A Dialogue Between Robert and Todd

Todd and I were discussing the election, and our conversation turned towards the subject of greenhouse gases, but then to regulations and taxes in general. I asked him if I could share our conversation to show our two different, but intertwined points of view. I hope it makes sense and makes for interesting reading. It all came out of one conversation we had over chat, but I broke it up into five posts. Hope everyone enjoys it.

Robert: Meaning complying with Kyoto will do a lot of damage to our economy.
Robert: What we NEED is the Fair Tax, and then some serious deregulation.
Todd: I think that a modified Kyoto compact among more developed nations has to be implemented soon. The ability for reductions in greenhouse gas emissions MUST be coupled with aggressive public investment in private research into new technologies that can affordably and profitably bring our emissions lower. It is quite easy to draft a plan that works for developing nations who do not have the private energy infrastructure that the US of A has. What is more difficult and less palatable to the extreme environmentalist is that we have to make "going green" an attractive business proposition.
Todd: Once we do that, we now have solutions that businesses will be more than happy to accept tougher government standards for. Regulation must always be married with the benefit of the corporation in mind. To do so otherwise is to simply ignore human nature and is a recipe for policy failure.
Robert: Tell me honestly, are you suggesting you believe in Global Warming as a human-caused phenomenon?
Todd: I would not even approach Global Warming as an end goal to alter when we know that emissions have such harmful public health effects on even the smallest scale. Here in Phoenix as our population grows our per capita rates of Asthma-related hospital discharges have erupted.
Todd: Harmful emissions in our atmosphere are a public health concern that government rightly should be concerned with. We must carefully study climate change data and if we are to accept the postulate that global warming is being caused by anthropogenic emissions, and we know that these emissions constitute a public health threat even in the short term, then I believe we have steady ground on which to make policy changes. Even if we don't accept that global warming is anthropogenic, we should continue to fund research into it to be certain. We do know that period s of global warming are occurring now. We believe that they have occurred in the past. We disagree on its possible effects. We KNOW that carbon dioxide, ozone, nitrous oxide and particulate matter emissions are harmful to humans.
Todd: Let's start with what we know.... that's all I'm suggesting.
Robert: Right now, there is no viable alternative to oil that works on a large scale. Emission reduction must come as a function of the economy, or in the end, it will just continue to wreck our economy.
Robert: Right now our standard of living is being stilted by government policies regarding oil restrictions and emissions.
Todd: Well there are two schools of thought on this, and I'm not certain I'm willing to subscribe to one of the other. One school says that humans invariably are going to have to change their behavior if they want to change the amount of harmful emissions we generate. Okay, that sounds logical. The other says that maybe humans don't have to change their behavior if we simply bring the most serious offenders in line with newer technologies.
Robert: There's also the school of thought that humans are somewhat arrogant to assume they can truly influence the whole environment in the way people like Al Gore think we do.






(to be continued tomorrow)

Tricks of the Trade (Political Trade, That Is)

The first time I went to a Grady County Republican Party meeting, there were nine people in the room, including myself and my father, who had also never been to their meetings. The various friends I told about the meeting laughed at the idea, warning me to watch out for the crazy old people there. Because there were so few people there, each person as given a chance to introduce himself or herself. What I heard from most of those in attendance were various themes on this concept: we will never win as a party because the whole town is full of old Democrats and the paper is run by the Democratic Party chairman. Having grown up in a town where a large percentage of the people voted Republican - enough so that some Republicans didn't agree with others and still Republicans held most of the offices - I was not ready (or willing) to listen to the negative attitude. Despite being the youngest person in the room by at least thirty years, I stood up and gave them my ideas, what I might call the tricks of the trade.

"If you want to win, then expecting to win with newspaper coverage and advertisement will never get it done. You have to go door to door, stand on corners with signs, get friends involved and build an organization," I explained. "By having an organization, it becomes easier to get out the message and to spread the work. You start with your own friends, then they bring in their friends, and in time you have a large organization and a great chance to win some offices."

I went to help my Dad become the chairman of the party. After that speech the almost immediate reaction was, "You want to be Treasurer?"

