Minor Thoughts from me to you

Amity Shlaes on what sparked the job growth of the 1980's.

The era didn't start well. The mid-1970s were a dead period. Then suddenly, from 1977 to 1978, new private capital devoted to venture capital increased by 15 times, to $570 million in 1978 from $39 million the year before.

In 1977, public underwritings of firms with a net worth of less than $5 million amounted to a meager $75 million. By 1980 that figure was $822 million, as Michael K. Evans, founder of Chase Econometrics, points out. The venture-capital boom continued down the decades, serving computing, technology, biotech and many other areas.

But what caused this boom? Three policy changes. The first was a [capital gains] tax cut for which this newspaper campaigned. ...

A second policy change came in pension law. ...

A third factor, and one that ensured the boom would continue, was a law ... [that] clarified murky intellectual property rights so that universities and professors, especially, knew they owned their own ideas and could sell them. ...

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The usual liberal complaint against the conservative opposition to higher income taxes is greed and the better-offs’ self-serving reluctance to pay their “fair share.” But while perhaps true in some instances, I don’t think that is an accurate writ against most of those in that now demonized $200,000 and above categories who resent forking over more. Rather, here are a random 12 complaints that I hear from those who become furious about preposed higher income tax rates:

1. The Entire Bite
2. Inequality?
3. Wise Spending?
4. Always More Spending?
5. Less Efficiency?
6. Inequality by Income?
7. Psychological
8. Sic Transit Gloria
9. The Private HHS Department
10. The Technocratic Class
11. Politics
12. Technology

Worth reading. This certainly explains a lot of my own resistance to higher taxes: for me or for others.

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President Obama is proposing a new principle: the “Buffett rule”

President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.

Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.

This argument, however, ignores the entire concept of double taxation. I oppose the Buffett rule because investment income is already taxed twice: once as corporate income and once as investment income. This means that investors are actually paying higher taxes than everyone else.

I’ll illustrate this by walking through a simplified example. I’m aware that this is a very, very, very simplified example. (For instance, it ignores corporate tax deductions and other “tax breaks”. It also ignores whatever “loopholes” Mr. Buffett is currently using to reduce his own personal tax liability.) I think the general idea is correct, however.

Let’s say Berkshire Hathaway earns a profit of $18,000,000 and wants to distribute the entire amount as dividends to its shareholders. And, for the purposes of extreme simplification, let’s say that Mr. Buffett is the sole shareholder.

First, Berkshire Hathaway must pay U.S. corporate income tax on the profits. Corporate income of $18,000,000 would be taxed at a rate of 35%. The remaining balance would be distributed as investment income, to Mr. Buffet. Mr Buffet will then pay a capital gains tax of 15% on that money. Here’s how that breaks down.

Now, let’s imagine that we implement the “Buffett Rule” and we require Mr. Buffett to pay a 35% tax rate on his investment income. Here’s how that breaks down.

This rule definitely forces Mr. Buffett’s taxes up, but he’s hardly paying the same rate as the rest of us. He’s now paying a total tax rate of 58% on his income—far more than the 35% rate that “we” pay.

If we wanted to aim for equal taxation (the supposed aim of the Buffett Rule), we need to aim at more fundamental reforms. For instance, how about eliminating the corporate tax rate and then taxing investment income at the same rate as personal income? That would eliminate all of the hanky panky that goes on with the corporate tax code and would, in one fell swoop, eliminate all of its deductions and loopholes. It would simultaneously increase the taxes directly paid by Mr. Buffett. Here’s how that breaks down.

Mr. Buffett is now paying the same rate as “we” do. That’s fair, isn’t it?

Megan McCardle is annoyed that President Obama wasted her time with a job's plan that he's not actually interested in passing.

If the president were serious about providing stimulus, he would pay attention to the work of his old CEA chair, and pay for the jobs bill by decreasing the growth rate of something-or-other in the future by 0.2%. This is also what he would do if he were serious about getting any part of it through Congress. Instead he is apparently sending them a less-stimulative bill designed to be maximally embarrassing to the GOP--which by definition means minimally politically viable.

