Taxing Christmas

The government is now taxing Christmas in order to pay for its wrecking of the economy.

In the pre-dawn darkness of a chilly LA morning, my day started off with a chuckle. A friend in the reforestation business sent me an email detailing the US Department of Agriculture’s new ‘Christmas Tree’ tax that was approved yesterday. I thought it was a joke. It wasn’t.

One can only laugh at the absurdity of the government getting involved in such a matter. But it’s happening more and more.

You see, the United States is on a one-way collision course with its financial judgment day; the country long ago passed the historical point of no return– the point at which it has to start borrowing money simply to pay interest on the money it has already borrowed.

Throughout history, countries that passed this point of no return soon defaulted on their debts, entered into extended periods of severe inflation, or both. This is nothing new– the idea of a government going bankrupt is practically as old as the concept of government itself.

The free lunch is over.

Cross Posted at Classical Values

It's The Money, Stupid.

The moral I got from watching Part 3 of "Prohibition" a movie by Ken Burns, is that when the influence of the moralists wanes and the government needs money it will scrap prohibition in favor of commerce. Especially if the bodies are piling up in America. Mexican bodies? Not Our Problem.

Where are we with drug prohibition:

Pretty far along. And that doesn't even count the 70% to 80% that support medical marijuana.

So what about the money? The direct costs run about $25 bn a year Federal. And about $45 bn a year State and local. And then there are taxes to be collected.

A San Francisco Bay area medical marijuana dispensary that promotes itself as the world's largest has been hit with a $2.4 million tax bill following an audit by the Internal Revenue Service, the dispensary founder said Tuesday.

The back taxes, penalties and interest levied against Harborside Health Center came after the IRS examined its returns for 2007 and 2008 and determined a 1982 tax code prohibiting cost deductions for businesses that traffic in illegal drugs applies to the dispensary.

Hmmmmmm. If this puts them out of business there will be no future revenue. No sales and other taxes for the locals. No more income taxes for the Fererales from the business and its workers. Are our politicians really that stupid? No need to answer that. It was a rhetorical question.

H/T Drug Policy Forum of Texas

Cross Posted at Classical Values

Who Said?

"We are living on borrowed money and borrowed time. These deficits hike interest rates, clobber exports, stunt investment, kill jobs, undermine growth, cheat our kids and shrink our future."

I'll give you a hint. It was from a political speech in 1980.

The answer is here.

Federal Revenue

Talking about how the Federal Government doesn't take in enough money seem to be all the rage this morning (well the New York Times did take the lead).

"We as a society will either have to pay more for our government, accept less in government services and benefits, or both," says Douglas Elmendorf, director of the nonpartisan Congressional Budget Office. "For many people, none of those choices is appealing — but they cannot be avoided for very long."

This year's federal tax revenues are forecast to equal 14.4 percent of gross domestic product, a broad measure of economic output, according to the Office of Management and Budget.

That's the lowest share since 1950, long before Congress approved expensive programs such as Medicare.

Ah. So taxes need to be raised. And why are collections so low? Rather simple. The rich (who pay most of the income tax) are not making so much money these days.

But are we really undertaxed? Historically taxes raise an amount equal to about 20% of GDP in America. So what are they raising now? The data is from the Wiki so some salt might be handy. But it is at least instructive. Taxation at all levels of the US economy is at 26.9% of GDP according to the Heritage Foundation. According to the EU it is 24%. So you get the ball park.

Taxation has been at a record level of GDP for a while now. Let us look at a little history thoughtfully provided by the federal government.

It looks like we are just returning to "normal" levels of taxation to me. In any case tax rates don't matter. If rates get too high people start working off the books. The people rule.

Cross Posted at Classical Values

Taxi Miles

Just in case you hadn't heard of it yet. The Obama administration has a plan to tax cars by the mile. Mothers of school age children often say they are running a taxi service. It will be truer than ever if this goes into effect.

The “Taxing your car by the mile” plan

Or in other words, we’ll all drive “taxis”, except for the chosen exempt few.

But that is not the last word. The idea is so spectacularly stupid that it will be delayed. For a while.

Today at 10:15AM EST, the story was updated, and now the White House says this:

“This is not an administration proposal,” White House spokeswoman Jennifer Psaki said. “This is not a bill supported by the administration. This was an early working draft proposal that was never formally circulated within the administration, does not taken into account the advice of the president’s senior advisers, economic team or Cabinet officials, and does not represent the views of the president.”

Their probable advice? "Right after the election and not a minute sooner."

It Ain't Fair

If the government just stole all the rich people's money and gave it to me the world would be a much better place.

