About Taxes, Each Side Is Equally and Foolishly Robotic

About Taxes, Each Side Is Equally and Foolishly Robotic
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I’ve been caught in a lie.

For a while now I’ve been telling friends, family and classes “don’t fear the robots. They’ll only make our lives easier. If we don’t have jobs and income, robot-made products will have no customers.” Some have taken Skynet from the “Terminator” movies too literally.

After some thought though, maybe some caution is in order. Perhaps we should be wary of the robots that create misleading headlines and flimsy stories. Those programmed to manufacture self-righteousness warrant suspicion as well. Worst of all are the cyborgs empowered by their masters to create burdensome taxing and spending policy.

As if on cue, the politically cynical concern about the federal budget deficit is back in vogue. Who is concerned at the moment depends on who is in power. These days, it’s democrats who feign such anxiety since republicans hold all levers of federal control. A few years back, Republicans were the worry warts, and a few years before that it was Democrats.

Republicans’ problem is that they can’t be taken seriously when it comes to curtailing spending, the real issue. Not only do some of them favor more (defense, propping up Obamacare, building a border wall), but they’re not even willing to rein in the bloated leviathan that’s been built up over the last century. Nevermind President Trump’s campaign pledge not to touch, nay reform the entitlement state.

As for Democrats, no one who seriously thinks “the rich” can fund the vast majority of government, or who characterizes slowing the growth rate of spending as a cut, could possibly know enough to care about budget deficits.

Watching these two parties compete to show the most concern about the deficit is like watching a Democrat leech and a Republican leech attached to the American citizen arguing who’s responsible for the patient’s deficit of blood.

Meanwhile, you’re probably aware of the positions staked out by these parties and their respective sympathizers in the punditocracy regarding income tax reform: leftists think we shouldn’t enact “tax cuts (for the rich) at the expense of vital federal government programs,” while the right wing generally supports reform as a way to “kickstart the economy that will pay for itself.”

But before congressional leaders even released detailed plans, the media had all they needed with the president’s 9-page “framework.” MarketWatch put out a tentative tax-reform-effect calculator (based partially on Republican proposals of prior years). The story that grabbed my attention however, was on National Public Radio’s website. It had the clickbait headline cautioning Americans not to pin their hopes on the “promised $4,000 raise from the GOP tax plan.”

It reinforced this persistent notion that we live in a static society. It’s that concept after all that informs the Congressional Budget Office’s predictions of the effects of legislation; $1 of tax cuts equals $1 of tax revenue lost by the government. CBO analyses assume little ripple effect, few changes in behavior. In this case, a report by the president’s Council of Economic Advisers regarding the proposed reduction of corporate income taxes was implied to predict an exact effect on individuals.

Nothing can be forecasted perfectly in a relatively free, dynamic economy, especially with so many other exogenous influences: new discoveries or inventions, business creation/closure, the regulatory state, trade policy, events near or far, etc. Most productive members of society aren’t gullible enough to think that as soon as any such reform passes, they can expect a raise soon thereafter. They know raises will continue to be based on the same core principles: work ethic, value added to the company, company/industry/economic conditions, etc. These kinds of things aren’t as easy to predict as a government handout.

Another headline that jumped out at me came from ABC News’ website that reported “60% of Americans say Trump tax plan will benefit wealthy.” Well, duh. It stands to reason that those who pay progressively more would subsequently realize more after-tax income. However, some wealthy folks not only want no part of it, but think none of their cohort should experience it either.

Berkshire Hathaway CEO Warren Buffet, who once famously claimed that his secretary pays a higher rate of tax than he does, recently said “I don’t think I need a tax cut.” Former hedge fund manager Tom Steyer piped in pleading “I’m a billionaire. Please raise my taxes.” And Morris Pearl, head of an outfit called Patriotic Millionaires, said that only the “poorest among us … should have tax cuts.”

Mr. Buffett’s secretary claim was sufficiently debunked by none other than Politifact, citing reasons that are apparently lost on Mr. Pearl; not only do most folks at such income levels fall into lower tax brackets, but they end up paying little-to-no net income taxes thanks to deductions and various loopholes. Yet according to Mr. Steyer, it has been “at the expense of working families” that “upper-income people in the United States have done disproportionately well.” I don’t know about you dear reader, but I’m struggling to remember the last time I felt “taken advantage of by the richest Americans.”

Political science degree from Yale in hand, surely Mr. Steyer isn’t referring to cuts in the size of government. After consulting USDebtClock.org, I see that Uncle Sam is spending more than $4-trillion, is in a $20-trillion hole, and has $109-trillion in unfunded liabilities. Regardless of the extra-constitutional functions which he fears being deprived of funds, it appears Uncle Sam’s operations continue apace.

And certainly having earned an economics degree, he’s familiar with the concept of deadweight loss. As John Stossel recently pointed out, we devote “the equivalent of 3.7 million people working 40-hour weeks” to filing our taxes. If they are so eager to pay more taxes, I bet they could chip away at that deadweight loss by refraining from exploiting the legal loopholes available to us all. Failing that, the Bureau of the Fiscal Service is happy to accept “gifts and unconditional donations” on behalf of the federal government (whether or not such a donation is tax deductible is unclear).

Whether such folks feel a little guilty for skillfully navigating the system as it is set up, or would perhaps prefer to maintain their perch atop the same for which they might have lobbied, or whether they just don’t understand the problem here is anyone’s guess. The core principle of this whole debate is a sensible one: the tax burden on laborers and wealth-creating entities should be as miniscule and simple as possible.

In a recent essay in the Wall Street Journal, Dr. Christoph Koch, chief scientist and president of the Allen Institute of Brain Science, explained the research that he’s been leading to “create technologies to enhance the processing and learning capabilities of the human brain” in response to AI (artificial intelligence, i.e. robots). Such work he hopes could turn “anyone into a programmer” who could create a “precise and error-free piece of digital code … at the speed of thought.”

Hopefully the general public figures out how to use such technology in order to better decode the nonsense fed to us by the automatons disguised as public policy makers and spinners.

Christopher E. Baecker manages fixed assets at Pioneer Energy Services and is an adjunct lecturer of economics at Northwest Vista College. 

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