For a while now I’ve been telling friends, family & classes “don’t fear the robots. They’ll only make our lives easier, better. If we don’t have jobs & income, we won’t be able to buy anything the robots make.” Some folks have taken the “Terminator” movies’ Cyberdine Systems’ Skynet too seriously.
After some more thought though, maybe we should fear them. Maybe we should be wary of the ones that create misleading headlines & flimsy stories. The ones programmed to manufacture self-righteousness warrant suspicion. Worst of all are the cyborgs designed by their masters (more familiar to us as politicians elected by voters) to confiscate private resources from us once they’ve tied our hands.
These particular robots have recently set their sights on tax reform.
As if on cue, the politically cynical concern about the federal budget deficit is back in vogue. This has come and gone as long as I remember. 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 who were all hot and bothered by the red ink. And so on and so on.
Republicans’ problem is that they can no longer be taken seriously when it comes to curtailing spending, (itself a tax on productive society), which is the real problem. Not only do some of them favor more, whether it be on defense, propping up Obamacare or 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.
And as for democrats, no one who seriously thinks ‘the rich’ can fund the vast majority of government operations, and that such spending has a wealth-producing multiplier, 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.
Alas, too many in the media dig a good story, even if they don’t get to juice it up a little …
Meanwhile, you’re probably aware of the different, though predictable takes on tax reform proposals put forth by the usual suspects amongst the punditocracy, political class, etc.: the left wing thinks 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 the House GOP released their detailed plan, the aforementioned media had all they needed with the president’s 9-page “framework”. MarketWatch even put out a calculator (which was also based partially on republican proposals of prior years) so folks could figure out how the guideline would affect them. 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”. In fairness, the piece clarified that there was no such promise, but that’s like T.V. lawyers who get to say something outrageous even if the remarks are ‘officially’ stricken from the record.
It seemed to reinforce 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. There’s no ripple effect whatsoever. Private citizen’s behavior is unchanged. In this case, a report by the president’s Council of Economic Advisers regarding reform of the corporate tax code was implied in the headline 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/inventions, business creation/closure, the regulatory state (a bright spot in the Trump administration), trade policy (a dark spot in the same), other legislation, events closer to home or on the other side of the world, alien invasion, etc. I maintain faith that most productive members of society aren’t gullible enough to think that as soon as any corporate tax reform passes, they can expect a subsequent raise soon thereafter. They know raises will continue to be based on the same core principles: how diligent are you at work, how much value are you adding to your company, how is your company doing, how is your industry doing, how is the economy doing, etc. These kinds of things aren’t as easily predictable 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. In the interests of equal treatment for all, it stands to reason that those who pay progressively more would realize more after-tax income as a result of ideal reform. Apparently some wealthy folks not only want no part of it, but think no one else in their tax brackets should benefit from reduction and/or simplification 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 … for 35 years.” 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.”
Surely with a political science degree from Yale, Mr. Steyer isn’t referring to cuts in the size of government. After my weekly consultation with USDebtClock.org just now, 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 for which he fears the deprivation of funds, it appears Uncle Sam’s operations continue apace.
And certainly as the holder also of an economics degree, he’s familiar with the concept of deadweight loss. As John Stossel recently pointed out, the latest count is 7 billion hours that we devote to filing our taxes, “the equivalent of 3.7 million people working 40-hour weeks.” If they are so eager to pay more taxes, I bet they could save some of that time and money by refraining from exploiting all 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 get it 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 public opinion makers and spinners.