Scape Goats

So previously, Greece was attacking everybody's favorite villains, Wall Street banks, for causing their debt problems. This is a very false assumption.

How do credit default swaps cause instability in Greece? Take a horse race analogy for example:
When you go to a horse track, you research the horses, you've seen how it has performed in the past, but more importantly, you compare relative performance. This horse may be good, but another horse may be better. However, when you place your bet on the third lane, your bet does not alter the performance of the horse in that lane! This is the same concept of credit default swaps.

From the book, Getting Started in Hedge Funds:

If these men and women were so powerful that they could control currencies and markets, wouldn’t they do so all the time so that they could always make money? No matter how much or how little money one has, no one likes to lose it. If the funds could truly control currencies or manipulate the markets, these massive losses would not have occurred.... The Economist magazine believes the reason hedge funds [and Wall Street Banks] catch flak for all of the world’s financial crises is ignorance.

Still not convinced? Read Swaps Not Responsible for Crisis, Greece Is and CDS not cause of Greek debt woe. In this second article there is mention of AIG causing a problem with CDS contracts, but the difference is that they took the other side of the trade with other firms, as insurance policies (first person). CDS contracts on Greece debt are third-party deals. CDS spreads on Greece debt are just contract prices that firms must pay to enter into default protection and simply reflect how risky Greece bonds have become.

Proportionate to Earnings

People treat wealth as a matter of fact, as if it is just a state of nature; you are born either a cat or a dog. They refer to the 'wealthy' as some privileged class as if those people took no action on their part to earn that status (I am not referring to the wealthy who were born wealthy, but those who get regarded as wealthy through the tax code - those earning high salaries). Consequently, the populist masses who are not in the same situation, despise these people. They want for them to pay higher taxes and complain that even the high progressive tax system of the US is not enough. It is obvious these populists want the 'elite' to earn the same salaries as them, even though it is likely their education, experience, position, and hard work to get there is the cause of this discrepancy in earnings.

America, once regarded as the land of opportunity, meant that if you wanted to have a better life, own a nice home, go on more vacations and have more toys, you could work to attain it. The system is not entirely defunct, but the treatment towards people who make it is viewed negatively and punished through the tax code. Those who have not achieved this elite status take comfort in their friends who are in the same situation and readily complain of those wealthy people who are taking advantage of them or have it so easy, how ever they justify such conclusions. If any of them defect and make it to a higher status, their old friends can no longer sympathize with them and secretly despise their new found status. It's like the old saying goes, misery loves company.

Populists complain that paying X amount of dollars for a product or tax is a higher percentage of their income and it is not fair that a 'wealthy' person pays the same amount and it is such a smaller percentage of their income. But obviously, isn't that the whole point of working hard to become 'wealthy'...? So that the relative cost of products or taxes is not as taxing on one's finances? These populists want to undermine the whole point of striving to earn more so that one can afford more. Otherwise, why bother getting a better paying career if the relative burden of things is going to stay the same?

Take downtown parking for example. I am not aware of a downtown city where it is not expensive to have the wonderful privilege of leaving one's car on the street. Populists will complain that it is unfair to them because only well off people can afford it. But there is only a limited number of spaces, and they have to be rationed somehow! The capitalist system is very efficient for problems like this, and the cities benefit greatly from those high parking fees. I would suspect their solution would be some sort of price discrimination, like everything else going back to the previous paragraph, but so far they have not offered a solution to the problem where costs would not be raised overall. As an aside, why encourage more auto use if there is already an over saturation? When some people cannot afford something, it encourages a cheaper option like mass transit.

For populists, the new American ideology is not about attaining a higher status, but about depressing the status of others.

The Democrat Strategy

The Democrats are eliminating federal income taxes on the bottom 50% to grow their base.

Unemployment Insurance

Economists have known since the beginning that unemployment insurance promotes unemployment. Even the liberal Krugman acknowledges this.

The attitude is, why work when you can get a reasonable amount of money for doing nothing? An article by Stossel sums it up with his take on French entitlements in America. This is why unemployment insurance should be limited to 3 months during boom periods and perhaps 6 months during recessions. Obama and friends are probably kicking themselves in the asses by continuing to extend these benefits because unemployment will remain high for a much longer time period, which makes them look bad.

Party Crasher

This explains a lot about a Liberal Teacher planning to undermine the Tea Party:

Levin has said he would seek to embarrass Tea Partiers by attending their rallies dressed as Adolf Hitler, carrying signs bearing racist, sexist and anti-gay epithets and acting as offensively as possible -- anything short of throwing punches.