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Zygi Wilf, Minnesota governor Mark Dayton discuss new Minnesota Vikings stadium - ESPN

When Gov. Mark Dayton and state lawmakers announced that the outlines of a new budget deal were in place, the Minnesota Vikings were hoping that the door was finally open to discuss their plan for a new $1 billion stadium in the Twin Cities suburbs.

It may not be quite that simple.

Vikings owner Zygi Wilf spoke with Dayton on Friday, telling him in a phone conversation that the team wants a stadium bill to be considered in a special legislative session expected to begin next week, according to Vikings vice president for stadium affairs Lester Bagley.

"He made the case that now is the time," Bagley said. "We've done everything that has been asked of us. It's time to do it. We're down to months left on our lease and every day that goes by, the cost of the project goes up."

… Arden Hills is about 10 miles north of the Metrodome in downtown Minneapolis. The new facility would be located at the site of a former Army ammunition plant with plans to open in spring 2015.

Wilf and the Vikings have pledged more than $400 million to the project, which also calls for a half-cent sales tax in Ramsey County that would contribute another $350 million and $300 million in state money.

This is just disgusting. Depending on where you Google, Zygi Wilf is worth somewhere around $300 million and the Vikings franchise itself is worth around $700 million. If he wants a new stadium, he has several options:

1. invest more of his own fortune and the team’s worth into the new facility
2. ask the team’s fans to invest into the facility in exchange for benefits (priority access to available tickets? special access to memorabilia?)
3. Get banks or investors to loan or invest the needed funds

The Vikings are a cash generating franchise. If a new stadium is a good investment, Wilf shouldn’t have any problems obtaining the funding he needs. If a new stadium isn’t a good investment, Wilf shouldn’t be demanding that the Minnesota taxpayers fund his boondoggle.

It’s disgusting the way that he’s demanding that a state that’s struggled to close a $5 billion budget hole turn around and give $300 million in state money and $350 million in county money to his privately owned business. I hope the state legislature smacks him down and shuts the door on his demands.

You may have seen charts floating around that supposedly show that we could pay for the Social Security shortfall by simply rolling back the Bush tax cuts “for the rich”. Megan McCardle has seen those charts too and she explains why they’re misleading and wrong.

The CBPP gets its figure by taking present values of the Bush upper income tax cuts extended over 75 years, and comparing them to the present value of the Social Security shortfall. For those who haven't taken finance classes, present values are sort of like compound interest, in reverse. Instead of adding up the future gains from interest rates, you discount future cash flows by a discount rate.

… Because it discounts future dollars, often quite heavily, cash flows which happen beyond 10-20 years out virtually disappear.

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The Tax Foundation crunches the numbers to see if it’s true that “the economic downturn, President Bush's tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years.”

1) Tax revenues have fluctuated largely with the economy, dropping precipitously in the aftermath of the 2008 recession, but are projected to remain close to historical norms with or without expiration of the Bush tax cuts in 2012.

2) Entitlement spending has roughly doubled in the last 40 years as a percentage of GDP and is projected to remain there through 2021, pushing total spending well above any historical precedent. Thus, the CBO projects deficits as far as the eye can see.

Should we blame Bush (or rather, all that happened during his presidency) for this? In a sense, yes, but not for the reason the CBPP would have us believe; the role of Bush-era policies in the projected deficits is mainly on the spending side of the equation, not the tax side.

We have a spending problem, not a revenue problem.

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Alan Reynolds is great in explaining the income tax facts of life. Higher tax rates on the rich do not bring in nearly as much revenue as lower tax rates. It’s important to emphasize that tax rates are not the same as tax revenues. Higher rates do not automatically bring higher revenues. In fact, historically, the opposite has happened.

Moreover—and this is what Mr. Reich and his friends always fail to mention—the individual income tax actually brought in less revenue when the highest tax rate was 70% to 91% than it did when the highest tax rate was 28%.

As the nearby chart shows, however, those super-high tax rates at all income levels brought in revenue of only 7.7% of GDP, according to U.S. budget historical data.

President John F. Kennedy's across-the-board tax cuts reduced the lowest and highest tax rates to 14% and 70% respectively after 1964, yet revenues (after excluding the 5%-10% surtaxes of 1969-70) rose to 8% of GDP. President Reagan's across-the-board tax cuts further reduced the lowest and highest tax rates to 11% and 50%, yet revenues rose again to 8.3% of GDP. The 1986 tax reform slashed the top tax rate to 28%, yet revenues dipped trivially to 8.1% of GDP.