The trouble is they divide it among all the indolent slobs out there and I'm lucky to get a few bucks out of the rip off.

It ain't fair!

Consume The Rich

It is possible I have the title wrong. Maybe it should be consume' the rich. Once they have been checked for nutritional value and diseases.

A link to Iowahawk.

A link to the Iowahawk post that kicked off the video.

H/T Instapundit

A Nuclear Attitude

I found a comment at The Telegraph UK that pretty well describes my current attitude and understanding towards events at Fukushima, Japan.

J.P. Craig-Weston [says,]

Look I apologise for being a bit rude with you, (although to fair you somewhat invite it,) but a couple of points that keep cropping up here irritate me.

First of all the casual and witless assumption that I'm opposed to Nuclear Power, I’m not in fact, quite the contrary I simply do not regard any of the so called alternatives as being, well realistic or practical alternatives, for the kind of large scale energy production that we use to drive everything from this computer to CERN.

The second, is the persistent attempst by certain blindly uncritically pro nuclear elements to disregard or dismiss the well documented and thoroughly understood effects of radiation poisoning, ( another commentator posted, “so - Chernobyl - according to WHO and a slew of UN bodies the probable final result is that the incidence of cancer amongst those in the immediate vicinity will be raise by just 3 and a bit percent,” I pointed out that 3% actually translates into a massive number of potential fatalities, 30,000 in every million in fact so the effect is neither small nor trivial.)

I also agree that the design of the Japanese reactors is superior to the Russian one at Chernobyl, but then so was the design of the Titanic, so to speak. It didn't save them.

If the events at Fukushima have demonstrate nothing else it is that nuclear power despite it's many advantages and merits still remains an extremely hazardous technology and one that still need to be deployed with caution and circumspection. When it fails, as it seems to have done at Fukushima, (after 40 years of earthquakes culminating in a 9 on the Richter scale event, followed immediately by inundation by a 10 meter tsunami,) it fails catastrophically and massively. I would have thought that this lesson would be entirely self evident to anyone who has observed this or previous nuclear disasters.

So statements such as,”So the second lesson is that nuclear power is even safer than we thought,” seem to me, to be in this context, not merely wrong headed but just inane.

This also bears repeating:

When it fails it fails catastrophically and massively.

We are about to learn that lesson about Just In Time (JIT) inventory management. It does free a lot of capital. It is less resilient. Taxing inventory reduces the resilience of the system by increasing the cost of inventory. JIT fits in well with the tax system in places where inventory is taxed. It does not fit in well with resilience.

What Would Jesus Cut?

Some one is asking the question, "What Would Jesus Cut?" The answer of course is foreskins. At least until the Council of Jerusalem changed all that.

H/T Instapundit

Eventually You Run Out Of Other People's Money

Walter Russell Mead is discussing the fact that anti-public union fever is not just for Wisconsin anymore. He comes up with a quote which is the perfect explanation for why the SIHTF.

From a state that is bluer than blue, ultraviolet Vermont, comes the news that Governor Peter Shumlin, a Democratic governor with solid Democratic majorities in both houses of the legislature, will not solve his state’s fiscal problems with a tax increase. Why? As Politico reports, “We’ve already got a progressive income tax in Vermont, and we can’t get more progressive because we’ll lose the few payers that we have,” Shumlin said in between sessions at the National Governors Association meeting. “We don’t have any more tax capacity.”

“I can see New Hampshire from my house,” said the governor, noting that Vermont is already losing business, investments and residents to its low-tax neighbor.

As Dame Margaret Thacher (a grocers daughter) is reputed to have said,

The problem with socialism is that eventually you run out of other people's money.

It looks like eventually has arrived.

H/T Instapundit

Cross Posted at Classical Values

The Amazon Tax

It seems the State of Illinois is so desperate for revenue that it is instituting an internet sales tax.

CHICAGO, Jan. 7, 2011 /PRNewswire/ -- The Internet Tax Bill (HB 3659) was passed in the Illinois Senate on January 5, by the House of Representatives on January 6 and brought to the Governor, who may sign it into a law as early as Friday, January 7.

The tax legislation relates to out-of-state merchants like Amazon.com and Overstock.com that do not have a physical presence in Illinois but have relationships with Illinois advertisers and publishers like CouponCabin.com. By this law, these merchants are deemed to have a presence (nexus) in Illinois and are therefore required to collect Illinois sales tax.

The goal of this is to increase tax revenue for the state, but what has happened in the four states that have passed similar laws (New York, Colorado, North Carolina and Rhode Island) is that instead of collecting sales tax, these merchants have severed their relationships with publishers in that state. Twelve other states have rejected similar legislation.

