I’m no tax expert. In fact my lowest grade in law school was in … income tax. Big surprise. But I pay enough in taxes to qualify me to opine, I think.

President Obama earns a $400k a year salary. This makes no sense, as I’ve noted in Taxing Astronauts and the President (see also Why is it okay to pay an intern $0? or, liberal hypocrisy on the minimum wage), because most people would pay lots of money to be President; if anything, they should receive no salary, and be taxed on the imputed income they receive for being permitted to be President. But there you have it.

Now Obama pays federal and presumably D.C. income tax on his salary, because he resides in D.C. (Instead of taxing them on the stolen tax dollars paid them, why not just pay them the difference, tax free? Nah, make ‘em file the tax returns like us plebes.)

But when Obama travels outside D.C.—to another state, or country—he is “always on the job” and usually performing official duties that he is being paid for. Apparently this is technically subject to local income tax in the state or country one performs activities in that earn money. This is why it’s okay to visit the US on a tourist visa, for example, but you cannot earn money while here. And so on.

Consider how pro athletes and famous performing artists are treated when they travel around making money in various states and countries. As noted in an L.A. Times article a couple years ago, “The taxing life of a pro athlete” (tagline: It’s one of life’s certainties: Athletes have to pay for income earned on the road):

For eight of his first nine major league seasons, Angels pitcher Darren Oliver worked in Texas, where the stars at night are big and bright and, more important, there’s no state income tax.

Yet, each April, he pays a small army of accountants to file more than a hundred pages of returns — and sometimes checks — to as many as a dozen states and one province in Canada, covering taxes on income he earned on the road.

…

In the tax world, it’s no secret that athletes are treated differently from other highly paid workers — investment bankers and corporate lawyers, for example — who also work in multiple states. The jock tax, critics say, is poorly targeted, arbitrarily enforced and unrealistically burdensome — and also completely understandable given the current economic climate.

“No, it’s probably not fair,” says Ralph Espinosa, a Miami-based accountant who has done tax work for several NFL and major league players. “But they make more money than most of us. Their information is easily accessible online. Most people know their salaries [and] they can go in and see their schedules.”

Athletes are taxed based on “duty days” they spend in each state. In baseball, there are approximately 181 “duty days,” meaning a player earning $1.81 million would make $10,000 each duty day. Therefore, if that player’s team had three games in California, he would be responsible for taxes on $30,000 of income.

At that point, all the tax collectors have left is a math problem to figure out that Ichiro Suzuki, the highest-paid baseball player in Washington, a tax-free state, will have to pay more than $218,000 in California taxes for the 25 games the Mariners will play there this summer.

The salaries and schedules for lawyers, bankers, entertainers and other professionals who might be subject to nonresident taxes aren’t as accessible. But that hasn’t stopped some states from trying to reel in CEOs and other well-paid executives by auditing corporations for their travel records, tax professionals say.

Touring entertainers such as singers or comedians often have taxes withheld by either the promoter or the venue. But collecting from film crews can be trickier since shooting schedules aren’t publicized and are frequently changed and actors aren’t on the set every day.

(See also The Tax Significance of Place of Residence for Professional Athletes.) So it appears that anyone who travels out of their home state as part of their income-earning job, technically is supposed to file multiple tax returns pro-rated by jurisdiction, but most people don’t do this because it’s hard for the other states to know. Sort of the same reason states have trouble enforcing the “use taxes” that residents of the state are supposed to pay on sales-tax free purchases of goods from Amazon. But for pro athletes, “ Their information is easily accessible online. Most people know their salaries [and] they can go in and see their schedules.” For normal people, however, like film crews, “shooting schedules aren’t publicized and are frequently changed”. So states focus on the big fry.

However: President Obama has a somewhat high salary, it’s publicly known, and it’s known publicly when he’s in another state or country. So when Obama meets with the President of France, in Paris, France should go after him for the French income tax due on the portion of his income attributable to his time in France. Or Canada, or California, or so on. I demand rectification of this outrage!

Or, better yet, he should be brought up on tax evasion charges.

And the same applies for other prominent politicians, like governors, members of Congress, Secretary of State, and so on.

And while we’re at it, politicians ought to have their Amazon accounts audited to ensure they are voluntarily paying use taxes in their state for all items bought sans sales tax.

“Institutions will try to preserve the problem to which they are the solution.” ~ Clay Shirky

You know the slavery Kool-Aid is working well when those who are oppressed petition their oppressors for more of that which helps keep them oppressed.

