Dystopian Utopia

A Wall Street Journal editorial (December 27, 2019 – link here) catalogued Presidential candidate Elizabeth Warren’s agenda if she were to be successful in her bid. These items consist of methods for raising revenue through “soak the rich” taxation, using those revenues to fund various programs and projects that would expand the federal government to an unprecedented degree that dwarfs FDR’s New Deal and LBJ’s Great Society. While Warren is not the only candidate who would support all or most of these proposals, she has been more specific in providing a wish list for the American far left-wing. These are presented below with comments. To wit:

• Wealth tax: Tax net worth over $50 million at 2% a year, and 6% above $1 billion. To prevent the rich from yachting off, add a 40% “exit tax” on assets over $50 million.

This is probably unconstitutional as a direct tax not apportioned to the Census. The case of Pollock v. Farmers’ Loan & Trust Co. (1895) appears to be still good law. The 16th Amendment made an exception for income taxes, but not all such direct taxes. Still, there is sufficient ambiguity that a Congress so inclined might pass such a tax, which would doubtless result in years of legal battles that would have to be resolved by the Supreme Court. That resolution would then depend on the makeup of the Court at the time the issue is presented.

• Medicare for All tax: Charge companies with at least 50 workers an “Employer Medicare Contribution.”

This burden would fall most heavily on small businesses that are growing. And it would be another incentive to use technology to reduce the number of employees in businesses of all sizes.

• Global corporate tax: Raise the top business rate to 35%. Apply this as a world-wide minimum on overseas earnings by U.S. companies.

This would result in double-taxation for U. S. companies who do business abroad and reduce their competitive position in the foreign marketplace.

• Corporate surtax: Tax profit over $100 million at a new 7% rate.

Defining “profit” whether unrealized or otherwise can be complicated. This would be a tax lawyer’s and accountant’s dream.

• Slower expensing (sic): “Our current tax system lets companies deduct the cost of certain investments they make in assets faster than those assets actually lose value.”

This is true, but it gives businesses an incentive to purchase new equipment rather than make do with older, less efficient devices. The downstream effect is to penalize innovation, manufacturing, and sales of business equipment.

• Higher capital gains taxes: Tax the investment gains of the wealthiest 1% as ordinary income.

Anyone who believes this will be limited to the so called “wealthiest 1%” should be reminded that once a tax method is enacted, modification is much easier. The first income tax was modest and only applied to a small number of persons. Anyway, this is another tax lawyer and accountant boon.

• Finance taxes: Tax the sale of bonds, stocks and so forth at 0.1%.

This, of course, penalizes the beneficiaries of IRA, 401k, and other plans that so many employees rely upon for retirement.

• Individual tax increases: There’s no detailed proposal.

The vagueness of this proposal is scary. It could be detrimental to every working person.

• Social Security: Increase benefits by $2,400 a year across the board. Raise them further “for lower-income families, women, people with disabilities, public-sector workers, and ‘people of color’”

This is so open-ended as to be scary. Public sector workers? Most, particularly federal employees, are covered by cushy pensions. Women? Just because of their sex? Who is a “person of color”? I’m still wondering. Is there a color chip we can obtain somewhere? A “colored person” used to mean a Negro or black person, but that term is disfavored, particularly by the left. Wonder if this would apply to Oprah Winfrey?

• Lobbying tax: Tax “excessive lobbying.”

There are serious First Amendment implications in this proposal. The Supreme Court in the Citizens United case has held as much. Warren has a dollar amount on what she would consider “excessive,” but even so, lobbying is protected as free speech and the ability to petition the government for redress of grievances.

According to Warren, this would raise $19.5 trillion, mind boggling and meaningless to most people, over a decade. As noted this would not include the increased social security taxes.

What is all this supposed to fund? Here are some proposals.

• Green New Deal: Spend $3 trillion, including $1.5 trillion on industrial mobilization, $400 billion on research, and $100 billion on a Marshall Plan.

Not sure what would Green New Deal entail. As H. L. Mencken observed, the old New Deal encouraged pillage and bribery. It began, he opined, like the Salvation Army, by promising to save humanity. It ended, again like the Salvation Army, by running flop-houses and disturbing the peace.

• An end to fossil fuels: Ban fracking. Halt new drilling leases on federal land. “Prohibit future fossil fuel exports.” Kill the Keystone XL and Dakota Access pipelines. “Subject each new infrastructure project to a climate test.” Give “workers transitioning (sic) into new industries” a “guaranteed wage and benefit parity” and “promised pensions and early retirement benefits.