In response to this Amazon sent me the following e-mail:

Greetings from the Amazon Associates Program:

We regret to inform you that the Illinois state legislature has passed an unconstitutional tax collection scheme that, if signed by Governor Quinn, would leave Amazon.com little choice but to end its relationships with Illinois-based Associates. You are receiving this email because our records indicate that you are a resident of Illinois. If our records are incorrect, you can manage the details of your Associates account here .

Please note that this not an immediate termination notice and you are still a valued participant in the Amazon Associates Program. But if the governor signs this bill, we will need to terminate the participation of all Illinois residents in the Associates Program. After that point, we will no longer pay any advertising fees for sales referred to amazon.com, endless.com and smallparts.com nor will we accept new applications for the Associates Program from Illinois residents.

The unfortunate consequences of this legislation on Illinois residents like you were explained to the legislature, including Senate and House leadership, as well as to the governor's staff.

Over a dozen other states have considered essentially identical legislation but have rejected these proposals largely because of the adverse impact on their states' residents.

Governor Quinn's office may be reached here.

We thank you for being part of the Amazon Associates Program, and wish you continued success in the future.

Sincerely,

Amazon.com

Here is the note I sent to the governors office:

Veto the bill.

I'm retired on Social Security and make a few dollars a month selling Amazon products. This is very helpful as I have a disabled son I have to take care of. This action on the part of the legislature is going to hurt my family greatly. You have no idea what an extra $20 or $30 a month means to my family.

If you would like to help out before the State of Illinois closes the window on my fingers order something from Amazon using this link:

Amazon.

I think the State of Illinois is doing its best to strangle business in the State. Once upon a time we had a fairly reasonable Republican government in this state. Until George Ryan ruined it for Republicans. The crook. Now all we get are anti-business Democrats. At least the Republicans had some idea that the goodies they were passing out had some connection to the productive economy. At least the Republicans before Ryan. It is Illinois after all.

Update: A nice link filled post on the subject from Backyard Conservative.

Cross Posted at Classical Values

DRAM Prices Will Fall in 2011

If you are planning RAM (memory) upgrades for your computer wait until the second half of 2011 to buy. Prices will be dropping drastically.

There are four phases in the semiconductor cycle. During a shortage, prices stabilize and manufacturers become profitable. They invest these profits in wafer fabs, avoiding steep taxes on retained earnings. Invariably, this level of investment is too high and results in an oversupply two years after the company’s original commitment to add capacity. This oversupply drives prices into a collapse, evaporating profits.

As long as manufacturers are unprofitable, they can’t expand production to meet the needs of a steadily growing market. This creates a shortage a couple of years later, and the market enters another period of stable prices and profits.

So the reason the market is so unsteady is taxes. Just another entry in "the power to tax is the power to destroy" file. The smart investor takes advantage of these known cycles - when he can.

On The Heads Of The Children

H/T Libertarian Republican

Tipping Point

Reason Magazine is where I got the video. They have this to say:

Fichtner points out, three public policy trajectories converging. The medical marijuana movement is gaining momentum. People are increasingly wakening up to the fact that drug prohibition creates more public health problems than it solves. And, in the same way that the Great Depression caused people to reprioritize how we spend our public dollars, the current economic crisis has got people thinking that bringing the biggest cash crop in the US out into the open might not be such a bad idea.

Hard economic times are good for companies and governments. They force the rationalization of policies and expenditures. Alcohol was in part legalized because before prohibition the Federal Government got 1/3 of its revenue from taxing alcohol. The same dynamic (although not the scale) is at work with marijuana.

You can find the book mentioned in the video here:

Cannabinomics: The Marijuana Policy Tipping Point

Some other books on the subject:

Marijuana is Safer: So Why Are We Driving People to Drink?

Why Marijuana Should Be Legal

William F. Buckley Jr. "A Conservative Look at Marijuana"

And if you want to get in on the boom it might be good to learn a little horticulture:

Marijuana Horticulture: The Indoor/Outdoor Medical Grower's Bible

But get in early. Because like the microprocessor/personal computer industry eventually economies of scale are going to drive most small undercapitalized businesses out of the market. OTOH you might wind up being the Steve Jobs of the industry.

Cross Posted at Classical Values

Not Ponies - Boats

In a discussion of government pensions a person who makes their living lobbying for more money for government workers says:

“The biggest fallacy here is the discussion about comparing what a private sector employee gets to a public sector. And if where we want to go from a policy perspective is to go down and bring everybody’s boat down, so that they’re retiring on nothing, I mean that’s an interesting conversation to have. What do you do with those people?” said Cathie G. Eitelberg, senior vice president at the Segal Company, which advises public employee pension fund directors.

