Monday, April 30, 2012

Apple should save California by paying higher taxes

Bill Whittle over at Pajamas Media had a great piece in his Afterburner segment this week. Calling statistician William M. Briggs’ “The love of theory is the root of all evil” “The Best Sentence Ever”, Whittle discusses how the love of the theory of Communism caused the deaths of well over 100,000 million people during the 20th century. The crux of his piece is that liberals, living in their world of theory and planning have no clue how the world actually works.

Just such liberal fatuousness was on display in Saturday’s New York Times. The paper ran a 3,800 piece bemoaning the fact that Apple Computer, the most valuable company in the world was short changing California (and the United States) on taxes. Somehow, the company, which employs over 20,000 people in the state is not doing its fair share. According to the Times, Apple, which is headquartered in Cupertino, California, could earn up to $46 billion this year worldwide and California is getting bilked. The Times states that Apple utilizes offices as close as Nevada and as far away as Luxemburg to shield itself from California and US taxes.

While the Times explicitly states that Apple is not responsible for California’s budget problems, in a piece Mark Antony would be proud of, it helpfully points out: Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill suited to today’s digital economy. And if the subtlety makes the point too opaque, the Gray Lady makes it clear: The growing digital economy presents a conundrum for lawmakers overseeing corporate taxation: although technology is now one of the nation’s largest and most valued industries, many tech companies are among the least taxed…

The message is clear. The fact that California is an economic basket case is Apple’s fault, (along with other high tech companies). It couldn’t have anything to do with the fact that California’s budget grew by 40% from 2000 to 2010 while the population grew by a mere 13%. It couldn’t have anything to do with the fact that the government has been chasing companies and jobs out of the state for decades with their regulatory straightjacket. It couldn’t have anything to do with the fact that state employees, most supported by unions, earn an average salary of $68,000 (vs. a state average salary of $54,000) and total compensation in excess of $105,000. No, the problem is that Apple is legally taking advantage of the tax code to reduce the amount of money it pours down the bottomless pit known as Sacramento. That should be obvious to anyone.

The Times suggests that if Apple were not using these “tactics” its federal taxes would have been $2.4 billion higher in 2011. Assuming that Apple does half of its US work in California, that figure suggests that Apple would have paid approximately $300 million dollars more in California taxes than it actually did. Obviously that would have fixed the state’s $25 billion shortfall.

To put this in perspective it might be helpful to examine what Apple actually does in California. It employs over 20,000 people in the Golden State, with an average salary of $70,000. Their $1.5 billion in wages contribute $132 million directly to the state’s coffers via income taxes. According to Apple, for every one employee in the United States, it creates or supports 11 jobs outside the company via suppliers, partners, service providers etc. Taking Apple’s metric and applying it to those 20,000 employees would give you an additional 220,000 California jobs. Given that the average salary in California is $54,000, those 220,000 employees doing the jobs created or supported by Apple generate an additional $12 billion in salary which would generate another $1.05 billion in state income taxes. Then of course all of those employees likely spent most of that $13 billion wage income in California, which in turn generated much income and more taxes.

Not to be forgotten are the shareholders such as California’s many shareholders, pensioners and mutual fund holders who own shares of Apple stock. The country’s largest pension fund, CalPERS, owns 2.8 Apple shares and provides benefits to more than 1.6 million California employees and retirees. Because the company has done such a good job of husbanding its resources, its stock has quadrupled in three years, generating almost half a trillion dollars in wealth. No doubt many of those investors and pensioners have enjoyed the capital gains Apple has provided, which are of course taxed as ordinary income at 9.3%. Not only did those capital gains generate tens of millions of dollars to state coffers, they no doubt generated revenue at the local coffee shops, grocery stores and movie theaters as well.

The Times provides a perfect example of Whittle’s point. California is a fiscal basket case and the solution is fairly straightforward: Change the tax code to force companies like Apple to pony up hundreds of millions or billions more in taxes. As liberals often do, they sit in their little cubbyholes and play with their calculators. “We can raise taxes or plug that loophole and the money will just pour in”. They rarely look at how the world really works. Certainly California and Congressional legislators could revise the tax code to make it more difficult for companies like Apple to reduce their tax burden. But would it generate a tax windfall? A balanced California budget? Not likely. What’s more likely is that Apple would start looking to reduce its California footprint and begin to open offices and actually employ people outside the state and the country, imperiling the real impact the company has on the state.

