June 14, 2013

Answering Greg Gutfeld's Question

By Jeanne C Minton

Greg Gutfeld opened the June 6th broadcast of The Five by talking about the IRS scandal and asking "What can we do as Americans right now? This seems like a golden opportunity to go after a bloated bureaucracy, clean it out and create something."

The answer is to spark a national protest demanding limited government by doing 3 things:
First, unhide our taxes.
Even the 47% who don't pay federal income tax pay taxes. During the 2012 Presidential campaign, Mitt Romney said "There are 47% of the people who will vote for the president, no matter what..." and "These are people who pay no income tax." Obama's media machine, including Stephen Colbert, immediately exploited the opportunity to further brand Romney as a typical out-of-touch rich guy. Romney defended his remarks as inelegant, but should have followed the advice of his father to be bold. Rather than dismissing them as a given megagroup voting bloc for the other side, why not recruit them?
People are unaware of how enormous the average person's total tax burden is because it's either hidden or dispersed across a wide spectrum of goods and services. Fair Tax advocates speak about hidden (embedded) taxes in mind-numbing detail, putting everyone to sleep. Keep people awake by making it simple. Arnold Schwarzenegger's short and memorable 2003 rant helped him win California's governorship: "From the time they get up in the morning and flush the toilet, they are taxed. When they go get a coffee, they are taxed. When they get in their car, they are taxed. When they go to the gas station they are taxed. When they go to lunch, they are taxed. This goes on all day long. Tax. Tax. Tax. Tax. Tax."
Nothing has changed since 2003. During the recent LA mayoral primary all the candidates came out against a ½ percent sales tax increase. Why? It's visible to everyone. When given a choice, nobody likes paying taxes and, as expected, the small increase was voted down. Explain to voters that they unknowingly pay an enormous percentage of their income in taxes and they will be comparing and complaining all the way to the ballot box. A typical Los Angeles resident, who is single, earning $65,000 per annum with a standard deduction, can end up paying $23,072 or more than 35% of earned income in various taxes, as demonstrated by the following example:

DESCRIPTION	AMOUNT
Federal income tax, social security, & Medicare	$14,651
CA state income tax	3,191
CA SDI @ 1%	650
Federal and state gas tax	280
Embedded taxes @ 22% on $10K of purchases	2,200
Los Angeles sales tax @ 9% on $10K of purchases	900
Vehicle registration	200
Property taxes embedded in rent or paid directly	1,000

Furthermore, this example doesn't include utility taxes, phone taxes, sin taxes on tobacco and alcohol, and many other taxes.
This will be an eye-opener for most Angelinos in the same way that it was for California resident Bill Maher when he learned just how much of the total tax load he carries by being rich. He said "And here in California, I just want to say, liberals, you could actually lose me." The fact that this new knowledge caused him to question his liberal ties proves just how potent taxation is as an argument for limited government.
Second, expose the wealthy and well-connected hypocrites who give away other peoples' freedom.
Rich people like Warren Buffett and Bill Gates, who want the rich to pay more taxes, sacrifice nothing. If they don't like the TSA, they can charter a flight. They can proudly support gun control laws and hire armed guards. Even if strict environmental regulations are violated by someone like Sean Parker, he can afford the fines. Money is freedom because it gives you the power of choice regardless of obstacles.
Campaign promises to increase taxes on only big business and the wealthy are a political ruse. Everyone pays, no matter how narrowly such taxes may be defined. If you raise income tax rates on businesses, the additional tax will increase the price of the merchandise and buyers from all income levels will end up paying it. Or, increasing prices may cause sales to decline as more and more customers are unable to afford the product. And, when sales go down, people lose jobs. Raise taxes on the rich and they have less to invest, reducing economic activity and employment, if they don't lobby for a loophole, assuring that the tax burden falls on someone else's doorstep.
Government power gained from higher taxes and increased regulations can be used by politicians to bestow favors and create tax loopholes, thereby keeping campaign contributions flowing from the wealthy and well-connected. If Warren Buffett and Bill Gates are really concerned about middle-class Americans, they should become proponents of limited government and advocate ending the favors and closing the loopholes that they both enjoy.
Third, refine and co-opt the liberal talking point "we are the government."
A popular liberal argument is: "Government is not evil because we are the government." If we elect representatives from amongst ourselves to govern us, how can we complain and why should we fear tyranny when there will always be another election?
There are two problems with this argument.
First, Conservatives generally do not believe that government is inherently evil, but are wary of what can happen as its power increases. Governing is a human endeavor subject to myriad human failings, the consequences of which are magnified as it grows in size and scope. Refine the argument by pointing out that once an ordinary citizen crosses the line from the private sector to a government post, they immediately have the force of the government behind them. Think about TSA and IRS employees. Do you watch what you say or how you behave around them? Unlike the rest of us, they can inflict varying degrees of misery on people based on their authority.
Second, oftentimes people imbue government with the ability to magically handle problems in the most efficient and equitable manner possible. Co-opt the argument by explaining that since we elect representatives from amongst ourselves, they are just like us and the people we know, with all the flaws, shortcomings, and varying degrees of skill and judgment that come with being human, including the potential for abuse of power. We should only delegate that which we cannot do for ourselves, like national defense, so that any negative outcomes have a smaller impact.
George Washington said "Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." It is as true today as it was at our founding because human nature has not progressed.
All of the above ideas need to be disseminated and repeated as core talking points of conservative and libertarian pundits and politicians when they discuss how to solve problems. Limiting the size of the federal government in accordance with the Constitution should become the default position, not tinkering with the tax code and the growing mountain of regulations, greater oversight or coming to a compromise.
As soon as you have a majority of the people clamoring for lower taxes, smaller government and more freedom, a charismatic, eloquent leader will appear. People are drawn to power for a lot of reasons: attention, admiration, public service, or simply the power itself. Those seeking power will jump in front of a parade once it becomes a potential route to power.
Jeanne C Minton is a retired financial executive and the author of Second Nature.

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