The rest of the article is chock full of interesting facts on the link between tax rates and tax revenue.

I don’t think it can be repeated nearly often enough: if you want the rich to pay a lot of taxes, you should probably keep their rates low. Ignore what Warren Buffet says in favor of watching what Warren Buffet does. If you raise his tax rates, he’ll probably just shift his money and income around, so that his effective rate of taxation remains nearly the same.

(And, if he really wants to pay more in taxes, he can cut a check to the IRS anytime he wants to.

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William Voegeli takes on the idea that “it’s absurd to cut spending because we tax the wealthiest Americans less today than we did in 1955”.

First he illustrates that today’s rich pay more in taxes than the rich of 1955 did. (They pay more in real dollar terms, even if they do pay less in percentage terms.) Then he cuts to the core of the moral argument.

If the principle is that the rich should pay higher taxes because they can more easily bear the rates, then we should keep raising tax rates until the rich can no longer bear them—until, that is, they're no longer rich. One need not be rich to find this prospect disquieting. A government that can take whatever it wants strikes a lot of people as unfair, and unfree.

He also points out that (many) blue states are net federal taxpayers while (many) red states are net federal tax recipients because “states with wealthier residents pay higher federal taxes per capita thanks to the progressive structure of the income tax”. If you don’t like the idea of states subsidizing each others’ residents, you need to scale back (or eliminate) the progressivity of the federal income tax.

I like this welfare reform idea too.

Buckley would confine eligibility for [Federal] welfare state programs to Americans living in states whose median income was below the national average. Because Buckley thought it was economically and politically debilitating to "turn the skies black with criss-crossing dollars," his reform would ground a lot of those dollars. Federal welfare expenditures would shrink, as the number of people eligible for them was limited, and prosperous states would pay for their own welfare programs without the transit and administrative fees of sending them on to Washington and then back to the states.

This reform would do much to take power away from Washington, D.C.

Only the poorest states would receive moneys from Washington. The more well to do states would spend their own money on welfare programs. Of course, they do that today too. But right now, that money goes through Washington (in the form of federal income taxes), where policitians get to attach rules and conditions to it, before sending it back to the states (as Medicaid payments or transportation funds or something else). If this reform were implemented, policitians would have many fewer opportunities to meddle and states would have a much greater freedom of action. That’s what I call a win-win scenario.

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It turns out that the life insurance industry loves the estate tax.

The life insurance industry's lobbying presence in D.C. is huge - larger than almost any other industry sector. According to the report, life insurers spent $10 million per month on lobbying in the first half of 2010. Only the pharmaceutical, electric utilities and oil and gas sectors, the heaviest of heavy hitters, spent more.

Life insurers spent more on lobbying than even bankers and health insurers.

One of the most outspoken voices urging a higher estate tax, Warren Buffet, owns six life insurance companies, the report says.

The report was produced by the American Family Business Foundation, an ardent opponent of the estate tax, and written in part by Tim Carney, a senior political columnist at the Washington Examiner.

It's really not hard to understand why the life insurance companies would love the estate tax. Most wealthy people don't have banks and mattresses stuffed full of money. They own expensive assets: businesses, houses, artwork, the Yankees, the Cowboys, etc. When they die, and their estate is suddenly taxed at 55%, the heirs are left with unpalatable choices. Do you sell the Yankees, to pay the tax man?

In steps the helpful life insurance company. For a hefty annual premium, they can help provide the money to pay the tax man, without needing to sell cherished family assets. If the estate tax goes, how many of these wealthy individuals will need life insurance? None, probably. Poof. There goes 10% of the industry's revenues.

Fight "the man". Fight oligarchic "capitalism". Fight crony capitalism. Fight the estate tax.

Everyone is discussing tax cuts -- and tax hikes -- right now. The prevailing opinion seems to be that the tax cuts for "the rich" (defined as anyone making more than $500,000 a year) have to go.