Despite decades of crystal clear proof that they simply don’t work, liberals maintain their devotion to the theories of high taxes, centralization and state control like members of the People’s Temple following every Jim Jones dictum as if it were gospel, regardless of its rather negative consequences. The only problem is, they not only want to drink the Kool-aid themselves, they want to force us to drink it as well. As a good libertarian I’m happy to let anyone put anything in their bodies they choose, but I’d just rather not drink the cyanide myself.

Monday, April 23, 2012

Beyond Mitt... the Conservative challenge to saving America

In 1990 I knew everything I needed to know about Rush Limbaugh. He was a racist. He was sexist. He was an arrogant, rich SOB who didn’t care about the poor. He was a fool who knew nothing about how the world worked. How did I know these things despite never once having listened to his program? Via the media of course. Despite having a Bachelor’s in Political Science, I paid very little attention to actual politics. As a grad student I paid cursory attention to the news and didn’t much venture beyond what I saw on ABC news.

One day while arguing about Limbaugh something of an epiphany was forced on me by my roommate. He simply asked, “Have you ever actually listened to him?” As I stammered a bit I had to admit that I had not. It dawned on me that I was speaking quite authoritatively about someone I knew so little about… Hence the epiphany. Not about the nature of Limbaugh, but rather about the notion of taking what media says about someone or something as gospel. Today I take virtually everything I hear or read with a grain of salt. When possible I compare what I’ve heard with what I know firsthand. When that’s not possible I make sure that I look to sources I trust for corroboration.

As for Limbaugh, I started listening to him and it took a while for him to grow on me. At first blush he’s rather bombastic and just a wee bit arrogant. After a while however it became clear that at the core, he is, as he puts it “Right, 99.7% of the time”. One might not always appreciate his particular brand of commentary, but, far more often than not he is spot on in terms of the point he is making.

To this day, despite having the most popular and profitable radio program in the United States, Limbaugh remains a polarizing figure. He is a convenient lightning rod for the left as they seek to mischaracterize the conservative message he promotes. And they have done a great job of disparaging conservatives. From a sexist Rush Limbaugh to the Tea Party racists to Paul Ryan seeking to throw Grandma off a cliff, the left in general and the media in particular have done a spectacular job of misrepresenting conservatives to those who are like I was twenty years ago, too busy or lazy to look at the facts.

As such I’d like to provide a little reality to the way conservatives are characterized.

Myth: Conservatives hate government and want to get rid of it. Reality: Conservatives know you need government, just not big government. They believe that government should be small and should do only those things for which it is Constitutionally empowered. Conservatives believe that citizens, either individually, as part of a family or a community or even as owners of corporations can make better decisions than government can. This does not suggest that conservatives believe that everything works perfectly without government. They simply believe that government is a poor vehicle with which to address most problems.

Myth: Conservatives are racists.
Reality: Conservatives focus on the rule of law and individual responsibility. Conservatives generally oppose affirmative action programs not because they hate minorities, but rather they believe in the words of Martin Luther King, Jr. that Americans should “Not be judged by the color of their skin, but by the content of their character.” Conservatives don’t believe that government contracts or school admissions should be forced to reflect the specific demographic makeup of the United States any more than the NBA or NHL should be.

Myth: Conservatives don’t care about the poor.
Reality: Conservatives care greatly about the poor and needy, they just don’t think government is the solution to the myriad problems that the poor face. Indeed, in his 2007 book “Who Really Cares: The Surprising Truth About Compassionate Conservatism” Arthur C. Brooks shows that conservatives, or people who disagree with this statement, "The government has a basic responsibility to take care of the people who can't take care of themselves," are 27 percent more likely to give to charity than liberals. Conservatives don’t hate the poor, they simply don’t believe that failed government redistribution programs are the way to lift people out of poverty. They believe that communities and churches and private organizations would do a far better job.

Myth: Conservatives love big business.
Reality: Conservatives certainly love business because they recognize that America’s capitalist system has generated more wealth and improved the condition of man more than any other economic system in the history of the world. However, conservatives are actually frequently at odds with big business because of the cozy relationships big, established businesses often nurture with politicians and bureaucrats to the disadvantage of their smaller competitors. Conservatives would rather see big companies go bankrupt so that their assets can be rationalized rather than having the government support them and distort the markets. Failure and reinvention are, after all, at the core of economic success.

