Different Means to Very Different Ends

In the US, well meaning individuals on the liberal left, mostly Democrats, and on the conservative right, mostly Republicans, may actually want the same thing. That is a reduction in the vast economic differences between the relatively poor, and the relatively wealthy in our nation, That, of course does not include extremists of either persuasion. The irreconcilable difference between the two is in the method used to achieve this noble end.

Conservatives believe that is best achieved by focusing on building, using words from the famous Chinese parable, “teaching them to fish.” They work to improve the social and economic conditions of the poor by providing suitable private sector jobs. This improves and raises the living standard of those with less. Conservatives strive to help them improve their own economic status, so they can move into the reasonably well off or even the wealthy category. This is done with a minimum of aid or interference from government, by shrinking government, and by lowering taxes.

Liberals take the opposite tack. They use class envy to incite the less well off to agitate for the confiscation or destruction of the wealth of those better off than the poor and reduce them to poverty. This achieves their particular goal of equality, the equality of poverty and dependence. They promote the opposing part of the same parable and “give them a fish.” This makes more individuals dependent on government. This is done by maximizing the control of government, by expanding the role and size of government, and by increasing taxes.

The reason for the political success of the left is that it is much easier to destroy than to build. It is infinitely simpler to use emotional appeals of class envy and hate rhetoric to motivate people to cooperate and destroy, than it is to use logic and rationality to get people to work together to build. Throughout history, men have worked together in massive efforts to build buildings, even cities, only to have them destroyed by armies of ignorant, slavish followers, even those few with admirable overall intent. There are countless examples in many scales.

A small child on the beach will squeal with joy as he runs through and quickly demolishes even a complex sand castle that took the builder many hours to imagine and create. It took but a few relatively unskilled men a very short time to destroy the World Trade Center and kill 3,000 innocent humans. Contrast this with the immense effort by countless individuals cooperating over the many years required to imagine, create plans, design, build, furnish, and then staff this complex of buildings.

The destruction of anything is far easier than the building, The left has historically been the destroyers of virtually everything. A look at those nations of the world where the left has had free reign and mostly the support of the masses provides ample evidence. I don’t even need to mention their names. Interestingly it is more the direction of change of political direction than the actual position that creates economic boom or bust.

The US is one example of political movement from right to left that is driving our nation into eventual economic chaos. No, we are not there quite yet, but we may have already passed the event horizon—the point of no return. Greece is in the midst of self destructing. I wonder if we are among the next to go that route.

In contrast, China is moving rapidly in the other direction. By removing many government controls, freeing restraints on individuals, permitting and even encouraging private investment in business and industry, and moving away from socialism toward a capitalistic system, China has grown rapidly in economic power and will soon pass the US in that essential wealth. Numerous other Asian nations preceded China down this path and many more are now following.

While this has resulted in huge economic gains and a rising standard of living for those nations, there is one nation bucking this trend. North Korea may be a military power with many advanced weapons, but the North Korean people wallow in abject poverty and even starvation under an oppressive socialist government.

All of this makes me wonder just how long Chinese money will support the socialist excesses of the US with huge loans. Remember Margaret Thatcher’s oft repeated quote, “The problem with socialism is that eventually you run out of other people’s money.”

Actually it is not the Congress, or the Whitehouse, or even the judiciary that prompts my fear and distaste of our government. These are temporarily peopled by a relatively small number of those with varying degrees of power and ability. The real force and control of the US government now lies in the legions of increasingly powerful bureaucrats who actually run the growing machine of government and seemingly, can not be removed from their positions of power—ever.

This machine is very much in control of huge numbers of career bureaucrats and has learned to manipulate well connected political forces giving them increasing powers over thousands of federal workers. They have far more real control than do any of the three main elected and appointed branches of government. The Postal Service, the IRS, and Fannie Mae are several types of examples, but there are many more. Due to the efforts of liberal Democrats since 2008, this monster machine has grown tremendously in power, in cost, and in number of employees.

The obviously powerful banking industry is deeply involved in the control of the financial sectors of this bureaucracy. I need not site examples. All one needs do is examine the resume of those pernicious bureaucrats running the Federal Reserve Bank and all others involved in controls on Wall street and the banking industry. The foxes are now living in the hen house and whose interests do you think they are guarding? Not those of the public, that’s for certain.

If you think government bureaucrats aren’t running things to their own advantage, just try to get any kind of government help if you are an ordinary citizen without a political connection. I have experienced a few of these personally. One instance involved my late wife, Barbara. In 1998 she was diagnosed with Post Polio Syndrome, a pernicious and debilitating condition that often attacks individuals who had Polio that was seemingly cured without any damage. It takes twenty to fifty years for the actual damage done to become a problem. It shows up as weakness and pain to the extremities, progresses to inability to stand or walk while causing intense pain, and eventually end in premature death. Barbara battled it for seven years until her death.

