Over the last week or so, there has been talk of a VAT. For those of you who don't know what a VAT is, VAT stands for Value Added Tax. What a VAT does is taxes the value of a product increases through the manufacturing process. I'll Give an example.
You want to buy a widget. This widget has 3 parts supplied to the widget manufacturer (WM) which it uses to construct the final product. Each part supplier purchases raw materials and makes a part A, B, & C. During the process of manufacturing each part the value of each part increases in value by $50. So, lets say each part manufacturer (PM) pays $50 in materials making the price sold to the WM is $100. At this point, the PM is taxed 25% (one of the floated rates). This means the PM will pay $12.50 when selling each part. The WM takes each part and makes a widget which it sells at a price of $500. The value increase will be $200 ($500-3($100)). So at the same 25% VAT, the tax paid by WM will be $50. So the VAT taxes paid on the purchase of a $500 widget will be $87.50 ($50 + 3(12.50)).
What is good about this?
Well, the first thing is that a VAT will be partially an elective tax. If you don't want to pay the VAT, don't buy anything. The ability of paying taxes electively gives power to the people. Don't like a military engagement? Don't buy anything. Don't like a entitlement program? Don't buy anything. Having a tax system based upon a "sales tax" model (Note that a VAT is not a sales tax) gives the public the ability to control the purse strings of the nation through voting with their pocketbook.
So, what's the down side to this?
The VAT balloon floated by the Obama administration is not a tax system in opposition to the current system. In other words the VAT will not replace, but be added to, all the other taxes. There is some talk about possibly augmenting the income tax to make the tax more palatable to tax payers; however, the income tax is not being proposed to being repealed. This will mean just another layer of taxation added to the already multiple-tax tax policy of the governments in the U.S.
The $500 widget will rapidly assume a $587.50 price. The VAT, just as other corporate taxes, will be passed on to the consumer. The VAT will not just be applied to our $500 widgets. The VAT will be applied to basic necessities. It will be more expensive to survive; or in other words, it will be more difficult to rise above the poverty line. $5 gallons of milk and $2 bread will be a thing of the past. A $50 grocery trip will now be about $60. Sound like a winner to you?
In addition to the higher prices at the check out, the increase in prices will not be in any way transparent. "VAT" will not be a line on your receipt. You won't know how much you are paying in taxes; you'll just know that you're paying more. Through this type of cloaked tax, politicians will be able to talk about how the corporate fat cats aren't paying their "fair share" and you won't have the foggiest idea of how much the fat cats aren't paying because you can't see, and by these types of hidden taxes prevented from seeing, how much of these taxes you are actually paying.
What should we do?
Well certainly, the VAT should be opposed. It is a tool by which politicians will use to hide how much they are actually spending so they can confiscate your wealth without you getting wise to their scam. There is, however, a tax policy that can retain the benefits of the VAT and eliminate the disadvantages. This is the FairTax. The FairTax will be an actual sales tax. You will know how much you are being taxed. There will be a line on your receipt which tells you how much you spent on your taxes. Not only that, but it will not be a tax added to all the other taxes you already pay. Personal & corporate income taxes, Medicare & Medicaid withholdings, Social Security withholdings, self-employment taxes, the alternative minimum tax (AMT), estate taxes, every federal tax; ALL GONE! Your "take home pay" will become your "gross pay!" Not only that, but the additional resources your company allocates to your employment in taxes and government paperwork will be eliminated. Your company will be more efficient and would have the choice to reallocate that money to its employees. So in addition to getting your whole pay check, you could get an additional raise on top of it.
It is less stressful. You don't have to worry about filing your taxes. You don't have to worry about getting audited. April 15th will no longer be a day you have to your government paper work done, submitted, & paid for; but might be an excellent day to find a nice place in the park for a picnic. That sounds pretty stress free to me (depending on your company of course), but how many of you have been told by your health care provider to reduce your stress? It just another additional benefit. And since we're on the topic of not having to file your taxes, how much of you spend on having someone prepare your taxes? How many hours do you spend doing them yourself? You don't have to pay for or spend your time doing any of that stuff again! I do want to suggest to you that the onerous tax laws require you to pay a de-facto tax by paying to have your taxes prepared by a professional, or a tax of your personal time (either at your job, with your family, or other) so that you can become competent in knowledge of tax law and actually filling out your tax return. The cost of compliance is a tax with a different name.
