TeaParty Attendees: beware of wolves in conservative clothing

If you attending your local teaparty event Watch out for random Liberal bloggers trying to play this as far right anti-government folks. Don’t let them. This government is too big and we are taxed enough to support a proper government. This is not “no tax, anarchy”. This is slimmer more efficient and more fair representation. We have to try and force the media to cover the truth. We can only do that if they have a tough time finding the “wild” quotations.

Be diligent, do not allow them to pull you (or anyone around) you into an anti-Obama, anti-government chant. The fact that they will be there is proof of the power this is having and proof that they are scared. It is time to unite the Libertarians and the Conservatives from all stripes to wrestle control back from Washington and back to the people.


Update: 4/14:
Hot air has done a good job of wrapping a lot of this together and linking out to other articles. Read this…

Update: 4/14: Michelle Malkin has confirmed the DHS report targetting the “right-wing”. The left will continue to try and link any opposition to Obama and his agenda as racists and anarcists.

Obama is not Robin Hood he is Prince John

Let’s get something clear here. This Robin Hood, “Take form the Rich and Give to the Poor” babble is completely off base. It is dead wrong and insulting.

Dead-Wrong because Robin Hood did not take from the “rich” indiscriminately. He took from the elite insider class of the government to give it back to the peasants. He did not take from the store owner, the farm worker or the blacksmith. He took from those connected to the Prince because the Prince had created an unfair tax burden on the working class and was lining his and his friends pockets. This tax system created scenarios where people tried to hide their money to protect it from taxation. Obama is no Robin Hood. His eilite Harvard and Acedemic circles are not the working class.

The second and more insulting part of the metaphor is the notion that the “rich” in this country came into wealth by wringing the money from the poor working class by force. Companies that provide jobs, services and goods are the elite class separated from the people? In fact, these companies and individuals are from the people. They are construction companies, farmers, and service organizations of all shapes and sizes.

The metaphor is a joke both illustratively and literally. I do believe that it shows the underlying distaste of success now popular in today’s Liberal thinking.

A clear difference in philosophy

I heard an explanation of the differences between Conservatives and Liberals that I thought was interesting. The comparison was something along the lines of … Two Americans both have big dreams. The conservative wants to wrok for himself, create a company, provide for his family, grow the business and retire comfortably. The Liberal wants to make sure that others are provided for, that health care is afforable and poverty is reduced. What is so different is not these dreams but the way in which they are acheived. Unfortunately, the second man’s dreams are accomplished by taking money from and destorying the dreams of the first.

I found this interesting at first and the more I thought about the better it fit. Looking at it from the other man’s point of view. The dreams of the first man have no impact on those of the second. In fact his ability to grow the business does support providing others with employment, possible philtopic donations and the ability for employees to succeed and pursue their own dreams. Why can’t the second man create a company, pursue business partners and provide for others on his own accord? Why is it necessary to require extraction of income from others? I find it very likely that there is a buiness opportunity in helping others. In fact if local companies were taxed less and incented in their philithropic efforts this business venture would be even more likely.

How to lie with statistics (politics II)

I have mentioned a few in a previous post and I now have a few more that are bugging me.

The income gap

One you have likely heard and may fall into is this…The income gap between the have and have-nots is widening. I do not deny that the gap is widening in fact if it was not the economy would likely be in serious trouble. It is just a function of simple math. Let’s take some simple examples. One, let’s say plumber, makes $40,000 a year. The second makes a clean $1,000,000. The plumber has a great year, things go really well and he increasing his income by a whopping 50% to $60,000 the following year. Now the millions did ok, his business was not growing as fast as he would like but he did out pace inflation and increased his income by 5%. This would take him up to $1,050,000. Yep there it is, the income gap is widening. In the first year the difference in income was 960,000 (1Mil – 40k) and this year it is over 990,000 (1.05Mil-60k). Everyone is making more money and the government would get more revenue… and this is BAD.

