The Greek Thing

I haven't had much to say about the Greek Thing -- or that much of anything -- lately due to the fact that so much of the reporting about it has been based on rumor, insult, innuendo, and advice, not on whatever is actually happening at all.

Much of it is absolutely captivated with the sayings of various heavy-hitter-players in the drama with no particular interest in the consequences to ordinary Greek people -- who have been suffering mightily under the lash of a bunch of wilding Euro-Creeps, the men and women of the Institutions wielding the instruments of the financial torture of the Greek People on behalf of... whom? Who is profiting from all this suffering?

You know that somebody is.

Yesterday, however, was the referendum on the question of whether to accept the terms of the Euro-Creeps for more austerity which has been wrongly (deliberately wrongly) termed a "Greek Bailout." There's been no hint of a Greek bailout since the start of the crisis all those many years ago. The bailout, such as there's been one, has been of the banks that lent Greece money it couldn't pay back, and of the Titans of Europe, the Troika, the "Institutions" which made the banks whole and which are now demanding the Greeks make them whole on a bunch of loans that shouldn't have been made in the first place, most of them "odious" by any rational standard.

The referendum was considered to be running neck and neck right up to the point where the initial results came in showing a 60/40 No (OXI) to Yes (NAI) vote. It was not neck and neck, it was not even close. The pre-vote polling was wildly wrong, but that's been typical of the reporting too. The overwhelming sentiment among the Greek people is to reject -- in no uncertain terms -- the threats, ultimatums and harsh impositions from Brussels and Berlin and do what it takes to achieve a decent resolution to the crisis.

Brussels and Berlin are apparently not in the mood for a decent resolution, and they have never cared a whit about the dignity -- let alone the survival -- of the Greek People. The impasse remains. But the Greeks have finally taken matters far enough into their own hands that they have options they did not have when they were yoked tightly to the demands of their creditors putting the lives of ordinary Greeks in jeopardy, and the well-being of many Greeks in the toilet.

We'll see whether the Titans of Europe come to their senses. I doubt they will. Instead, they are likely to seek titanic levels of vengeance -- just as they have blustered and threatened all along. Defiance is to be punished. But the time comes when defiance, sustained defiance, is the right course, and all I can say for the moment is that the Greek defiance is a thrilling sight to see.

The Titans may not be tameable, but the Greeks have already gone far to undermining their authority and turning back the fear with which they rule. The gods will have to deal with their creatures in time, and that time is drawing nigh.

The Greeks just might save civilization one more time... or at least give it a boost.

On Taxes: "Broaden the Base; Lower the Rates"

This has become the Mantra of Tax Reform, replacing -- at least temporarily -- the Mantra of Simplicity that came out of the Forbes Tax Shop some years back: So simple, you can file your taxes on the back of a post card. Of course, most people file online these days, and hardly anybody would know what this thing called a "post card" is anymore.

There was an op-ed in my morning newswipe about "Broadening the Tax Base and Lowering the Rates" of California state taxes, written by a local (former) pol and prominent business owner (car dealerships).

His main premise is that the California's tax system is a nightmare that relies heavily on the income tax which, in a word, is a somewhat volatile revenue source. "We are dependent upon a system of taxation that us overly reliant on burdening the productive sector of our economy and so highly volatile that it makes rational budgeting very difficult."

Yes, well.

His solution? "A more rational system of taxation is one with the broadest possible base and the lowest possible rate that brings with it the built-in ability to pay. The broad base is to appropriately share the burden of public services. The lowest possible rate is to minimize the drag on the economy. The built-in ability to pay is to provide equity in the exaction."

Essentially, what he is advocating is a flat rate income tax of 4% with no deductions. In other words, "everyone pays." This is the key concept to understanding what he and and everyone else who has advocated "broadening the base" and "lowering the rate" of income taxes is really talking about. There are plenty of people in California who don't pay state income taxes -- because their incomes are too low -- just like there are plenty of people nationally who don't pay federal income taxes. This is considered to be a deeply offensive and unfair situation, "punishing" the successful and "rewarding" the parasites. It's an article of faith with these people that taxes are punishment, and that they should not be punished for their success.

So what they want is a flat income tax that is imposed on everyone regardless of their income. This is actually a step beyond the Forbes plan of years gone by. In that version of the flat tax proposal, there would be a rather large exemption (say, the first $35,000 of income; a subsistence level for a family in other words) that would not be subjected to the income tax. That's been abandoned by the "tax reform" crusaders. Now, they want every dime of wage income to be taxed -- at the same rate for millionaires and field workers.

This, they believe, would allow lowering the tax rates to 4% in California for state income taxes. The current highest rate is 10% with a 1% surcharge on the highest earners to pay for mental health services (which still aren't being adequately delivered, but that's another issue).

If every dime of a worker's wages is taxed, much like the way the payroll tax applies to every dime of a worker's wages up to $106,800, "studies show" that a revenue neutral equilibrium would emerge at a 4% rate in California -- thus cutting the income tax rate for everyone earning an AGI of more than $26,821 (cutting it by well over half for those in the upper income brackets), while increasing the tax punishment on those earning less. Since deductions would no longer be allowed, many more Californians would be subjected to paying income taxes than is currently the case.

This is supposedly "tax fairness."

In addition, there is a push underway by people who sell things (as opposed to service providers) to extend the sales tax to services as well as products ("why should the government be in the business of picking winners and losers?") -- and simultaneously lowering the sales tax rate.

Property taxes (rigorously controlled in California under Proposition 13, primarily to the benefit of commercial real estate) would remain the same. For now.

So basically what this op-ed writer and many others who think like him want to do is to base taxation and revenue almost entirely on the number of payers rather than on ability to pay, quite the opposite of what we have been doing (at least with the income tax) since the beginning.

He didn't get in to "Death Taxes" -- but I would assume he is in favor of their abolition.

Let's start with some First Principles here:

Taxation is not punishment. Really. Taxation is an assessment made to pay for government functions and services. People are not taxed to punish them. Nor are they relieved of taxation as a reward.

Taxation must be agreed upon, fair, and equitable.

Everyone pay taxes, no one is immune. Not everyone pays every kind of tax there is, because not everyone qualifies for every kind of tax there is. On the other hand, no one is immune from paying some taxes because everyone qualifies to be assessed some taxes.

Taxes are the fee you pay to live in a civilized society. Those who benefit the most from living in this society should pay the most in taxes.

These simple principles are being lost in the urge by America's wealthiest and most privileged to extend the income tax to "everyone," and to continue to substantially lower their own income tax obligation.

That's what "broadening the tax base and lowering the rates" means.

If you're poor, you'll pay more. If you're rich, you'll pay less.

Is that the country we want to live in?

See also:

http://chewhatyoucallyourpasa.blogspot.com/2011/06/broadening-tax-base.html

[I feel like I have to keep repeating what should be obvious. Whenever anyone in the media or politics refers to "broadening the tax base and lowering rates" they are talking (in code) about increasing taxes on the poor, the working classes and the middle class, and reducing or eliminating taxes on the rich, on corporations, and on estates.]