Income Tax, Burt Folsom

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The three Biggest Myths About the Income Tax

by ADMIN on APRIL 14, 2013

1.  We need the income tax to pay all the costs of running our federal government.  No, the current income tax is a huge premium we pay for the services and the meddling we receive from our government.  Only for the last 100 years have we had the 16th amendment, which permits an income tax.  Before that we supported our government through taxes on imports, taxes on whiskey and tobacco, and on the sale of federal land. That was it.  Even with that limited tax base, our leaders usually spent money wisely, and we had budget surpluses most years before 1913.  We actually cut our Civil War debt in half.  We learned this lesson:  When our politicians had little money to spend, they rarely went over budget.

2.  We need a large income tax to give more needed social services to the American people.  No, the greater the flow of cash into the government, the greater the waste and the worse the social services.  In the 1800s, people in need got help from churches and local charities. People helped people directly; almost no one depended on federal bureaucrats and welfare checks.  In the late 1800s, various entrepreneurs and community leaders began the Red Cross, the Salvation Army, humane societies, and orphanages across the country. In 1885, President Grover Cleveland vetoed a bill to give seeds to drought-stricken farmers in Texas because he wanted people, not government, to help bail out those in need.  Charities throughout the U.S. rushed to help their fellow Americans; more money was sent to the needy farmers than was provided in the bill Cleveland had vetoed.

3.  The rich ought to pay proportionately much more income tax than everyone else.  Wrong again.  The rich already pay much more than everyone else–and taxing them even more only causes them to hide their wealth, or take it elsewhere.  The 14th amendment promises equal protection of the laws to all citizens, and if we discriminate against the rich, the door is open to pass laws discriminating against blacks, women, and old people.  When President Franklin Roosevelt began taxing the rich at rates of 80, 90, and 94%, he discovered that their wealth vanished from sight.  When that happened, he could have let the rich keep more of what they earned.  But he chose to keep taxes high on the rich, and instead he hiked taxes on the middle class and poor to make up for the revenue lost because rich people were now sheltering their income through various tax dodges.  Should we be following FDR’s example today?

Education, Test and Tiger Mom’s

*** Education ***

“New York City’s Stuyvesant High School is one of those all too rare public schools for intellectually outstanding students. Such students are often bored to death in schools where the work is geared to the lowest common denominator, and it is by no means uncommon for very bright students to become behavior problems.

Recent statistics on the students who passed the examination to get into Stuyvesant High School raise troubling questions that are unlikely to receive the kind of serious answers they deserve.

These successful applicants included 9 black students, 24 Latino students, 177 white students and 620 Asian Americans.

Since this is definitely not the ethnic makeup of the general population of New York City, we can expect to hear the usual sort of comments from those who are in the business of being indignant and offended.

The most common of these comments is that the tests are “unfair.” That is of course possible, but it is also possible that the groups themselves are different. Yet only the first possibility is allowed to be mentioned, in an age when race can be discussed only with pious hypocrisy and obligatory lies.

However shocked some people may be by the ethnic breakdown among students who passed the test to get into Stuyvesant High School, similar disparities can be found among students from different ethnic backgrounds in other countries around the world. Back in the decade of the 1960s, students from the Chinese minority in Malaysia earned 20 times as many Bachelor of Science degrees as students from the Malay majority.

In Sri Lanka, children from the Tamil minority consistently outperformed members of the Sinhalese majority on university admissions tests and, in at least one year, made an absolute majority of the A’s on those tests.

Back in the days of the Ottoman Empire, Armenian students did better than Turkish students when it came to writing in the Turkish language.

What does all this mean? That people are different. Would ordinary observation and ordinary common sense not tell you that? Or dare you not even think that, in the suffocating atmosphere of political correctness?

These differences are not set in stone. Back during the First World War, low mental test scores among Jewish soldiers in the U.S. Army led one mental test expert to declare that this tended to “disprove the popular belief that the Jew is highly intelligent.”

But many of the men taking the Army’s mental tests during the First World War were the children of immigrants, and had grown up in homes where English was not the language used. Mental tests in later years showed Jews scoring above the national average.

Every study I know of that compares the amount of time that black students and Asian American students spend watching television, and how much time they spend on school work, shows disparities as great as the disparities in their academic outcomes.