For instance, public education is a tool that was designed–specifically and directly–as a means of controlling the hoi polloi.  The educational system of compulsory public education championed by Horace Mann, chock-full of multiple-choice testing perfected by Frederick J. Kelly, feeding into statistical models based upon the work of (eugenicist) Sir Francis Galton, was (and is) designed to fulfill the need for employees who are primed and ready to inhabit factories where efficiency can be measured in ways developed by Frederick Winslow Taylor. (The fact that so few of such factories currently exist in America should also be telling, but that’s a different discussion.) Mann believed “universal public education was the best way to turn the nation’s unruly children into disciplined, judicious republican citizens.” The whole thing was designed to produce a seething throng of people ready to take orders, stand in line, ask few questions, and install bumpers all day–accepting the interminable boredom of such a life–while their over-lords made a ton of money.  Free and compulsory public education was never intended to create inquisitive, risk-taking, leaders. Or entrepreneurs and/or business owners.  Or frankly, owners of anything! Yet, people clamor that “education is a right” and “we need more funding for our schools” despite the inescapable fact that these same crap holes are doing their best at producing children incapable of independent thought and unable to read a book (or a blueprint), solve a simple mathematics problem, or devise a new strategy.  It’s damned sad, really.

A similar conclusion can be drawn regarding government job creation. Throughout the current election season, you’ll hear people clamoring that Obama will do all he can to create jobs while Romney won’t, or some such simplistic foolishness. Any president who claims to create jobs, uses tax dollars and government debt to pay people wages that are too high, for work that otherwise likely would not be done. In other words, the money is wasted on boondoggles. This action has at least two negative side-effects.  One, it takes money from those who produce it and gives it to someone else. (That’s the taxation piece.) That might sound good to the recipient unless he realizes that he is only getting the proverbial fish that feeds him for a day, if that long. Secondly, this stolen–they call it stimulus nowadays–money results in those at the top having more real income than the supposed beneficiaries of those government-created jobs. (That’s the inflation piece.) The people who think they benefit from the government-created-jobs are worse off in the long term, despite all appearances to the contrary in the short term. Ludwig von Mises spoke of this phenomenon in, “On Current Monetary Problems” with:

The advocates of annual increases in the quantity of money never mention the fact that for all those who do not get a share of the newly created additional quantity of money, the government’s action means a drop in their purchasing power which forces them to restrict their consumption. It is ignorance of this fundamental fact that induces various authors of economic books and articles to suggest a yearly increase of money without realizing that such a measure necessarily brings about an undesirable impoverishment of a great part, even the majority, of the population.

An injection of money into the economy by the government generally results in a transfer of wealth towards the top—real income transferred from those who can least afford it to those who already have plenty. (I already noted some time ago that this phenomenon seemed to get rolling in 1980.  The chart below is instructive.) One might even suppose this state-facilitated income transfer is the reason why statists in power so strongly support government control of the money supply, but that’s another discussion. Bottom Line:  Those who clamor for a president who cares about them get the same treatment and results as they would from some random bastard who openly scorned them. (No offense to the random bastard you support!)

And yet, here we are at election time, and the clarion calls continue to go up, from both sides of the ostensible aisle.

Cross-Posted at LRCBlog.

“Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.” ~ Frederic Bastiat

No. Not even.

When Romney said “there are 47 percent who are with him [POTUS], who are dependent on government, who believe that, that they are victims, who believe that government has the responsibility to care for them” he was roughly half right. Very. Roughly. What he left out is that the “other” 47 percent, those that are with him [Romney] are after the same thing. Admittedly, the number of people who are unrepentant tax feeders, to use Will Grigg’s apt description, is likely (hopefully?) lower than 94 percent. The naive, hopeful dreamer in me would peg it at probably closer to 65–75 percent.  Whatever the exact number is, the simple fact of the matter is that politics — particularly in the U.S., but abroad as well — is dominated by sociopaths with megalomaniacal tendencies who are often attended to and served by sycophants with dependency issues.

The other 25-35 percent and I just wish they’d all leave us the hell alone.

(Cross-Posted at LRCBlog.)

Part of the zeitgeist throughout much of the libertarian speaking circuit today involves a false dichotomy: that economically speaking, the US is on the way down and China is on the way up.  That entitlement programs in the US are dragging an already wounded thoroughbred down into an abyss.  And that China does not have these same sort of entitlement programs and is therefore becoming a bastion of free-market liberty.

For example, Jeffrey Knoll wrote in the TLS comments section two months ago:

One aspect of China that is more libertarian is that they have limited welfare and social security, so their society is not burdened with unfunded liabilities like the West is. This also forces the Chinese to save more which provides more capital for investment.

Another example is from Peter Schiff, who said in a debate four months ago that:

“[China has] accumulated massive savings, doesn’t have social security and doesn’t have a lot of the same government programs that the US does.”