The problem, as I see it, is that the income tax rate essentially doesn't matter. Income tax revenues (the actual amount of money collected) have stayed flat over the last 50 years even as income tax rates have fluctuated wildly.

Cutting taxes for the rich hasn't led to a massive drop in tax revenues. When Bill Clinton left office, in 2000, income taxes made up 12% of GDP. In 2008, income taxes made up 10% of GDP. As a percentage of GDP, the Bush tax cuts led to a very small drop in tax revenue. In actual dollar terms, the Bush tax cuts didn't create any drop in tax revenues. In 2000, the government collected $1.5 trillion of incomes taxes. In 2008, the government collected $1.8 trillion of income taxes.

In fact, federal government revenues have more than tripled since 1965.

Note the uptick in federal revenue starting in 2004, after the Bush tax cuts were passed. Taxes as a percentage of GDP stayed relatively constant (or fell slightly) even as tax revenues were increasing dramatically. That's because the economy started growing as soon as the tax rates were cut. People paid more in taxes even as their tax rates fell. From a government's perspective, that looks pretty good to me. You could argue that the growth is coincidental to the tax rates. (I don't believe that but you could choose to argue that.) But I don't see how you can argue that the tax cuts actually cut federal revenues or hurt the economy.

The real problem with the federal budget isn't tax cuts it's spending. We don't have a revenue problem, we have a spending problem. In 2000, the federal government spent $3.2 trillion. In 2008, the federal government spent $5.3 trillion. In eight years, federal spending increased by an incredible 65%. Why do we even have anyone arguing that the government needs even more money? Does the government do everything so efficiently that there is no fat anywhere in the federal budget? When was the last time you saw legislators seriously looking for money to cut out of the budget instead of looking for more ways to tax citizens? When was the last time you saw a government agency get its budget truly cut instead of just getting a cut in the rate of increase?

Income tax rates aren't the problem. Government spending is the problem. Until we start talking seriously about cutting spending, we won't make any progress on cutting the federal deficit and the federal debt.

If you want some ideas about what spending to cut, I'd start with Downsizing the Federal Government.

(Numbers from US Government Revenue and the Heritage Foundation.)

Alex Tabarrok recently wrote a great explanation of the economic concept of deadweight loss:

Imagine that you want to go to New York on a trip. You value the trip at $50 and a bus ticket costs $40. Do you take the trip?

A. Yes. The value ($50) of the trip exceeds the cost of the ticket ($40) so you travel to New York.

How much consumer surplus (net value) do you get from the trip?

A. $10=$50-$40.

The government taxes bus tickets which raises the price of a bus ticket to $60. Do you take the trip?

A. No. The value of the trip is now less than the price of the ticket.

What happened to the $10 consumer surplus which you used to get when there was no tax?

A. It's gone since no trip takes place.

Did the government get any tax revenue from you?

A. No.

Key idea: Consumers lose but the government does not gain from trips that are not taken.

Conclusion: Deadweight loss is the value of the trips (trades) which do not happen because of the tax.

When you hear someone mention the "deadweight loss of taxes" on the economy, this is exactly what they mean: taxes that result in the government not getting money and consumers not getting what they wanted.

Obamacare delenda est

For decades now state and local governments have been content to turn taxation over to the Federal governmnet. It's a pretty sweet gig. The Feds raise taxes -- capital gains, income, tarrifs, gasoline, whatever -- and get all of the voter anger and contempt. Then the Feds turn around and give the money back to the state in the form of grants, road spending bills, earmarks, or other forms of largesse.

It's an arrangement that gives State and local lawmakers the thrill of spending without the pain of actually, themselves, being responsible for taxing that much out of their residents.

It's an arrangement that does have some downsides. The biggest is the complete lack of local control. Remember the golden rule: he who has the gold makes the rules. A local Madison neighborhood is finding that out the hard way.

The pedestrian walkway under University Avenue at Spring Harbor Drive may be old and spooky. But school and neighborhood officials say it's necessary to keep kids and residents safe when they cross that roadway, where drivers routinely exceed the posted 35 mph speed limit.

Now they're worried that plans for a $7 million reconstruction of 1.9 miles of the avenue -- from North Segoe Road in Madison to Allen Boulevard in Middleton -- next year don't include re-building the tunnel.