I accepted, largely because I would have lost all credibility for what I had just said if I didn't back it up by taking an office. In the next election, we helped elect the first Republican governor in the state of Georgia. Did our little party get him elected? Probably not, but we did help our county vote for him, and the same county had previously voted for his opponent - the sitting governor. We also elected the first Republican state senator from that district. In the election after that one, we elected the first Republican state representative from a district built to keep Democrats elected for the next ten years. And most of what we did came from my speech. Was it all my idea? Far from it, but it was what I had seen time and again in successful campaigns.

1) The best (read: most electable) candidates almost always have a lot of friends. They have the sort of friends that love the idea of helping them get elected.

2) Once those friends have bought in to the campaign, they often get infected with the energy of politics, what I call "the disease". They find themselves sharing the message of the candidate with their friends, and some of those friends get involved, too.

3) The group that has formed around the candidate shares the message the candidate has to offer. They pass out bumper stickers and put up signs. They hold parties and fundraisers to help the candidate meet the constituency, the people.

4) The group can help stuff mailers that go directly to the voters. Newspaper ads and articles are more easily ignored because they are within a lot of other articles and ads. A single glossy mailer (or a lot of them) with the right picture and message can leave an impression.

5) The group can help make phone calls just before the actual election to remind people to get out and vote for their candidate.

Those basic concepts have many candidates become elected officials. They worked for the candidates here. Now the same Republican meetings have had as many as fifty for official meetings, and a recent dinner the week after Thanksgiving (never a great time for politics, especially in a non-election year) had over 100 in attendance with $25/plate entry fee. Even more showed up for a meet-and-greet for the Republican governor. Eight years ago, the Democratic primary was considered the end of an election cycle for local offices in this town. Now there have been opposed primaries in both parties, and this year there may be several locally elected Republicans. I know one thing: people don't make fun of someone for being willing to call themselves Republican anymore.

-- Robert

Corporations

A lot of people in this country look at corporations as evil, money-mongering institutions that must be kept in check by the government. The liberal press has a lot to do with that feeling. The problem is, corporations employ the same people who claim to hate them, and they do what the consumer demands - they find ways to cut costs to deliver a lower priced, higher quality product, or at least a product that has such a lower price that some lessening of quality is made up by the fact the product is just so cheap. Consumers rarely go to a store and intentionally pay more to encourage certain business practices. Most consumers go to the big box stores - the largest retailer and largest grocer in the world is Walmart for a reason - and buy the cheapest products that suit their needs.

Corporations, in other words, are not evil - they are entities run by people who respond to the market. They do things to remain competitive, and they do things to sustain their business, their employees (where possible), and their shareholders. When taxes get cut on corporations in America, jobs get created. It is a verifiable fact that the job market improves when corporate taxes are cut. If they were removed altogether, there would be a lot more jobs in this country. Corporations would stop shipping as much work overseas because it would be less expensive to produce things in the US. The tax structure has as much to do with companies shipping jobs overseas as anything else, though overregulation plays another key role.

Imagine for a moment, a business looking for a place to start up. The owners want to make a product for sale. Would they be smart to start that business in a location that charged high taxes, had workers that had to be paid more highly because of similarly high taxes on their payroll, and had stiff regulations on everything from hours someone can work to what sort of emissions their facility could release into the environment and many things in between? Or would it make more sense to locate in a place that had relatively low taxes, low costs of land and facilities, low regulations, and a work force willing to take a much lower wage? What individual would make the choice to locate in the first location? Why should a business do anything different than a reasonably intelligent person? Yet, any time an American-based corporation chooses to move its operations to a foreign country, they are villified for it. Why not villify those truly responsible for making the company choose to move - the government? Few products are made in America anymore, largely because regulations and taxes have made it so unreasonable to stay. Americans still buy the products of these companies, so the message is clear: Americans have voted with their dollars to approve the move. The Unites States Government does not regulate foreign products coming in nearly as severely as they regulate American-made products. Other countries often do quite the opposite. Japan, for instance, has much harsher regulations on foreign products than on Japanese products, and they charge higher taxes on foreign products. Their government supports their national economy in that way. Shouldn't our government do the same thing? Wouldn't such a shift have a wonderfully positive influence on the economy of the United States? Manufacturing jobs could return as products are built here. Costs of shipping those products would go down because they are made here instead of abroad. As costs go down, prices drop, and people can live on much less. With a program like the FairTax, though, people would actually have more of their wages to live on, which would in turn create more jobs as spending caused the economy to grow rapidly.

