you would, I would suggest you begin by reading the works of Kevin Phillips "The Politics of Rich and Poor", "Arrogant Capital" among others. Phillips was no wild eyed leftist but the author of Richard Nixon's 'southern strategy' in the1968 campaign, and later worked in the Nixon Justice Department. A died in the wool Republican, until recently, Phillips as early as 1988 began publishing the economic returns on the Jarvis inspired 'Reagan Reaction", and the effect it was having on the middle class in this country. In these works you will find, quite clearly delineated, the effect of the changes in the tax code, the movement from taxing wealth to taxing work, and the results of shifting the base of the economy from industrial production to finance has had on the decline not only of the contemporary United States but also the historical precedents in Argentina, Holland, Spain, and Great Britain. Those who refuse to learn history are damned to repeat it and we are doing our level best to repeat the examples of the aforementioned nations. The conclusion is inescapable that the implementation of breathtakingly myopic public policies since Great Actor became President has squandered the national trust to the point where for the first time since U.S. Grant was President the United States is no longer the world's largest economy. For this we can thank our conservative friends and the Democratic Leadership Council and the other Dems that went along and are currently going along with them.

No doubt I have not heard the last of these responses but I fear that I have been, by degrees, drawn to play the fool. For it is a fool’s errand indeed to try to inject some degree of enlightenment into the dark recesses of willful ignorance.

October 29, 2011: Fool Me Two Times, Arms around Ignorance, Some Things Never Change

 "Fool me two times girl
fool me twice today
fool me two-times baby
i'm going away
fool me two-times yeah
once for tomorrow
once just for today"
         ----Parody of  The Doors "Love Me Two Times."


How does one get one’s arms around such ignorance?  Where does one begin?  At MSNBC and Current TV as well as the publications of Rachel Maddow and Al Franken, a veritable cottage industry has arisen to try to answer the outrageous assertions coming hourly from the “idiot wrong”.

This headlong drive to stupidity, this “will to ignorance” finds many manifestations, most recently in the form of tax proposals by Rescumlican wannabees Governor Rick Perry of Texas and former Pizza executive Herman Cain.  These proposals, a 20% “flat tax” put forward by the Texan and the so-called 9-9-9 proposal by Mr. Cain are derivatives of the old rescumlican push to eliminate whatever progressivity still exists in the tax code in favor of the seemingly “fair” flat tax.  For our purposes, I’m republishing a previous post on the then so-called “fair tax” proposal that was floated in the 2008 election and championed by yet another conservative neophyte Governor Huckabee of Arkansas.  Here, then, is how it looked four years ago.  Some things never change:

“Why is it that every time one sees a fundamentalist preacher turned politician campaigning for the Presidency he has the Bible in his left hand, his right index finger in your face and a tax cut for the rich in his back pocket? It is difficult to say, perhaps overweening ambition, perhaps the reluctance or the inability to understand something as complex as economics, perhaps intellectual laziness, perhaps a simple willingness to be a shill for wealth. But in any case we are now presented with another such spectacle this time in the form of Mike Huckabee, our very own Elmer Gantry.

He arrived late to the Presidential sweepstakes and took up the twin causes of God and good government in an effort to gin up the support of the fundamentalist wrong that heretofore were seen to have controlled the proceedings. Initially his message was a welcome variant from the old standard in which Christ was seen not as the apostle of greed but became, briefly in the hands of the Reverend Mike, once again the God of compassion. Accordingly Mike spoke eloquently, if only briefly, of our collective need to tend to the least among us. But his campaign, after Iowa, gained little traction with victories limited by religious and sectional boundaries. In order to breathe new life into his flagging effort, the Huckster has now transformed himself into a full-throated champion of the so called “Fair Tax”, not so much to win the nomination but to pick up the broken petard of Pat Robertson and become the new Champion of the idiot right.