Let's return to the fact that the FairTax is an actual sales tax. Now the VAT has the element of elective taxation that is shared by the FairTax. The FairTax is different from the regressiveness of the VAT is not shared by the FairTax. The FairTax is progressive and not applied to the basic necessities. So, if you don't like what the government is doing; no matter what the percentage of tax is, you can control the purse stings by choosing not to buy anything but the basic necessities. The FairTax will also be limited to the retail market. Although it makes sense to me that the VAT would be collected at the point of retail sales, what about sales of used products at the retail level? Although I am sure there are other examples, the used car market seems the most obvious question. Would the VAT apply to the average elevated value of used vehicles sold at retail dealerships? I don't know, but what I do know is that the FairTax would not. The FairTax only applies to new products at the retail level. If you want to go buy a previously purchased vehicle (or anything else for that matter), you don't pay tax. You pay tax once, that it! Simple.
Although there are a couple good things about the VAT, the disadvantages outweigh the benefits. If we were to enact the FairTax, we would have all of the benefits of the VAT without any of the disadvantages. If you want a more in depth discussion of the FairTax, the link above will take you to FairTax.org, but I severely recommend getting "The FairTax Book" and "The FairTax Book: Answering the Critics." I have read both of them and they are very informative. There are even more benefits to enacting the FairTax which you will read about in those books, but I believe I've covered the basics.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
Friday, June 5, 2009
Thursday, June 4, 2009
Tennessee Legislature Overides Anti-Gun Veto
This week the Tennessee State Legislature overrode the veto by Governor Phil Bredesen of the gun - alcohol bill. Here are some articles: WATE; CCRKBA.
It is about time. First, I want to say that the law that this veto override will eliminate plus all other legislation and regulations restricting guns are unconstitutional.
The 2nd Amendment is for the purpose of keeping an armed population as to discourage the formation of a tyrannic government through the citizen's access to the tools of war. Anyone who objectively looks and studies the 2nd Amendment will come to the same conclusion. Now after saying that, I do concede that the actions one takes with the weapon can be a subject of legislative authority. If anyone injures the rights of someone else through any means, there should be repercussions. The problem with the Tennessee law that was just repealed is that you can cause injury to no one's rights and be charged with a crime. When governments legislate topics outside of areas regarding the infringement of one's rights, they legislate personal decisions. Analogous to the soon to be repealed law would be laws requiring individuals to go armed or to refrain from wearing clothing of certain colors. These decisions are personal decisions which aught to and must be, in a free society, left to the individual.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
It is about time. First, I want to say that the law that this veto override will eliminate plus all other legislation and regulations restricting guns are unconstitutional.
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
The 2nd Amendment is for the purpose of keeping an armed population as to discourage the formation of a tyrannic government through the citizen's access to the tools of war. Anyone who objectively looks and studies the 2nd Amendment will come to the same conclusion. Now after saying that, I do concede that the actions one takes with the weapon can be a subject of legislative authority. If anyone injures the rights of someone else through any means, there should be repercussions. The problem with the Tennessee law that was just repealed is that you can cause injury to no one's rights and be charged with a crime. When governments legislate topics outside of areas regarding the infringement of one's rights, they legislate personal decisions. Analogous to the soon to be repealed law would be laws requiring individuals to go armed or to refrain from wearing clothing of certain colors. These decisions are personal decisions which aught to and must be, in a free society, left to the individual.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
Thursday, April 16, 2009
TEA Party: Knoxville '09
Yesterday I attended Knoxville's TEA party at the Word's Fair Park near down town Knoxville. Along with me there were about 3,000 people there. I made sure to bring along my camera to take some shots of the people who were there. I'll post some photos of the the more creative/funny costumes and signs people made and wore.
But first I'd like to provide my thoughts on the nature of the tea party. Since yesterday, there have been several reports on the news, most notably Susan Roesgen's report from Chicago on CNN, which describe the TEA parties as being a right wing coordinated invention. This simply is not true. There certainly is an anti-Obama sentiment to the people who showed up, but this also coexisted with an anti-Republican sentiment as well. (If you look in the background of Roesgen's report, you'll see an sign which says, "Republicans Suck Too.") The whole point to why these TEA parties are occurring is that people see a huge intrusion by government on all levels, but most noticeably the Federal level, into the lives and pocketbooks of the citizens. That's it.