This is a move up. The Democrats are no longer promising ponies. We will now get boats.

Which reminds me of John Kerry's little boat. Are we all going to get one of those? I propose we get ahead of this curve and start building yacht basins at once. Let me see. Seventy-six feet long would be about 16 feet in the beam. Times 300 million. I think taxes are going up. But at least we will all have boats. See. We just pass a law.

H/T Instapundit

Tariffs

Commenter simentt at my post Got An Old Hard Drive? tells me about a campaign going on in Norway to reduce the costs of goods imported to Norway.

Do you eBay?

There is a small campaign (Organized by the libertarian magazine 'Farmann', apparently on Facebook) going on to have people eBay all kinds of stuff for 30USD with a 'buy now' option enabled. The reason for this, is that the Norwegian customs service collects VAT for all imports above 200NOK (~33USD), and that this tax is waived for lower amounts.

Thus the above campaign to get a as large as possible market for 'no-tax' imports.

This USB-adapter would thus be tax-free from Amazon, while a device costing 40USD would be taxed (the tax is 25%, and in addition a 'handling fee' of another ~20USD would be applied).

The intent of the campaign is to have people offer up goods from WallMart and other low-price vendors at less than 33USD (depending on exchange-rates) on eBay and similar so that we Norwegians can benefit from low US prices, and US citizens can make a few bucks pr item on reselling them to Norwegians.

Which just goes to show the problem of "no feedback" accounting when it comes to government taxes and tariffs. Citizens will do as much as they can to thwart the efforts of government to steal their money.

If only those passing the laws took to heart the old libertarian slogan:

Taxation Is Theft

we might get some legislators who tried to increase tax revenue by growing the economy rather than just trying to increase the extortion rate.

In general the smartest people go into the sciences and mathematics. Then come the engineers. Followed by businessmen. And who goes into politics and crime? (what's the difference?) The dimmest bulbs on the block.

Cross Posted at Classical Values

What Happens When You Run Out Of Them?

It seems that the Greek socialists are not happy with their government's plan to rectify Greek finances.

About 3,000-4,000 protesters marched through central Athens, carrying banners reading "tax the rich" and "Don't take the bread from our table." Scuffles broke out when about 150 demonstrators challenged police lines near the city's central Syntagma Square, and police responded with tear gas.

Greek airports remained open, however, after air traffic controllers suspended their participation in the strike because of the travel chaos caused by Iceland's volcanic ash cloud.

Labor unions fear deeper cuts after the Socialist government began talks this week with the International Monetary Fund, the European Central Bank and the European Commission for a three-year rescue package aimed at easing the country's acute debt crisis.

So what happens when you run out of rich to tax? California.

Protect The Rich

Why protect the rich? Because who will the government come after once it runs out of rich people's money?

Inspired by a bit disparaging the Tea Party folk as protectors of the rich.

Revenue Enhancer

Philadelphia has decriminalized pot. At least for amounts under one ounce.

By Kamika Dunlap on April 7, 2010 9:55 AM

Philadelphia's new marijuana policy will take effect next month and decriminalizes the small possession of pot for personal use.

The goal of the new policy is to sweep about 3,000 small-time marijuana cases annually out of the main court system in an effort to unclog Philadelphia's crowded court dockets, Philly.com reports. The policy decriminalizes small amounts of marijuana possession.

The policy shift will allow prosecutors to charge such cases for people with arrested with up to 30 grams (slightly more than an ounce) of the drug as summary offenses rather than as misdemeanors. As a result they may have to pay a fine but face no risk of a criminal record.

The fines could range from $200 for minor drug possession and first-time offenders and $300 for others. The fines could generate significant revenue for the Philadelphia courts.

Many marijuana consumers in Philadelphia welcome the new approach. Members of the city's defense bar also endorsed the new marijuana-prosecution policy.

Crushing state budget deficits gave advocates in California, Washington, New Hampshire, Rhode Island, New York and elsewhere an opening to pitch marijuana as a new source of tax revenue.

I wonder if police will be carrying scales?

Monica Yant Kinney I think has the best take on this.

Goldstein thought pols might act to avert a lawsuit over startling statistics showing black men make up more than 75 percent of pot arrests. Instead of fear, the promise of saving beaucoup cash - and even raising revenue - spurred the shift.

"There was," he noted, "too much money on the table to leave it."

You'd think if authorities are now treating pot possession as a summary offense, they'd simply seize the weed, issue a ticket, send the smoker walking, and save cops' time. But Williams won't go there, calling full-blown marijuana arrests a time-honored means of "clearing a corner."