... Madison officials say it would cost $1 million just to build a new tunnel because federal laws would require it to be accessible for people with physical handicaps -- unlike the current walkway -- and so far the money isn't available.

City officials say they'd love to make the passage's users happy, and staff engineer Christy Bachmann said the city has applied several times for federal money to redo the tunnel, but the project always ranks low and loses out on the grants. Ald. Mark Clear, whose 19th District includes the underpass, said the city has to do something with the passage come next spring.

"Because the reconstruction project is federally funded, they require that the pedestrian underpass at University Avenue and Spring Harbor Drive be brought into ADA compliance or removed," Clear said, referring to the federal Americans with Disabilities Act.

Glen Yoerger, an engineer for the city of Madison, said the reconstruction of the street, 80 percent of which will be paid for with federal funds with the remainder coming from local funds, will install curb and gutters and medians where needed along University Avenue, among other improvements.

Well, better luck next time kids. Your Aldermen, County Board members, state Assemblymen, state Senators, and Governor long ago gave up the right to actually govern this state. As a result, they're powerless to help you now.

Speaking personally, I'd love to see a State legislature and a State governor stand up to the Feds and fight to keep tax dollars. Then, take responsibility for collecting the money for local needs and spending the money in a way that will best serve local needs. The Feds are never going to be as good at knowing what your State needs as you. Quit dodging responsibility and start doing your jobs.

The Dividend Tax Bill Arrives - WSJ.com

As the big tax increase day of January 1, 2011 approaches, the Democrats running Congress are beginning to lay out their priorities. Get ready for bigger rate increases than previously advertised.

Last week the Senate Budget Committee passed a fiscal 2011 budget resolution that includes an increase in the top tax rate on dividends to 39.6% from the current 15%—a 164% increase. This blows past the 20% rate that President Obama proposed in his 2011 budget and which his economic advisers promised on these pages in 2008.

(See "The Obama Tax Plan," August 14, 2008, by Jason Furman and Austan Goolsbee: "The tax rate on dividends would also be 20% for families making more than $250,000, rather than returning to the ordinary income rate.")

And that's only for starters. The recent health-care bill includes a 3.8% surcharge on all investment income, including dividends, beginning in 2013. This would nearly triple the top dividend rate to 43.4% in Mr. Obama's four years as President.

Do you think this will

a) encourage me to put more money into the stock market
b) encourage me to put my money somewhere else
c) encourage companies to pay out more money as dividends to stockholders
d) encourage companies to put their money somewhere else
e) both "b" and "d"

If you said "e", you're right. And, when the economy keeps failing to recover from the recession, you may try asking Nancy Pelois, Harry Reid, and President Obama if they have any idea what could have caused people to just sit on their money for a while. If you have a 401(k) account, you might also try asking them why they're trying to torch your retirement savings.

Finally, if you live in Wisconsin, you may want to give Senator Russ Feingold a call. He's up for re-election this year and he sits on the Senate Budget Committee. You might want to put those questions to him too. You can reach his local, Madison, office at (608) 828-1200. If you'd prefer email, his address is russell_feingold@feingold.senate.gov. If you'd prefer snail mail, you can send it to:

1600 Aspen Commons
Middleton, WI 53562-4716

Liberals might want to consider that one of the reasons most people don't like government is the behavior of, well, government. Two stories caught my eye this morning.

First: One-Fourth of Nonprofits Are to Lose Tax Breaks - NYTimes.com.

As many as 400,000 nonprofit organizations are weeks away from a doomsday.

At midnight on May 15, an estimated one-fifth to one-quarter of some 1.6 million charities, trade associations and membership groups will lose their tax exemptions, thanks to a provision buried in a 2006 federal bill aimed at pension reform.

"It's going to be an unholy mess once these organizations realize what's happened to them," said Diana Aviv, president of the Independent Sector, a nonprofit trade group.

The federal legislation passed in 2006 required all nonprofits to file tax forms the following year. Previously, only organizations with revenues of $25,000 or more -- or the vast majority of nonprofit groups -- had to file.

The new law, embedded in the 393 pages of the Pension Protection Act of 2006, also directed the Internal Revenue Service to revoke the tax exemptions of groups that failed to file for three consecutive years. Three years have passed, and thus the deadline looms.