Accordingly he is now out canvassing the country saying that “in Arkansas if it can’t be fixed with duct tape it cannot be fixed, and the tax code and the IRS cannot be fixed with duct tape”. There you have it in a ‘nut’ shell. If it cannot be fixed with duct tape it must go. Well Mike, I hate to break the news but you cannot fix the schools with duct tape, you cannot fix the military with duct tape, you cannot fix the roads with duct tape…..shall we get rid of those too? Talk to any heating and cooling contractor and you will learn that in fact one cannot fix anything with duct tape, not even ductwork. But it is by these standards that the Huckster wages his war to rid us of the onerous Internal Revenue Service.

No one, especially a progressive, is about to defend the present system of how we tax ourselves in these United States. The present tax code is as close to a ‘flat’ tax as we have seen in generations, with nearly all the progressivity having been taken out of it. But the problem of taxation in America is not that we are being taxed too much, for we rank near the bottom in overall taxation among industrial countries. It is that the near elimination of the graduated income tax of our forefathers has produced a society that has increasingly become more bifurcated between great wealth and the struggling rest of us. This tax proposal, coming as it does on the abject failure of a straight out ‘flat’ tax proposed by the likes of Pierre DuPont in his Presidential campaigns, is even more regressive. It would move the tax burden increasingly from the wealthy unto the backs of the working middle and lower classes; increasing the taxation on work while nearly eliminating the taxation of wealth.

When our forefathers introduced the graduated income tax they understood, as the ‘boomers’ apparently do not, that it is better to tax wealth than tax work. Reasoning from the tenets of Adam Smith, the founder of modern free-market capitalism, that work produces wealth, our forefathers rightly concluded that it would be counterproductive to tax work since it was through work that all wealth originates. Better, they said, to tax wealth at a higher rate. By taxing wealth at higher rates it leaves work with a relatively lighter share of the overall burden, freeing it to generate more wealth. This reasoning took the form of the distinction, in the terminology of our ancestors, between what was called “earned” and “unearned” income. Better they said to tax at higher rates unearned income (income from rents, interest and profits), than earned income (income from wages). Accordingly heavier taxes were laid upon the upper income tax bracket (in the 90% range), capital gains and estate taxes. The result was a more egalitarian society, one in which the fruits of our collective labor were generally shared, a society in which we witnessed the explosive growth of a large industrial middle class.

But the ‘Boomers’, the grand recipients of our forefathers collective wisdom, saw nothing in the lessons taught that we felt obliged to learn. Accordingly we have followed the siren song of greed introducing one tax ‘reform’ after another from the tax limitation craze set off by Howard Jarvis in California in the late ‘70s, to Ronald Reagan and the Republican assault on the graduated income tax, to the several flat tax proposals, and efforts to eliminate outright the capital gains and estate taxes. Let us take a brief look at the latest entry in the tax ‘reform’ craze put forward by the conservative stink tanks. The effort, such as it is, requires more from us than it deserves.

John Kenneth Galbraith once termed economics the ‘dismal science’, and although he was referring to the writings of Smith, Malthus and Ricardo, he can also be read to understand that approaching a study of economic theory or practice is like going to the dentist. Accordingly one approaches the study of the “Fair Tax” with all the enthusiasm of facing root canal work.

The idea came out of the bowels of Americans for Fair Taxation as a simple shell game in which the tax burden would be shifted from income taxes on profits and wages to what is, in effect, a national sales tax. Now even a flat rate tax of say 10 or 12%, as our friend Pierre DuPont proposed, has at least the appearance of ‘progressivity’ inasmuch as that the more one makes the more taxes one pays. But the so called “Fair Tax” proposes a 23% sales tax on all goods and services. It would eliminate taxes on savings and investments, all estate taxes, and virtually every other form of taxation. The result is that the tax burden would be shifted entirely onto consumption. What this means is that there becomes an inverse relation between income and the effective level of taxation. That is the lower your income the higher the percentage of your income to taxation. Those at the lowest levels, required as they are to spend virtually every cent on necessities, would pay the going rate. The higher one’s income the more can be put aside for saving and investment which, under this scheme, is shielded from taxation. Yes say the proponents but when it is withdrawn it is spent and taxes are paid on it. No say we critics because the interest on this money is earned and compounded while in the bank and is not subject to taxation. “Unearned” income, which is income nonetheless, is not subject to taxation unless and until it is spent. Suppose it is not spent, suppose it is left to constantly multiply itself over a period of time. Yes when it finally is withdrawn from the bank to make some purchases it is taxed but in the meantime it is tax free. Wages are not so lucky. One is presented then with the spectacle of the worker being taxed at every turn while the investor merely clips his coupons and watches his money grow.

