In fact, 47 to 51 percent of people who file income tax returns do not even pay income tax, according to the Tax Foundation in Washington, D.C. They file tax returns to get the generous Earned Income Tax Credit (EITC) and the Child Tax credit for households with children. A worker with three children and an income of $12,750 can get a refund of $8,751 from these credits, and without any payroll withholding.

In essence, the income tax has become one of America’s largest welfare programs.

Bribed with Our Own Money

The payroll withholding system was created in 1942 to make working families pay for the war against Japan and Germany. Milton and Rose Friedman’s autobiography has an excellent story about how “pay as you go” was set up to make sure workers paid the higher war taxes.

Before the war, only wealthy people had to file tax returns, because most people’s incomes were less than their personal exemptions. But Congress and the War Department needed more money, so tax collections expanded. Collecting the money in advance, with payroll withholding, was a quick solution.

Today, since most people live on narrow budget margins, with little surplus from week to week, it can be stressful to owe the IRS a balance due on April 17. To avoid that stress, your paycheck tax withholding can be a bit larger each payday, and the surplus is returned in the form of a tax refund the following February. Some people use this refund as a form of a savings account, by splurging on something they normally wouldn’t with the unexpected money.

However, what many do not realize is that the payroll withholding tables published by the IRS for employers are actually tilted to give workers a refund. So, if a family of four chose four allowances on the W-4 form, which employers use, the formula the payroll department uses will guarantee a surplus, and thus, a refund next February.

This means that the withholding system bribes taxpayers with their own money to file tax forms on time, even early, to get their money back.

The EITC and the Child Tax Credit cause a mania among the lowest income Americans, who come to H&R Block and other tax companies as soon as their W-2 forms are released – because the refunds that include those tax credits are very generous.

The FairTax “Prebate” Is Worse

You might have heard of the FairTax, as its popularity was expanded during the brief presidential campaign of Herman Cain in the Republican debates, when he proposed his “9-9-9” version. Radio talk show host Neal Boortz also wrote on the subject in books that were on the New York Times best-seller list for several months in 2005 and 2008. And there has been legislation introduced in the Senate and House of Representatives to enact such a national sales tax—and many Congressmen are co-sponsors. It is a cheap thing for a member of Congress to co-sponsor such a bill, since it is very unlikely to pass. FairTax.org and Boortz are based in Georgia, and the legislation’s chief sponsors are from that state.

FairTax.org and popular writers like Neal Boortz have promoted the FairTax as a way to get rid of the IRS and liberate Americans from the oppressive tyranny of government tax collections. However, take a closer look and you’ll find it is almost exactly the opposite kind of scheme than it claims to be.

If enacted, the FairTax would require every American to be registered with the IRS and keep a current address and bank account information on file with the government to receive regular tax “prebates.”

The FairTax is a national retail sales tax. And a national retail sales tax is a flat tax. Sales tax rates, which most states impose, are flat rates on all transactions subject to the tax. Some states tax goods and services; other states only tax goods sold at retail and exempt wholesale and intermediate products. A value-added tax is a sales tax that does not exempt intermediate products, but allows a rebate on subsequent sales for producers, so the tax is not compounded over many stages of production.

The FairTax is supposed to be a tax only on final sales, although it is sometimes not clear when a sale is “final” and not part of a continuing series of production steps.

The problem with a flat tax, in today’s political society, is that most people believe “the rich” should pay more and “the poor” should get tax credits and exemptions, particularly if they have children.

But a flat tax is the same rate for everyone.

Another problem with a retail sales tax is that it only taxes items purchased for consumption. It does not tax savings. Higher income families have savings for retirement and college funds, while lower income families are always in debt. The sales tax would exempt savings and collect taxes even when a family borrows money to buy a new TV or repair an old car.

So if you believe a family’s “income” is the proper way to think about tax rates, a sales tax is “regressive.”

