The Real-World Middle Class Tax Rate: 75%

If we include all taxes, the real-world tax rate is much higher than the "official" income tax rate

By Charles Hugh Smith

For those Americans earning between $34,500 and $106,000, the real-world middle class tax burden in high-tax locales is 15% + 25% + 5% + 15% + 15% = 75%. Yes, 75%. Before you start listing the innumerable caveats and quibbles raised by any discussion of taxes, please hear me out first. Let's start by defining "taxes" as any fee that is mandated by law or legal necessity. In other words, taxes are what is not optional.

If we include all taxes, the real-world tax rate is much higher than the "official" income tax rate. These "other taxes" vary from nation to nation. France, for example, has a "television tax." It is mandatory, and since virtually every household has a TV this operates as a universal tax. The argument that this is "optional" is specious.

The Morality of Choice

Choice itself is really an extension of the moral basis for capitalism

by James E. Miller

Picture yourself walking into a department store to purchase some laundry detergent.  As you approach the aisle stocked full of brightly-labeled containers, you come face to face with a crucial decision.  Which detergent do you choose?  Do you go with the tried-and-trusted brand?  Do you save money with the generic variety?  What’s on sale?  What about the high-efficiency kind?

The choice between something as inexpensive as laundry detergent seems trivial in a modern economy marked by mass production and the division of labor.  But the large selection of goods that consumers are faced with today is an incredible betterment relative to the past thousand years of human existence.  Indeed, the lives of even the most impoverished in Western economies far surpasses that of kings centuries ago.

Germany’s economy is only king in the blind valley of the Eurozone

Like most other ‘mature social democracies’ Germany is slowly but surely going broke

by DETLEV SCHLICHTER

In the present debate on the Euro crisis, Germany is frequently portrayed as a model of economic strength, a beacon of fiscal prudence and a proponent of structural reform. Her resources seem endless and her government debt an indisputable ‘safe-haven’. If only Germany shared her strength and resources more generously, the Euro debt crisis could be solved. But this is an optical illusion. Sooner or later, markets will wake up to the reality of the country’s fundamental weaknesses and grave challenges.

Over the 13 full calendar years of the life of the Euro, Germany accumulated an additional €900 billion in public debt. The overall debt load rose from €1,200 billion in early 1999 to €2,100 billion at the end of 2011, or from 61 per cent to 81 per cent of GDP. Remember that it was Germany that pushed through the Maastricht criteria, among them a debt-to-GDP ratio of no more than 60 per cent. Germany met this benchmark – barely – in only 3 of 13 years and presently has little chance to get there ever again. Only for 4 of those 13 years did Germany’s deficit stay within the Maastricht Treaty’s recommended limit of 1 percent, and on 7 occasions it exceeded the ‘maximum’ of 3 percent.

Is Marxism Coming Back?

More and more people may come to blame markets and freedom for the problems of corporatism and statism

by John Aziz

It is true that as the financial and economic crises roll on, as more and more disasters accumulate, as more people are thrown into unemployment and suffering that more and more of us will question the fundamentals of our economic system. It is inevitable that many will be drawn to some of the criticisms of capitalism, including Marxism.

The Guardian today published a salutary overview of this revival:

In his introduction to a new edition of The Communist Manifesto, Professor Eric Hobsbawm suggests that Marx was right to argue that the “contradictions of a market system based on no other nexus between man and man than naked self-interest, than callous ‘cash payment’, a system of exploitation and of ‘endless accumulation’ can never be overcome: that at some point in a series of transformations and restructurings the development of this essentially destabilising system will lead to a state of affairs that can no longer be described as capitalism”.

John Roberts Makes His Career Move

For John Roberts, it is Palm Sunday

by Patrick J. Buchanan

Out of relief and gratitude for his having saved Obamacare, he is being compared to John Marshall and Oliver Wendell Holmes.

Liberal commentators are burbling that his act of statesmanship has shown us the way to the sunny uplands of a new consensus. If only Republicans will follow Roberts’ bold and brave example, and agree to new revenues, the dark days of partisan acrimony and tea party intransigence could be behind us.

Yet imagine if Justice Stephen Breyer had crossed over from the liberal bench to join Antonin Scalia, Sam Alito, Clarence Thomas and Anthony Kennedy in striking down Obamacare. Those hailing John Roberts for his independence would be giving Breyer a public caning for desertion of principle.