Now let’s look at more realistic numbers. If employee making 40k got a more traditional 5% increase to 42k, the millionaire would have to make less then 1/5th of 1% to keep the gap from widening. I am not sure how you can make sense of changes in this number?

So what we come to is this, the millionaires in this country would have to stop making money just to keep it fair. Suppose one of those millionaires instead was a founder of say…Google…and clears 100Million. Well then we are all toast they will outpace 100,000s of Americans combined. So to make it fair we need to take more of their money. Right? Raise their taxes to level the playing field… hold on… taxes do not change income levels. So in fact, to stop this gap from widening we have to stop them from making the money in the first place. What options do we have to stop millionaires from making more money? The most obvious one I can think of is slowing the economy and making it harder for businesses to turn a profit. I am sure their are others but this seems to be the one currently in practice.

Median incomes

Closely tied to the last is the median income argument. The next statistics you will hear about is “median income”. This is the logical counter to the simple math used in the income gap analysis above. Again, I submit that mathematics and normal economics is the cause of such statistics.Remember that the median is not an average it is the middle salary of all employed Americans. It is used to approximate the expected income of a “normal” worker and from this aspect is a better indicator then the average.

In a given year, employees join and employees exit the work force. Other employees move up the brackets. In a growing economy it is likely that more people are entering the workforce as jobs open up then those that are leaving it. With the workforce always changing, all that is necessary to shift the median downward is to have more employees enter the work force under the median then above it.

Here is a simple example. We have a small company of 5 employees. They all make 50K a year. So the median is 50K. Let’s say that 2 of those people are principles in the company and due to company growth they report 100k each on their taxes. The average moves up but the median (middle/third employee) is still 50K. This growth allows them to hire 3 new employees at 30K each. The average moves back down and the median is still 50K (30k,30k,30k,50k,50k,50k,100k,100k). But if they were to hire 3 more employees (at anything lower then 50K) the median would now move down. What does this statistic tell us about the health of our company? It is failing right? NOT MUCH of a useful metric on its own.

So, if the economy is growing, is it more likely to be hiring high-level employees and managers or staff level employees? Most corporations have more staff level employees then management level (at least they should). When they grow, the dominant trend would be to promote from within and hire junior staff. Since the overall number of Americans employed increases the median is likely to go down. Again, and this is somehow BAD?

So What really happened these past years?
My intent is simply to have you take the numbers going up and/or down with a grain of salt and think about them. Each statistic alone can mean many things. It is only when we combine multiple indicators that we can truly see the full picture. I attempt to combine more information from the IRS statistics to clarify the economic picture around the median income levels.

In 1999, There were 94.5 million tax returns that paid taxes. There were 30.5 million returns for Americans making under $25,000 which amounts to 32.3% of the returns from that year. The median income that year was $50,641 (2007 dollars). Just bank those numbers as comparisons.

By 2003, [after the beginning of the recession and the attacks on 9/11/2001], we [logically] seem to have slid back a bit. There were 89 million returns that paid taxes but a full 3 million more returns were filed than in 1999 (more returns; less tax payers). Of those returns 23 million of those were from Americans making less than 25,000. There were 3 million more returns filed but 7 million less low income tax payers. Is this proof the shrinking economy was hurting those at the bottom the most? The median income that year was down to $48,835 (2007 dollars). Or is it proof that the Bush tax cuts of 2001 eliminated more lower income people from the tax roles completely while adding 3 million new wage earners?

Slide forward to 2006. There were now 10 million returns that paid taxes. Of those 28 million were filed by Americans making less than 25,000. We were now are up another 8 million tax filers including almost 5 million of those under 25,000. I believe that this is proof that the economy is growing and more wage earners are joining. If this is the case depending on the type of jobs being created, it is very possible that an influx of lower paying wage earners would bring the median income down. Would this be good or bad? If you know please let me know. Well… the median income for 2006 was $49,568 (2007 dollars). So it moved up.