The solution proposed by advocates of the FairTax is a rebate. They call it a “prebate” because the plan would give a rebate in advance to every American family. The families would be paying the national sales tax every day, at the grocery store and the gas station, so it would be hard for them to wait until next year to get a rebate. Since the “prebate” is paid in advance, Americans will have enough money to give to a cashier for the tax when they go shopping. The “prebate” would be received as a check in the mail, or deposited to a bank account, each month – similar to how Social Security payments are made, or how food stamps are distributed on debit cards.

It’s a frightening thought that every American would depend on the automatic gift of money each month from the government.

It is surprising to me that Neal Boortz, who calls himself a “libertarian,” would promote this idea. Recall that Libertarians are opposed to taxes, and they oppose the idea that people should become dependent on the government. But, clearly, after such a system of “prebate” payments was created, the main issue among voters would be how much political candidates would promise to increase the monthly payments when running for office. If any politician suggested cutting the payments, it would be like getting caught on Twitter with lewd photos. Nobody today proposes cutting Social Security benefits, not even Ron Paul or Gary Johnson.

Sound Familiar?
George McGovern’s “Demogrant” Proposal in 1972

The idea of a “prebate” for the FairTax is very similar to an idea that presidential candidate George McGovern proposed in 1972. He suggested that every American should be given a $1,000 tax credit, which would be refunded to poor people. This idea was widely criticized, not least by Sen. Hubert Humphrey who used it against him in the California primary election. Even liberals in the Democratic Party thought it was too “left wing” for prime time.

The Earned Income Tax credit was then enacted in 1975, and it has increased continually with each new tax law. The Republican administration joined with the Democratic Congress to enact a variation of the McGovern idea, because “fairness” in the tax system is always a political football. “Fairness” is commonly defined as taxing someone else who is not “paying a fair share,” and getting a tax cut for yourself and your friends. The McGovern idea of giving tax credits is at the center of the FairTax idea of a “prebate.” The tax is not “fair” if it is really a flat tax, as most people think about these things.

But the really important question we need to ask is about taxes in general. Is it “fair” to take money from some people, who earn it or receive it by trading with others voluntarily for a profit, and give it to others?

The question is never asked.

Materialists since Thomas Hobbes have questioned the idea of free will in human agents. Everything has a cause, and the efficient cause, like billiard balls, is what most people think about.

Billiard ball (1) hits Billiard ball (2) and (1) stops or slows down; (2) begins to roll at some angle from (1). You know that, basic mechanics.

The problem is you don’t ask whether that is the only way “things” can happen. There are more ways that things can happen.

“Free will” as a claim (assumption) in human psychology was challenged by Harvard professor B.F. Skinner in the 1950-70s. Skinner was a behaviorist, and perhaps the most extreme one although Karl Marx was not much different, with his materialism theory and his slander about “class” as it would influence ethical conclusions. This is determinism applied to the human mind and the whole idea about individualism.

Free Will Obviously Exists

This is not a claim anyone really needs “to prove.” If you don’t agree, it makes no difference because you were just determined to disagree with me, who (in your view) was just determined to hold an absurd position. Good bye. Have a nice day.

But, aside from trumping the argument, let me offer an example of free will. Poetry is an art form. We have all understood the beauty of some poetry (not all of it!), and we have all tried it – with limited success.

My high school English teacher in 10th grade emphasized that poetry was the art of placing the words, in harmony, rhyme, etc. as well as the choosing of words to make the best use of metaphor and visualization by the reader.

Sandburg writes, “The fog comes on little cat feet.” You know what that means, although the words do not specify it; they suggest it.

Knowledge is an interesting thing, in the human mind, and poetry is evidence that human free will exists. One might get the same, one idea out to others with different words. And some might be as lovely as Sandburg.

To take a single concept or proposition, like fog rolling in, and put it into words could have been done many different ways. The beauty of Sandburg’s formula, however, is unique. I claim it is superior, without claiming some universal super-duper. It is at the top, relatively.