Dirty politics. I bet there is a lot more of this going on as mentioned by other commentators. All the racist remarks, death threats and spitting that we have heard of, now there is proof on the record that liberal operatives are engaging in this kind of behavior.

Tax Breaks for the Wealthy

This is a very misleading statement, and depending on the motives of the speaker, it is also biased. Most Americans hear this and think that somehow the 'wealthy' are paying a lower percentage and/or a lower absolute amount than them. The 'wealthy' pay both a higher percentage of their income and a higher absolute. There are of course exceptions, such as Warren Buffett, who pay a lower percentage (but not an absolute level) but this is because nearly all of this income comes from capital gains. Capital gains are returns on investments and receive a lower tax rate
because there is an element of risk that one must factor into the true cost. You may win, or you may lose. It is different than just collecting a paycheck.

Fratto's Rebuttal

CNBC: Fratto: That 47 Percent No Taxes—Another Closer Look

Rebuttal

So a writer at the left-leaning NYTimes felt he had to attempt to skew perceptions a little bit by writing a completely biased article in response to the 47% fed-tax-free article (prior posts). Also at CNBC (you have to give it to CNBC, they try to provide both sides to the issue).

Something I posted in the comments section:

The author himself is selectively reading the facts.
"Over the last 30 years, rates have fallen more for the wealthy, and especially the very wealthy, than for any other group"
But the fact remains, they are still paying most of the taxes!! A 35% Top federal (+ 7.5% SS + 3% Medicare/medicaid) is still higher than ZERO. It doesn't matter if tax rates have come down from 90%, they are still paying a 1) higher percentage and 2) higher absolute. Why do we have a problem with people's incomes growing? Obviously they have a useful skill and should be 'rewarded' by allowing them to keep more of the income that THEY earned.

Stop raising taxes, it just gives politicians more incentive to SPEND MORE! Across the board cuts need to take place including wiping out a large portion of the 57% of the federal budget that goes towards social entitlement programs.

Some selected quotes:
"There are also payroll taxes and capital gains taxes, among others. And, of course, people pay state and local taxes, too."
Yes, but did you read the article? It specifically mentions 'federal' not all taxes.

"If anything, the government numbers I’m using here exaggerate how much of the tax burden falls on the wealthy. "
The numbers are not exaggerated, the top 10% of earners pay about 90% of the taxes in this country. The burden falls on 'the wealthy.' Which by the way, I would expect a NY times columnist to expect anyone earning more than 100k a year to be wealthy.

"That is, middle-class and poor families may face higher tax rates than the wealthy"
This is consistently one of the most bogus Orwellian arguments ever. The sky is blue, but it is really green. If a tax is based on a fixed percent, or it is progressive, it cannot be regressive! By definition.

"Well, it’s hard not to notice that the talk show hosts themselves tend to be among the very wealthy. "
It's not hard to notice that the very ones promoting more taxes on the 'wealthy' are the ones who are not. Sounds like taxation without representation to me.

"They would prefer if other people had to pick up the bill for Medicare, Social Security and the military "
Wait, isn't this the attitude of the 'non-wealthy' Americans and the system currently in place (the 'wealthy' picking up the tab)?

Get rid of the free loaders in this country, support a flat tax. If everybody had to put some money into the pot they would stand up against the wasteful government spending of this country.

We're VAT it again

Mankiw on money.cnn.com:

Unless the president revises his spending plans substantially, he will have no choice but to find some major source of government revenue," wrote Mankiw in the New York Times. "A VAT tax may be the best of a bunch of bad alternatives.

Well gee, why is the former option not getting the proper attention?
Kudlow on CNBC:

Look, if you think for a one moment that spendthrift politicians in Washington won’t treat higher tax revenues as their very own honey pot, think again. That’s exactly what this crowd will do.

As it has always been the case. Government only seems to get bigger and more powerful.

At each stage, the buyer receives a tax invoice that is filed with the government tax collectors; the buyer then gets a refund for the tax already paid by the previous person in the chain. The government, of course, gets the entire sales tax; it just receives it in a piecemeal way.

Sounds like a lot of additional bureaucratic paperwork to me.

But if nothing is done soon, argue proponents of the tax, the nation's huge deficit and debt burden are going to produce a wicked fiscal hangover similar to the one that Greece is experiencing now.

So these proponents never thought that culling wasteful government spending could provide the answer?

Move to Canada?

After the Bush tax cuts expire at the end of this year, it would actually be cheaper for many high income earners well into the top tax bracket to live and work in many parts of Canada than in California or New York City. And Canadians get free health care with that.

Canada has a top federal rate of 29% with Provinces ranging from 10-17.5% for their top tax brackets.