Myth: Conservatives want to destroy education in the United States.
Reality: Conservatives want their children and grandchildren and friends’ children educated as much as anyone. Conservatives simply don’t want the government running the education industrial complex. They look at the skyrocketing costs, unaccountable bureaucracies and abysmal performance records in the country’s public schools and believe a free market provides a far better opportunity for students to get a good education.

There are of course many other myths the left has successfully propagated about conservatives that have manifested themselves into our political landscape. That’s a problem for conservatives in general and in particular for the kinda / sort of conservative Mittens Romney. The economic foundation of the United States is not going to be saved by simply putting Barack Obama in the unemployment line, although that is certainly a necessary first step…

Rolling back the government and unleashing the economic might of the United States is going to take a conservative Congress sufficiently motivated to make the hard choices and be willing to bear the arrows of a cornered left. And this is where the tire hits the road. Conservatives have to stop allowing the left to define what conservatism means. Rush does a great job of energizing the base, but the reality is not everyone is lucky enough to get pushed into an epiphany as I was. Not everyone will be on board with everything in the conservative agenda, but 90% agreement is better than 10%... at least then we'd still have a country to talk about.

Conservatives must make crystal clear the choices Americans face. It’s not between mending Medicare and killing Grandma. It’s not between closing the Department of Education and illiterate children. It’s not between cutting taxes and starving the homeless. It’s between the Republic and failure. Conservatives need to take a page from the dairy farmers with their Got Milk moustaches and tee shirts. Find an engaging and compelling meme to highlight the conservative message and invite Americans to understand what it means. If you get people talking about the real issues then the possibility exists to bring them over from the dark side. I wonder how James Earl Jones would look in a "got conservative" tee shirt…

Monday, April 9, 2012

How much is your country really worth to you?

Over the course of the last ten years millions of brave men and women have served in the United States military. Those people, those fathers, mothers, sons and daughters deserve every ounce of respect that Americans of all stripes have.

It says a lot about both the country and these individuals that they still see something in the United States worth defending and that they were willing to sign on the dotted line to do so.

Unfortunately, that is simply not enough. Not that those brave men and women aren’t giving enough, but rather, the great sacrifice they have been and are making today is simply not sufficient to save the United States.

The United States is far more than a military power. In reality, military power is but a small part of what makes America great and a leader in the world. People around the planet have been flocking to watch Hollywood movies for decades. They’ve also been sending the best and the brightest of their progeny to study at our universities. During the Cold War it was Levis and Pepsi that Soviet citizens were clamoring for. According to Interbrand, ten of the ten most valuable consumer brands in the world are American, including names like Coke, Disney, McDonalds and Google. None of these things were accomplished with a barrel of a gun. From Star Wars to Big Macs to our private and public universities, people around the world see the United States as a place where seemingly everything is possible, where great ideas come from and where anyone can find success. Little of that is the result of American military intervention. It’s the result of accomplishments and achievements Americans have forged throughout the nation’s history… although winning two world wars certainly didn’t hurt.

The bottom line is, the United States’ military is strong because America is strong. Not the other way around. And what has made America strong is her people, the individual freedom and liberty they have enjoyed since June 21, 1788 and the economic strength that freedom has created.

Unfortunately the liberty and economic strength that underlie two centuries of success are under assault today like they have never been before. As much as I dislike Barack Obama, the blame is not all his. He may be the worst president this country has ever had, but the problem that is undermining the foundation of American greatness has been going on for seven decades. No, the majority of the blame does not fall on the shoulders of Barack Obama, or even the collective presidents of the last 70 years… The fault for the situation we find ourselves in is the fault of the American people.

A free people get the government they deserve and we are to blame for what Barack Hussein Obama has wrought as well as what George W. Bush, Bill Clinton and their predecessors did. Government is a dangerous weapon in the hands of mere mortals with their natural failings of greed, vanity, arrogance and avarice among others. Our Constitution was specifically designed to temper the worst inclinations of men and to limit the scope to which a citizen’s life might be impacted by government action. Staggered terms, a Senate appointed by state legislatures, an independent judiciary a bill of rights. Everything in our Constitution was written to give citizens the greatest degree of liberty possible.

