Sunday, February 22, 2015

Two Muslims - Lost in Translation?

Some time ago I wrote a rather LONG post explaining why you can't apply moral equivalency comparisons between Islam and Christianity based on Old Testament scripture. For reference, here's a link:

I should re-iterate what's in the "Ground Rules" page. This is a moderated blog. All comments are presented to me for approval before posting. Sometimes, this is to prevent offensive comments, though I can't remember having done that before. This time it's for a different reason.

Yesterday I received two comments from Muslim readers congratulating me on the clarity of that post. Normally I would say "thank you!" and approve the comments. However, I'm not doing that in the present case. Here's why:

The comments are from Middle East Muslims and it's evident to me that they do not speak or write English fluently. Normally that wouldn't bother me either. They SAID they liked it. The weird part is, I don't know whether that's because they did, or because of flawed translation software (Google Translate or equivalent). I suspect it's the latter, because my criticism "above the fold" was pretty subtle. I just laid it out and invited people to make up their minds.

I was trying my best to be even handed about it and present Islamic arguments precisely as I have seen sheiks explain them to other Muslims. Now, these guys seemed to think it was exactly what I did.

BUT... my audience is not Muslim. One of my points is that the arguments that are solidly pro-Islam to a Muslim are exactly the opposite to us kafir ("infidels"). I firmly believe that to be the case, as when a sheik patiently explains that death is the "best possible punishment" for certain crimes, such as apostasy (leaving the religion). Fundamentalist Muslims firmly believe that without any twinge of guilt because they believe Allah has ordained it. Christians find the suggestion abhorrent because they believe God would never ordain such a thing since the advent of the Messiah. Atheists would also find the suggestion abhorrent because no one has the right to curtail another person's life for something as deeply personal as a religious choice.

My problem is not that, having presented both sides fairly and inviting you to make a choice, they of course chose Islam and wrote to tell me how well I explained it. My concern is what this might mean to them if they made this statement of agreement accidentally. They may not actually agree with what I'm actually saying, in which case they may be surrounded by others who would be greatly offended if they were to catch on that I am definitely not pro-Jihad. These commenters may be very nice people whose only faults may be not knowing English very well and having violent friends. I don't want anyone to be injured or lose face simply because they accidentally agreed with me.

On the other hand, it's possible that they do agree with me (God bless them). If so, withholding their names and website information could be the greatest favor I can do for them.

To those commenters: I don't know whether you sincerely agree with me, or even intend to. If you do, I appreciate your moral support. If you don't, I hope I've just saved you from some embarrassment, or worse. The next time you see a Christian being persecuted, remember that it could be you. If you would rather clarify your thoughts, please try commenting again.

Saturday, February 21, 2015

Tax Breaks Are Not "Expensive", Forbes

Forbes recently published the following:
The 15 Most Expensive Tax Breaks
The January 2013 fiscal cliff tax deal raised tax rates for the wealthy, but Washington continues to look at limiting tax breaks – either to raise more revenue or to reform the tax code and lower tax rates, or both. Here are the 15 most expensive “tax expenditures” benefiting individuals, based on the Joint Tax Committee’s estimates of what they’ll cost Uncle Sam in 2013 through 2017. The list includes not only deductions and income exclusions, but also refundable credits and subsidies that are wholly or partly delivered through the tax code and IRS.

 The entire article is based on that premise that they will "cost Uncle Sam". Here's a newsflash for the experts at Forbes:
The money that is retained by the people 
belongs to the people.
It is not Uncle Sam's to "give", and it is not an "expenditure" of the governments. Unrealized income is not, not, not an expense. Presenting it in those terms is a clear indication of anti-Constitutional bias of the author, atypical of Forbes magazine. They are in practice simply parroting the Administration's own anti-capitalistic rhetoric. So let's acknowledge the puppetry and address the Administration's points. Click through the header so Forbes will get a visit and can't bitch about losing traffic. Then read this point-by-point list, reproduced here under Fair Use under Title 17 for the purpose of critical analysis and political commentary:
1. Employer Paid Health Insurance 
Five year cost: $760 billion
If a company provides you with health insurance or health care, it can deduct the cost from its taxable income. But the value of the premiums or care is not counted as income to you, even though it may now, confusingly, show up on your W-2 (in box 12, Code DD). Beginning in 2018, the value of certain high-cost “Cadillac” health insurance plans will be subject to a premium tax, but even that tax won’t be levied directly on individuals.
It is absolutely astonishing that a deduction for healthcare is listed here. Of course, the Administration would prefer to BE the sole payer of health costs through heavy taxation, rather than allow the free market to work. If you spend more on better insurance, reducing the burden on the government, the government taxes you for it; and the government itself defines "premium". There is no possible universe in which that does not exactly equal the government deliberately undermining free enterprise and the use of private insurance.

