Make Government Smaller

The highest form of civilization is individual freedom, meaning freedom from excessive government. Government is the only entity legally empowered to exert force over citizens. Such force should be strictly limited.


The bigger the government, the more the rich gain wealth faster than the poor, because the rich can induce government to help them. It's called crony capitalism.

The smaller the government, the more the poor gain wealth faster than the rich, because they're willing to work harder.

The best way for the government to help the poor is to just get out of the way.

The Dividend Tax May Soar

Dividends matter, and so do the taxes on dividends. When the dividend’s tax goes up, the after-tax yield goes down. To keep the after-tax yield the same as before, the price of the stock must fall.

 

President Obama, who dislikes even those capitalists who are not rich, has arranged for next year’s tax on dividends to almost triple from 15 percent to a whopping 43.4 percent. To retired folks living on their dividends, he’s flipping the bird. 

If the tax increase actually takes effect, the stock market would probably suffer a substantial decline. 
But if the increase in the dividend tax takes effect in January, the stock market would be falling substantially now in anticipation. It is not falling substantially now. Therefore, I suspect that the dividend tax increase will be nullified after the election – retroactive to January 1 – by a newly-conservative Congress. 

Dividends matter. But then, so do elections.

 

The Dividend Tax May Soar

Dividends matter, and so do the taxes on dividends. When the dividend’s tax goes up, the after-tax yield goes down. To keep the after-tax yield the same as before, the price of the stock must fall.

President Obama, who dislikes capitalists, even the ones who aren't rich, has arranged for next year’s tax on dividends to almost triple from 15 percent to a whopping 43.4 percent. To retired folks living on their dividends, he’s flipping the bird.

If the tax increase actually takes effect, the stock market would probably suffer a substantial decline.

But if the increase in the dividend tax actually takes effect in January, the stock market would likely be falling substantially now in anticipation. It is not falling substantially now. Therefore, I suspect that the dividend tax increase will be nullified after the election – retroactive to January 1 – by a newly-conservative Congress.  

Dividends matter. But then, so do elections.

 

Bring Warren G. Harding Back from the Dead

Beginning in 1920, after the end of World War I, the U.S. Gross Domestic Product plunged 24 percent, consumer prices dropped 18 percent, and unemployment soared from 2 percent to 12 percent. It was ugly.

Did President Harding try to spend his way out of the downturn? Not on your life. Instead, he cut federal expenditures, reduced the top tax rates, and broadened the tax base, making the rates flatter and less progressive. He also induced the Federal Reserve Bank to cut the money supply.

Bingo, the depression came to a screeching halt. Unemployment plunged, and the extraordinary prosperity of the 1920s was launched.

Bigger government and higher tax rates don’t cure economic downturns. They lengthen and intensify them.

 

 

 

Who’s Greedy for Oil Profits?

Oil companies are the greedy ones. They make too much profit, right?

Well, let’s see. Assume the retail price is gas is $3.50:

$2.66 (or 76%) goes to the oil producers. This price is set in the global market for crude oil, moving up or down like any commodity according to world-wide supply and demand.

The next major cost is the refining of crude to extract gasoline, lubricants, and many other products. The gasoline portion costs 21 cents (6%).

Then comes another 21 cents (6%), for transportation, advertising, and retailer markup.

Out of the $3.50 retail price, we’ve got 42 cents left, or 12%. The recipient?

Government. The federal sales tax on every gallon of gasoline is 18.4 cents. The State taxes vary from 8 cents (Alaska) to 49 cents (New York and California), with an average of 23.6 cents per gallon.

For every gallon of gas sold in 2011, Exxon made 7 cents. Government made 42 cents. That’s six times greater. The biggest oil profiteer of all is government. 

The Best Way for Governments to Raise Revenues

At federal, state, and local governments, all revenues should be voluntary gifts. Governments should be allowed to pay for advertisements about what a great job they’re doing. But in collecting revenues, no coercion would be permitted.

Services not provided by government, if desired, would be furnished by profit-making enterprises or by voluntary gifts.

Citizens would give, all right; I certainly would. But the government sector of the United States would nevertheless fall from the current 38 percent of the Gross National Product to something like 8 percent. This is where it stood a century ago, and where it belongs today.

Killed by Prosperity

Almost everywhere in the world, prosperous people are having too few babies.

The fertility rate – the number of children produced by the average woman during her lifetime – is too low. To maintain the population, the rate must be 2.1. At 2.0, the U.S. is close. Northern Europe, at about 1.8, isn’t bad, but Southern Europe, including Germany, is under 1.5. India is a stellar 2.5, but China, hindered by a one-child policy, is only 1.6. Japan and Singapore are a disastrous 1.2.

The children of old-time farmers served as farm hands and counted as assets. But the children of prosperous urban dwellers are costly liabilities. For women, college degrees, full-time jobs, the pill, marriages later in life (or never) all create a dearth of births. As developing nations become prosperous, their birth rates, too, will fall.

Entitlement programs, including Social Security, face bankruptcy, because the benefits to numerous older beneficiaries are paid by too-few younger workers.

Human beings may eventually expire and be replaced by robots. By that time, robots will have judgment, common sense, and even a sense of humor. That’ll be quite a Darwinian twist.