Next: I Got a Little More Libertarian Today | The Agitator.

So I got an email from TurboTax this afternoon telling me that my federal tax return has been rejected. Reason? Invalid Social Security number. So I double checked the return. Same Social Security number I've been using since I started paying taxes. Same number that's on my Social Security card. So TurboTax gave me the 800 number of the Social Security Administration so I could call to verify my number. Except that when I called, they told me that they can only verify numbers over the phone for employers, not individuals.

... The kicker: According to the TurboTax help forum I consulted, other people this has happened to say they were fined for filing late, even though they had actually filed on time, and it was the government's fault that their Social Security number was rejected.

I listen to the President's Weekly Radio Address every week. It's usually a painful process, since I almost always disagree with the President. (That's been true for both President Bush and President Obama, in case you're wondering.)

Last week's address was particularly painful. It was almost scary to listen to. The President spoke quite passionately about his desire to tax big banks to pay for the assistance they've received over the past 2 years. This is part of what he had to say (emphasis added by me).

Much of the turmoil of this recession was caused by the irresponsibility of banks and financial institutions on Wall Street. These financial firms took huge, reckless risks in pursuit of short-term profits and soaring bonuses. They gambled with borrowed money, without enough oversight or regard for the consequences. And when they lost, they lost big. Little more than a year ago, many of the largest and oldest financial firms in the world teetered on the brink of collapse, overwhelmed by the consequences of their irresponsible decisions. This financial crisis nearly pulled the entire economy into a second Great Depression.

As a result, the American people - struggling in their own right - were placed in a deeply unfair and unsatisfying position. Even though these financial firms were largely facing a crisis of their own creation, their failure could have led to an even greater calamity for the country. That is why the previous administration started a program - the Troubled Asset Relief Program, or TARP - to provide these financial institutions with funds to survive the turmoil they helped unleash. It was a distasteful but necessary thing to do.

Many originally feared that most of the $700 billion in TARP money would be lost. But when my administration came into office, we put in place rigorous rules for accountability and transparency, which cut the cost of the bailout dramatically. We have now recovered most of the money we provided to the banks. That's good news, but as far as I'm concerned, it's not good enough. We want the taxpayers' money back, and we're going to collect every dime.

That is why, this week, I proposed a new fee on major financial firms to compensate the American people for the extraordinary assistance they provided to the financial industry. And the fee would be in place until the American taxpayer is made whole.

Reading the President's address now, it sounds bland and reasonable. But listening to it was a different experience. The President sounded angry and distinctly sounded like he wanted to punish the banks for ever daring to make trouble. He sounded like what he really wanted was to make the banks pay for the entire cost of the stimulus bill. I was deeply disturbed, as I listened to the speech, to the hear the President so angrily attacking and villianizing a specific industry.

Here's the thing. Not all of the banks that received government help wanted government help. Some of them were strong-armed into accepting the help. The President's new "fee" doesn't account for that. Nor does it account for the fact that not all large banks even received help. Nor does it account for the fact that some banks were healthy throughout the crisis and had no rule in causing the crisis. No, the President's "fee" taxes all banks equally, just for the sin of being big.

As I listened to the speech, I wondered if the plan was even Constitutional. As I said, it sounded like he really wanted to lay into the banking industry, to punish it. And the Constitution specifically forbids a "bill of attainder". What's that? It's when Congress passes a bill declaring someone guilty of a crime -- and punishing them -- without giving that person the benefit of a trial. And the President's language and tone sounded dangerously close to someone who wants to declare the entire banking industry guilty of "crimes against America" and then punish them.

It turns out, that I'm not the only person to think this is un-Constitutional. John Carney writes in The Business Insider Law Review that he's recently concluded that the proposed bank tax is an illegal bill of attainder.

Read his full piece for a much better explanation of the concept of a "bill of attainder", as well as some great examples. Here is his conclusion.