What the inventors of this scheme have done is take the entire cost of government and raise the money by levying a consumption or sales tax. The proposal, with the requisite misleading moniker of ‘Fair Tax’ has the appearance, like the flat tax, of fairness. Everyone pays the same tax, right? Wrong. Everyone pays the same tax, as now, at the checkout counter, but not everyone pays the same effective tax. Whole parts of the economy, principally the investment community, earn money but are exempt from taxation. So for instance, the poor slob earning $15,000. a year pays an effective tax at the going rate of 23% while the billionaire, because so much of his money is off earning income at compounded rates tax free, pays an effective rate of less than 2%.

What makes this shell game so appealing is the deceptively simple complexity of it. It reminds me, in a perverse way, of the objections modern Republicans raise to the idea of returning to a graduated income tax. “The rich already pay the lion’s share of income taxes”, they point out parroting the talking points of the Republican National Committee. The Rich do pay nearly two thirds of all income tax in this country. But that is precisely the problem. The fact that the upper ten percent carry such a burden is not due to the unfairness of the present system or to the horrors of reinstituting the tax code of John Kennedy or even Jimmy Carter. It is due, quite simply, to the fact that the wealthy now own such a large share of the economic pie. No the answer is not to lower taxes on the all too heavily burdened upper classes, it is instead to raise those taxes and return a greater share of the wealth to those who labored to produce it in the first place. What is needed is a candidate for President to look the American people in the eye and tell them that what we want to see is the middle class paying 80% of the income taxes, because under this administration the middle class will control 80% of the wealth.

There are other problems with this so-called "fair tax" proposal:

There is the question of the effective tax rate. Proponents say that it is 23% but for the scheme to be income neutral—that is for it to generate as much money into the federal treasury as the current system—the effective tax on goods and services would be at least 30% and, according to the President’s Advisory Panel on Tax Reform, as much as a 34% in order to fund government at present levels. In fact according to economist William Gale of the Brookings Institution taxation at the 23% rate would blow a 7 trillion dollar hole in the budget over 10 years and he projects a more realistic rate of 31% or higher in order to reach present levels of funding.(seehttp://money.cnn.com/2005/09/06/pf/taxes/consumptiontax_0510/index.htm) This new tax would be levied at time of purchase on new homes, rent, interest on credit cards, mortgages and car loans, doctor bills, utilities, gasoline (current taxes would not be repealed) legal fees, ad nauseum.

Conservative radio talk-show host Neil Boortz contends that there will be a 22% reduction in prices as companies will be able to produce and sell goods and services cheaper because they would no longer be required to withhold taxes. This is a blanket admission, by one of the scheme’s principal proponents, that by passing the savings on to the consumer wages will in effect be cut by at least 22%. In other words the money now being withheld would not be returned to the worker but would instead be passed on to the consumer who would then realize the savings when the product is purchased. For the worker, on the other hand, the tax burden remains but must now be paid at the check out counter. The tax must be paid, albeit at the reduced price, not with one’s old ‘gross’ income but with one’s old ‘net income’ that is what was previously left after the old IRS got done with it. Assuming that all of the savings are passed on to the consumer this is at best a simple economic wash. No real savings emerges.