Both of these statements are wrong.  In fact, here is the official website from the PRC explaining their social security system.  China’s public pension system has been operating in the red for many years now (due in part to a relatively low retirement age and longer lifespan), hitting a purported $267.6 billion deficit last year.  Chinese policy makers have even rolled out universal health care plan that is targeted for a 2020 completion date — what will the ultimate financial costs be for this?

Cato even published a paper (pdf) back in 2003 explaining the challenges that the Chinese pension system faces.   And this demographic issue is only going to get worse, or in the words of The Economist — China will become old before they become rich.

Not only has the Chinese government implemented several types of social security plans, but foreigners are fully co-opted into the apparatus too.

In fact, the only way for a foreigner to get out of the new laws that were passed last year are to sign a promissory note, saying that you will never work in China again.

So, just like the myth of a China that is visa-free was busted, the myth of a social security-free China should be taken off the list as well.

Below is a fantastic overview from Matthew Stinson regarding the new laws, specifically applied to foreigners.

Six Points on Social Insurance for Foreigners

Author’s note:  This post has been modified slightly from the original to correct a couple of misstatements and reflect new information and concerns.  These changes are mainly found in the introduction below, points one, four, and five.

Starting in July, my coworkers and I will be among the first foreign residents of China asked to contribute to the Chinese social insurance system. Although the law was promulgated last October at the national level, Tianjin, like most major cities, has been slow to implement it locally. In fact, according to people at my company’s headquarters in Shanghai, Suzhou is the only other city which has enforced the social insurance law for foreigners working at training centers like mine. For many foreigners working in Shanghai and Beijing the social insurance tax is still something on the horizon.

The English language press published a flurry of articles about the law in fall 2011, but since then reporters seem to have tabled the topic, mostly because of the glacial speed of Chinese bureaucracy, but also because, for most foreigners, the tax seemed hypothetical, not something we could comment on directly. Now that I actually have to pay the tax, I went back and reviewed the original news articles for information, and also submitted a list of questions for the government to our HR department. After doing so I decided that there are six major issues for foreigners and their employers to think about:

(1) According to Chinese law, workers will be guaranteed retirement benefits after contributing to the system for fifteen years. However, during those fifteen years there is no interest on your contributions, though the government should provide something like a cost of living adjustment once you start receiving benefits. Every city will set its own contribution rates. In the case of Tianjin, I pay 11% of my base salary and my danwei “matches” with 33%. Much like Social Security in the United States, there’s an income cap, and any income above that level isn’t taxed for social insurance purposes. In Tianjin the income cap is 10,560 while in Beijing the cap is 12,600. Some of these funds go to medical insurance, unemployment insurance, and maternity insurance, but most are earmarked for retirement insurance. Given the rate of the inflation, the Chinese social insurance system represents a net loss for contributors, even more so than China’s low-interest savings accounts. Many of us will be wishing we could’ve spent the money while we had it – or put it into private retirement insurance.

(2) Most foreign workers have no intention to stay in China for fifteen years or more, and thus the issue becomes: how can I get my money back? Well, the government has assured us that we can get our own contributions refunded, but contributions from our employers will stay in the system. We have been told that to get the money back a foreign worker must sign a document declaring that he or she will never work in China again. However, this will certainly increase the rate of illegal foreign workers (see point 5 below), as many foreigners “swear off” China, leave, and wander back a few years later. A separate but arguably related issue is that most social insurance in China is being run on a city-by-city basis, and is not easily portable if a worker decides to move, but few foreigners want to stay in a single Chinese city for the rest of their life. What happens if I move from Tianjin to Shanghai? The government hasn’t answered this question yet.

(3) Like Chinese, foreigners should receive a social insurance card and corresponding social insurance number. There’s a fly in the ointment, however: is the Chinese system prepared for foreigners who get a new passport and thus a new passport number? Those of us who have been around long enough know that Chinese bureaucracy operates by analogizing passport numbers as Chinese ID numbers, yet Chinese ID numbers never change. Whenever foreigners renew their passports there’s a mad scramble at the bank, the phone company, and the local paichusuo (among other places) to update paperwork to reflect the changes. Most of the time we can’t get this done without letters from the embassy which endorse the passport renewal process. Considering the (potentially) large sums of money involved, and China’s track record thus far, one is left doubting the ability of the system to handle an essential fact about foreigners.