The Financial Crisis Responsibility Fee is unconstitutional on its face. It is as if the Obama administration had urged a tax called "The Fee That Violates Nonattainder Principles." Assigning responsibility after the matter and levying penalties is reserved for the judicial branch that is restricted to using already existing laws and treating similarly situated people equally. The Obama administration wants to assign responsibility for the financial crisis and levy a fee, while exempting its favored automakers. This is exactly the sort of thing the Attainder Clause was put in place to prevent.

"Let me be clear. If you like the health plan you have, you can keep it." President Obama has made this claim multiple times about healthcare reform. But it's simply not true. Let me offer one small example.

My wife and I enjoy our Flex Spending Account. We put in enough money each year to cover the various drugs we'll need to buy (both prescription and non-prescription), a new pair of glasses, and money to cover any other medical expenses we anticipate. Next year, I'm planning on putting in an extra $4000 for corrective laser eye surgery, so that I can finally stop wearing glasses. We like the plan we have.

Well, under the Senate healthcare bill, we'll no longer have that plan.

Both the House and Senate bills include a change in the definition of a “qualified medical expense” that impacts reimbursements and withdrawals under all types of health care accounts (i.e., FSAs, HRAs, HSAs, and Archer MSAs). As of 2011, expenses incurred for over-the-counter (OTC) medications and products will no longer be eligible for payment or reimbursement from any of the health care accounts. The House bill definition appears to apply to all OTC medications. However, the Senate bill would still allow OTC medicines obtained with a prescription and insulin to be reimbursed or paid tax-free from the health care accounts.

The most significant change likely to be enacted is an annual limit on contributions made by employees to flexible spending arrangements (FSAs) for health care. Both the House and Senate versions of health reform legislation would limit contributions to no more than $2,500 annually. The limit would be indexed to inflation for future years. Under the House bill, these changes would not take effect until 2013. In the Senate bill, these changes would take effect in 2011.

If the current "reform" bills, I wouldn't be able to buy OTC drugs -- Sudafed, Mucinex, ibuprofen, Tylenol -- tax free. If the "reform" bills pass, I wouldn't be able to save tax free for corrective eye surgery. I would no longer have the plan I like.

It's just one more broken promise from a president that's building quite a pile of them. Apparently, "yes we can" act just like any other politician.

I admit. I'm still intrigued by Sarah Palin. I'm not convinced that she's the blithering idiot that so many of my peers see. Nor am I convinced that she's the great conservative / libertarian hope that many others see. But I'm definitely intrigued by anyone who can attract as much attention as she has attracted.

That's why this op-ed caught my interest: Palin in Wasilla: Resistance to insider assimilation.

Early in the second chapter of "Going Rogue," a chapter titled "Kitchen-Table Politics," you learn everything you need to know to understand why [Palin is so hated].

... Recruited to run for the council in 1992 by local power broker Nick Carney, Palin was seen as an attractive face who would support the usual way of doing business in Wasilla. She wasn't.

In one of the first tests of her independence, Palin opposed a proposal touted by Carney, her political patron, to force residents to pay for neighborhood trash pickup rather than hauling their garbage to the dump themselves, as most did, and as Palin says she still does.

Why was this so important to Carney? Because he owned the local garbage truck company. If you've never had much exposure to local politics -- and this is largely true anywhere you go -- it's a pretty big deal for a young, inexperienced politician (especially a woman) to so blatantly go against the person who recruited you into politics and supported you in your first campaign. You come under tremendous pressure to fall into line. Most cave, right then and there, long before they ever sniff politics at a higher level.

Palin didn't.

During her terms on the council, she consistently opposed heavy-handed community planning initiatives and burdensome taxes.

... Among Palin-haters, one of the most popular canards is that she is an airhead, and clearly not capable of dealing with the intricacies of government. As this chapter demonstrates, nothing could be further from the truth.

Palin not only has a keen grasp of the details of governing and budgeting, she also understands the political difficulties inherent in making government responsive. Many of her antagonists at the national level scoffed at the notion that her experience in Wasilla was of any value. Quite the contrary, local government is where a public official's decisions have the most direct impact on the electorate. It's where you really have to understand the ins and outs of what you're doing.

Interesting, no? And, yes, I am planning on reading Going Rogue. I'll pick it up sometime after the Kindle edition comes out.

This morning I saw a new Facebook poll: "Is Health Care a Human Right?". I voted no.

