William Thien

Archive for November 2012

In discussing the matter of taxes with various associates and colleagues we began to clash on the matter of deductions for children. My opinion is that the deductions are unfair to single people or those who have perhaps only one child. The deduction taxpayers receive for their children is doubly unfair because they also get to add withholding allowances for their children, so less is taken from their pay check in terms of income taxes throughout the year. They therefore get paid more throughout the year and receive a substantially greater tax return in comparison to mine, yet we are paid the same by our employer.

If I compare the taxes I as a single person pay to that of another colleague who has five children, he makes on average $5,000 to $10,000 a year back on a tax return more than I do, depending upon the year. Round that up to $11,000 a year by including his withholding allowances and he makes then $11,000 a year more than I do. Our employer has decided that we should both be paid the same but the government has given him a raise, a rather substantial raise at that, one that is clearly unfair and merely because he has reproduced.

A chorus of my colleagues in response is that raising children is expensive. But that does not offer a reason as to why I should pay to raise their children or anyone else’s for that matter, and that is in fact what I’m doing. That money they get on their substantially larger tax return has to come from somewhere, and it comes from me and others like me who do not have children. To me that is unfair, perhaps parasitic even, particularly when throughout the year they also make more on their paychecks because they can claim withholding allowances for children. Yet, again we do exactly the same job and our employer has determined that we should be paid the same.

What to me exacerbates the situation is that most of my colleagues send their children to public schools because we have excellent schools where I reside and therefore those who receive the larger tax return also use substantially more government services than I do. Yet still they pay less in taxes, substantially less. Responses were, that it was what people wanted. What people, I replied? “It’s popular,” another colleague explained later. My response to that, simply because something is popular doesn’t mean its right, or fair for that matter. Fascism has been quite popular, even in the context of a democracy. Popular? Really? Clearly, democracy can be mobbish and irrational. Democracy can also be a shrieking, harrowing flock of scavengers.

Popular?! Really?

Then I began to explain to another colleague who is highly learned why what is occurring in terms of the tax code is really socialist or perhaps even communist as it is clearly a redistribution of wealth, a poorly engineered one at that if you can call a redistribution of wealth a good thing. Even worse, said deduction is a redistribution of wealth from someone in the same economic class, from someone who works right next to him. Myself. That’s not what a redistribution of wealth is supposed to be about. A redistribution of wealth isn’t supposed to make someone poor. It’s rather just the opposite. This is the fundamental, gaping flaw in the deduction.The tax code is not even a taking from the rich to pay the poor, the tax code is taking from someone in the lower middle-income bracket and effectively ‘making him poor’ by giving his income right to the guy next to him simply because the guy next to him has a family. The government is making people poor simply because they don’t have a family and others do. That’s not right. But ultimately I see many of those who receive the subject deduction don’t really care where the money is coming from, as long as it is coming from somewhere. And I am to know they are to be wicked if to see it gone.

Another exemplary colleague, and he is, in this ongoing debate claimed that what the government was doing was “social engineering.” To that I say, the government should engineer society on someone else’s dime. I don’t like the way this is turning out, anyway. Many of you don’t either. You’ve said so much yourselves. Shall I expect to hear a change of tune?

But really it’s none of that now is it? It’s not the “popular” sentiment. Nobody is “social engineering.” When you boil it all down, what is really happening is that I’m paying for other people to have sex and reproduce. That at the very least makes the deduction immoral as the burden of the result of that sex is knowingly and willfully transferred to others. Politicians wanting to get elected saw such tax deductions as a way to get elected and now those deductions are written into the tax code. The politicians and their media arm merely feed you the excuse that it is “popular” or “social engineering” to make you feel good about giving it to your fellow Americans and you swallow it like the apple. But popular, not really. Social engineering, doubtful. You give Washington too much credit. And though I am not an overly religious person, the bible has things to say about what is happening.

Each of my debate opponents were either carefully chosen based on the circumstances or approached me with incited commentary, knowing about my public position on taxes and wanting to express their position, to use me as a sounding board or I likewise.

When I look into their eyes during our debates on this particular matter and see the running fear that rises up as they begin to calculate how much less money they would have in their wallets if the government removed the child tax deduction from their income taxes and took away the withholding allowances, and thusly their boats (so you say it’s expensive to raise children, is it? Hmmmmm.), their second homes in the country, their annual extended trips overseas, I conclude I don’t really know if I have the heart to lobby said deduction away. And after all, I may wish to settle down some day myself. Though, I could change my mind.

So, what’s the solution for a single taxpayer like myself with no deductions? I think it is quite clear. I think it is time to raise the standard deduction for single taxpayers with no writeoffs.