Even The Beatles understood this

A Vast New Federal Power

               If you drive a car, I’ll tax the street,

              If you try to sit, I’ll tax your seat.

             If you get too cold, I’ll tax the heat,

            If you take a walk, I’ll tax your feet. 

                                               —The Beatles in “The Taxman”

by Andrew P. Napolitano
Of the 17 lawyers who have served as chief justice of the United States, John Marshall—the fourth chief justice—has come to be known as the “Great Chief Justice.” The folks who have given him that title are the progressives who have largely written the history we are taught in government schools. They revere him because he is the intellectual progenitor of federal power.

Marshall’s opinions over a 34-year period during the nation’s infancy—expanding federal power at the expense of personal freedom and the sovereignty of the states—set a pattern for federal control of our lives and actually invited Congress to regulate areas of human behavior nowhere mentioned in the Constitution. He was Thomas Jefferson’s cousin, but they rarely spoke. No chief justice in history has so pronouncedly and creatively offered the feds power on a platter as he.

Now he has a rival.

Public Choice Theory

Not the Whole Story

by Tibor Machan

ln October 1986 Professor James M. Buchanan was awarded the Nobel Prize for economics. He received the award for his pioneering work in public choice theory, a branch of economic analysis that studies the behavior of politicians and bureaucrats, especially in a representative democracy such as the United States.

Professor Buchanan, who now teaches at George Mason University in Fairfax, Virginia, developed his theory in cooperation with several other economists, most notably Professor Gordon Tullock. (During the development of public choice theory both of these economists taught at the Virginia Polytechnic Institute and State University, Blacksburg, Virginia.) Their book, The Calculus of Consent (University of Michigan Press, 1962), pioneered this new application of economics. Since its publication, other books and journals have followed, including the scholarly journal of the Center for Study of Public Choice, Public Choice, which published extensive and complex studies on a great variety of topics of concern to public choice theorists. Professors Buchanan and Tullock also have inspired numerous other economists, philosophers, political scientists and legal theorists to explore various implications of the public choice approach.

Living the dream

Carlo Marx Meets Mario Tse Tung

by Nicholas Farrell

Italian communists always wanted a revolution in Italy, but I do not think that this is quite what they had in mind: A Chinese man has just bought the bar at their party headquarters in the city of Forlì in the “red” Romagna region where I live.

Attached to the party’s headquarters, the bar is called the Carlo Marx, and the name is written in huge red letters on an enormous white billboard above the terrace outside.

Will the new owners, hailing as they do from the world’s most powerful remaining communist country, change the name to the Mario Tse Tung?

Will they construct suicide nets like those erected around Foxconn’s factory in China to deter the bar’s depressed clients from throwing themselves off the roof? Or maybe banners that warn, “Work hard on the job today or work hard to find a job tomorrow”?

Until the Berlin Wall fell in 1989, Italy’s Communist Party—the Partito comunista italiana (Pci)—became proportionally the largest in the capitalist world after World War II and Italy’s second-most-powerful party, polling about one-third of the vote in its 1970s heyday.

“You try to explain that communism and fascism have much more in common with each other than either does with freedom and democracy, but you waste your time. Their faith blinds them to the facts.”

Scientists and science are not so immune to ideology, after all

Environmentalism was an ugly experiment

Mark Lynas has converted from being an eco-alarmist to a pro-growth rationalist. But he still doesn’t get the problem with green thinking.

by Ben Pile 

Since becoming an advocate of genetic modification (GM) and nuclear power, Mark Lynas has drawn increasingly hostile criticism from his erstwhile comrades in the green movement. In turn, he has sharpened
his criticism of environmentalists for their hostility to technological and economic development. In his new book, The God Species: How the Planet Can Survive the Age of Humans, he attempts to reformulate environmentalism to overcome the excesses that have so far prevented it from saving the planet. This book will no doubt provoke debate, but what is this transformation really about, and is it really based on new ideas or merely the revision of old ones?

Last November, Channel 4 aired What the Green Movement Got Wrong, which featured prominent environmentalists, including Lynas, reflecting on the failures of environmentalism. The film claimed that environmentalists’ opposition to technologies that offered environmentally benign methods of energy and crop production had impeded their aim of creating an ecologically sustainable society. Since then, the debate between pro- and anti-nuclear environmentalists has deepened, exposing the many divisions that exist within the green camp.

What the hell is wrong with bankers?