When teaching at UCLA, years ago, I once went into a library on a Saturday night, noticed how many Asian students were studying — and looked around in vain for any black students. How surprised should I have been when Asian students did better in the courses I taught?

A few years ago, Professor Amy Chua of Yale caused a controversy when she wrote a book about Asian “Tiger Moms” who put heavy pressure on their children to succeed in school. But a more recent book (“Gifted Hands”) by black neurosurgeon Benjamin Carson shows that his mother was as much of a Tiger Mom as the Asians.

Not only did Dr. Carson rise from the ghetto to become an internationally recognized neurosurgeon, his brother became an engineer — both of them children of a poverty-stricken mother with only three years of education. But Tiger Moms get results.

Unfortunately, we are at a stage where the interests of race hustlers is to cry “unfair” at the tests — and they have a lot more political clout than black Tiger Moms have. So long as the rest of us are silenced by political correctness, racial progress on that front is unlikely.

Put differently, whole generations of black young people can continue to go down the drain because their fate carries less weight than fashionable racial rhetoric” Thomas Sowell

Political Entrepreneurs vs. Market Entrepreneurs

*** Posted by Anita Folsom ***

 

 

What is an entrepreneur? The dictionary says an entrepreneur is ”a person who organizes and operates a business or businesses, taking on financial risk to do so.”  What is a political entrepreneur?  A political entrepreneur uses government funds in business, which greatly reduces any financial risks to the “entrepreneur.”

Not only do political entrepreneurs lobby to receive federal funds, they often work to pass laws that hinder their competitors. Thus, political entrepreneurs, one could argue, are really not entrepreneurs at all.  In most respects, they resemble government bureaucrats.

History is strewn with the wreckage of projects built by political entrepreneurs, and Americans would do well to learn history’s lessons.

In the early 1800s, the great technological innovation of the day was the steamship. Textbooks tell us that Robert Fulton operated the first American steamship, the Clermont, on New York’s Hudson River in 1807.  Man was no longer bound by the capricious winds of nature for transportation.  Steam-powered ships could move against the wind, meaning that human beings could finally cross the oceans quickly or sailupstream, travelling easily against the force of rivers’ rushing waters.

The economic impact of steamships was dramatic.  Further west, along the Mississippi River, for instance, goods from New Orleans such as furniture had to be brought north to towns upriver by horse-drawn wagons, which took weeks and meant that such items were luxuries that only the well-to-do could afford.  But once steamships began operating, prices of such goods dropped dramatically.  Soon a new settee or dining room table only cost one-sixth of the former price, because steamships quickly and reliably carried large loads upstream, which slashed transportation costs.

Robert Fulton began as an entrepreneur when he used steam power to give the public quick and easy transportation. But he became a political entrepreneur when he obtained a monopoly from the New York state legislature to carry all steamboat traffic in the state of New York for thirty years.

Fulton insisted that his monopoly meant that no one else could ferry passengers to New York City from neighboring states, but an enterprising businessman named Thomas Gibbons wanted to break Fulton’s monopoly. In 1817 Gibbons hired young Cornelius Vanderbilt to run steamboats between Elizabeth, New Jersey and New York City. On the mast of Gibbons’ ship, Vanderbilt hoisted a flag that read: “New Jersey must be free.” (Myth of the Robber Barons, page 2) For sixty days, Vanderbilt defied capture as he speedily transported passengers, lowered fares, and eluded police authorities.

The actions of Gibbons and Vanderbilt led to the landmark Supreme Court case Gibbons v. Ogden, in which the Supreme Court struck down the Fulton monopoly:  Only the federal government, not the states, could regulate interstate commerce.

Cornelius Vanderbilt went on to develop his own steamship company, and once again, he had to compete against a government subsidized political entrepreneur, Edward Collins. Collins’ company eventually went bankrupt, after wasting millions of tax-payer dollars. Vanderbilt’s line proved to be faster, safer, and much cheaper for consumers. Once again, the government had tried to pick a winner in a new business enterprise and had failed. Vanderbilt is the classic example of an entrepreneur, a market entrepreneur, which we will discuss in tomorrow’s blog.