I think the standard deduction for single taxpayers should at the very least be raised by adding the standard single household deduction to a multiple of the average number of children in a household in America multiplied by the dependent child deduction. If the average number of children is 2.3 children per household (as an example I found that figure at an online statistics site which I did not verify and am using the figure simply to make a point) and families are receiving a deduction for each of their 2.3 children, for example, then the standard single with no children household deduction should be increased by 2.3 times the standard dependent child deduction plus the single household deduction. If the average number of children per household fluctuates from year to year, so then should the additional deduction offered to single tax payers with no children. In other words, a single tax payer would receive their normal single tax payer standard deduction plus a deduction for 2.3 children. That’s creative, fair tax policy, by the way. You don’t see that coming out of Washington D.C.,.

At this time and because I see no other yet, I believe that is a fair solution. I’d still be paying for everyone else’s children. Those though who want children of their own and don’t have any might be able to afford them with an increase in the single deduction to save up to have some of their own then some day. But for now, it is not possible to save much when they are paying to raise everyone else’s children. Because that’s exactly what they are doing.

As if I don’t already know it, patting themselves on the back for their brilliant observations many have used the excuse during this debate, “raising children is expensive.”

Tell me about it. It’s time for a fair tax code.

Copyright © William Thien 2012

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I recently suggested that The US Government put its stake in General Motors on the market in order to help balance the budget after acknowledging that I lobbied early on for a bailout of GM and the auto industry. For a number of reasons I believed the auto industry bailout was a sound idea, and the auto industry bailout has been a dramatic success in a number of ways. (Caveat, my opinions on the banking bailout may not be fit for this forum).

Yet, I believe that if there ever was a time for The United States to divest itself of GM, that time is now, now while the country is approaching a fiscal cliff and is searching for avenues of solvency.

All along contemporary government policy has been driven by the philosophy that the government should run its house as the citizen has to run theirs, often selling off prized possessions (in this circumstance that would be GM) when times are lean, or that the government should run itself more efficiently, like a business. Clearly running such a massive government as that of The United States is unlike that of the finances of a home or even a business, but the government owes some deference to the public in that it runs its affairs in a way which at the very least approximates how the taxpayer runs their affairs.

And that sentiment became more apparent to me recently when I saw someone driving down the street in a brand new, shiny GM automobile. I thought to myself, that’s a nice looking car. Then the thought occurred to me that I’m paying for that person’s new car to a certain extent and I said to myself, it’s time for The US to sell that car company before it’s too late and I own that car, too, yet I don’t get to drive it home, which is exactly what was happening late in the afternoon, November 27, 2012, several years already, several years after The United States purchased a controlling interest in the automaker in order to save it from the brink.

To the US government I say, it’s time to let go of the GM wheel. It’s time to start thinking about selling GM to the highest bidder and paying down the national debt, and I don’t see even an initial discussion of that occurring.

Instead, they want to “reach a compromise” on raising taxes. I would ask that they reach into their own pockets this time.

Copyright © William Thien 2012

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Recently I’ve listened to news reports and stories in the media about how both Republicans and Democrats are willing to compromise on matters of taxation with regard to “The Fiscal Cliff.” The obvious sticking point is that the Democrats want to raise taxes and The Republicans do not. A headline at a prominent news site even claimed stocks rallied on a “possible compromise” from the Speaker of The House on matters of taxation.

I was rather expecting that the good members of Congress would see to it that the size of government would be addressed rather than to offer up more of our income in “compromise,” as a means of dealing with the approaching “fiscal cliff” that is.

I agree that it is important that our elected work together to our benefit and have in fact written to it. But compromising on taxes, which in this case obviously means raising them, can be categorically deemed contrary to our benefit, particularly to those of us who find no refuge in an unfair US tax code to begin with.

Copyright © William Thien 2012

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Recently I blogged that I supported the bailout of General Motors and in fact lobbied to see to it that a bailout was provided. The result was US Government ownership of a large stake of General Motors, a company which has made a dramatic turnaround but has also acquired the moniker, “Government Motors.”

With the US Government approaching a fiscal cliff, something we haven’t heard much about since almost all of the news lately has been about the habits of shoppers on Black Friday, but with the government approaching a fiscal cliff and desperately in need of money, why doesn’t the US Government divest itself of General Motors for starters?

Do what most Americans do when they need cash quickly, sell something. The US Government should auction General Motors off to the highest bidder. I am certain there is someone, some organization that would be interested in maintaining a controlling interest. Don’t wait for General Motors to obtain the highest price on the stock market and then flood the market with shares, that won’t do anyone any good and it might not happen for years. Simply sell General Motors all off, perhaps as a controlling interest. That would more likely create the most interest.

As I’ve said before, I lobbied for a bailout of General Motors. Though my intent was not for the country to buy General Motors itself, that apparently was the only option at the time. Now that it is time to address the approaching fiscal cliff, maybe it is time for the government to divest itself of GM to pay down some of that debt.

Otherwise the nickname “Government Motors” will stick for good. And then GM stock won’t be worth a penny.

