American Republic Online

Another year means another cost of living adjustment for those on Social Security. Since inflation has been quite low lately (even including gas gouging by Big Oil) the raise SS recipients will receive is 2.3%. How much was your raise this year?

In any event, here are the numbers behind the increase. There are currently 49,633,000 on Social Security (not including the 4+ Million receiving Supplemental Security Income) as of August 2007 according to the Social Sec. Administration. Taking the average increase of $24 per month and doing the math gives you the following:

$14,294,304,000. That’s just the increase. How much longer can we continue to ignore this problem?

Or look at the problem another way:  In 2008 the average SS check will be for $984.84 and that burden will be split between 4 workers, or $246.21 per worker per month.  As the baby boomers retire the ratio of workers will drop to 3:1.  Even with modest cost of living adjustmentsthe average check will hit $1211.22 in 2015 but only be split to three workers.  That’s right, you can look forward to $403.74 out of each month’s paycheck.  Wouldn’t it be nice to have that money for yourself?

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Greg Mankiw points out a Cato report on the tax share for the rich and poor:

Hmmm…so the bottom 50% of income earners (the so-called poor) pay around 2% of their income in taxes and the top 1% pay 23%? Looks progressive to me. So how does one lower someone’s tax “burden” by any noticeable amount if they’re only really paying a couple hundred bucks into the system? Oh wait, Edwards reminds us that

…these data do not include the tens of billions of dollars sent to lower-income families as a result of the earned income tax credit, and thus it overstates taxes paid by the bottom group.

Negative taxes! And how do you give “poor” people free money? Why, just raise taxes on the rich. Not only will you not pay taxes, but you get some of the taxes rich people paid!

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Neal Boortz responds to recent attempts to associate the FairTax with Scientology:

Bartlett is illustrating one basic truth about the FairTax. It is easy to demagogue. Has the FairTax so-alarmed advocates of big government that they actually have to resort to childish attacks such as this Scientology nonsense? You would think that if FairTax opponents had a choice they would rather base their attacks on the FairTax on solid and defensible criticisms or objections. Perhaps these attacks centered around the absurd notion that the FairTax is a part of some great Scientologist plot are more evidence of concern that the idea is catching on … an idea that could cost them a livelihood or render their intricate knowledge of the current tax code useless … than anything else. 

Robert E. Rector of the Heritage Foundation has released his latest research on poverty in the US. The numbers on many of the 37 Million “poor” are surprising. Before jumping into Rector’s work let’s define poverty. The US Census Bureau uses the Office of Management and Budget’s Statistical Policy Directive 14. In 2005 the OMB defined the Poverty Thresholds at $9,367 - $43,254 depending on family size. (U.S. Census Bureau Report)

Does the high end of that spectrum seem, well, high? It should, the same report lists the median household income in the US for 2005 at $46,326. But it gets better because “The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps).” - Appendix B. Which means if you have a large family and are using food stamps you can actually be both poor AND above the median household income. But that could be an extreme case, right? So let’s take a look at the top third of the poor and see just how nice “poverty” can be.

The Top One Third of the “Poor” in the US:

• Own a 3 bedroom 1 1/2 bath home worth $95,276 and have more living space than a European (Poor Americans have 439 sq ft per person while the average, not poor, European has 396 sq ft per person).
• Own two cars.
• Own two or more TVs - and most (75%) own a big screen. (Which you need to get the full enjoyment out of your cable or satellite feed)
• Own a computer
• Own a cel phone & a land line
• Own a stereo, dishwasher, microwave, DVD player & have air conditioning

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After the recent tragedy of the bridge collapse, I’ve heard a lot of politicians calling for “more taxes”. The problem is that Minnesota has a budget SURPLUS of 1 Billion dollars for their 2006-2007 budget (they do two year budgets) that is projected to grow to 2 Billion dollars for the 2008-2009 budget. (minnesota.publicradio.org)

As pointed out in the debate column, the problem is not lack of money, it’s money management. Politicians love to call for more money at every crisis, because people fall for it. And then once the money is blown somewhere else (like MN spending $1M on a virtual reality spray paint simulator system and training program), they can always go back ask for more money to meet the government “needs”.

Thomas Sowell believes the cause to be a fundamental problem with the political incentives involved in different types of money management:

There may be enough money available to maintain bridges and other infrastructure but that same money can have a bigger political payoff if spent building something new instead of maintaining and repairing existing structures.

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This snippet comes from the Sunday GOP debate. Giuliani exposes a flawed assumption made about taxation so well that I grabbed for it’s instructive value. He uses actual real world numbers from when he was the Mayor of NY to support his assertion. A rare thing these days when many politicians are throwing around obviously made up numbers like they are facts - for instance Mrs. Clinton saying “a lot of people did extremely well during the nineties… when economic policies lifts a hundred times more people out of poverty than in the Reagan years.” (emphasis added - 8/7/07 interview with Dylan Ratigan, CNBC.) - not that anyone calls them on it.

David Yepsen (Des Moines Register):”Mayor Giuliani, the Republican dogma against taxes now precluding the ability of you and your party to come up with the revenues that the country needs to fix its bridges?”

GIULIANI: David, there’s an assumption in your question that is not necessarily correct. It’s sort of the Democratic liberal assumption. I need money, I raise taxes.

YEPSEN: Then what are you going to cut sir, what do you cut?

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Following up on our Cigar Tax story, I’ve found out even more. In fact, The more I dig into this legislation the more surprises I find.

First there was the amendment to limit free insurance to people at 2x the poverty line instead of 4x or more (you know the supposed rich) - proposed by Republicans, voted down by Democrats.

Then another amendment to require 60 votes (to make it more difficult) for increasing excise taxes that disproportionately affects taxpayers with income less than 2x the poverty line… proposed by Republicans, voted down by Democrats. Am I in the twilight zone? When did the Dems & Repubs switch places on defending the poor?

And here’s some more proof that the goal was universal government health care: Read the rest of this entry »

Stunned? You’re not the only one:

“I thought there was a typo. I thought they meant 10 cents per cigar, not $10 per cigar. I was stunned like everyone else,” Sharp said.

Currently the tobacco tax is 4.8 cents per cigar and 39 cents per pack of cigarettes (1.95 cents each). The latest bill will raise those to $1/pack for cigs and $10/cigar. The increase of 150% on cigarettes is ridiculous but the cigar tax is off the scale.

The average aficionado smokes about three cigars a week at about $3 to $5 apiece, according to the cigar association.

The tax would mean that relaxing past time would go to $13 to $15 for the exact same cigars! Of course the true tragedy is that (as always) the poorest cigar smokers will be the hardest hit. For those that can’t afford the sweet nectar of a hand rolled smoke, machine made cigars typically run between 50 cents and a dollar apiece. So a poor man’s cigar relaxation costs about as much as everyday acceleration found in a Coke. Imagine paying $11 for a 16oz bottle of Coke.

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The IRS has lost a case involving the constitutionality of income taxes.

The argument is an interesting one:

Essentially, he argued that income is not necessarily any money that comes to a person, but rather categories such as profit and interest.

He said the free exchange of labor for compensation has been upheld as a right by the Supreme Court, but that doesn’t necessarily make the compensation income.

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