(4) One of the less commented upon yet more onerous aspects of China’s social insurance law for foreigners is retroactivity. When the central government said that the law went “into effect” in October of 2011, they really meant it. Even though most Chinese cities have been lax in implementing the law, the requirement of retroactive payments has been sitting there like a time bomb waiting to go off. The first time a foreigner has to pay social insurance it’s probably going to be a massive hit – at the time of this writing foreigners and their employers will have to pay up to 9 months of tax in one lump sum. The degree of retroactivity seems to vary from city to city and even district to district, but Tianjin seems fairly consistent.  Consider a foreign teacher employed at an international school in Tianjin with a hypothetical base salary of 18,000 RMB/mo. and benefits worth 7,000 RMB/mo. The teacher would have to forgo more than half an entire month’s salary in back taxes (10,454 RMB, to be precise), while his/her employer would have to pony up more than 30,000 RMB. Afterwards this teacher will still be paying an extra 1,161 RMB in taxes every month while his/her employer will be paying roughly 3,500 RMB in tax.* Those expensive kindergartens with foreign teachers in Beijing just got even more expensive, which leads me to…

(5) The law only applies to foreigners with a “Foreign Experts Certificate,” aka the “work visa” aka the Z Visa aka the Zed Visa. Here’s where the perverse incentives come into play. If a foreigner has a tourist visa, business visa, or marriage visa and is thus working illegally (Yang Rui knows who you are!), he/she won’t have to pay into the system. In fact, the requirement that employers must make contributions on our behalf means that, all other things being equal, an illegal employee is going to be considerably cheaper than a legal one, even if the foreigner in question has exactly the same contract salary as his/her legal counterpart. Moreover, employers during the next round of contract renewals may decide to pressure employees into changing their visas and working illegally so as to cut costs, and foreigners themselves may agree, figuring that the risks of being one of the san fei is worth the benefit of paying fewer taxes. At the same time, an employer wishing to stay aboveboard may decide to keep employees legal but refuse to offer raises during the next contract on the grounds that we are now receiving the “benefit” of social insurance.  We haven’t even factored freelance workers into the equation – those working legally should fall under the aegis of the social insurance law, which begs the question of whether they or their employers are prepared to pay the tax.

(6) Many of the above complaints and concerns could be addressed or alleviated if China reformed its green card process. For those of us who have worked here for an extended period of time or are married to a Chinese national, it’s frankly ridiculous that we have to renew our visa every year or have a work visa that ties us to a single employer’s tender mercies. Yet, despite periodic talk about making green cards easier to obtain (which recalls similar talk about ending the hukou system for Chinese migrants), the Chinese green card quota remains out of step with China’s aspirations to be a global leader. That foreigners are now being asked to contribute to a social insurance system that they are not actually guaranteed access to only adds insult to injury.

Matthew Stinson is a Floridian stalking the urban wilds of Tianjin since 2004. An educator, writer, and photographer, he pens 140 character rants as @stinson

—————————–

* Before anyone shouts “Wait a minute!” the above calculations may not reflect final tax burdens, insomuch as a foreign employee’s base salary may shrink and bonuses and benefits may grow in response to the law.

David Brin is the author of science fiction novels The Postman, the Uplift series beginning with Sundiver, and others as well as the ever-popular nonfiction work, The Transparent Society: Will Technology Force Us to Choose Between Privacy and Freedom?. He recently sat down with Reason.tv’s Tim Cavanaugh to discuss his recent criticisms of “dogmatic libertarians,” his hobbyhorse of government transparency, and the subject of uplifting dolphins.

I have much to say about Brin’s attacks on “dogmatic libertarians,” by which he means followers of Murray Rothbard and Ayn Rand who worship property too much, but watch the video first and then continue on below for my commentary.

I’ll state right up front that I do not think of Brin as a libertarian, much less as a heretical one (as he describes himself). To the extent that he is right on anything, he’s not telling libertarians anything new. As for the rest, I’ve seen enough on his blog and various social networks to come to the conclusion that he doesn’t understand the actual positions held by principled libertarians (as opposed to the bizarre straw men he’s concocted and attributed to us) and that it’s impossible to carry on a civil, constructive conversation over the internet with him about libertarianism if you disagree with him on the subject. Although he says in the video that he doesn’t want to insult, after he’s already insulted, if you dare to challenge his views about “dogmatic libertarianism,” prepare to be mocked and insulted and misinterpreted and talked past.

Brin says, “The issue should not be government. It should not be unalloyed and unlimited idolatry of personal property,  which is the path that the libertarian movement has gone down.”

I have no idea what he means by “unalloyed and unlimited idolatry of personal property” and I’ve yet to see him give a clear explanation of this magic-talisman phrase he bandies about like a Hammer of Refutation. I can’t imagine what problem he sees in upholding private property rights. He seems to think our “unalloyed and unlimited idolatry” somehow leads to oligarchy, but I’m at a loss as to how it is supposed to do so. I can only assume he thinks it means we must uphold “rights” to even unjustly acquired property, but this is simply not so.