I am unconvinced that median income means much at all by itself. But in this more complete context of more tax returns being filed and more wage earners it would seem to indicate a growing economy.

Final Conclusion

For further confusion the median income in 2007 was now $50,233. So what do we now have. We have increasing tax filings, increasing median incomes, increasing revenues. I would think that this is proof of the value of cutting taxes to avoid recession. I would also think that this exemplifies “a rising tide lifts all boats”. Simple proof of conservative principals in action for the benefit of all.

But for my liberal friends, I have a statistic to help you out…it is listed within these numbers and you might have even heard it before…”Median incomes are down during the past eight years of the Bush presidency.” Yep down from $50,641 to $50,233 over the eight year period. Of course, you have to ignore the facts of the recession of 1999-2000 and the attacks of 9/11 and the fact that the major drops all occurred before the Bush tax plan was fully in place. But hell, if you are going to use a confusing statistic in the first place, no need to burden it with the truth.

Obama’s statements on taxes explained

Having the benefit of years of pouring through data and trying to correct entrenched assumptions about what that data is telling us, has been far more useful in this election than in the past. I find it fascinating to listen to the “words” and “speeches” of Oabama and the ease at which he uses statistics and statements to back up false arguments. It is not surprising that many fall for it.

Statements like ‘tax cuts for 95% of Americans” leaves out the little fact the close to 40% of Americans do not pay taxes so their “tax cut” is actually a check based on someone else’s tax payments. That didn’t uses to be called a tax cut. It used to be called welfare or socialism. But “tax cut” sounds so much better and 95% is such a high number. The Wall Street Journal went in to this as well yesterday. Un fortunately their numbers are worse then I thought, they say under Obama 44% of people will n0t pay taxes. Then others will get a refund check that pay very little taxes. We are approaching the 50% mark when all Liberals will have to do to retain full power in blame the rich Republicans for trying to tax you. 50% of the population will do almost whatever it takes to vote themselves money out of other peoples pockets. An economy built on those principles will not last. Can we make it even 2 or 4 years under this model? Will it ever be reversed? I fear the incline of the slippery slope just got higher and Obama is greasing the skids. In fact I see that the Wall Street Journal just hit on this point today. This is far more scary then any tax policy could ever be.

The other statements about “taxing the rich” or that “most small business make under $250,000” . I had heard (maybe seen) that 2/3 of the tax returns in the top 5% are s1 corporations and small businesses. How can these two be reconciled. Let me add in this simple fact, “most small businesses fail”. So since most fail and only a few succeed, Barrack Obama is right. Most small businesses due make under 250,000. The problem is that those that succeed and make money and want to grow and hire people are the ones he wants to tax an additional 10%. Those that succeed created 80% of the jobs in the last five years. Guess what… The Wall Street Journal hit on this yesterday.

I am glad to know I have this much influence over their reporting. Or maybe it is that they too have a bit of common sense. I am sure I will have more lying through statistics soon.

So what of McCain’s idea of a "Spending Freeze"

We all hear how big the national debt is. They even have Debt Tickers that attempt to show it. The National Debt is currently at 10Trillion dollars. But what of the yearly impact on this number. From 2005-2007 the Debt rose by just under 1.1Trillion dollars. Or about 550 billion a year.

Tracking the growth of the federal budget from 2001-2007. We can see that the budgets grew from 1.9Trillion in 2001 to 2.77 Trillion in 2007. Each year it grew between 5 and 10%. During that same time Revenues were 2.1Trillion in 2001 and grew to 2.7 trillion in 2007.

Looking at the year by year numbers a single year hold in expenditures and a traditional year in GDP growth would put the budget back in balance for the short term. So in a general sense the point is valid. In fact this is exactly how we were able to turn deficits into surpluses in the Clinton years. Under the last four years of the Clinton Administration the Federal budget grew 100 billion dollars and tax receipts grew 500 billion. In some of those years the budgets did not grow at all. All it takes is someone with enough discipline to put it in place.