The atmosphere contrary to Ms. Roesgen's comments was in no way anything but family-friendly. Everyone I spoke to was courteous and kind. Anyone could have brought their children, and some did, without even the fear of exposing them to profanity. The most family-unfriendly things that I saw was the photos which some anti-abortion people brought.
...although this is somewhat of a digression, but even though I believe abortion outside of certain circumstances is murder, some of the photos people use to progress the anit-abortion discussion should be used with more discretion.
2/17/09 Update:
If you would like to see a video of the Knoxville TEA party go here.
I'll be looking forward to a TEA party next year....AND GOOOOOOOO FAIRTAX!!!!!
Here are some photos from yesterday.
Some Good Signs:
Some Good Costumes:
Yes, that is a Tax Vampire.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
But first I'd like to provide my thoughts on the nature of the tea party. Since yesterday, there have been several reports on the news, most notably Susan Roesgen's report from Chicago on CNN, which describe the TEA parties as being a right wing coordinated invention. This simply is not true. There certainly is an anti-Obama sentiment to the people who showed up, but this also coexisted with an anti-Republican sentiment as well. (If you look in the background of Roesgen's report, you'll see an sign which says, "Republicans Suck Too.") The whole point to why these TEA parties are occurring is that people see a huge intrusion by government on all levels, but most noticeably the Federal level, into the lives and pocketbooks of the citizens. That's it.
The atmosphere contrary to Ms. Roesgen's comments was in no way anything but family-friendly. Everyone I spoke to was courteous and kind. Anyone could have brought their children, and some did, without even the fear of exposing them to profanity. The most family-unfriendly things that I saw was the photos which some anti-abortion people brought.
...although this is somewhat of a digression, but even though I believe abortion outside of certain circumstances is murder, some of the photos people use to progress the anit-abortion discussion should be used with more discretion.
2/17/09 Update:
If you would like to see a video of the Knoxville TEA party go here.
I'll be looking forward to a TEA party next year....AND GOOOOOOOO FAIRTAX!!!!!
Here are some photos from yesterday.
Some Good Signs:
Some Good Costumes:
Yes, that is a Tax Vampire.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
Wednesday, March 25, 2009
A Breath of Fresh Air from Europe
Hannan's words to P.M. Brown are too good not to share. If you haven't heard this yet or want to listen to it again, here is the video.
If only this caliber of exposition could be more often available here in the U.S. in a measure which is preventative and restorative towards the destruction of our wealth, currency, and liberty rather than one which will eventually be only restorative.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
If only this caliber of exposition could be more often available here in the U.S. in a measure which is preventative and restorative towards the destruction of our wealth, currency, and liberty rather than one which will eventually be only restorative.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
Saturday, March 21, 2009
The Fairtax Discussed on the House Floor
Go FairTax!!!
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
Friday, March 20, 2009
Bailouts, Attainders, & Ex Post Facto
For the last several days, we have had wall to wall coverage about bailouts, bonuses, and an overload of demonization against AIG & it's executives who have taken millions of dollars in bonuses after accepting billions of tax dollars.
Yesterday, the U.S. House of Representatives voted to tax bonus payments of companies who have been given more than $5 Billion in government handouts. So, what's the problem with that? Companies shouldn't be profiting on a taxpayer subsidy. That sounds fair, right? It seems outrageous that a company would accept taxpayer money, and then its upper most echelon line its pockets with the money. I certainly agree it's outrageous. Think of college students (myself included) who's families would like to support them in further scholastic achievement by financing their continued education who cannot because the income which would go to such worthwhile causes is siphoned off by local, state, & federal taxes & fees. Then we see our hard earned money go towards some group of corporate fat-cats who had enough money to buy off a few influential government officials. Think I'm making this up? I don't hold John Stewart as having any debatable serious reporting or commentary stature, but check out 2:58-8:44 of his March 19th show. It's, I believe, fairly accurate and entertaining at the same time.