The phrase is also code for “Hey, man, let’s be practical; sometimes one has to make compromises, break a few eggs to make an omelette.” Those who want government solutions to perceived problems hate it when libertarians stand on principle and refuse to budge. It drives them into uncivilized fits of apoplectic, frothing rage.

Brin also seems to think that so-called “dogmatic libertarians” have lost sight of the importance of competition and transparency and whatnot. Uh… No. No, we haven’t. I don’t know where he gets this stuff from. We see private property rights as making fair and creative competition possible in the first place; and we value fair and creative competition greatly, especially those of us who see intellectual property as illegitimate government grants of monopoly privilege that can only be enforced by infringing on the pre-existing rights of others to their physical property.

“Libertarians need to be reminded that, across 6,000 years, the greatest enemy of free enterprise, of market enterprise, innovation, creative competition… have always been oligarchs,” says Brin.

No… No, we don’t. But mayhaps you need to be reminded that all forms of government, not just the one labeled oligarchy, are ultimately ruled by oligarchs. It’s in the nature of the state. You know… that organization you said we shouldn’t concern ourselves with. Theory and history show us that it is through the state that oligarchs acquire and exercise their power. Without it, they are impotent. It is the state, always ruled by oligarchs, that has been the greatest enemy of free markets, free enterprise, innovation, and fair and creative competition.

The Pyramid of Oligarchy

In the video, Brin lays out a plan to rein in government growth, corruption, and “abuse.” Here’s a summary: Let’s draft 10,000 average Americans into a pool every year. Excuse Brin’s poor choice of words; this “draft” is one that can be refused without penalty (although an opt-out system is an unnecessary hassle for people and is frowned upon by savvy Netizens). We’ll then do background checks on this pool of candidates to winnow it down to a list 1,000 trustworthy, loyal citizens who can keep their mouths shut. Give them security clearances and arm them with a badge that let’s them get in any door in the United States of America — you read that right, any door. They are tasked with watching the watchmen. There will be penalties for revealing “anything about anything the’ve seen.” Brin suggests a mere month in jail. The idea being that spending a month in jail will be a price worth paying to patriots in order to bring truly heinous acts of government out into the light so that they can be stopped.

What was interviewer Tim Cavanaugh’s response to all this? “Huh. Okay.”

That’s it?

This didn’t immediately strike him as a terrible idea? He didn’t think or, better yet, say: “Gee, this can’t possibly go wrong.” Not a single problem with the proposed system immediately sprang to mind that he could ask Brin to address? Or did Cavanaugh just not want to ask the celebrity any tough questions?

I’ll just toss a few ideas off the top of my head into the ring for consideration:

1. Who is going to administer this new system of citizen-watchmen — the lottery for the draft, the background checks, security clearance decisions, and so on? Oh, that’s right — the government. Despite Brin’s talk about non-governmental, or market, solutions to problems, his proposal is a government solution to a government problem (government failure).  What? You need me to flesh the implications out for you? Okay…
2. It means the creation of a new bureaucracy or ratcheting up an exsiting one. Either way, a WIN for big government and more spending! That’s what we libertarians are fighting for!
3. Who’s to say the penalty won’t be ratcheted up over time like the income tax? Thus decreasing the risk to government officials that their secrets will get out?
4. The selection process couldn’t possibly be rigged or gamed, could it?
5. No citizen-watchman would ever take a bribe to keep quiet,  surely.
6. Or stay mum in the face of threats to himself or his family… right?
7. Brin’s proposed system entails acclimating Americans to increased government surveillance of and deep-probing into their public and private lives. Oh, and revisit #4-6 in light of this. Worse, it might come to be seen as a patriotic duty to accept such scrutiny from the government.
8. Brin says there will be penalties for revealing “anything about anything the’ve seen.” I hope he’s only referring to classified or top secret, not unclassified, information here. Let’s take him charitably and assume he is; how much do you want to bet that this will lead to more and more aspects of government becoming classified so as to have the threat of the penalty for revealing what is seen hanging over the citizen-watchmen’s heads for matters of less and less importance to the “national interest”?
9. The system Brin proposes is likely to make people more complacent about government in the same way and for the same reasons that democracy fools them into believing they’re ultimately in charge and that regulations encourage them to abdicate responsibility for the quality of the goods and services they buy, for their own safety and security and that of their families, and so on. “Hey, man, there’s a system in place to make sure our representives and public servants do what they’re tasked with doing and to weed out corruption and bad secret policies and stuff. They have enough volunteers. I don’t need to waste my valuable  Celebrity Apprentice–watching time ((Bread and circuses! Bread and circuses!)) worrying about it. Did you see what happened last night? Aubrey O’Day is soooo right. She’s the only one with any talent on her team. Nobody else every has a creative.”
10. Brin doesn’t  mention monetary compensation for being a citizen-watchman. Is it likely that as many as 1 in 10 draftees will not only accept being drafted but pass the background checks to qualify for a security clearance? A much larger pool than 10,000 might be needed. And might there not be a selection bias in who chooses to accept the responsibility after being drafted? No potential for abuse there?
11. What if the citizen-watchmen are generally okay with things libertarians would deem heinous? In light of the direction this country has been headed lo the past couple centuries, this isn’t much of a stretch, is it?
12. Brin says that citizen-watchmen will be able to get into any door in the United States. Any door. I hope he means any government door, not really any door.
13. Let’s face it, Brin’s proposal is a pipe dream. The Powers That Be will never let it happen and the American people are not really interested in that level of transparency in their government — not enough to make Brin’s plan a reality, at least. And Brin has the gall to mock and blame “dogmatic libertarians,” the lapel-grabbing (lolwut?) Rothbardian and Randian wing of the movement, for the Libertarian Party failing to make headway (more than 1%) at the polls in presidential elections.
14. Brin’s citizen-watchman program will be funded by taxes, and taxation is theft. Oh, sorry, did I grab your lapels too hard?