Do you have a right to health care? Yes. And no. My answer ultimately depends on what you mean by a "right" to health care.

Rights come in two varieties: negative and positive. A negative right can be thought of as the right to be left alone. It's the right to do something without the fear that someone else will restrain you. A positive right can be thought of as the right to be served. While a negative right requires only that someone leave you in peace, a positive right requires that someone actively do something for you.

I believe you have the right to work with the doctor of your choice -- whether or not that doctor has been credentialed by a government.

I believe you have the right to take the drugs of your choice -- whether or not those drugs have been approved by a government panel of experts. I believe you have the right to take experimental cancer drugs, especially as a last ditch attempt to save your life. I believe you have the right to take marijuana to treat pain, to build appetite, and to relax.

I believe you have the right to buy insurance from any company, located in any state, covering any combination of conditions. I belive you shouldn't be limited to only the health insurance that covers a government approved list of condition from a government approved list of companies.

I believe in a strong negative right to health care. That's something that doesn't really exist in America today. Right now, you are not free to receive health care from anyone you trust, you are not free to take the drugs of your choice, and you are not free to buy whatever health care you desire. I am in favor of more freedom in health care. I believe you have a right to consume health care as you see fit, even if the majority of people around you disagree with your decisions. That's freedom.

I don't believe you have a right to force someone else to pay for treatment, medications, or medical supplies. I don't believe you have a right to force a doctor to work with you. It's one thing if you and the doctor can come to a mutual agreement regarding pay and hours of availability. It's something else entirely to require a doctor to treat you at a price of your choosing (not his) and at a time of your choosing (not his). I don't believe you have a positive right to health care.

To be blunt, I don't believe you have a right to turn doctors into slaves (by requiring them to treat for free or at a steep discount) or a right to turn your fellow citizens into slaves (by requiring them to work in order to pay the bills for your health care).

The current discussion of health care rights revolves almost entirely around positive rights -- getting someone else to pay for our health care. It includes an "exchange" that would strictly limit the options available. It includes subsidies forcibly taken from some people through taxes and used to pay for someone else's health care.

It includes a requirement for insurance companies to charge everyone the same price for health care. This practice, known as community rating, allows sicker people to pay less than the cost of their care and requires healthier people to pay more. In effect, community rating is a subsidy to the sick courtesy of the healthy. Community rated health care is a very bad deal for young, healthy individuals. So the current discussion revolves around a health care mandate. Most of the plans under consideration would require young people to purchase something that's a bad deal. They would be required to do this solely to provide a good deal to sick people and the elderly.

Claiming a positive right to health care is nothing more nor less than the claiming the right to enslave your fellow man. I don't believe you have that right.

This morning, the Wall Street Journal reported on another one of the goodies that's buried in the House healthcare "reform" bill. If the bill passes, the IRS will fine you for any mistakes you make on your tax returns.

Under current law, taxpayers who lose an argument with the IRS can generally avoid penalties by showing they tried in good faith to comply with the tax law. In a broad range of circumstances, the health-care bill would change the law to impose strict liability penalties for income-tax underpayments, meaning that taxpayers will no longer have the luxury of making an honest mistake. The ability of even the IRS to waive penalties in sympathetic cases would be sharply curtailed.

Recent experience shows that Congress needs to be careful about imposing no-fault penalties. In 2004, Congress adopted very large automatic penalties for failures of taxpayers to attach a tax-shelter reporting form to their tax returns. While penalties make sense where a taxpayer deliberately fails to file a return, the approach here was too unforgiving.

The normal ability of the IRS to waive penalties was taken away. Predictably, the result was some taxpayers getting hit with penalties they didn't deserve.

Last June, the Small Business Council of America sent some compelling tales of woe to Congress, including one in which a 72-year-old owner of a coin operated car wash set up retirement plans for his seven employees and got socked for his good deed with a $900,000 penalty for not reporting the plans properly. The company and its owner are now headed for bankruptcy. In another case, a penalty of $100,000 each was imposed on the six minor children of an owner of a small business in Utah for not filing the right tax forms.

I think I'll call Congresswoman Baldwin's office. I'm very curious to know if she supports this measure; if so, why; or, if not, what she's going to do about it.