Now either prices increase or wages must fall. Either the employer pockets the monies formerly withheld and passes the savings on to the consumer in which case it is a dead wash—if, and it’s a big if, all of said savings are recycled back to the worker as consumer. The worker is then confronted with a giant leap in retail prices. If the schemers allow us to keep all our earnings and we have all of our former paycheck in hand then prices we will face will be as high as 34% greater. In any case the system, as presented, is a wash. The proponents contend that it will raise as much money as the present system. The question is why make the change?
The answer lies in the hidden agendas. Remember these are the same folks that have been toying with the tax code now for nearly a generation, killing with a thousand cuts the golden goose given us by our ancestors. It began at the 1976 Democratic National Convention when Jimmy Carter, as he accepted his party’s nomination for the Presidency, called the American tax code a “disgrace to the human race.” The problem facing the nation at the time was that the tax code as it had evolved in the postwar era had not been adjusted for inflation. Greater numbers of working Americans were now lifted, by the hyperinflation of the era, into higher tax brackets fuelling a nation-wide tax revolt. Carter in calling for reform gave voice and legitimacy to this growing concern. Instead of simply adjusting the tax code for inflation the Democrats stalled and it was left to Ronald Reagan to do the reforming.

Posturing as a progressive Reagan, much as ‘Ol Two-Cows would do two decades later, put conservative stink tanks in overdrive spinning ‘tax reform’ that had the veneer of being progressive but in effect shifted the tax burden increasingly from wealth to work. Accordingly they cut the highest tax brackets from 72% to 35%; they cut the capital gains tax in half, made similar reductions in the estate tax. They increased Social Security withholding taxes and cut federal revenue sharing meaning that state and local governments, funded on flat rate income or sales taxes, were left to make up the difference. This had the effect of further shifting taxation over the entire spectrum from the graduated income to more regressive forms of taxation. To add insult to injury they eliminated the exemptions for consumer loans, most medical bills, and other previous exemptions that the middle class had enjoyed so as to raise the needed revenues. The result, as has been noted by Republican turned independent Kevin Phillips, is that there has been a growing gap between rich and poor and the middle class, now owning a smaller share of the national economy than at any time since before 1929, is shrinking relative to the rest of the economy. The economic high tides of the 80’s and 90’s did not, as Reagan had promised, raise all boats; and under the maladministration of ‘Ol Two-Cows, over 5 million have slipped through the now tattered safety net into poverty. It is from advocates such as these that the latest incarnation of ‘tax reform’ in the shape of the so called ‘fair tax’ comes. The question poses itself: why trust them?
The shell game gets complicated. The proposal calls for a “Prebate” program in which those at the lowest levels will be reimbursed for taxes paid giving the act a ‘populist’ veneer but this would ensure, under a revenue neutral standard, that the middle class will bear a greater share of the burden. And, to be fair, the proposal does for the first time shift social security funding in such a way as to make the rich belly up to the bar and pay more. But the fact remains that this is perhaps the most regressive tax proposal to ever have reached the national political debate since early in the nineteenth century. It is a shell game in which wealth walks away from the table nearly scot-free.

Nor does the ‘Fair Tax’ eliminate the IRS as the Huckster would have us believe. Some agency, however named, will have to collect the taxes. Taxes, in the new form would simply be collected not by the employer but by the merchant. How the retail industry will react to this burden is unclear. This proposal, by their own admission, will not cut the overall tax burden it will simply shift who will pay it. To suggest otherwise is to hint at a hidden agenda in which the real purposes are to simultaneously cut taxes on wealth and cut government revenue so as to further savage governance. It gets harder to fund the OSHA or the Consumer Protection Agency, when funding has gone dry. Whatever the real intent, one smells a rat under the kitchen sink.

It is doubtful that neither the Huckster nor Neil Boortz has studied Econ 101. If they had they would be able to recognize so obvious an economic shell game. Let us give them the benefit of the doubt and put this present misunderstanding down to a lack of proper schooling. To assume otherwise is to understand that they have become mere shills for great wealth, mere apologists for their corporate paymasters, and mere pimps for the GOP-- the Grand Old Prostitute.

In the immortal words of ‘Ol Two-Cows’, fool me once shame on you, fool me twice, shame on me, fool me three times, ‘won’t get fooled again’. No! No! “

                                                                                                                                

For another assessment of the impact of the “Fair Tax “proposal see:
http://www.factcheck.org/taxes/unspinning_the_fairtax.html