Talk about a prescription to ruin our economy. Superior innovation enabled the U. S. to finally become energy independent and a net exporter of petroleum products through fracking. Do the leftists really believe we’re going to give that up? Also, fracking mainly produces natural gas, which is considerably less polluting than other fuels. Petroleum is the raw material for many products other than its use as a fuel. Not surprisingly, there was no reference to expansion of nuclear power. Even though nuclear, which the left abhors, is the only way to seriously limit dependence on fossil fuels.

• K-12 education: Add $450 billion to Title I, $200 billion for students with disabilities, $100 billion for “excellence grants,” and $50 billion for school upgrades. “End federal funding for the expansion of charter schools.”

Charter schools have been the success story of the last two decades for public education. Anyway, education is a state function and federal DOE meddling has increased the expense and cumbersomeness of public education. Urban school districts typically have more administrators than teachers. And they are generally better paid.

• A “right” to child care: Build a federal network of local providers, subject to national standards. Give free care to the “millions of children” whose households are under 200% of poverty, or $51,500 for a family of four. For everyone else, cap child-care spending at 7% of income.

Why should there by a federal “right” to child-care? And what does it actually mean? Again, this should be a state function. The “everyone else” cap seems to mean that individuals cannot spend their own money or resources as they see fit — a totalitarian limit on individual freedom.

• Free college: “Give every American the opportunity to attend a two-year or four-year public college without paying a dime in tuition or fees.”

It is true that a college education increases one’s earning power, but college is not for everyone. Making something free debases it as being of little value. Various trades can provide good earnings, and money could be better spent funding trade schools for those so inclined. Right now, the U. S. is importing trades from other countries; try to find a construction worker, even a highly skilled one, who can speak English. Our neighbors to the south are doing a better job of training trades.

• Student-debt forgiveness: Write off $50,000 for households with incomes under $100,000.

Perhaps in some cases, it can be warranted. As it is, there is partial or even full forgiveness for performing certain skills in under-served areas. What would happen to this incentive? Like so many of these other proposals, unintended consequences abound.

• Housing: Spend $500 billion “to build, preserve, and rehab” millions of affordable-housing units. Condition such funding “on repealing state laws that prohibit local rent control.”

“Affordable-housing” is bound to mean substandard. Rent-control breeds deterioration of the property, and would have the consequence of reducing the available rental properties.

Other wishes include:

• Unions: Overturn “so-called ‘right to work’ laws” in 27 states. Guarantee public employees an ability to “bargain collectively in every state.” Amend labor law to aid “sectoral bargaining.” Give the National Labor Relations Board “much stronger” powers, such as “to impose compensatory and punitive damages.”

The repeal of section 12b of the Taft-Hartley Act (the right-to-work provision) has been a left-wing goal for 60 years, unsuccessful fortunately. All of the states having such laws have been well-served in economic growth. Giving public employees the ability to bargain collectively has the effect of the government entity bargaining with other people’s – the taxpayer’s – money. The public entity’s representative has no incentive to bargain fairly on behalf of his employer.

• Corporate governance: Make companies with revenue over $1 billion obtain a new federal charter—separate from the current state charter system—that requires them to “consider the interests of all corporate stakeholders.” Give workers 40% of board seats, and put CEOs under “a new criminal negligence standard.”

How can the interest of nebulous “stakeholders” be measured? The only “stakeholders” who should matter to the governing body of a corporate entity are the stockholders, whose benefit or detriment is a result of good or poor management.

• Industrial policy: Manage the dollar’s value “more actively” to “promote exports and domestic manufacturing.”

If only a few of Warren’s tax/revenue gathering schemes are implemented, only magicians will be able to successfully “manage the dollar’s value.”

• Antitrust: Break up Amazon, Facebook and Google. “Unwind” their mergers with Whole Foods, Instagram, DoubleClick and more.

The founders and management of the named organizations, who have been generally sympathetic to the left, on social issues anyway, might change their thinking regarding their political inclinations. The general standard for monopolies is restraint of trade. It is unclear how any of these entities restrain trade.

• Banking: Pass “a 21st Century Glass-Steagall Act that breaks up the big banks.” Let the U.S. Postal Service “partner with local community banks” to provide “basic banking services like checking and savings accounts.”