In 1999, when she became unable to stand, she had to step down as pastor of her church, ending a promising career as a Methodist minister. It was both financially and emotionally devastating. She was advised by her physician to file for SSI as she was only 59 years old. In spite of the fact that she easily qualified, she was turned down a total of five times over the next three years. It was pure luck that she found out about Congressman Mike Pence, Republican from the sixth district. She contacted his office and within two months she started receiving her SSI payments. It amazed us what this one little political connection accomplished. As we were in the third district, Pence was not even our congressman. We wrote him a letter expressing our great appreciation for his help.

It was Dwight Eisenhower who has been quoted as saying, “Beware the Military/Industrial complex.” His actual words, delivered in a speech given in 1961, are quite different and convey a very different warning. He stated, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military/industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” This warning, in its broad application, actually applies to any “acquisition of unwarranted influence.”

Then consider the following: The military is an arm of the US government and is under control of the President and the Congress. Industrial refers strictly to those industries that produce arms and military equipment. The section of our economy that actually profits the most, the generates the most dollar profits from the sale of military supplies and equipment is, guess what, the banking industry. I therefore assume that one should now change “Beware the military/industrial complex.” to “Beware the government/banking complex.” Or maybe, in Eisenhower’s meaning, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the government/banking complex. The potential for the disastrous rise of misplaced power exists and will persist.”

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Eisenhower’s entire Military-Industrial Complex Speech of 1961 follows

From the Public Papers of the Presidents, Dwight D. Eisenhower, 1960, p. 1035- 1040

My fellow Americans:

Three days from now, after half a century in the service of our country, I shall lay down the responsibilities of office as, in traditional and solemn ceremony, the authority of the Presidency is vested in my successor.

This evening I come to you with a message of leave-taking and farewell, and to share a few final thoughts with you, my countrymen.

Like every other citizen, I wish the new President, and all who will labor with him, Godspeed. I pray that the coming years will be blessed with peace and prosperity for all.
Our people expect their President and the Congress to find essential agreement on issues of great moment, the wise resolution of which will better shape the future of the Nation.
My own relations with the Congress, which began on a remote and tenuous basis when, long ago, a member of the Senate appointed me to West Point, have since ranged to the intimate during the war and immediate post-war period, and, finally, to the mutually interdependent during these past eight years.

In this final relationship, the Congress and the Administration have, on most vital issues, cooperated well, to serve the national good rather than mere partisanship, and so have assured that the business of the Nation should go forward. So, my official relationship with the Congress ends in a feeling, on my part, of gratitude that we have been able to do so much together.

II. We now stand ten years past the midpoint of a century that has witnessed four major wars among great nations. Three of these involved our own country. Despite these holocausts America is today the strongest, the most influential and most productive nation in the world. Understandably proud of this pre-eminence, we yet realize that America's leadership and prestige depend, not merely upon our unmatched material progress, riches and military strength, but on how we use our power in the interests of world peace and human betterment.

III. Throughout America's adventure in free government, our basic purposes have been to keep the peace; to foster progress in human achievement, and to enhance liberty, dignity and integrity among people and among nations. To strive for less would be unworthy of a free and religious people. Any failure traceable to arrogance, or our lack of comprehension or readiness to sacrifice would inflict upon us grievous hurt both at home and abroad.

Progress toward these noble goals is persistently threatened by the conflict now engulfing the world. It commands our whole attention, absorbs our very beings. We face a hostile ideology -- global in scope, atheistic in character, ruthless in purpose, and insidious in method. Unhappily the danger is poses promises to be of indefinite duration. To meet it successfully, there is called for, not so much the emotional and transitory sacrifices of crisis, but rather those which enable us to carry forward steadily, surely, and without complaint the burdens of a prolonged and complex struggle -- with liberty the stake. Only thus shall we remain, despite every provocation, on our charted course toward permanent peace and human betterment.

Crises there will continue to be. In meeting them, whether foreign or domestic, great or small, there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties. A huge increase in newer elements of our defense; development of unrealistic programs to cure every ill in agriculture; a dramatic expansion in basic and applied research -- these and many other possibilities, each possibly promising in itself, may be suggested as the only way to the road we wish to travel.

But each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs -- balance between the private and the public economy, balance between cost and hoped for advantage -- balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between actions of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration.

The record of many decades stands as proof that our people and their government have, in the main, understood these truths and have responded to them well, in the face of stress and threat. But threats, new in kind or degree, constantly arise. I mention two only.
IV. A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction.

Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea.

Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.
In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present
and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific/technological elite.

It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system -- ever aiming toward the supreme goals of our free society.

V. Another factor in maintaining balance involves the element of time. As we peer into society's future, we -- you and I, and our government -- must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.

VI. Down the long lane of the history yet to be written America knows that this world of ours, ever growing smaller, must avoid becoming a community of dreadful fear and hate, and be instead, a proud confederation of mutual trust and respect.

Such a confederation must be one of equals. The weakest must come to the conference table with the same confidence as do we, protected as we are by our moral, economic, and military strength. That table, though scarred by many past frustrations, cannot be abandoned for the certain agony of the battlefield.

Disarmament, with mutual honor and confidence, is a continuing imperative. Together we must learn how to compose differences, not with arms, but with intellect and decent purpose. Because this need is so sharp and apparent I confess that I lay down my official responsibilities in this field with a definite sense of disappointment. As one who has witnessed the horror and the lingering sadness of war -- as one who knows that another war could utterly destroy this civilization which has been so slowly and painfully built over thousands of years -- I wish I could say tonight that a lasting peace is in sight.

Happily, I can say that war has been avoided. Steady progress toward our ultimate goal has been made. But, so much remains to be done. As a private citizen, I shall never cease to do what little I can to help the world advance along that road.

VII. So -- in this my last good night to you as your President -- I thank you for the many opportunities you have given me for public service in war and peace. I trust that in that service you find some things worthy; as for the rest of it, I know you will find ways to improve performance in the future.

You and I -- my fellow citizens -- need to be strong in our faith that all nations, under God, will reach the goal of peace with justice. May we be ever unswerving in devotion to principle, confident but humble with power, diligent in pursuit of the Nation's great goals.
To all the peoples of the world, I once more give expression to America's prayerful and continuing aspiration:

We pray that peoples of all faiths, all races, all nations, may have their great human needs satisfied; that those now denied opportunity shall come to enjoy it to the full; that all who yearn for freedom may experience its spiritual blessings; that those who have freedom will understand, also, its heavy responsibilities; that all who are insensitive to the needs of others will learn charity; that the scourges of poverty, disease and ignorance will be made to disappear from the earth, and that, in the goodness of time, all peoples will come to live together in a peace guaranteed by the binding force of mutual respect and love.

Who is it that really and truly pays taxes

For those of you who don’t like my political views, this piece is completely a-political. It is written so people can understand the effects on everyone that taxes have and how many taxes on the “wealthy” are actually paid by average and even poor Americans.

Who is it that really and truly pays all those taxes, and I mean all, every penny?

That includes all payroll taxes, income taxes, FICA, unemployment taxes, sales or value added taxes, real estate taxes, and all those hidden taxes on practically everything. Let’s follow some tax dollars and see who actually pays, where the tax debt ends up. The figures reported have been taken from the actual financial statements of real companies. The names have been changed to prevent law suits.

EXAMPLE, STEP 1: XYZ Mining in Arizona digs copper ore out of the ground in several Arizona copper mines. They refine the ore and sell it to copper users. In 2010 their sales were nearly a $billion. Their net earnings before taxes were $211 million, or 21.1% of sales. Federal income taxes on those earnings were $47 million. Taxes other than income taxes were $22 million. These included state and local taxes, franchise taxes, and federal direct mining taxes. Payroll taxes, including both portions of FICA were $67 million. The total tax portion of XYZ’s expenses were $136 million or 13.6% of total sales. Out of every $1,000 worth of copper sold, $136 was for taxes that the purchaser of the copper actually paid for. XYZ simply passed that tax burden on to those who bought their copper, a fabricator or manufacturer.

STEP 2: ABC fabricating of Texas bought the raw copper ingots from XYZ and produced copper pipe among many other products. A financial analysis similar to XYZ shows that for every $1,000 worth of pipe sold, $227 was for taxes. Factoring in the portion of the taxes XYZ paid, adds $42 to that amount for a total of $269 out of the $1,000 of sales. This amount is simply passed on down the chain to the purchaser of the pipe, a contractor..

STEP 3: A building contractor in Dallas bought some of this pipe for a major building project. A financial analysis similar to XYZ and ABC shows that for every $1,000 worth of pipe used and priced in the project, $296 was for taxes. Factoring in the portion of the taxes XYZ and ABC paid, adds $84 to that amount for a total of $380 out of the $1,000 of the contract price. This amount is simply passed on down the chain to the purchaser of the pipe, a building owner.