Copyright © William Thien 2012

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Recently I heard a comment about the auto industry bailout followed by, “where’s my bailout?” I believe unlike the bailout of the banking industry, the bailout of the auto industry was a good choice.

When Detroit was getting ready to put itself up on the chopping block due to pending bankruptcies at the major auto manufacturers, I lobbied the Honorable Sen. Kohl (D) of Wisconsin by written correspondence to request that some sort of bailout by The United States be offered for General Motors. My reasoning I was told in a letter of reply was well received and yet unexpected. Nobody had thought of my reasons for keeping GM intact other than it was an industrial Icon in America.

I explained in my correspondence that during World War II due to Detroit’s industrial capability the major auto manufacturers were ramped up to produce all manner of battlefield equipment to include tanks and even military aircraft, with Detroit having an industrial capability which exists nowhere else in The United States, with the exception perhaps today of Milwaukee, WI. I notified Sen. Kohl that it would be inadvisable to sell off GM, to break it up into little pieces, and lose that industrial potential.

I think it was wise of the administration to bail out GM at the time and I still believe that.

For this I feel partially responsible for the auto bailout.

Copyright © William Thien 2012

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A discussion arose in a public place this weekend that the president re-elect intends to raise taxes on the wealthy because he has an ‘ideological belief’ that the wealthy should “pay their fair share.” It was said that if a middle income earner is paying at a tax rate of twenty-five percent, then someone who is very wealthy should pay at the same rate at the very least, instead of fifteen percent, or the current tax rate on investment income.

On the surface the statement does indeed seem fair and I admit it did seem so to me as well at first. But upon careful examination it is nothing more really than a flat tax whereby all income earners pay at the same rate with the middle income earners and the wealthy earners paying the same rate. A flat tax is really the fairest form of tax in a way. The problem with that belief is that to the very poor, such tax rates as paid by the middle classes and the wealthy can be extremely severe, as a tax rate of twenty-five percent (randomly chosen number to make a point) deals a greater blow to the tax payer in the lower income classes than it does to the middle or upper income earner. But in reality, in terms of a numerical value, it is fair. And what’s fair is fair, really, in a way, so to speak, as it is said. I’m not so sure I favor a flat tax, though. Let’s read on.

Furthermore, as I’ve inquired in other essays and observations, is it really fair to the wealthy that they pay more taxes simply because they earn more when in fact often they use fewer government services? Why should the wealthy or the middle classes have to “share” their wealth in the first place? Because others are not wealthy? The term “sharing” implies something voluntary. When it is written into the tax code, clearly it is not voluntary, whether it effects the wealthy, the middle classes, or the poor for that matter. And why should the middle classes have to share their wealth as well? Because others are not in the middle classes and are poor? That is not “fairness” to the middle classes. Yet, the middle classes are the beasts of tax burden in The United States.

I am concerned about the phrase “pay their fair share” when it is used in reference to taxes. More often than not, there is nothing fair about it.

Copyright © William Thien 2012

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The thing about socialism and communism and/or any government program designed to help people during difficult times is that due to the frailties of human nature and the human condition whether it be single-mother pregnancies (recently reaching forty-one percent of the population!), treating the elderly, you name it , it is only a matter of time before a majority of the population is utilizing some form of government program that is part of what is traditionally called “The Social Safety Net.”

Add to that significant abuses of the social safety network such as false claims or hiding income to obtain benefits, and the costs begin to skyrocket. When a numerical majority of the population is using some government program or another and receiving some form of government payment, it is only a matter of time before the situation is no longer tenable as that portion of the population using the government programs balloons. The situation is no longer affordable unless of course you raise taxes or cut social and entitlement programs. Eventually the tax burden upon the working classes is so significant the matter really becomes one of social ethics. Those who are working find themselves in a state of tax servitude perpetuating those who are not working and often have no intention of doing so.

That is where the country is now. The country is unable to pay its debt. And it is at the brink of an ideological dilemma. Should we raise taxes or cut social programs? The result of the most recent presidential election would suggest that we raise taxes as the majority vote went to that candidate which has stated all along it is his intent to raise taxes. But is that what the country really wants?

A victim I of an unfair tax code myself I have many philosophical impediments to raising tax rates on anyone, poor or wealthy, because sooner or later that tax increase will most likely be used to raise my taxes once again, with the excuse that taxes were raised on one particular economic class, now it is my turn. History tells us this is how governments proceed to tax their populations into poverty, taxing one economic class, then another, then back and forth again and again until few have any discretionary income, commerce ceases, and everyone suffers, resulting eventually in the demise of the country itself. Shall we repeat history?

So, if raising tax rates is not an option, that leaves the alternative, cutting or scaling back on social programs. The problem with this approach is that with each suggested cut an outcry from the effected classes stifles the elected. Fear of losing future elections due to a backlash from recipients of a government check (not particularly SSN or Medicare) causes politicians to balk at any activity which might streamline that portion of the government called “The Social Safety Net.”