Bottom Line: You are responsible for your health, and should be encouraged to spend wisely toward the same, using your own funds. "Safety nets" are for those who can not; not for those who will not. The government doesn't need to tax income that was expended for insurance, because the government has no role in paying for the services that you purchased on the free market. The Administration's argument translates to their desire to simply steal your money and lie about its use.
2. Lower Rate For Capital Gains, Dividends 
Five year cost: $616 billion
Qualified corporate dividends and capital gains on stock and certain other investments held for more than a year are taxed at a top 20% rate, compared to a 39.6% rate for ordinary income such as salary and taxable bond and CD interest. Among the biggest tax expenditures, the benefit of this one skews the most to the rich.
This is fomentation of class-envy, and nothing else. Private-sector innovation and competition are fueled by investment. This is why capital gains must be held for a time before realizing the lower rate. If they were taxed at the same rate as ordinary income, you might as well cash them in, removing them from the investment pool.

Bottom Line: This skews to investors, because investment is a necessary component of a free-market economy. Without this, investors would cash out early, which wouldn't harm them at all, but would greatly retard the economy.
3. State And Local Tax Deductions
Five year cost: $431 billion
Taxpayers who itemize can deduct state income or sales tax, plus taxes on personal property. The tally for that is $278 billion. Itemizers can also deduct real estate taxes on their homes – another $153 billion over the five years.
The Administration would like to tax the money you've paid in as taxes.

Bottom Line: There is no intelligent reason whatsoever to tax your taxes.
4. Mortgage interest deduction
Five year cost: $379 billion
Taxpayers can deduct interest paid on mortgages totaling up to $1.1 million used to buy or improve a primary home and a secondary or vacation home. A yacht with a berth, galley and head can count as a second home. The $379 billion doesn’t include other breaks for housing, such as the exclusion from income of up to $500,000 per couple in capital gains from the sale of a principal residence, which will cost $130 billion over the next five years.
Once again, we see class envy's ugly head. A yacht counts as a second home because it's factually a home. People live on yachts.

Bottom Line: The hidden bulk of the iceberg of this deduction goes not to rich fat-cats, but to millions of working men and women who are buying homes. It's there to encourage home ownership, and that's a Good Thing(tm). The Administration decry its application to certain people not because it's bad or unfair, but because those people have money that the Administration would like to steal.
5. Tax Free Medicare Benefits
Five year cost: $358 billion
All Medicare insurance benefits are excluded from taxation. To the extent that the value of that insurance exceeds the premiums senior pay and the amount they have contributed in Medicare taxes during their working years, the value of Medicare is considered untaxed income to them.
We tax people so as to cover healthcare insurance which they otherwise couldn't afford in their old age. Some people receive more than they paid in, but that's the way insurance normally and necessarily works. It is, in fact, a defining characteristic of insurance as opposed to a pre-payment plan. Insurance is not only a bet; it's a distribution of risk.

Now wrap your head around this: having received the money and re-distributed it (not to the patients, but to the healthcare providers), the Administration would like to tax the patients for the value that was paid to the third party. These are the same patients who are old enough to receive Medicare benefits and are typically living on a fixed income. Incidentally, taxes on that same money are already paid by the healthcare providers, because it is their income.

Bottom Line: "the value... is considered untaxed income...". Is considered by who? Answer: by the people who would rather have the money themselves.
6. Workplace Retirement Saving Plans 
Five year cost: $336 billion  
This number includes the exclusion from taxable income of employer and employee contributions to 401(k)s and other employer sponsored retirement savings plans, as well as the exclusion of earnings in these accounts. It doesn't include the additional $64 billion cost for retirement plans for the self employed or the $212 billion cost for traditional, employer paid “defined benefit” pensions – the kind that pay a set amount each month.
Retirement savings are tax deferred to encourage people to save for their own retirement. Indeed, there is no need for the government to tax this income at all, as it reduces the need for the government to step in and care for those people who did not so save. All government taxation should have a direct purpose; and "the money exists" just isn't good enough.

Bottom Line: This is more empty class-envy rhetoric; this time focused on the gainfully employed and responsibly self-employed. The Administration has no objection to you being wholly dependent on the government.
7. Earned Income Credit
Five year cost: $326 billion 
This credit is available to low income working families; the maximum credit in 2013 for families with three or more children is $6,044. The credit is refundable – meaning families can get back more from the credit than paid in taxes. Of the $326 billion, $283 billion will be made up of such refunds.
The EITC is money the government provides you for being poor and having a job. That's it. It's difficult to make ends meet, so if you get a job, the government gives you money, redistributed from the wealth collected from other taxpayers. For instance, if you have a low-paying job at McDonald's and you've got a family, you get up to $6,000 a year that you didn't earn... something that the "Occupy Wall Street" crowd never figures into their calculations. Mainly that's because it's given in a lump sum once a year as a tax "refund", and the recipients blow it.