They’re all Barclays bankers now…

Depicting Barclays’ Libor-fiddling staff as uniquely corrupt overlooks what they share in common with the rest of the reckless ruling class

by Brendan O’Neill 

What the hell is wrong with bankers? That’s the question on the lips of every commentator and politician in the wake of the Libor rate-fixing controversy. The hunt is now on to find the root cause of bankers’ aberrant behaviour, whether it’s in the nerve endings of their heads (they have greed ‘hardwired into their brains’, says one observer) or in their cushioned, value-lite upbringings (apparently they come from ‘the most privileged backgrounds in Britain’). Everyone agrees there must be some mental or lifestyle cause of bankers’ deviancy, which so shocks ‘decent Britain’.

The tyranny of green do-gooders

Rio+20

The latest ‘save the planet’ shindig provided yet another chance for political poseurs to dictate our future.

by Ben Pile 

Some 50,000 delegates and 100 world leaders met at the Rio+20 ‘Earth Summit’ last month to settle on ‘the future we want’. They failed.

‘Let me be frank. Our efforts have not lived up to the measure of the challenge’, said UN secretary-general, Ban Ki-moon, at the opening ceremony. What ‘we want’ turned out to be the opposite of what he thought we wanted. Ban continued: ‘For too long, we have behaved as though we could… burn and consume our way to prosperity. Today, we recognise that we can no longer do so. We recognise that the old model for economic development and social advancement is broken… Our global footprint has overstepped our planet’s boundaries.’

Calvin knew what Roberts pretends to forget

Cool with Coolidge

By James Dewars

Calvin Coolidge was assailed as “silent Cal”—though who wouldn’t wish more a relatively more silent president these days?—and ridiculed by fashionable people everywhere for saying “the business of America is business.”  I’ve got a long passage in the second volume of my Age of Reagan recalling liberal outrage when Reagan put up Coolidge’s portrait in the White House cabinet room in place of Jefferson.

Germany will walk

Germany Will Choose to Bail on the EU Rather Than Bail It Out

By Graham Summers

It all boils down to Germany.

I’ve been forecasting for months that the country will increasingly focus on domestic interests and that it will ultimately opt to leave the Euro rather than prop up the EU.

The former (focusing on domestic issues) is already underway.

Germany Plans Joint Federal-State Debt in Merkel Fiscal Deal

Chancellor Angela Merkel agreed to share borrowing costs with Germany’s states to help ease their budget squeeze, completing a deal the opposition said will help secure German ratification of the European Union’s fiscal pact.

The party has run out of booze

Germany Backtracks On Last Week's Summit

by Tyler Durden

Those curious why peripheral European bond yields have once again resumed their levitation creep higher, it is because not only did yesterday the key Merkel coalition partner, CSU, threaten to leave Germany's ruling party hanging "if further euro zone states secure bailouts, saying there were limits to how far his party was prepared to go", but today we have gotten even more furious backtracking on Mario Monti's history "success" less than a week earlier, after on one hand German opposition SPD has said it opposed Direct ESM aid to banks, but more importantly, the German Finance Ministry itself said that the entire bailout timeline is now in question, saying that it "remains unclear if Eurozone finance ministers will decide on Spain's request for banking sector aid at their next monthly meeting on July 9." The ministry also added that a decision could only come once the report on Spain by the troika - the European Commission, the ECB and the IMF - had been finalized. In other words, that much maligned Troika, which Monti had supposedly exorcised from intervening in the economies of Spain and Italy, will, after all be very much present, which also means that all the media spin about last week's "gamechanging" and unconditional bailout summit resolution, has been for nothing, in line with all the skeptical expectations.

Αn old-fashioned model

Two different stories

by RUSS ROBERTS 

Robert Samuelson has an interesting narrative in the Washington Post. He argues that the prosperity of the last 30 years was driven by consumer spending, consumer spending that came from a false sense of wealth as housing prices rose artificially high due to an expansion of credit:

We live in a world of broken models. To understand why world leaders can’t easily fix the sputtering global economy, you have to realize that the economic models on which the United States, Europe and China relied are collapsing. The models differ, but the breakdowns are occurring simultaneously and feed on each other. The result is that the global recovery flags, while pessimism and uncertainty mount.

