Wednesday, July 22, 2009

Dr. Davis on Taxes

The libertarian ideal is to do away with all taxes. However, recognizing that there will always be need for government (or at least for as long as people live in any proximity to each other) there must be a source of whatever funds are necessary. I propose the following measures as a means of initiating discussion on what should be taxed:

1. Short term capital gains (< 1 year) and ordinary dividends collected to be taxed as normal income
2. Long term capital gains and reinvested dividends and interest taxed at 10% below $75,000, as ordinary income for any in excess of 75,000 with these limits adjusted annually for inflation. For those disabled or retired, no tax up to $75,000, 5% above 75,000.
3. Individuals over age 80 exempt from tax on interest/dividends/capital gains.
4. A shift from tax on income to tax on consumption. Exemptions for necessities such as food and medical care, partial exemptions on shelter, clothing, energy/utilities to be determined by a determined level of what constitutes necessity versus luxury. Obviously this would be a complex process, but there are already examples in individual states that define, for example, foods that qualify as necessities versus luxuries such as snack foods.

Ultimately, reducing taxes is pointless without limiting government spending. Whether government takes resources as taxes or in the form of borrowing and inflation, the resources are taken. As the current economic crisis has spurred individuals to increased savings, we must encourage this trend, as money saved by an individual, whether invested in stocks and bonds or simply saved in a bank is ultimately reinvested in the economy, allowing growth at a pace determined by that saving. (There is, of course, one exception: money hoarded, whether buried or stuffed in a mattress, grows nothing.) Not all consumption is bad, but too much consumption in the present with too little saving to build for the future leads to disaster on both the individual and the national levels.

Monday, July 20, 2009

Dr. Davis on Social Security

The extreme libertarian position is that Social Security is a huge Ponzi scheme and should be abolished immediately and completely. I differ in that I believe a true Ponzi scheme is at least voluntary for the investors. For almost 75 years, millions of people have had money removed from their pay totaling billions of dollars, with the implied, if somewhat shaky promise that it will be returned to them as retirement funding. I believe the social and economic disruption from a sudden termination of the “plan” would be catastrophic. I therefore propose the following steps:

1. Establish a credible Consumer Price Index based on the living needs of retirees: food, shelter, utilities, medical care, and clothing. Cost of living increases in benefits to be both determined and limited by this. (I suspect this might actually add to the cost of the system.)
2. No other changes for EXISTING retirees.
3. For everyone aged 55 or younger at the effective date of the appropriate legislation end the option of eligibility for retirement earlier than the full effective retirement age except in cases of medical necessity.
4. With the effective date of the appropriate legislation, retirement effective date for anyone aged 40 or younger would be life expectancy minus 15 years. For those born after the new system takes effect, retirement eligibility would be life expectancy at birth minus 15 years. (When Social Security began, five years was a normal retirement life expectancy.)
5. Allow an individual to opt out of the system at age 35, 40, 45, 50, and 55. To opt out, the individual would be paid the full amount of contributions to date in his or her choice of five or ten year government bonds at the prevailing rate of interest. Eligibility for any other benefits would be waived at opt-out. The individual could hold the bonds and roll them over as they matured or sell them at any time, but would be responsible for their own retirement in any case. (For years the argument has been, as Congress borrows from the “trust fund” that “we owe the money to ourselves”. Since much of what “we” owe is now to the Chinese, the Japanese, the Saudis, and anyone else who has bought large quantities of U.S. government bonds, this would return choice to the individual as to whether he or she wishes to entrust the government with retirement savings. This should, at least in theory, require Congress to take more seriously the levels of debt it is willing to incur, though I remain a bit skeptical that anything can really accomplish that, short of more frequent changes in the membership of Congress.)
6. Ultimately, this should allow a gradual phasing out of the current system, with all its complexity and bureaucracy. People who wish to do so could invest all or part of their retirement savings in government bonds, but would do so entirely by their own choice and would retain full control of those savings. The only control they would cede to the government would be of the creditworthiness of the bonds, which could be influenced by the fiscal responsibility – or lack thereof – of their representatives in Congress

I believe this system would return to the individual citizens increased control over their own financial destinies while reducing the cost of government by eliminating (gradually) a huge bureaucracy and spurring people to take a much more active interest in both their own financial affairs and in the spending policies of their government, while potentially raising their incomes by the 15.3% currently withheld for retirement benefits by the Federal government.

Sunday, July 19, 2009

Congressional candidate represents Shore values

Many of the complex issues that face our society are simply the result of too much government. This is a problem that has been decades in the making as our liberties get chipped away bit by bit. Our Constitution as it stands today either means what it says or it is not worth the paper it was written on.

The president, Congress and the Senate have all sworn oaths to protect and defend the Constitution. Yet their actions are nothing short of treasonous, as they consistently violate it with the numerous laws, acts, treaties, and countless amendments they pass -- without even reading and understanding the very legislation for which they cast their votes.

Elected Republicans, Democrats and President Bush violated nearly every Article and Amendment of the Constitution with the Patriot Act and by invading Iraq.

President Obama and Congress have violated nearly every one as well, with the massive amounts of legislation they have passed.

In the pipeline are more centralized control, more tax increases, more spending and more control of your life and liberties.

We consistently elect people to Congress and the Senate who become nothing more than patsies for their lobbyists and party bosses. We have given these two parties too many chances and we simply cannot afford them anymore.

Maryland's 1st District has an opportunity to make a difference, as Libertarian Dr. Richard Davis is running again for Congress. Anti-war, anti-Patriot Act and anti-bailout, -- Davis represents true Eastern Shore values.

Muir W. Boda


Boda is on the Maryland Libertarian Party's executive board and serves as director of communications. -- Editor