Now you need to do the same "wrap your head" exercise you did with the concept of taxing Medicare. This is money collected from taxes, redistributed. It IS taxes. The Administration would like to tax taxes.

They could do the same thing by reducing the EITC (which to the average Joe means "I get less back in taxes") or by lowering the statutory minimum wage (which likewise leaves the average Joe less cash in pocket). Of course, these things are political suicide, because people would notice. "Earned Income Tax Credit" isn't descriptive in any way, but sounds vaguely technical and unfair, so it's easy to slide by low-income working families that it primarily targets.

It's also possible to do the same thing by raising the minimum wage; but be advised that should this happen, the EITC should be done away with. The guy who's been working several years and has gotten several raises doesn't get or need that credit; and when you're suddenly raised to his level you shouldn't need it either. It then goes from being non-taxable "free money" to taxable income, and you'll see less of it. Welcome to wealth.

Bottom Line: It's best to work and earn your own way. What Uncle Sam giveth, Uncle Sam taketh away. If you're getting an EITC, you're now "rich" because you're working and not on the dole; though really, you are.
8. Child Credit 
Five year cost: $292 billion  
This $1,000 credit for each child under 17 begins to phase out once a couple’s modified adjusted gross income exceeds $110,000 or a single parent’s MAGI exceeds $75,000. The credit is partially refundable – meaning families can get back more from the credit than they paid in income tax. Of the $292 billion cost, $154 billion comes from such refunds.
A credit is not a "refund". The shoddy thinking that results from shoddy language was evident when we saw that people blow their Earned Income Tax Credit because it's considered a "refund" when in fact it's supplemental income. It makes people who receive thousands more than they're taxed complain about the taxable part of their income because they mistakenly believe it's their only income.

Having and raising kids is expensive. Parents -- real parents -- make hard sacrifices for their children. The government promotes the "it takes a village" mentality by making sure that it does take a village. So they rob Peter to pay you for having children.

Bottom Line: There is no reason that anyone else should pay you child support for children they had no part in creating. You should have the number of children you can afford. If the government pays for your kids, it's difficult for you to argue that you should be the sole arbiter of how they are raised. The administration would like to buy your sovereignty, and you've been happy to let them.
9. Capital Gains Excluded At Death 
Five year cost: $258 billion  
When you die the basis of your assets is “stepped up” to their current market value. That means heirs can sell right away without owing capital gains tax and that the unrealized appreciation in assets held until death is never taxed.
Your heirs do not buy their inheritance. When they acquire it, it's worth what it's worth. They don't pay capital gains because they realize no capital gains, and that's just reality. However, they do owe inheritance taxes based on the present value.

Bottom Line: The Administration would like to tax the same assets twice: once as capital gains, and again as inheritance. Why? Because you have money that they would like to steal. There's no social purpose for the confiscation.
10. Insurance Exchange Subsidies 
Five year cost: $238 billion  
Under Obamacare, beginning in 2014, families that buy insurance through state health insurance exchanges and earn up to 400% of the poverty level will be eligible for refundable tax credits to subsidize the cost of insurance premiums that exceed a certain percentage of their income (the percentage rises with income). The credits are “advanceable”—meaning they can be delivered through insurers in the form of lower premium payments.
The federal government shouldn't be offering insurance exchange subsidies in any case. Under the ACA ("Obamacare") this is at the option of the various states. There is no statutory authority under which permits the federal government to supply the subsidies. But let's pretend for a moment that this is not as blatantly illegal as it obviously is...

This is another case of the government giving money collected as taxes to someone else, where it is already taxed as income, then wanting to come back to you and tax you for the value that was given to the third party. As you can see, they do this a lot, hoping that you won't notice.

Bottom Line: It's wrong every time they do it. Again, the exact same result is achieved by lowering the "benefit". But politics trumps intelligence on Capitol Hill every single day, and the current Administration has no respect for the laws passed by the representatives of the People.
11. Charitable Deductions 
Five year cost: $224 billion  
This includes the cost of itemized deductions for contributions to social welfare charities ($178 billion), as well as health ($30 billion) and educational institutions ($16 billion). Since donors who don’t itemize get no tax break, more than half of the value of this deduction goes to those with income above $200,000.
Couched in the commentary is the hogwash off-hand class envy implication that the rich (who indisputably do the lion's share of charitable giving, and therefore itemize) unfairly benefit from the deduction that is there to encourage them to make the charitable contributions that they subsequently make.

It's just a fact that the Government deals with social welfare poorly, inefficiently, with far too much bureaucracy. In a world where the government is tasked with promoting the "general welfare", it makes plenty of sense to encourage people to support charities to lessen the dependency of the poor on inefficient government programs.