Many of us have experience with the nationwide “big banks” that has not been good. Thus, I give my banking business to a locally owned bank, where I get personal service. Not sure where this comes from. Anyone who wants a bank account can obtain one. Most banks are more than willing to take charge of a a person’s money. They do charge for servicing demand accounts. Maybe this is more free stuff funneled through the U.S. Postal Service.

• Gun control: Create a “federal licensing system for the purchase of any type of firearm or ammunition.” Raise taxes to 30% on guns and 50% on ammo. Ban sales of “assault weapons,”and make current owners “register them under the National Firearms Act.” Pass a law to let shooting victims “hold the manufacturer of the weapon that harmed them strictly liable.”

You were waiting for this. Not only are there serious Constitutional problems with this proposal, it would result in a vast number of presently law-abiding citizens to become criminals without their committing a single act, and it will not disarm a single current criminal. Few of the law-abiding and none of the criminals would voluntarily comply with federal registration. There may well be thousands of unregistered machine-guns in private hands here in the U.S. as we speak. Implementation of this policy would require a totalitarian state, and a vastly expanded ATF. The strict liability would put the domestic manufacturers out of business, but even if it didn’t, do we really want the manufacturer of a gun used by one drug dealer to shoot another one, to pay under that or similar circumstances?

• Centralized elections: Use federal money to “replace every voting machine in the country.” For federal elections, mandate early voting and same-day registration. If state elections follow the same rules, they can be “fully funded by the federal government,” with “a bonus for achieving high voter turnout.”

Again, more Constitutional problems. Even federal elections are governed by state law.

• Miscellaneous. Give congressional staff “competitive salaries.” Recruit 10,000 people to “a 21st Century Civilian Conservation Corps.” End entry fees at national parks. Buy flood-prone houses “for low-income homeowners at a value that will allow them to relocate.” Plus much more.

One would shudder to think about what “much more” means. One item not specifically mentioned (except the employment tax) was the “Medicare for All” scheme. Contrary to many impressions, generally among those under 65, current Medicare in the U.S. is not entirely “free.” There are co-pays and deductibles, which can be covered by private insurance. Warren’s articulated plan is to phase out private insurance and make it illegal. Interestingly, Canadian federal law makes it illegal for private clinics to provide medical services that are covered by the Canada Health Act practice, restrictions which are said rival to those of Cuba and North Korea. It appears the law is widely flouted, and Canadians who can afford it (or obtain health insurance in the U. S.) come here for medical treatment. Americans by and large are satisfied with their health insurance, and certainly do not want to emulate Cuba or North Korea.

It is doubtful that Warren, or any other candidate, could get all, or even most of these proposal through Congress, and past a legal challenge. Nevertheless, many Americans might be enticed by a lot of what looks like free stuff. Why not soak the rich? An aggressive and persistent President and a compliant Congress could result in many of these proposals being passed. Recall that Obamacare was essentially crammed down the nation’s throat by a bare, ephemeral (and tyrannical) majority despite clear indications that many were not comfortable with it.

One final thought. President Donald Trump can be rude, crude, and loves hyperbole. He is not, as so many of those who disdain him say, a fascist or a racist. Those terms have become all purpose epithets for use by those who either have a warped notion of what they mean, or do know, but use them anyway to stir up the useful idiots. Communism and genuine socialism are not that different from the fascism of the 20th Century. A deep analysis reveals that the Warren agenda has many fascist characteristics. It is government commandeering the economy to suit its purposes in a way that is necessarily totalitarian. Creation of a vast bureaucracy that can supplant due process and make its own regulations that have the force of law was characteristic of National Socialist Germany. There are certain hints of racism in this present agenda. Lumping so-called “persons of color” into a group that vilifies those not eligible for membership; i.e., so-called “white” people, is a fascist hallmark, albeit with a twist. Though it does have precedent in the Soviet oppression of the kulaks during the 1930. (Some would say genocide –- Aleksandr Solzhenitsyn suggested that six million kulaks were murdered by Stalin; if true it would put that atrocity on the same level of the Nazi Holocaust.)

Given this analysis, and considering Ms. Warren’s attempt at ethnic identification, I wondered how to say Il Duce or Der Führer in Cherokee. The only possibility I found is Ugvwiyuhi. Haven’t figured out how to pronounce it, though.

 

 

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