That in itself should tell you something about many of the recipients of government checks. If a politician is afraid of scaling back on a social program due to fear of not being re-elected by those receiving a government check (again, not particularly SSN recipients or Medicare), then perhaps many of those entitlement recipients don’t really need the entitlement in the first place. What, what is that you say?!

What I’m saying is that if the entitlement, government program (of which there are many programs now, perhaps thousands if you include all of those in all of the states) and government check recipients are still receiving a government check from some portion of the social safety net when the politician is up for re-election, chances are those recipients really don’t need the check, they are merely milking the system in perpetuity, they are abusing the system. The social safety net is meant, whether it is designed that way or not, the social safety net is meant to help those in need during times of crisis. It is not meant to be a perpetual source of income to last for years and years. But it is often used exactly that way. If a politician is afraid of scaling back on a social program for fear of not being elected three or four years down the road, then there simply are too many receiving benefits and receiving benefits for too long. That , ladies and gentlemen, is the primary, the main, the greatest reason to scale back on social programs, that there is a general expectation of receipt of benefits in a state of perpetuity and any suggestion of changing that to a finite period of time is met with drastic resistance.

I do not want to digress but this seems like the perfect time to introduce the subject of “term limits” into the discussion. Making unpopular adjustments to the social safety net is a prime example of why term limits would improve governance. Politicians would not fear a backlash from a portion or mass of the population and the politician may be more likely to make that type of decision which on the surface may seem cruel but really belies kindness to their constituency. But I do digress and so I return to my main premise.

If raising taxes in not a suitable solution, then cutting social programs, cutting government programs is the only alternative. This is the dilemma the country now faces. With the country approaching a fiscal cliff there really are only two alternatives.

But perhaps the subject is really not as simple as I’ve described. For instance, one portion of one economic class has been very successful at seeing to it that the tax code is structured in a way which almost insures they pay no taxes. Some corporations have been able to do that as well. The result being that said parties periodically have zero tax liability. Some corporations are not that profitable but they are structured so that their tax liability makes them so. Letting the population carry unproductive industry cannot be healthy for the country’s economy. If the only profitability a company has is through tax write-offs, then it’s time to close its doors and get it off the backs of the taxpayer.

Previously I have argued that the wealthy should not see a tax increase because though they often pay at a lower rate, they pay much more in taxes than someone with an income such as mine. But simply because they make more money than I raises a question of fairness, “does that mean they should pay more than I do in taxes?” Why should someone who makes a million dollars a year pay more in taxes than I do? If we both use the same amount of government services, then why shouldn’t we both pay the same amount of taxes? If I pay at a tax rate approaching the vicinity of 30 percent income tax, it in no way compares to what someone who makes a million dollars on investments pays, at the rate of 15 percent or $150,000. That $150,000 in taxes the person making a million dollars pays is multiples of what I make in salary. But does that person use a disproportionately larger amount of government services than I do? Probably not. In fact, they may use fewer government services because they have more options due to their income as to what services they can use, such as private schools and other such public services.

So, as a matter of fairness, I am not certain raising taxes, or tax rates rather, on the wealthy is fair. But cutting ridiculous loopholes and diminishing tax laws that allow the shelter of income which effectively zeroes out what is paid in taxes by corporations and particular tax payers, that seems to me to be fair. This is something that you don’t hear much about in the media and I believe it is due to the fact that an entire industry exists designed to hide wealth and the members of that industry vote and they lobby.

Prior to this dilemma the subject of a flat tax has come up again and again. It is really, truly the only fair way to tax across the board. The problem is that the very poor will suffer to a greater extent, it is believed, because 10 percent (randomly chosen number to make a point) to someone making $10,000 a year is more significant than 10 percent to someone making a million dollars a year. In essence, in our economy it is harder to get by on $9,000 than it is on $90,000 per year.

But again, I digress. I do so because of the social and political complexity of the matter, though. And due to the complexity of the tax code, which I believe is unfair, and the huge number of social programs, many of which, perhaps all the subject of abuses, due to the complexity of the matter I could digress and digress and digress ad infinitum.

Sooner or later though you have to make a decision.

As a matter of fairness then, when all is said and done, I believe the best path to balancing the country’s budget is by dramatically scaling back on social programs at the federal level and those mandated to the states and thereby curtailing the abuses they invite at both levels, and by eliminating the myriad of often seemingly ridiculous loopholes many taxpayers and corporations use, paying little or no tax at all.

As I’ve already stated here and in other essays and observations, I believe the tax code is unfair. Raising the tax rates themselves on any one particular economic class though won’t change that any. Because history tells me sooner or later my taxes are next.

Copyright © William Thien 2012

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