Deregulation and lower taxes would help the United States, its economy, and its citizens far more than increased regulation, higher taxes, and more government programs. I pray that some day the government, and those in the halls of power, will see those facts and do something to truly help America, instead of giving us back our own money and hoping we'll go spend it to put a bandaid on a badly broken economy.

-- Robert

FairTax Illustration - basic example

If it suddenly cost 40% less to make a product, even if the corporation only passed on 20% of that 40% initially, prices would drop. If a product cost $2.00 to make after taxes and gets sold for $4.00, with $1.00 of overhead cost coming out, that's about $1.00 of profit that gets taxed $.40. If the product costs $1.60 because that tax is gone, it could be sold for $3.20 with the $1.00 overhead, and the corporation still makes the same $.60 profit, but the cost of that $3.20 product after the 23% tax is $3.94 - but they're paying that out of their whole paycheck plus their prebate. So the cost of bringing that product home is less, the corporation makes the same profit, and the taxes are still paid to cover the cost of running the government.

Corporations will reduce their costs as a function of competition. Some might temporarily withhold the savings, but as soon as the first "Tax sale! We're passing the savings on to you! Buy now and save!" commercial flashes across the TV, prices will drop dramatically. I will cover more on corporations in my next post.

-- Robert

Taxes (FairTax Part 1)

In its present form, the tax code penalizes success. The more a person succeeds financially, the more the government taxes him. This practice takes funds out of the hands of people who have shown they know how to use them. It also pits one group against another through envy, making prosperity unpopular. Leaving funds in the hands of individuals promotes success because it allows them to use them as they want. The United States still stands as a bastion of individual freedom and opportunity. Tax reduction gives individuals back greater freedom (and responsibility) for choosing how they live their lives. Tax cuts represent an increase in the standard of living, and they stimulate the economy through increased spending, investing, and saving. Individuals built and rebuilt this nation time and again. The more the government raises taxes to build government programs to solve problems, the less money individuals have to implement plans privately. Program after program created in the private sector have outperformed government programs designed to achieve the same thing. Our government has grown too large, and the only way to downsize government is to cut its resources.

The Fair Tax represents the best idea of how to put more dollars back into the hands of consumers. It is not, as some critics assume, just a new tax. It is a tax to replace all forms of federal income and payroll taxes. To quote the website:

"The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.
The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.
The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system."

I want to cover a few points of why this tax is not bad for the poor, and what some of the language means.

1) As it states, this tax is "progressive", which means it taxes the wealthy more than the poor (a regressive tax taxes the poor more). How is it progressive? By giving "prebates" to all citizens, only those who use up their prebate actually pay taxes.

2) What is a prebate? The government will issue checks to every individual or family based on family size that will be enough to cover taxes up to the level of poverty (as determined by the government). Those funds reimburse everyone before the funds are actually spent - thus the term PREbate. Once those funds have been spent, then any spending on new goods will be taxed. Yes, the Fair Tax is only paid on new items (just like state sales tax), so those who want to avoid the tax can buy used goods.

3) By eliminating all other government taxes, individuals have their entire paycheck to spend, giving them more choices in where their money goes.

4) The 23% tax rate sounds high, but after corporations cease paying taxes (often 40-50% of income) prices will drop more than enough to compensate for the tax.

5) Eliminating the current tax code will remove $265 billion in costs to maintain the current tax code. Since sales taxes are already handled by state agencies, a much smaller cost will be involved in implementing the new federal tax.

6) The Fair Tax legislation involves repealing the 16th Amendment which allows a federal income tax, so (despite what critics say) without a new amendment being passed to replace it, the federal government could not simply put back in the income tax.

Anyone interested in a program that would provide more funding, remove more government waste, and return more individual freedom, please read up on the Fair Tax at FairTax.org. The "About'>http://www.fairtax.org/site/PageServer?pagename=about_main/">About the Fair Tax" link is a good place to start, especially the FairTax Five towards the bottom of that page.

This tax does not necessarily eliminate government spending, because it better funds the government. Still, that makes it a wonderful idea for both parties to get behind - it helps the poor and wealthy alike, funds all the programs that both sides are so fond of, and spurs the economy to new heights. By giving the money back to the people, the country can see just how strong the power of one is.