Even to suggest the idea of “relative” good is another example of Free Will in our affairs, and in our minds. People disagree over economic values, and often also we disagree over moral values, like “fairness” or “happiness.” Interesting disagreements like these cannot just be determined like billiard-ball motion.

Neuroscience is an interesting new field of study. I do not expect it to bring us to some Skinner box of determinism. Science will instead bring more evidence of how individual human agency works. Some writers, generalizing, say this is like quantum mechanics with statistics. Free will is randomness. But that would not produce logical deduction or analysis. Most people live fairly successful lives by using practical wisdom, which is systematic because it needs “objective reality” to work. Behaviorism doesn’t answer that, and again, why do they care? Only we, who want to use free choice to decide questions, really want to know different answers.

So, go out tomorrow and make some totally free choice and ask yourself, “why?”

This essay by the head of the Brookings Institution further shows why there in no JUSTICE in the urgency for suppressing CO2 gas.

As the world community gears up for another round of climate-change talks – and Secretary of State Hillary Clinton arrives in Delhi on Sunday for meetings with Indian Prime Minister Manmohan Singh – a central issue will be how to bring developing countries into a climate-change pact.

Developing countries such as India do not want to pledge to reduce their emissions until industrial countries have first demonstrated not just pledges but actual emissions cuts. Industrial countries, for their part, generally recognize that they should act first. But they want some assurance that their reductions won’t be meaningless in the face of rapidly rising emissions in China and India.

India’s Mr. Singh has become the spokesperson for “equity” in emissions reductions. Mr. Singh has acknowledged that climate change is a problem and has said that India will do its part. Like all developing country leaders, however, he points to the fact that industrial countries have contributed a century’s worth of emissions to the global atmosphere while developing countries have only started to use, in his phrase, their “share of the global atmosphere.” He has pledged that India will never exceed the per capita emissions of industrialized nations. He also said that India will only consider signing on to a climate pact when a common global per capita emissions target has been established.

When it comes to saving the planet, there are strong reasons to consider per capita emissions as part of a burden sharing formula. However, we should be cautious about making this the magic bullet that resolves the dispute between industrial and developing countries. Indeed, the Indians themselves should be cautious. It undermines a core part of their argument.

At some level, Mr. Singh is right. India has not contributed historically to the problem. U.S. per capita emissions are probably 12 times those of India’s. If the U.S. meets the ambitious goal of cutting emissions 83% by 2050 – as stipulated in the recent energy bill passed by the House of Representatives – U.S per capita emissions would drop from 20 tons to three or four tons per person annually.

That per capita standard would still be double India’s current level of two tons per person. Because emissions linger in the atmosphere for 50 years, scientists tell us that all countries must cut their emissions over the next four decades to protect the planet. So if the U.S., the EU, and Japan slash emissions, but China, India and other developing countries continue to emit greenhouse gases unabated, by 2050 the overall global emissions might decrease, but not by enough.

But that’s not the only reason to be concerned about the per capita standard.

First, a per capita emissions standard does not consider population growth. It only looks at the quantity of greenhouse gases each person emits. That standard accepts, in essence, that unmitigated population growth is fine. This undermines a careful consensus developed over a decade ago, with India’s support, at the 1994 United Nations International Conference on Population and Development. After a century of inaction, the world community agreed that population growth needed to be managed. Even under that mandate, China and India together may add almost a billion more people to the world’s population by 2050.

Second, countries like India are using a double standard when they talk about history. In essence, developing nations are arguing that the U.S., the EU and Japan need to act first on climate change. They need to make up for their history of using fossil fuels, even though these nations did not know at the time that they were threatening the climate.

Yet there is also a population-growth history that can’t be ignored. During at least the last half of the 20th century, population growth exploded in developing nations. From 1950 to 2000, world population grew 2.5 billion to six billion – an increase of about 140%. Over that period, India went from 350 million people to over a billion – up 182%, outpacing even China’s increase. By comparison, the U.S. grew from 157 million to 287 million – a rate of increase that is well below the world average.