I could go on, but what’s the point of continuing to kick a dead horse?

[Prometheus Unbound]

This question was recently answered in length by physicist Steven Weinberg in the NY Review of Books.

After a well-written overview of how science projects grew from privately-funded individual labs to publicly-funded international collaborations, Weinberg states that:

It seems to me that what is really needed is not more special pleading for one or another particular public good, but for all the people who care about these things to unite in restoring higher and more progressive tax rates, especially on investment income. I am not an economist, but I talk to economists, and I gather that dollar for dollar, government spending stimulates the economy more than tax cuts. It is simply a fallacy to say that we cannot afford increased government spending. But given the anti-tax mania that seems to be gripping the public, views like these are political poison. This is the real crisis, and not just for science.

When boiled down, what Weinberg promotes is actually stated most clearly by H. L. Mencken, “Every election is a sort of advance auction sale of stolen goods.”  Weinberg has created a existential slippery slope, one that assumes that only governments can provide the goods and services that are currently on the chopping block.  Will we all run around like headless chickens if the government no longer is the sole financier and provider of roads, schools, modern art and particle colliders?

The actual problem facing Big Science is a lack of creativity and critical thinking.  In Weinberg’s mind, because the state has historically had the largest piggy bank at the table and has historically divvied out funds, he thinks the solution to all solvency issues is to continue appropriating (my euphemism for coerced) funds from the haves.    However if you remove the state and its funding, the monies it appropriated from taxpayers does not disappear into a black hole.   Rather the less money that goes to the government necessarily means the more capital is available for spending by private individuals, companies and institutions.

For example: Sergey Brin, Larry Page, James Cameron and several other high-rollers are set to announce next Tuesday about a private endeavor to capture and mine an asteroid.

Weinberg’s plea is just the latest in a line of well-intentioned science promoters (following most notably Sagan) yet his solution is misplaced.  Science took place before the state monopolized both scarce resources and skilled human capital.   In the event that government agencies are defunded and taxes are returned to individuals, what would stop private individuals in the future from financing other such activities?  If there is a commercial and practical application to the research surely there will be capitalists and entrepreneurs nearby.

In an ironic twist, Weinberg also noted in the same article that:

Space-based astronomy has a special problem in the US. NASA, the government agency responsible for this work, has always devoted more of its resources to manned space flight, which contributes little to science. All of the space-based observatories that have contributed so much to astronomy in recent years have been unmanned. The International Space Station was sold in part as a scientific laboratory, but nothing of scientific importance has come from it. Last year a cosmic ray observatory was carried up to the Space Station (after NASA had tried to remove it from the schedule for shuttle flights), and for the first time significant science may be done on the Space Station, but astronauts will have no part in its operation, and it could have been developed more cheaply as an unmanned satellite.

Look, the bottom line is that Big Science is socialism for engineers.  Despite claims to the contrary, the same problem that plagues all socialized endeavors (e.g. politicization, favoritism, subsidization, price distortion, misallocation) also plays a leading role in government planned science projects.  What particle scientists really needs is to take a page from NASA and hire Hollywood  spin-doctors  to portray the life-or-death drama at CERN.  And then get a voice over actor like the late-Don LaFontaine to talk about one physicist who is on a mission to save all of humanity by pressing the “any key.”