-- Robert

A New Month

A lot of business scramble at the end of a month or the beginning of the next one to "close the books". What exactly does that mean? In accounting, before computers, the records of a business were literally kept in books called ledgers. The ledgers related to income and expense have to be closed each period, which means they have to be brought to a zero balance. Entries to close income look like this:

---------------------------------Debit ----------------Credit
Income -------------------------[balance in income]
--------Retained earnings ----------------------------[same amount]

The reason the amount is the same on both sides is that accounting entries always have to balance. The retained earnings account is a long term measure of the earnings of a business that have not been distributed to owners.

The entries to close expense accounts look reversed:

---------------------------------Debit------------------Credit
Retained earnings-------------- [balance in expense]
------------------Expense -----------------------------[same amount]

The reason the entry is reversed is because expenses reduce retained earnings (which have a "credit" balance. All accounting is done with debits and credits, and no, that does not refer to debit cards or credit cards. Here's a lesson in what those two words actually mean: debit means "left" and credit means "right" and they refer to the left and right of the ledger. The reason for credit and debit cards being called what they are is how they are accounted for at a bank - a credit card increases a debt, which is a liability account; liability accounts have "credit" or right side balances. A debit card comes directly out of an cash account, which is an asset; assets have "debit" or left side balances.

The beginning of a new month seemed like a good time to explain those terms. Thankfully, I don't have to close the books, because my Quickbooks software does all of that work for me. I just have to handle a payroll this morning, which is also made much easier thanks to software.

-- Robert

Politics: More than Kissing Babies

One of the worst candidates I ever saw (that actually had a large number of supporters) ran for statewide office three times: as governor, US Senate, and governor. The state party chairman at the time decided that the man had a lot of money, so he made a perfect candidate. Because he would put in his own money? Well, no, he actually sapped all the resources that other candidates might have used. Well, he must have been an inspiring leader with great ideas of how to improve the state, right? Well, no, not really. He once went to a meeting of farmers and said, "So, is everyone here a farmer, or do you have real jobs?" Was he a man of high moral character that would attract people because of how well he demonstrated his values in life? No, he was on his fourth wife at the time - and the decision to run for office was apparently her idea.

I knew this man vicariously - my uncle had once worked for him. I had not heard much good about him. But I made up my mind in one simple moment. I was a teenager, but I certainly looked like I was of voting age (several people thought *I* was the candidate for office at political functions), and yet he walked right past me (and everyone else in a large group near the door) as if no one was there. Again, this was a large political meeting where a candidate comes to meet voters and garner support, and he was too busy to actually acknowledge the voters. That was, at least, until a camera turned on directly in front of me. He literally stopped, turned on a dime, and shot out a hand towards me, saying, "Hi, I'm [name omitted to avoid being sued by insanely wealthy jerk]."

I simply said, "I know who you are," and looked into his eyes. I saw no heart, no passion... I saw no soul. And instantly I knew, this man should never have run for office. I wouldn't elect a man with such a cold demeanor to county coroner. Yet this man gained the nomination in three separate elections - all of which he (obviously) lost. How did he manage to continue winning? Simple: the party leadership wanted him. I nearly quit the party over his candidacy, deciding politics was simply too disgusting to be involved in any more. Thankfully, I just took some time away from politics, thought long and hard about what was more important to me - my convictions or my disgust - and I decided to stick it out. I was definitely glad I did. It turned out that a large part of the party agreed with me, so they threw out the leaders that continued supporting the dead-eye never-winner, and replaced those leaders with men (and women) of vision. Four years after that last run for governor, the Republicans elected the first governor from their party since Reconstruction - the last Southern state to do so. Two years later, the State Senate became Republican. Two more years later, the State House became Republican, as did the Lieutenant Governor and the Secretary of State. They elected those representatives and senators despite the districts being structured by the Democrats to maximize Democratic areas and minimize Republican areas. They were so heinous in their attempts to gerrymander the districts, the districts got thrown out because they failed to follow the Civil Rights Act, requiring that all voters have equal say. The districts were changed only slightly from their gerrymandered form, though, and still the Democrats in this state lost. I was glad I stayed so I could help elect that governor, that lieutenant governor (first ever as a Republican), that Secretary of State, and the State Senator and Representative (in districts that were drawn to guarantee Democrats would win easily). I got to help the voice of the people of this state be heard. I even got quoted by the most well known Georgia political writer when I wrote a letter to the editor explaining that South Georgia would be where the governor was elected.