If developed nations are held responsible for emissions that they historically contributed, oblivious to their impact on climate change, why shouldn’t developing nations take responsibility for producing generations of people who will generate emissions into the future? Put another way, it is unclear whether we should use the population figures of 1950, 2000 or 2050 in judging per capita contributions to climate change.

Fighting climate change is a complex and dynamic undertaking. As with most metrics, the per capita standard is too simple. It doesn’t fully acknowledge the emissions of previous and future generations. When Mrs. Clinton meets with Mr. Singh, she should make it clear that a static per capita metric alone cannot solve the problem of climate change.

Mr. Antholis, who served on the National Security Council during the Kyoto negotiations, is managing director of the Brookings Institution.

Reprinted from The Wall Street Journal, July 18, 2009.

The following is what I think is wrong with the world. It’s a worldwide lack of IDENTITY on the part of the great majority of the earth’s population.

There are three Levels of existence -

(1) the highest Level is who or what you are.

The next lower Level is

(2) what you’re doing or what you have done.

(3) the lowest Level is what you own.

An example of Level (1) is Jesus, who changed the world based on who he was. An example of Level (2) is George Patton, one of the great generals of World War II, whose daring exploits amazed the world. As for Level (3), we have John Rockefeller who possessed fabulous wealth or today we have Bill Gates.

Most people on this earth have no identity, no “self.” As a result, they often pick an identity such as I’m a “Yankee fan” or I’m a “Texan” or I’m a “race-car driver” or I’m a “blood.” To lack an identity means you are mindless fodder in this world, and you’re open to join any group that fascinates you or that fits into your personal fantasy.

People long to have an identity – to belong to something which gives them an identity. People without an identity can be dangerous. When you have an identity you have a self – you are centered, and you can stand as a person with your own strong convictions.

I’ve always been fascinated with the Nazi phenomenon, which I fought against. When Hitler came to power, the German people adored him. They crowded the roadsides as Hitler rode by in his armored Mercedes, and they gave him the Nazi salute as they cheered their hearts out. Some women broke down in tears as their beloved Führer drove by. The German people were proud to be Nazis, and they were mesmerized when Hitler spoke in his hysterical voice.

This was the rebirth of Germany, and their new leader was a God. Hitler’s brain-washed army swore allegiance to their amazing leader as though he was a living god. Hitler could do no wrong, and once again Germany was a land of proud Germans with a new and proud identity.

Hitler’s army did their leaders’ bidding, even if it involved murder on the most colossal scale in all history. The German population, most having no identity, finally found an identity – it was to be a member of the “master race,” a proud conquering Nazi.

You look at what the Nazis did. Burning down village after village in Russia. Murdering millions of Jews, Gypsies, homosexuals, disabled people, Poles, Slavs, and you think – it required thousands of Germans to do this. How could this have happened? It happened because most of the German people (like most people) lacked an identity. They simply followed the orders of their leaders, and the leaders followed the orders of a sadistic madman.

“Why doesn’t this occur in America,” I ask. It’s because Americans have an identity. Their identity, handed down from generation to generation, is “independence and freedom.” The history of tyrants and would-be dictators in the US is that they don’t survive. Huey Long was shot dead. Joseph McCarthy was run out of the Senate. J. Edgar Hoover has become a joke.

This is why I have no use for organized religion or for nationalism. Both provide their followers with an identity – “I’m a Jew, I’m a Catholic, I’m an American, I’m a Frenchman, I’m a Crip.” But without having a personal sense of identity, who the hell are you? Do you know who you really are? If you know yourself, then you probably have an authentic identity.

If you have a real identity, you follow no one without examining their cause. If you have an identity, you are an original, you follow no other person, nor do you accept any specific philosophy or thought process out of hand. Why do men go to war, knowing that they may be killed? Because some “leader” told them that the patriotic thing to do was to take up arms and kill other men. Why do people accept the thinking and orders of some ego-driven mindless leader? It’s because “I’m a Republican, and I follow my party’s lead” or “I’m an American, and I fight for my Country right or wrong.”