None of that matters when the government simply decides it wants more power and the people do nothing to stop it, or as in the case of the 17th Amendment, assist in the takeover. A government of men can be expected to try and expand its power and reach and James Madison’s Constitution and George Mason’s Bill of Rights were intended to stop such expansion.

Today however both might as well have been written on an Etch-a-Sketch. How does this happen? Simple. Two symbiotic developments resulted in the situation we find ourselves in today. The first is the division of labor. When Cyrus McCormick freed mankind from the yoke of the farm he unleashed a parabolic curve of innovation such as the world had never seen. The specialization wrought an increase in the standard of living that was exponentially more powerful than anything that had come before. Simultaneously Americans began to enjoy something that few people in the world had ever enjoyed and no people had had on that scale: leisure time.

The division of labor meant that while citizens were able to focus on their jobs stamping engine blocks, editing books, testing scientific theories or flipping burgers, everything else was magically available to them at far less than it would cost them to produce or procure on their own. As their lives became more silo like, they began to understand less and less about things with which they had little contact. For a while they relied on family, friends and community organizations to help fill in the gaps. Then government stepped in and decreed that it was their job to tell citizens what was good and what was bad and what needed to be done, when, and by who. Government is, after all, there to help… isn’t it?

Then of course there is the money. Government largesse becomes a powerful weapon when combined with citizen’s ignorance. As government started providing more information and benefits it started issuing more and more regulations. Today we have the situation where the government seeks to control virtually every aspect of a citizen’s life. Indeed, half the population pays no income taxes, one third of the population relies on the government for most if not all of their income while the entire population is burdened with regulations around every corner. This regulation is particularly onerous to entrepreneurs and businessmen, the backbone of American progress.

Today, with individual liberty and capitalism under fire, the foundation of American greatness is withering away like the grains of sand through an hourglass. The question is, can the country be turned before the sand is fully drained? This is one battle that the men and women of the military cannot fight for us. This is a battle that will be fought in the voting booths across the country. But the real battle is going to go on long before November 6th. The question is, are you going to join the battle? How far are you willing to go to preserve the greatest nation in the history of the world? Politics is rarely a pretty thing and sometimes it causes real pain when you disagree with people close to you. Such is life. Would you rather keep the peace with your brother in law or friend at the cost of watching everything you hold dear slip away, or do you want to take a chance and try and change someone’s mind? It may not work. You might end up talking to yourself or having someone yelling at you. The battle between now and November 6th is not a hot war like what is going on in Afghanistan, but it no less important.

The pending nomination of Mitt Romney demonstrates that conservatives cannot depend on the GOP to light a fire under the American people about the dangers of the leftist agenda and profligate spending. The danger posed by your mother in law or your best friend are nothing compared to the Taliban or Al Qaeda and the other real dangers our men and women in uniform face every day. How much are you willing to do to make sure that their sacrifice is not in vain? Are you willing to do what it takes to help send the Democrats home? Are you willing to do what it takes to help put the United States back on track to greatness and prosperity? Pick up the phone, buy your buddy a beer. Start a conversation. Have a dinner party. Post something on Facebook. At some point someone has to do it. If not you, who? If not now, when? How much is your country really worth? How much are you willing to do for her? Are you going to sit back and watch as the sands of liberty and prosperity pass or is a free Republic worth fighting for? Twenty years from now when someone asks you what were you doing during the most important election of your lifetime, what do you want to be able to say? Do the things today that you will be proud to speak of tomorrow... make a difference, help save your country.

Monday, April 2, 2012

ObamaCare and the children's lemonade stand next door

This past week the Supreme Court heard arguments for and against ObamaCare. The decision, expected to be handed down in June may very well be the single most important case in the history of the United States.

Justice Anthony Kennedy, the perennial swing vote on the court pinpointed the argument on Tuesday:

Here the government is saying that the federal government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases, and that changes the relationship of the federal government to the individual in a very fundamental way.

He is making the observation that if ObamaCare stands, the federal government can not only tell you what you are prohibited from doing, but at the same time it can tell you what you must do.

Donald Verrilli, the administration’s attorney, suggests that the reason the government can regulate the healthcare market is that that everyone participates in it at some point.