STEP 4: The building owner leases space in the building to a group of dentists. Their financial analysis shows that for every $1,000 of the building lease income attributable to the extensive copper piping in their suite, $198 was for taxes. Factoring in the portion of the previous taxes paid adds $123 to that amount for a total of $321 out of each $1,000 of the rent paid by the dentists. This amount is simply passed on down the chain to the dentists who lease the space.

STEP 5: The group of dentists have many patients that pay for their dental services. Their financial analysis shows that for every $1,000 of the patient fees they receive, $321 was for taxes. Factoring in the portion of the previous taxes paid adds $140 to that amount for a total of $461 out of each $1,000 of the fees paid by the patients. This amount, the entire tax burden applied to each of the 5 steps combined, is actually paid by the end user, the patient who is at the end of the chain, the final or end user.

Conclusion: It is always the end user of any product or service that actually pays every penny of all taxes. This tax burden falls on rich and poor alike and, as in the above example, currently averages about $46 out of every $100 spent by every individual, regardless of income or wealth status. That percentage can be accurately calculated another way. Currently, our federal government consumes about 41% of our GNP. Add to that approximately 5% consumed by state and local governments. It’s funny how that adds up to the same $46 out of every $100 spent by every individual, regardless of income or wealth status.

Raising taxes always increases the cost of absolutely everything. From gasoline to bread to apartment rent to health care, increasing taxes will always raise these prices for the consumer. By the same token, lowering taxes will always lower these prices for the consumer. These are demonstrable and proven facts from time immemorial. So, no matter how you slice it, the poor always pay a far higher portion of their needed income from any and all sources, than do those not considered among the poor. The less income one has, the more important that portion is that goes up the chain to pay all those taxes. Said another way, the loss of that $46 out of every $100 spent is much more damaging the less income one has. That $46 is far more important to a low income family trying to get by, than to a slightly wealthy family or even the one down the street making $50k per year.

EXAMPLE 1. A poor family has a total income including welfare payments of $1,600 a month. They pay no income taxes. Assuming they spend all of their income, 46% of what they spend, or $736 is taxes that were passed down the chain.

EXAMPLE 2. Another family makes about $5,000 a month. They invest $500 per month in savings and pay $225 for income taxes. They also have a mortgage payment of $1,000 each month. This leaves them with $3,275 of disposable income which they use for all household necessities, food, clothing, transportation, insurance, etc. etc. Assuming they spend it all, 46% or $1,622 is taxes that were passed down the chain. Their total taxes are $1,847 or 34.63 of their income.

EXAMPLE 3. Another family makes about $15,000 a month. They invest $3000 per month in savings and stocks, and pay $2,000 for income taxes. They also have a mortgage payment of $3,000 each month. This leaves them with $7,000 of disposable income which they use for all household necessities, food, clothing, transportation, insurance, etc. etc. Assuming they spend it all, 46% or $3,268 is taxes that were passed down the chain. Their total taxes are $5,164 or 34.43% of their income

EXAMPLE 4: Another “wealthy” family makes about $100,000 a month. They invest $40,000 per month in stocks and savings, and pay $15,000 for income taxes. They also have a mortgage payment of $10,000 each month. They make charitable donations of $5,000 per month. This leaves them with $30,000 of disposable income which they use for all household necessities, food, clothing, transportation, insurance, etc. etc. Assuming they spend it all, 46% or $13,800 is taxes that were passed down the chain. Their total taxes are $28,800 or 28.8% of their income.
Lets see, here’s the resulting tax table:

Family (monthly)... Income... Disposable... Taxes... Tax %... Left to Invest
Poor ...................................$1,600............. $1,600..........$736.....46.0%......................$0.0
Lower middle................... $5,000.............$3,525....... $1,847 ....34.63%.............. $500
Upper middle .................$15,000 ............$7,104....... $5,220.....34.43%.......... $3,000
Wealthy ........................$100,000 ........$30,000 .....$28,800.... 28.8% ..........$40,000

Who thinks this is fair?

The table below gives the same figures with the “Fair Tax” 15-25% base

Family (monthly)... Income... Diposable... Taxes... Tax %... Left to Invest
Poor $1,600 $0 0.0% $0.0
Lower middle $5,000 $750 15.0% $1,955
Upper middle $15,000 $3,250 21.7% $4,970
Wealthy $100,000 $25,000 25.0% $43,800

The table below gives the same figures with the “Fair Tax” 20-30% base

Family (monthly) Income Diposable Taxes Tax % Left to Invest
Poor $1,600 $0 0.0% $0.0
Lower middle $5,000 $1000 20.0% $1,445
Upper middle $15,000 $4,000 21.7% $4,220
Wealthy $100,000 $30,000 30.0% $38,800