Reality: The Administration would like to take credit for your charity by claiming it as their expense, while at the same time suggesting it should be taxed (which would remove any credit they might claim). All together now: Unrealized income is not an expense. This enables them to promote the populist fiction that it is "the rich" who are sticking it to them.
12. Interest On Municipal Bonds 
Five year cost: $217 billion  
Interest earned on state and local bonds is tax free, although individual taxpayers don’t get the benefit of all of this subsidy, since they accept lower interest rates on muni bonds than on taxable bonds. The $217 billion includes $192 billion for state and local general purpose bonds and $25 billion for various “private activity” bonds that are exempted from regular tax but subject to the alternative minimum tax.
It seems that the Constitutional mandate to "promote the general welfare" wasn't much of a consideration when compiling this list.

Municipal bonds pay a pittance; but they're considered a safe investment because it's "the government", and you're not likely to lose. (Remember, investment is about profit AND loss.) People think of "the government" as something monolithic, but it's not. Your city, county, state, and federal governments are all separate. Nevertheless, the federal government is composed of lawmakers drawn from your localities, and it's in the interests of their constituents... "the People"... that they serve.

Bottom Line: It's in the interests of the People to encourage investment in local governments. Municipal bonds are sold to fund specific local projects that are quite frankly none of the federal government's business. As such, the federal government has no claim on these funds and should never tax them.
13. Employer Paid Pensions 
Five year cost: $212 billion  
This cost  is for traditional defined benefit pension plans, which, along with the cost of this break, are in decline. Employers can deduct their contributions now, but workers aren't taxed on their pensions until they retire and start receiving income from them.
Employers deduct the expense when the expense is incurred, and workers are taxed on the income when the income is received.

Reality: this isn't a problem, it's a pure example of fairness. Furthermore, it's none of the government's business.
14. Cafeteria Plan Benefits 
Five year cost: $193 billion  
Through what are known as Section 125 cafeteria plans, workers can elect to divert what would have been taxable salary into tax free benefits, such as group-term life insurance, extra dental or vision care and flexible spending accounts for medical and child care expenses. This cost doesn't include the estimated $29 billion Uncle Sam will lose from tax exclusion for parking and public transit benefits. 
Everything previously said about medical spending (particularly in item 1) applies here.

Bottom Line: It's still your health and your responsibility. The government still does not supply these services to those who purchase them, and therefore has no claim on that money. Universal taxation for healthcare makes sense to those who want a single-payer system, but that's not what we have.
15. Untaxed Social Security benefits 
Five year cost: $180 billion  
Anywhere from 0% to 85% of Social Security and Railroad Retirement benefits are included in taxable income, with the percentage rising as the taxpayer’s total income rises. The amount that isn't taxed and exceeds a beneficiary’s payment of Social Security taxes during his working life is counted as a tax expenditure.
As before... counted by who? Just because you choose to "count" something as a tax expenditure doesn't mean that it is. Social Security (in the United States) is not a retirement account; rather, it is social insurance. Don't believe me? It's listed in your payroll deductions as FICA, which stands for "Federal Insurance Contributions Act". If you're self-employed it's called SECA, which stand for Self "Employed Contributions Act".

As this is structured as "insurance", and it is administered by actuaries; then yes, sometimes people get out more than they paid in. Again, there's nothing wrong with that: it's the way insurance works. Some people get out less than they paid in. But there is no purpose whatsoever in taxing money that was collected as taxes and then paid back out. The exact same purpose can be accomplished by reducing the benefit. However, this (again) is political suicide. Politicians would still rather pay out the benefit, then play the class-envy card by pointing out how "unfair" it is that some people aren't paying taxes on some "income"; although they worked and contributed all their lives, with this stipend representing the many years when FICA taxes were deducted from their earnings.

Bottom Line: The Administration never tires of double taxation. And they never tire of finding creative ways to gain your permission to steal from you.

These are the kinds of games that the government plays with your money once they wrest it from you. They tax you, "give" it back to you, and then claim that the returned money is your "income". It happens over and over.

Outside the realm of taxation, they engage in licensing: that is, taking freedoms from you and then selling them back. (Example: You fished in a pond as a child. The government passes a law making it illegal to fish without a license. The government sells you a license. Meanwhile, the government never had jack shit to do with the pond or any fish in it.)

The government routinely over-spends money on things that it has no business spending money on in the first place. Our problem is not now, nor has it ever been a problem of under-taxation. It is wholly a problem of overspending.

Taxes should never be enacted except with precise, definable purpose. Those purposes should be limited and within the authority invested in Congress by the Constitution. Yet we repeatedly witness a trend toward taxing everything imaginable simply because it exists. This is ridiculous, by which I mean "worthy of ridicule". Meanwhile, you are increasingly restricted from acting on your own behalf for your own benefit. The right to the "pursuit of happiness" lies discarded and disused. "Don't pursue your happiness," we're advised, "vote for us and we'll give it to you."