We live in a world of the mindless, a world of 4 billion souls who for the most part lack an identity. The ancient Greek aphorism, “Know Thyself” was inscribed in the forecourt of the Temple of Apollo at Delphi. Know thyself – it’s something we should still live by in today’s propaganda-filled modern era.
_________
This essay has been quoted from Russell’s “Dow Theory Letter” of June 4, 2009. All rights reserved by the author. Russell. Mr. Russell is 85 and very wise.

Let me begin by raising some questions about taxation. First, let us compare a system of pure extortion, ungoverned by any rules or laws. The mobster who extorts you says “your money or your life” and doesn’t bargain. But then why would extortionists ever give you a break? Once a system is unjust, dickering about bits and pieces of it is virtually pointless and makes little sense anyway. There is no way to deal justly with stolen goods.

Taxes

And there is that other matter, one of the triumphs of the American revolution, that has gone south big time. It is the idea of “No taxation without representation.” Arguably the revolution began because this idea was violated by the Brits. Never mind. Our current extortionists – for never forget that something like the income tax amounts to flat out extortion, a major source of revenue for organized criminals – borrow against the expected wealth of members of future generations, committing those people to pay back what the current regime borrowed. Yet, of course, those members haven’t even been born yet, or are so young that they may not vote. So these folks are being taxed with no one representing their voice in the so called democratic process.

Of course, this policy of taxing the unrepresented is widespread. Airport and hotel taxes are typical cases in point – one is taxed in the locale of the airport or hotel but of course hasn’t any voice there at all concerning the disposition of the “revenues” thus collected. Clearly this again violates the idea of no taxation without representation. Another triumph of the American revolution that’s routinely betrayed.

Feudal Rent

But of course the policy of taxation is never a just one, be the taxpayer represented or not. For taxes are nothing but a phantom rent collected by the government for permitting the citizenry to live and work within the realm. That is how taxation made sense in feudal times, where it amounted to rent paid to the owner of the realm for the privilege of living and working there. In effect, everything was owned by the monarch and one who lived in the area had to pay for that privilege. Only the monarch had rights – sometimes dubbed “the divine rights of kings” – and he or she had the authority to issue permits to the subjects who lived within the realm.

It is just this arrangement that was supposed to have been overthrown by means of the American revolution. Sovereignty was supposed to have been taken from the monarch and assigned to individual citizens in accordance with their natural rights to their lives, liberty and property. But today there is little sign of this in America, the so called leader of the free world! So it isn’t just that governments tax earnings and capital gains at their nominal value though they have effectively been made worth less over time by inflation.

The very idea of taxation is a fraud, despite such noble designations of it as “the price we pay for civilization.” Because taxation was kept in place after the regime change, from a feudal to a free society – unlike serfdom, for example, as well as in time slavery – today it is the major instrument of tyranny. All these bailouts that amount to committing members of future generations to pay for the widespread irresponsibility of present ones could not be perpetrated without this vicious instrument of coercion. Yet in the mainstream hardly any mention is made of just how inconsistent is the financial foundation of the policy of bailouts and just how predatory is the policy of taxation.

Betrayal by the Intellectuals

What is even worse is that throughout the academic community, where radical ideas are supposed to be proposed and considered, the notion that taxation is unjust, with or without representation, doesn’t even get discussed. Instead, famous academics write prominently published tracks defending taxation and the corresponding reactionary notion that all wealth really belongs to, you guessed it, the government!

–
Tibor Machan holds the R. C. Hoiles Chair in Business Ethics & Free Enterprise at Chapman University’s Argyros School of B&E and is a research fellow at the Hoover Institution (Stanford University, CA). (www.Tibormachan.com)

“The envious man thinks that if his neighbor breaks a leg, he will be able to walk better himself.” – Helmut Schoeck

ETR reader Greg A. wants to know how to deal with “family or friends that seem to want you to fail… if a great break in your plan to future success happens, and you tell everyone the good news, and half of them act bitter and discouraging.”