An American Declaration of Independence From Big Government

 "We hold these truths to be self-evident ..."

by Richard Ebeling

The Declaration of Independence, signed by members of the Continental Congress on July 4, 1776, is the founding document of the American experiment in free government. What is too often forgotten is that what the Founding Fathers argued against in the Declaration was the heavy and intrusive hand of big government.

Most Americans easily recall those eloquent words with which the Founding Fathers expressed the basis of their claim for independence from Great Britain in 1776:

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness – That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed – That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness."

Lamenting The Lost Legacy Of Independence Day

May providence have mercy on our nation, lest we end up getting what we deserve

By By Bill Frezza

Why do we still celebrate Independence Day? Is it a lingering habit, a mindless bit of nostalgia, a time to indulge in fireworks and barbecues, devoid of any deeper meaning? Can anyone honestly argue that our nation still honors the values, or practices the principles, for which our Founders fought?

Today, most Americans have been trained to be embarrassed by the “extremist” individualist ethos that made the protection of liberty the primary purpose of government. They have been taught to apologize for the shortcomings of the “rich white men” who led the revolution. A majority of Americans now subscribe to an expansive view of government as both great provider and beneficent leveler. Its primary purpose is to redress unequal or unhappy outcomes, regardless of their source, through wealth redistribution on a scale so vast that it mocks the concept “private property.”

The American way to Utopia

The Sovietization Of American Medicine

By Leonid Poretsky

For me, the expanded reach of an already bloated central government brings back bad memories of being a physician in the Soviet Union, which collapsed under the weight of its own bureaucratic inefficiencies two decades ago. I was among the many Soviets cheering for its demise. Now I worry that some of the most ruinous traits of the Soviet system are taking hold of American medicine.

I am not alone. Many opponents of “Obamacare” almost viscerally condemn what they call an unprecedented federal power-grab into personal healthcare. “What makes this so pernicious,” Paul D. Clements, a lawyer for the 26 states opposing the law argued in court, “is that the Federal Government knows that the citizenry is not going to take lightly the idea that there are huge, new Federal bureaucracies popping up across the country.”

Mr. Clements is correct. But perhaps even he does not fully fathom the degree to which Washington has already imposed its will on health-care delivery. American medicine, I fear, is falling increasingly under the control of a centralized health-care politburo that dictates how physicians diagnose, treat and monitor their patients.

Dear Person Seeking a Job : Why I Can't Hire You

Free Trip to Cabo

Potential employers have to respond to the incentives and disincentives that exist in today's world, and those do not favor conventional permanent employees.

by Charles Hugh-Smith

I know you're hard-working, motivated, tech-savvy and willing to learn. The reason I can't hire you has nothing to do with your work ethic or skills; it's the high-cost Status Quo, and the many perverse consequences of maintaining a failing Status Quo.

The sad truth is that it's costly and risky to hire anyone to do anything, and "bankable projects" that might generate profit/require more labor are few and far between. The overhead costs for employees have skyrocketed. So even though the wages employees see on their paychecks have stagnated, the total compensation costs the employer pays have risen substantially.

Thirty years ago the overhead costs were considerably less, adjusted for inflation, and there weren't billboards advertising a free trip to Cabo if you sued your employer. (I just saw an advert placed by a legal firm while riding a BART train that solicited employees to sue their employers, with the incentive being "free money" for a vacation to Cabo.)

Did Merkel Win or Lose?

Everyone on the euro Titanic was relieved that the ship's sinking could once again be postponed

by Pater Tenebrarum

It was interesting to read two articles in German news magazine 'Der Spiegel' that appeared to take completely opposing views on this particular matter.

One article considered her the clear loser of the summit, suffering a 'painful defeat'. 

“It is a painful defeat for Merkel. With the German parliament set to approve the ESM and the fiscal pact on Friday evening, Merkel had been eager to avoid making concessions to the southern Europeans. On the eve of the summit, the chancellor's advisers had ruled out the possibility of easing the rules governing access to the ESM. In particular, Merkel considered IMF oversight of aid recipients to be non-negotiable.

Now, however, she will travel in defeat back to Berlin, where she is scheduled to address the German parliament in the afternoon. Merkel's confidants began trying to put a positive spin on the summit results early on Friday morning. The chancellor had pushed through her maxim of "no liability without oversight," said Hermann Gröhe, general secretary of Merkel's Christian Democrats, in an interview on German breakfast television. Direct ESM aid to banks will only be allowed, he said, once the oversight authority is established at the ECB.