Justice Scalia points out that everyone participates in the food market and therefore the government could use that rationale to force everyone to buy broccoli.

Verrilli's retort: Though the two markets do share that one trait, they remain distinctly different. The healthcare market, he said, contains participation that is "often unpredictable and often involuntary." The food market is not that.

Which in turn caused Justice Alito to ask about burial insurance, the cause of which is often unpredictable and almost always involuntary.

You can see where this is going. This gets us to the fundamental question about liberalism in general. When will enough regulation be enough? Will there ever come a point where liberals believe that there is simply enough government regulation in place and that they should stop making new laws? Is there a point where citizens are going to be allowed to exercise individual responsibility to the point that they are responsible for their own lives? From the federal government all the way down to local towns and counties, what one describes as freedom in America is rapidly shrinking.

The thing that liberals never seem to get is that the unknown factor in their plans for universal perfection (read equal outcomes) is the fact that it includes humans. There is nothing that humans have ever been involved in that is perfect, that is 100% successful or 100% safe. Yet liberals continue to push the envelope. And it’s not just about safety… it’s gotten to the point that New York City’s Department of Education believes it’s the government’s job to save people from getting their feelings hurt so they’ve put out a list of 50 topics that should not be used in tests because they might offend various people. Dinosaurs are on the list, presumably because it would offend people who don’t believe in evolution. Computers in the home cannot be mentioned (because not all kids will have computers in their homes) but mentioning a computer in a school environment is allowed.

Is there some point of minutia that is beyond the reach of liberals? John Stossel did a special recently called “Illegal Everything” about regulation and featured children from around the country being stopped from selling lemonade. In one case, in Midway, GA, one of the little girls’ father went to city hall to find out what law the girls had broken. No one knew, but the Chief of Police was clear about why they had to be stopped: We were not aware of how the lemonade was made, who made the lemonade, or what the lemonade was made with.

In the spirit of the times, I would like to suggest a new regulation. All men should be required to get a federal dating permit in order to strike up a conversation with a women in a bar or at the supermarket. Certainly some men lie about all sorts of things in order to get a woman into bed. From their jobs (or lack thereof) their salaries, their previous relationships, their education and even their marital status. Women across the country would be saved from ever getting their hearts broken or their purity despoiled. Licenses would be $25 per year and would have to be shown within the first 5 minutes of any intended coupling. The woman could scan the license with her smartphone and immediately know everything about her would be suitor.

Such as system would open a Pandora’s box of issues. What happens when a man changes jobs? How long does he have to update his license? What happens if he gets a raise? A cut in pay? Who decides if a previous relationship ended amicably, the man or the ex? Does she have the right or obligation to comment on the issuance of his license? How would a government computer weigh an acceptable honesty score? Does lying to your girlfriend about how beautiful your last girlfriend was generate enough positive points to outweigh the truth you told her about how bad her cooking is? Is there even a remote possibility that this could somehow make dating a better experience?

This may sound farfetched, but that’s what happens when government gets involved in practically anything. Education. Healthcare. Housing…

At the end of the day the United States, like every other society throughout history is guaranteed to be imperfect by the fact that it is made up of imperfect humans. Liberals make the mistake that collective decision making and rule making can move the nation farther down the road to perfection. It can’t and it won’t. The strange thing is, the more regulations they foist on the population, the more people become law breakers, inadvertent and otherwise. With over 100,000 federal regulations and literally millions of state and local ordinances it’s virtually impossible that individuals can go through any day without breaking some laws. With so many regulations, virtually everything is illegal, and it’s simply the whim of the regulators, politicians and police that decides who gets prosecuted and for what.

ObamaCare is the single most important court case in a century for one simple reason. It presents the American people with the clearest choice between freedom and statism since the calamitous 1942 decision in Wickard v. Filburn.

If the Supreme Court throws out the individual mandate and the rest of ObamaCare, perhaps citizens will finally feel like they have a fighting chance in taking on the borg that government has become and begin the process of rolling back the overreach that permeates every area of our lives.

On the other hand, if the Court upholds ObamaCare then it is the swan song of freedom as you know it. The United States will not collapse the next day or the next week or even within the next few years. It will however happen. Power corrupts absolutely and absolute power corrupts even more… A government bestowed with carte blanche will see no reason to ever curb its own power, and eventually it will take over everything. Lemonade anyone?