It is not a tumor

Many moons ago back in the suburb of Richardson I found out my high school physics teacher had originally moved from California to work on the SSC project down in Waxahachie — the same high-energy particle project that Weinberg discusses at length in his article.  And at the time my teacher held a similar opinion as Steven.

I haven’t spoken to her since I graduated last century but when the dust settled, science marched on.

Innovation in telephony did not end when the FCC privatized the air-waves.  Innovation in computing did not end when the NSF privatized their supercomputing facilities.   Innovation in the web browsing industry did not end after Mosaic’s team developed Netscape.   Innovation from pre-Web 1.0 technologies did not end after the national pipes were opened to commercial activity.

Twenty years from now – barring an apocalypse – science projects will continue to be carried out by curious individuals and enterprising firms.  We still might not know anything new about the Higgs boson, but then again maybe there is nothing commercially useful about the god particle.  And besides, it is not fair or just to coerce taxpayers to fund any agency, let alone NASA, NIH or any other alphabet organization.

Who knows, perhaps twenty years from now the Intel-IBM-Hasselhoff supercolider will have finally solved some of the fundamental questions of the day such as unifying quantum mechanics and gravity or how many licks it takes to get to the center of a tootsie pop.  After all, the big in Big Science is entirely relative.  Just ask the winners of the Ig Nobel’s.

President Obama pays a lower tax rate than his secretary – the very sort of disparity which, according to his own staff, illustrates why the so-called “Buffett Rule” needs to be implemented so that the wealthy pay more.

But Obama won’t consider the idea of simply donating more to the Treasury to address the gap – oh no! “That’s not the way we operate our tax system, okay?” his campaign strategist says. “We don’t run bake sales. It’s not about volunteerism. We all kick in according to the system.”

He’s right. It’s not about “volunteerism.” It’s about violence. Pay your “fair share,” or the government will take it from you by force. They won’t even entertain the novel idea that if people wanted to give the government more money, they could – the Treasury Department will gladly accept their check! But that’s somehow less legitimate than pointing a gun at them and taking whatever the law decrees is “fair.”

And yes, I am reminded of the scene from Monty Python and the Holy Grail where the peasant observes “now we see the violence inherent in the system!” If only we had a government which derived its authority from a mandate from the masses…

Bonus reading: Matt Welch on the five new ways the IRS is screwing Americans.  Happy Tax Day!

Last week, the Heritage Foundation published commentary on the number of Americans who pay income tax, and decried the fact that 49.5 percent of Americans are “not represented on a taxable return.” The Daily Mail then picked up the statistics and announced that “HALF of Americans don’t pay income tax despite crippling government debt.”

To its credit, the body of the Heritage post began with a reference to the “the sharp increase of Americans who rely on the federal government for housing, food, income, student aid or other assistance.” The emphasis of the piece, however, and thus, the emphasis of the other news outlets and pundits who have picked up on the statistic, is that too few people pay taxes.

The increase in reliance on government assistance is the problem here, not a lack of people who pay income tax.

Yet, it has become something of a right-wing talking point to claim that a declining number of taxpayers among some income groups is a nefarious development in American history.

The emphasis on the lack of taxpayers is getting the whole issue backward. The problem is the increase of income from government transfer payments. There is nothing bad whatsoever about fewer people paying income taxes.

The Conservative obsession with getting people to pay more in taxes comes from a preoccupation with class warfare in which it is assumed that if middle-class and wealthy people are paying too much in taxes (which they are), then the solution is to punish low-income people by making them pay more in taxes. It’s allegedly not “fair” if everyone is not being extorted by the state in a similar fashion.

The just solution, however, is to greatly decrease the tax burden of those paying taxes now. In a recent NPR interview, Ron Paul nicely summed up what is actually “fair”:

MR. SIEGEL: This week’s release of Mitt Romney’s taxes and President Obama’s advocacy of a millionaire’s tax raise questions about fairness in funding the government. The first question: Do you believe that income derived from dividends interest or capital gains should be taxed at a lower rate than income earned from a salary or commissions?

REP. PAUL: Well, I’d like to have everybody taxed at the same rate, and of course, my goal is to get as close to zero as possible, because there was a time in our history when we didn’t have income taxes. But when government takes it upon themselves to do so much, you have to have a tax code. But if you’re going to be the policemen of the world and run all these wars, you have to have a tax code. But as far as what the rates should be, I think it should be as low as possible for – for everybody.

