Whenever you hear of tax "reform," think of a shell game, or the re-arranging of chairs on a sinking ship. America is in dire need, not for tax "reform," but of genuine tax "cuts." Government revenues, spending and debt have to shrink. Don't hold your breath.
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Taxes And The Cost Of Living
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| Thank you everybody for tuning in today to this report on taxes. | |
| As most people know, Washington, D.C. is talking a whole lot about whether or not we're going to get a tax cut. | |
| There are predictions that it's going to be good and the markets are very happy about it. | |
| The markets are skyrocketing. | |
| But the Secretary of the Treasury says if it isn't passed by the end of the year, at the end of December, it's going to do tremendous damage to the stock market. | |
| Well, I wonder whether the tax cut will save us from an adjustment in the stock market. | |
| But anyway, there's a lot of attention given. | |
| There's a lot of proposals. | |
| And I like the idea. | |
| I'm all for tax cuts. | |
| I want to get rid of the income tax and a lot of other things. | |
| But to tell you the truth, I have a lot of reservations about the success of this tax cut because I've seen this happen before. | |
| And there's a lot of arguments going on. | |
| And I think there's some shortcomings that indicate that it might not get passed. | |
| It's sort of like the legislative difficulties of passing and repealing Obamacare, and that didn't work out so well. | |
| And it's on again, off again. | |
| And I just think that tax cuts are going to face a similar problem in the Congress. | |
| You know, and we can't be totally convinced where Trump actually stands on that, because one day he'll be working with somebody and say that, oh, they're against me on taxes. | |
| The next day he'd be with them. | |
| So that raises some questions about it. | |
| But I think there are some definite reasons why I tend toward pessimism of this being very successful. | |
| First thing is, is they have a rule that they're supposed to follow, and it's called revenue neutrality, which means that if you cut somebody's taxes in one area, you have to raise somebody else's taxes. | |
| So there's no intention. | |
| They don't even pretend to cut taxes. | |
| And there's no sincere effort to cut spending. | |
| So it doesn't work very well. | |
| But sometimes they will go along and they will try to cut taxes and increases the deficit. | |
| And they say, well, what will happen is there will be a thing called dynamic scoring. | |
| If you just cut the rates, there'll be tremendous increase in the economy that will generate new revenues and everybody's going to be happy. | |
| We can get rid of the deficit we have plus what's left over and we can keep cutting taxes. | |
| But that has never worked out very well. | |
| And I think that what we have to think, have to realize is the country is bankrupt and nobody wants to admit it. | |
| So when they tinker around with trying to adjust medical care or taxes, they don't want to admit the truth that this country is bankrupt and we don't have enough money. | |
| And that's why the arguments are going on. | |
| We have been living beyond our means for way too long and there's no real serious attempt to say, well, we ought to live within our means. | |
| And we live in a society right now where productivity has decreased. | |
| So you can't keep paying these bills if you're not producing enough. | |
| The cost of living is up more than the government will admit. | |
| And that is a problem. | |
| We have now a national debt of $20 trillion and that's going to continue to go up. | |
| And there's estimates now in a couple of years, it'll be $21, $22 trillion. | |
| But then there's the unfunded liabilities that not too many people worry about because that's down the road a bit. | |
| And it's way over $200 trillion, $100 trillion of unfunded liabilities. | |
| But the economic growth that they hope to have with this tax bill Is really not realistic. | |
| They think that they can get enough economic growth to generate $2 trillion of more taxes and solve all our problems. | |
| But what if a recession is due? | |
| I think it is due. | |
| It's overdue, and it will come. | |
| It'll change all the dynamics of what happened. | |
| It reminds me of a story about what happened the first year I ran for Congress. | |
| It was 1974. | |
| And Ford had just taken over, and they were still suffering the problems with price inflation. | |
| And they had wage and price controls, you know, under Nixon. | |
| And Ford wanted to get rid of it. | |
| So, but they still recognized that they had inflation. | |
| Prices were going up too fast, and they didn't want to go back to wage and price controls. | |
| So he came up with this crazy scheme that if everybody put a button and they wore it around, and the people in government, the congressmen, and the people in administration and all the secretaries were supposed to win this big, wear this big red button, say, WIN, whip inflation now. | |
| And this was going to be a solution. | |
| It got to the point where it was a joke. | |
| And the other thing they suggested at the time, well, we'll increase saving and get the people to increase their savings and spend less money. | |