Unfortunately, envy is about as commonplace as crabgrass, though not as easy to spot. But you can defeat it – once you learn how to recognize it.

As you become more successful, the people who know you will change in two ways. First, they will begin to think of you as smarter than they do now. Second, they will sometimes resent your good fortune.

You will probably notice the first – your new intellectual status. Friends will seek your advice and treat it seriously. Siblings will come to you for help. Colleagues and competitors will nod in studied contemplation when you make an offhand remark about business. (Well, not always – but it will happen. And you’re probably going to like it.)

You won’t notice – at least most of the time – the resentment your accomplishments will stir up. You may be kidded now and then about your financial status. You may hear self-deprecatory comparisons. (“It isn’t big money to you, but…”) Every once in a great while, you’ll be stung by a zinger. I remember being lambasted for my penchant for expensive cigar lighters (“You think you’re too good for a Bic?”) and denounced for my tax bracket (“People like you can afford to pay 41 percent, so they should”).

You may be shocked to learn how widespread envy is. In fact, it may floor you to discover that some of your closest relations – partners, family members, and old friends – bear the greatest resentment.

Envy damages the person who feels it, but it can hurt the person envied too. Not the envy itself, but the actions and lack of action that can result from it. And most people – both the enviers and the envied – aren’t even aware of it.

I am always surprised when I discover that someone is envious of me, because I have never felt envious of others. How is it that I, a man who has admitted to many other sins in my lifetime, managed to be free of this one? Because, to feel envy, you must:

1. Want something that someone else has
2. Feel that you can’t easily get that thing yourself

If either of those feelings is absent, it’s pretty much impossible to be envious.

Let’s say, for example, that Ralph gets a nice new boat. When you see his boat, you decide that you want one too. If you have the resources, you buy a boat of your own – one that’s perhaps a little nicer than Ralph’s. But if, for whatever reason, you can’t buy one, you start to feel a certain amount of dissatisfaction. And, before long, that turns to envy.

Let’s go back to Greg, the ETR reader I mentioned at the beginning of this essay who wants to know how to deal with people who envy his success. In his case, he is just starting to be successful – while his friends aren’t. I’m guessing that because he has stopped doing whatever unproductive things he was doing before that prevented him from achieving his goals, his friends feel that he has betrayed them. They liked him just the way he was – unfulfilled and burdened by bad habits.

When he dropped his bad habits, it was as if he were dropping them. Greg is like the alcoholic who joins AA and leaves his barfly friends behind. They know he is doing something that is considered to be “good,” but it feels “bad” to them.

If they were smart, Greg’s friends would emulate him. But it’s easier to be envious – and even to hope that Greg ends up failing miserably.

When you think like that, you do yourself a double injustice.

First, you accept limitations that you don’t really have.

Second, you spoil a good relationship.

Several times in my career, acquaintances, colleagues, and even friends have done things or said things or failed to do or say things because it was clear that they envied my success. For the most part, I’ve tried not to pay too much attention to this. But I can’t ignore the fact that there are people out there who don’t like me . . . simply because they don’t have the things that I have. As a result, I’ve learned to make certain adjustments to my behavior that seem to help.

Based on my experience, here’s what I suggest you do:
[ see Book IX, on Friendship, in "The Ethics" by Aristotle ]

• Don’t talk too much about your success. Don’t, for example, talk about awards you’ve won, famous people you’ve met, or how much money you’ve made.
• If the subject comes up, make a concerted effort to diminish your own role and praise others.
• Eschew the trappings of success – the fancy cars, the expensive watches, anything that’s ostentatious.
• Most important, be interested in other people – in what they are doing and what successes they are having. Focus attention away from yourself, even while you work on achieving more of your own goals.

This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.