Besides Williams, two state Supreme Court justices have signed off on the kinda-sorta-decriminalization, wink-and-nod-minimization pot policy change. One is Chief Justice Ronald D. Castille, once the D.A. The other is Seamus P. McCaffery, the Harley-riding former cop who called advocates' wishful thinking about legalization "a crock."

"I spent 20 years patrolling the streets," McCaffery told me. "I'd lock up Monica Yant Kinney if I caught her smoking a joint."

At the same time, McCaffery seems to admit that until now, the penalty hasn't fit the crime. "We're giving young men and women criminal records," he demurred, "when it doesn't need to be that way."

Ah. Raising money from the previously untaxed. And the best thing? There is no limit on the amount that can be assessed on any given criminal - uh I mean taxpayer, or should that be citizen? Every State treats its marks, uh, I mean citizens, differently. Take California for instance.

On Wednesday, advocates for legalizing marijuana officially secured enough signatures to put a referendum on the California ballot this November asking voters to legalize and tax pot.

Taxes are a big selling point. Politicians can't resist. "People who want to be taxed? Its a miracle." But it is also a protection racket. "Please tax us so we don't have to live in fear."

So far the city of Washington DC hasn't caught on.

"California, like it or not, really pushes American politics and business in one direction or another," said St. Pierre, noting the issue is also expected to soon land on the ballot in Nevada and Oregon. "I am going to guess four to six years after the citizens of California pass something like this, there is either an initiative here or the city council takes it up."

Already, D.C. Council member Marion Barry (D-Ward 8) has been grumbling publicly that some of the District's drug laws need to be reformed because too many residents are being locked up for drug possession. But Council member David A. Catania (I-At large), the chairman of the Committee on Health, and other council members have made it clear they do not want the medical marijuana legislation pending before the council to spiral into a debate over outright legalization.

A Washington Post poll conducted in January found District residents were split on whether they supported legalizing small amounts of marijuana for personal use. Forty-six percent of residents favored the idea, but 48 percent opposed.

But while 60 percent of whites supported legalizing marijuana, only 37 percent of African-Americans felt that way, largely due to strong opposition among older black women.

I would love to see a Republican Congress vote out prohibition as a fiscal sanity measure. Just to see heads explode on all sides of the issue.

Here are a couple of books on the subject. This one I have read:

Marijuana is Safer: So Why Are We Driving People to Drink?

This one I have not:

Why Marijuana Should Be Legal

Waste Fraud And Abuse

Remember a few days back when I posted about the trouble with police crime labs? Well I have more evidence.

San Francisco prosecutors told judges Friday that they could not "ethically go forward" with 46 narcotics trials because of evidence problems arising out of the scandal at the Police Department's drug-analysis lab - signaling that the district attorney is likely to dismiss nearly all 750 pending drug cases in the city.

"Based on what the district attorney's office knows about the issues within the narcotics division of the crime lab, we cannot ethically go forward with this prosecution," Assistant District Attorney Nancy Tung told a judge overseeing a case that was serving as a test of how much police and prosecutors had to disclose to defense attorneys about problems at the drug lab.

Prosecutors dropped that test case, a cocaine-sales trial, after having been deluged with 1,500 pages of police files about the lab that a spokesman for the district attorney called "troubling" and said pointed to possible larger problems in the Police Department.

As if you needed more evidence of what a waste the drug war is.

But it gets worse.

The exact contents of the 1,500 pages of police files have not been made public, but Buckelew said the documents hinted at problems with police and the drug lab that go beyond Madden's conduct. Buckelew called the files "troubling."

"At the very beginning this was a case about Debbie Madden and isolated incidents that could have been resolved by retesting," Buckelew said. However, he added, "the face of this has changed."

Bell's attorney said he believed the material included audits of the crime lab at Hunters Point, and its drug-testing section, going back at least six years.

Among the questions raised since the suspicions about Madden were made public is why the Police Department took more than two months to open a criminal investigation into her actions after her sister said she had found what she believed to be a stolen lab vial of cocaine in Madden's home. Documents contained in the files could help answer that question and reveal who in the Police Department knew what and when.

If you have been a libertarian as long as I have you know what a waste government is in general. So what will be the outcome? Most likely the government will ask for more money to fix the mess the government caused. The bigger the screw up the more government will take from citizens. Heads we win and tails we win bigger. You'd almost think the game was rigged.

The government has no interest in fighting drugs per se. That is incidental to emptying your wallet. I can't wait for the marks to wise up.

H/T Pete Guither at Drug War Rant

Cross Posted at Classical Values