Sunday, May 10, 2009
Obamas New Tax Plan
While my last blog was somewhat supportive of Obama's moderate approach to the national "prayer day", I must quickly go on record to say this does not mean I am a blind supporter of this new President and his current policies. If anything, he is proving to be more progressive and "Leftist" towards BIG Government ideals than I had ever thought he would be. While I admire the man's accomplishments and his charisma, I still find myself on the opposite side of about 70% of his views...so don't count me in as a new "Democrat" just because there are some issues I support him on.
Of course the latest case in point is Obama's new tax reform proposals. His unabashed appeal to go after American corporations and individuals living and/or doing business "offshore" is obviously not in my best interests...nor do I believe it to be in the best interests of our country or accomplishing what he is trying to achieve. Obviously he cannot keep forking out all the money in the tax coffers and nationalizing banks and automotive companies without eventually have a source for those funds. He knows his election was carried by the working class, the poor and the socialistic left in our country, so he can't go to them for more money even though they only pay about 6% of the national tax bill. So, it seems obvious to me he is going to go after funds of those who probably didn't support him to begin with...the wealthy and international corporations...and wealthy estates. He is following the traditional Democrat model of taking from the rich...and after shaking the piggy bank around to support your big government complexes and budgets...getting some small percentages of the take to the real economy.
Somehow in the 20th Century our government succeeded in making its tax codes a patriotic theme. I think that a majority of Americans think it a patriotic duty to pay whatever tax their government demands...and along with that citizens become more and more demanding for government controls and entitlements BECAUSE they pay these taxes. Somehow we have grown to believe that 1)it is the government's legal right to leverage taxes at any time or level, and 2)it's OK for the government to have unbalanced budgets and live off trillions of dollars of international debt because they DO "take care of us". As many wise writers and thinkers of the past 200 years have said, the end of democracy and freedom is when citizens expect their government to cover their every risk and need by entitlement. Our country is living on an upside down "Pyramid" economically and theoretically. Each year a higher percentage of Americans are living off of government programs and entitlements while the producer's numbers continue to shrink and disappear. It is no wonder that Obama wants to go after offshore money, because that's where most of the money is...and based on these actions will probably accelerate in going there. So he is both trying to stop the money from going there, and going after what percentages he can of what is already there.
I think he has a couple core deficiencies in thinking here. Number one is somehow he and most of the G20 nations think that the rest of the world is just going to rollover and accept the "bones" that these countries are offering for access to their financial markets and disallowing competition in taxation between countries. One of the core remaining equalizers in world law are the various laws pertaining to sovereignty of nations...and one of the main reasons so many foreign countries do NOT respect my country, even after millions or billions of dollars of aid to many of them, is the thinking that the USA can control them...from their politics to their economies. I think our days of controlling world conflicts through wars, CIA espionage, intrigue and just by writing big checks to our neighbors are over. The combination of our global empiricism this past 100 years on top of our current economic greed and meltdown has put the USA in a position of having a "loud voice" but less of a big stick to back up our words. The past 8 years of dual conflicts against the "enemies of freedom", and probably more significantly our domestic lack of foundations in work ethic, education, and a dying middle class have weakened our nation like no other time I can think of in this century. This is no joking matter my friends, and what our leaders do now will float or sink the rest of the boat. The end of historic great empires have always fallen at the point where they thought they were invincible. We just don't have that kind of power anymore. Sure, we still have military power...but the coffers and production capacity are declining together to where our superiority is unsustainable.
OK, now that we have reviewed a couple macros of why we are in this mess, lets look at the folly of using tax codes to "right the ship". A government cannot tax itself into financial health. It just doesn't work. And you can't keep spending more while taking less in. No business in the world survives with that approach to accounting, yet somehow our government thinks it can sustain itself by increasing the budget and increasing competitive production in our economy...while sucking the lifeblood out of the hens that are still laying eggs. This program is going the wrong direction in a hurry. Sure, markets for short spurts are going to rejoice when the government floods them with billions of relatively "free" money, but this will be short term when all this freshly printed "money" becomes more and more worthless against more productive and cautious global countries and currencies. Sure, the government is still big enough and has enough of a following to hold on to the "tigers tale" of swinging global economies...but as you run out of money and followers due to failure, there will come a point where you have to let go and dive for protection from the Tiger.
Putting aside the allegories, let's cut to the heart of the matter. Nationalization and killing of free markets or tax competitions is not going solve the USA dilemma. Now more than ever, the USA needs successful global companies to do business within our borders and successfully sell our products and ingenuity outside the USA. We need more wealth to come to the USA, bringing jobs and productivity to meet the growing global competition and demands of better products and services. If our government continues to fleece its domestic companies and entrepreneurs doing business globally and if they continue to out tax a majority of other countries on the profits that are made...no matter what laws or tax codes are passed, the USA will hear a big "WHOOSHING" sound of capital and companies leaving the USA so that they don't go down with the ship. I see very few incentivizing ideas coming out of our current government. Instead, they want to castigate and villainize the few remaining profitable productive companies and patriots. They want independents and producers to feel guilty about their gains, and push forward as "patriotism" a more altruistic attitude towards the country and government. From what I am seeing where I sit, they are just putting up more walls and defenses on the part of the companies and people outside the USA who they need to produce right now. Talk about doing the opposite of what you SHOULD be doing...
Obama obviously has a flood of support and political clout right now and will probably succeed in getting most of his taxes and initiatives passed by Congress. What will be interesting to see is how the international business community and foreign countries respond to an increasingly desperate and controlling USA government who like France and even Venezuela are speeding towards total socialism and elimination of incentive for private investment. The wealthy, industrious people of the world will continue to be pressure to escape these tyrannies in small paradises throughout the world...while the huge irrational government systems will continue to implode the once free and productive society some of us remember growing up in.
I am going to read more in coming days about competitive tax structures, and try to come up with some constructive suggestions for a sane and just tax system that would be preferable for the USA. I'm sure Obama and company are just dying to hear my ideas:)...
Here are links to some of the alarming news articles that caused this diatribe.
Business Groups Gear Up To Fight Tax Plan
Corporations Assail Latest Obama Tax Plan
Obama and the Tax Dodger