Since tax revenues are limited by GDP (as my previous blog explains) then the only options available are really to cut taxes, get the economy moving and limit spending. Since we are tasked with an ever increasing requirement for Entitlement Spending we will likely have to cut other items to get back in line. By “Freezing” the federal budget in total or at least in overall scope for a single year we can get ourselves back in line.

Democrats make this plan sound extreme and completely impossible. Many companies and individuals around this country have had to mange without a raise (or worse a cut in pay) at least once in their lives. Do we not think that government employees and agencies can do the same thing for a year? I think they can, in fact I think it is time we all expect from them what they have always forced upon us. I believe that until the impacts and returns of this financial crisis aer known we should hold all spending at current levels. If we could have the discipline to do this every other year and maintain a 5% growth rate we could be in a far better place in 4-8 years. But if instead we are to add another trillion in spending and raise taxes, slow the economy and lose revenues we dig even further into this hole. The impacts of that are likely to limit any possible return from the bailout and compound the problem.

The choice is so clear. If it is not made this November it will be made in the congressional elections of 2010 and again in 2012 but the climb out will take just that much longer. I would like to start now.

Invalid Tax Theory Abounds

I heard it yet again twice today. This time clearly state don Lou Dobbs Tonight and eluded to on Hannity and Colmes. It is the seemingly honest statement that the Bush tax cuts are the cause of the current deficits. The problem is that this common opinion is absolutely false. It is a perfect example of repeating a lie so often that you being to believe it and it becomes truth. But how hard would it be to verify this fact. Relatively simple if only the IRS published such details… oh wait they do.

What do these numbers tell us. They tell us that the economy was shrinking. The recession of the late nineties had been compounded by the terrorist attacks of 2001. So the first stage of tax cuts were passed. Revenue from individual income receipts was down by 140billion from 2001-2002. 2003 dropped another 50 billion. This alone would seem to prove the point that revenues were dropping because of the Bush tax cuts. But the economy was beginning to turn.

Looking at corporate taxes in those years reveals an interesting difference. Taxes from corporate revenues had also dropped by 50 billion dollars from 2000-2001. A year prior to personal income receipts dropping. …I feel, based on the assumed misconceptions, I must connect the obvious dots. Corporate profits were dropping in 2000, unemployment was on the rise, the impact of millions of Americans out of work is then seen in 2002 personal returns…The year following the tax cuts [even if assumed only for the rich] the revenues from corporate taxes was up by 30 billion dollars. That was short-lived and in 2003 they dropped back again by 30 billion dollars. Am I still contradicting my own point? Well let’s move forward.

In 2003 the Bush Administration said that the economy was not recovering fast enough and they did what? They cuts taxes again…and revenue from both corporate and personal income taxes rose; by 35 billion and 3 billion respectively. A modest rise for personal incomes but companies were growing again. So in the following year (2005) corporate tax receipts were up another 77billion dollars and personal up 117billion. They continued to rise in 2006 (C:+73billion, P:+199billion and 2007 (C:+15billion, P:+140Billion).

In total, this amounts to over 1.5 Trillion more dollars of tax revenue to the federal government over the years from 2004-2007. I know this contradicts conventional thinking… or at least what your have been told over and over again. But the facts are the facts. Revenue to the federal government is based almost solely on the GDP of the economy (growth or contraction) and had little to nothing to do with tax rates. This has been tracked by Kurt Hauser since 1950.

It may take some time to let is soak in and for some it never will.

So know the economy is in trouble again. Companies are losing money… the next step should be obvious to all… higher unemployment… and less revenue to the federal government. So what is the next step raise taxes in the hopes that those revenues can be gathered in a slowing economy, or drop taxes rates…especially on companies to get the economy back in gear and let revenues follow as they always do.