mage67 (mage67) wrote,

Why taxes are high

A normal person sees how much money they have and how much is going in and makes purchases based on that. A politician commits to buying whatever he pleases and figures out how to pay for it later. Politicians think backwards from normal people.

Politicians don't get much credit for saving money. They get credit for spending money. If a politician found a way to save $50 million, people would yawn in response. If they spent $50 million on an exciting program, then they would get attention and make themselves more re-electable and possibly help launch them into a higher office. They would please the people who benefited from it and therefore be more likely to get their support and votes.

If you had the choice of pissing people off by cutting programs or pleasing more people by spending money on them, (and it wasn't your money that you were spending) then what would you do?

The problem is the idea of sharing with little restraint. This sounds bizarre, but it can be explained by a school experiment I once saw done. The teacher started with bowl full of chocolate candies. The students could take as much as they wanted. The amount remaining from the bowl of candy would double after every student took what they wanted. However they took all the candy before the first round ended so there was no candy left for it to double. They all felt that even if they didn't want or need it, someone else would take more than necessary and they would never get any.

This is what happens in government. There is a pool of money and everyone grabs more than they need thinking someone is going to get greedy and they'll wind up with little to none. If they grab it, they have to justify the grabbing by spending it, so a lot is wasted. If money was left, it would grow with investment and there would be more to grab next time; but this rarely happens.

In this same school experiment, each person was given a private pool of candy only they could take from. The remainder after each time they took would be doubled. Since the students had an interest in seeing their private candy multiply, they only took very little and watched their candy savings grow great until it was plentiful and they didn't have to worry much about conserving.

The money politicians play with isn't real to them. The US Congress rounds it's figures to the nearest $100 million for most of Congress' consumption. So a $47 million observatory would round down to $0. We need to make our money seem more real to them.

Therefore the obvious answer is to give the politicians a reason to care about the money, which they have no real reason to do and have almost every incentive to do the opposite.

Obvious solutions like docking their pay if they overspend or making it illegal to not balance the budget simply won't happen. The reason is that Congress is only answerable to Congress in general. Would you enact extra penalties on yourself if you could avoid it?

Another solution is to find other sources of money. There are many untapped sources out there that can easily afford giving up some of their assets. If we taxed the people making over $17 million per year an extra 1% of their income, then we could easily balance the annual budget.

So why don't we do this? The answer is simple. Congress doesn't go after the people with the biggest pockets in general. It goes after the easiest pockets to pick. Whether they are large or small pockets is irrelevant. If you were an amoral robber, would you go after a small 90 year old woman in a wheel chair or a very fit karate grandmaster to rob, even if the grandmaster was a billionaire and carried millions on him? You'd never get it from the grandmaster and you'd get hurt bad even trying, so you might as well go after the old woman since it's so easy, even if she has almost nothing.

Sometimes a deep pocket becomes vulnerable and people jump all over it. The tobacco industry was a juggernaut at one time and they never lost a law suit. Then an attorney general from Louisiana had a brilliant idea. He saw that Louisiana paid a fortune in medical costs, just like any state did. He saw for a way to get some of that money back. If he sued tobacco companies for causing some of these costs and won, Louisiana would get billions of dollars from them. This potential money was far more than even tobacco companies could bribe with. The governor of Louisiana awarded that attorney general for his brilliant idea by firing him, but it was too late since the idea got out and all of the states wanted to get easy money like this.

This approach has yet to work for illegal drugs, since no one openly claims to be a drug lord nor welcomes people to identify them as such. It doesn't work for most big businesses, since they give money to polticians to keep them away from picking their pockets. Even ungreedy politicians need money to get re-elected, so few can resist.

Politicians simply won't go after many big pockets because they don't want to bite the hand that feeds them.

Bill Gates left himself vulnerable at one point by giving almost nothing to politicians. He hated the idea of giving out money to politicians. The politicians saw deep pockets and they weren't getting a taste. So they went after him. Bill Gates and Microsoft spent far more on his defense than the government would in prosecuting, so of course he more or less won. It almost makes him sound heroic, but we of course know better.

So what's the solution? We have to make people behave by making it in their best interest to behave. We have to demand it or Congress will never enact such laws. However politicians always trick us into going against our best interests. The concepts are above most of our heads and we simply don't have the time or talent in general as a populous to learn better since we can't make a career out of going after abusers.

We need to keep people educated enough to see some of this, so we can't be fooled. We need to keep the facts simple. We can't demand people see what we see, but guide them towards a conclusion.

Simple solutions that tend to defy politicians is
1. Don't make a budget cut blindly. Some programs ultimately generate more revenue than they cost. Those programs should simply not be cut if it can be avoided. Some programs cost far more than the revenue they generate. Those should be cut if they can be.
2. Try not to spend more money than you have coming in within the same time period.
3. Invest the income and assets you are not actively using in investments that will generate more money.
4. Try to keep the interest rate on money you owe as low as possible and keep working to get interest payments eliminated, lowered or deferred without penalty.
5. Take money from anywhere you can, regardless of who you might annoy. Take more from those who can give more. You can't take more from those who have little to take from since they just don't have it.
6. Spend on what you absolutely need first and only spend on luxuries if you have the extra assets on hand after doing this.

Sounds simple? It is in concept. Now the real trick is making people do it and not let themselves get confused. It'll only happen if the will is there to act against some people's best short-term interests. Good luck.

(Extra note: I remember what Meyer Lansky (1902-1983), a famous mobster once said. "By the turn of the century, the government will run gambling, drugs and prostitution. That's where the money is."

The government is into gambling and drugs already now in various forms. Can prostitution be far behind?)
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