| Also, they advise that if people would do more carpooling, this would help to dampen the economy, weaken the economy, because that'll bring prices down. | |
| It's part of this crazy Keynesianism economic. | |
| And also to bring prices of food down, everybody should have a home garden. | |
| And also, if we would decrease our thermostats, then that would decrease the expenses. | |
| And that would be the solution to the Federal Reserve putting too much money. | |
| They never talked seriously about why they were having the inflation and the recession in 1970. | |
| They never wanted to blame the Federal Reserve. | |
| The other problem is, is we spend a lot of time, and that's what we're doing now in Washington and around the country, spending time talking about taxes. | |
| It's important. | |
| I want to get rid of the taxes. | |
| I want to reduce taxes. | |
| I would vote always to reduce taxes. | |
| But I think they're totally missing the point. | |
| They're looking at a symptom. | |
| The tax is the problem because it is intended to take care of the spending and the deficit. | |
| So you can't solve the problem of making a fair tax system and getting rid of the tax code and reducing the taxes for everybody if you don't deal with the spending. | |
| And there's an ingrained tolerance of debt because we live in a generation or two of toleration of debt. | |
| We've been taught that by Keynesians ever since the Depression, a debt is good. | |
| And they're not serious about it. | |
| They occasionally mention it, but they're not serious about it. | |
| And also, including this administration, we're in a position where they can't and won't allow the market to determine interest rates. | |
| They think low interest rates, artificially low, will represent and be a substitute for saving money and creating capital. | |
| But low interest rates will continue. | |
| That means that tinkering with the tax code is not going to solve the basic problems that our economy faces. | |
| The welfare warfare state is accepted by both parties. | |
| And the love of liberty is not doing so well in Washington. | |
| I think it's alive and well in the country. | |
| And there's a nucleus of people who know exactly what's going on. | |
| But in Washington, it's the welfare warfare state that drives everything that they do. | |
| But they will, I think, pass something and some taxes will go down. | |
| But we don't know how much. | |
| And I'm just arguing it's not going to be a panacea. | |
| It's not going to solve the problem, even though we should lower the taxes. | |
| And, you know, it reminds me of a statement made by Oliver Wendell Holmes a long time ago, which has been repeated many times. | |
| He said, taxes are what we pay for civilized society. | |
| I kept thinking about that. | |
| Civilized society, I can't believe that the guns of the IRS coming and taking what is rightfully ours and using it to enhance the state is the solution to providing for a civilized society. | |
| Civilized people create a civilized society, not an IRS authoritarian coming to take our money and then planning the economy and telling the world how they're supposed to live. | |
| We have to deal more with some fundamentals like what is natural law all about? | |
| What is honest money all about? | |
| What is the purpose of government, the limited, you know, limited government's responsibilities to protect liberty? | |
| And this is something that they don't deal with because they keep thinking, well, we'll just raise the tax on the rich. | |
| Raising the tax on the rich, is that going to solve the problem? | |
| They already pay the 1%, you know, the 10% pays 84% of the taxes already. | |
| You could raise the taxes and maybe raise revenues, but the bottom half, how can you give them a tax cut? | |
| They only pay 3%. | |
| And that means, well, you should leave the top 10% alone. | |
| They have a lot of money and they run things. | |
| No, they have that money because it's ill-gotten gain. | |
| They get this money because they're in bed with the Federal Reserve. | |
| The Federal Reserve creates the money and they get to pass it out and they pass it out to their friends. | |
| So the tax system is probably irrelevant to the whole system. | |
| The whole thing is they should be concentrating on the size of government, the spending that occurs, and realize that spending is a tax. | |
| And you say, well, how can spending be a tax? | |
| Well, how do you pay for spending? | |
| You can have an income tax, you can borrow the money, you can print the money, but it always costs something. | |
| There's always a tax on the people. | |
| So even though the bottom 50% don't pay hardly any taxes, but when you have a monetary system like this, they suffer the most from the cost of living increase. | |
| And that's where the fallacy is. | |
| So, yes, if I were in Congress today, I'd vote for the tax cut if there would be any. | |
| But I would also try to warn the people that you're missing the boat. | |
| You're missing the whole problem. | |
| The whole problem is the size and scope of government. | |
| Instead of saying that taxes will pay for civilized society, we should say that taxes solidifies the state. | |
| That will not solve our problems. | |