It’s a safe bet that Siegel’s underlying assumption behind the question is that in order to make taxes fair, then anyone who is paying a tax bill that is too “low” should therefore have his taxes raised.

The opposite is true, as noted by Paul.

So, when Conservatives get bent out of shape about some people not paying tax, the response should be to demand lower taxes for everyone, not to complain that people aren’t paying their “fair share,” which seems to be the Conservative sentiment.

We might also note that this statistic apparently only applies to income taxes. It says nothing about payroll taxes, which for many middle-class people is by far the largest part of one’s monthly tax bill. Any teenager with his first job notices just how much those payroll taxes take out of one’s paycheck. So, to claim that people aren’t paying taxes simply because they’re not paying income tax is rather disingenuous. Since there’s no such thing as a Social Security or Medicare trust fund, payroll taxes are really just income taxes under another name.

Also, any demand for more taxation is really just a demand for increased government revenue. It’s a call for more money so government can bomb more people, bail out more banks and spread around more largesse to politically well-connected friends.

So, the focus on whether or not “enough” people are paying taxes completely misses the point. The larger point is that far too many Americans receive government benefits. Indeed, recent increases in income as measured by the BLS, reflect increases in government transfer payments, as I’ve shown here.

Ludwig von Mises wrote in Bureaucracy that a system in which a majority of the population is dependent on the government dole leads to an unstable political and economic situation, since a majority of the population then has a vested interest in increasing the power of government to redistribute wealth. While the Heritage article makes some comments in this vein, it nevertheless makes the claim that “The rapid growth of Americans who don’t pay income taxes is particularly alarming for the fate of the American form of government.” Really? By that logic, “the American form of government” would be in danger if the income tax were abolished. Oh, how did America ever survive prior to the 16th Amendment?

There is no doubt that the growth in dependency on government largesse is a serious problem, but that doesn’t mean that any American pays too little in taxes. It simply means that the government spends too much money.

The Conservative reaction to this statistic, however, seem to be: “Hey, those guys aren’t being taxed! Tax them!” This is hardly a phrase that should be uttered by anyone who claims to be for limited government.

From Salon:

Can the 1 percent accept “enough”?

The rich can’t stop trying to justify exorbitant salaries for everyone from Wall Street bankers to college coaches

Read more>>

When I hear this tripe,  I am reminded of Francisco D’Anconia’s “Money Speech” in Ayn Rand’s Atlas Shrugged: “Run for your life from any man who tells you that money is evil. That sentence is the leper’s bell of an approaching looter.” Likewise, anyone who talks about the 1 percent accepting “enough” is to be watched, very closely. (See Against the Non-Aggression Principle and Self-Ownership? Run!)

Many libertarians, perhaps most notably Thomas E. Woods, support the decentralization of power from the federal government, including the power of nullification. Many people fear and denounce this power, often because they like the immense power of the central state and are supporters of big government. There are, however, some very real concerns by people who desire freedom as their highest political goal. A simple question, which is asked in various forms is “if decentralization leads to more freedom, why did African slavery thrive in a more decentralized America, and only go away (well, sort of) when the central state forced it to go away?” Similar statements could be said of Jim Crow.

Tom Woods briefly addresses a critical point which bears emphasis: a major problem with decentralization is that decentralizing power may have huge negative effects for people who cannot vote.  The very people who are most obsessed with them not having political power are the people who are most empowered by the receding power of the central state. This points to the people that libertarian activists should concentrate on protecting: non-citizens (including both legal and illegal immigrants) and convicted felons in states which strip them of the franchise. As most minorities have the ability to exercise the vote, the greatest evils of the past have no chance of being repeated. And some unprecedented benefits may come about. Without the significant support of the federal government, individual states could not maintain the murderous drug war at the levels at which it is currently prosecuted.  Family and morals-destroying welfare programs would have to be greatly scaled back without the ability to print money. Taxes would have to be levied to pay for these things, forcing citizens to carefully evaluate just how much they wish to impoverish themselves in the attempt to eradicate various victimless crimes.

The benefits don’t end there. Freedom would be catching in this country for several reasons. Our national myths support the value of freedom. The proximity of states and the freedom of movement among them, in the face of massive differences in the amount of liberty inside them, would mean that the most inventive, industrious people would tend to leave less free areas and go to more free ones. This would impoverish the most oppressive states, further pressuring them to liberate. Perhaps the single most important factor which would allow liberty to really catch in the United States is that the US military would not be looking to crush these efforts, as it does in other countries. If liberty is to be permitted by any government, it is likely that it will have to be permitted in the USA, as the American government is among the world’s most fervent supporters of foisting government on people, whether they like it or not, in the name of “stability.”