Honestly, what did you (and I'm talking to all of you who supported TARP & the bailouts specifically) think was going to happen? It was such an emergency that the stimulus spending package be passed in such a short time that no one could read the bill. The very idea that such actions would lead to anything other than corruption is absurd; and in my opinion in this particular legislation, intentional. The whole idea that you tax the citizens to give to entities which don't function in a prosperous manner is inherently backwards. This is the same thing as if AIG, GM, Chrysler, and all the rest who got their hands on tax payer dollars broke into everyone's home and stole what they wanted. (See my comments on mortgages on the force of government for a little more lengthy discussion on this idea.) There is a reason why we didn't buy their services/products to begin with. Let's maybe look at this a different way. I'm a typical person who is watching his money and trying to make it though the recession with as little effect to my finances. Does it make sense to take out a loan to buy a car from GM or Chrysler or possibly go out and give money to AIG out of my finances which, if you are following your grandmother's advice to not spend what you don't have, doesn't exist. That's essentially what the government has done. Ask yourself, does it make sense? Would you do it with your own finances? And just for those of you who think all of this money is coming from the rich, The bailout has increased the U.S. debt limit by $700 Billion. It's not coming from the rich, its coming from our creditors. I don't know about you, but I'd like not to owe China anything let alone make our children beholden to them.
Now as bad as this is, lets put this into perspective. AIG was given $182.5 billion. AIG's people got $165 million in bonuses.
Of 182.5 B, $165 M is .09%. Pretty astounding how much difference a few decimal places makes. This means that if someone gave you $100, you would keep ¢9 (that's $0.09) to keep the same percentage. So go ahead, be outraged about the 165 million dollars. Go ahead, be worried about the pennies. Don't think to ask where the rest of it went. I'm sure it doesn't matter.
Now, back to the taxing of the bonuses. As reprehensible as the bonuses are, I cannot see justice being done by taxing the bonuses. There are constitutional issues with taxing the bonuses. Some say there isn't, but I think they might be wrong in some cases.
Here are the general provisions which some say are in contests with taxing the bailouted thieves' bonuses: Bills of Attainder, Ex Post Facto, Contract Clause, & the Fifth Amendment.
I think there may be some validity to the arguments in the above referenced piece in regards to the Contract Clause and the Fifth Amendment; however, I believe the Ex Post Facto & Bills of Attainder provisions in the Article I, Section 9 of the Constitution are clearly in contrast to this type of taxation.
Bills of attainder: Congress is singling out these people. Writing the bills in a broad sense may be a technical way around it, but the problems I see in it is that 1.) it may not be broad enough to pass a challenge in court; 2.) it makes the tax code that much more complicated; & most importantly 3.) the purpose is still the same. Lets say I want something my neighbor has. This thing is really cool, and I don't think he should have it for himself. Even though my representative sympathizes with my plight, he can't do anything because of the prevention of bills of attainder which wouldn't allow him to pass a law singling out the specific neighbor who has that really cool gizmo. Well, my neighbor doesn't have the same street address as I do; what if we write the law that says everyone who has a street address which ends in odd numbers (encompassing the neighbor's address and excluding my own) will be taxed at the cost of the really cool gizmo and such funds be directed to addresses ending in even numbers. Problem solved. Just because this law may be very broad natured, it doesn't remove the fact that I want a bill of attainder passed against my neighbor. Bills of attainder, regardless of how broad, exist as entities of purpose and not domain.
Ex Post Facto: This provision of the Constitution has been debated from the 1700's. The primary area of debate is whether the Ex Post Facto Clause applies to civil law in addition to criminal law. Everyone is familiar with the idea of criminal ex post facto. No one should fear drinking from a clear glass because if drinking from clear glasses were to be outlawed, no one would be subject to the penalties during the time previous to the passage of the laws when such activities were not subject to lawful penalty. No one disputes this, but what if legislatures are allowed to injure its population by passing laws to architect its will when such actions are contrary to agreements between two people? There would be no way to conduct business in any manner which derived it's intention from any expectation of the ability to be free from interference from a legislative body. In such a situation, no agreement can be binding. The Cato Journal has a very in depth piece on the civil application of the Ex Post Facto Clause in which quotes, as I do now, Federalist Paper 44 by James Madison.
The single problem with all of these issues in the replacement of the spirit & word of the law with the word of the law. The only way one can ignore the laws as they are intended is if they construe the wording to mean what is popular at the moment for the will of those who dismiss the purpose and distort the language of the law. This is why when people quote the Constitution or the law without addressing the Constitution or law's purpose, they do it often with the intention to dilute its meaning. When we hear people speak about the Constitution, how often do we hear the same people quoting the Federalist or Anti-federalist Papers or other documents discussing the purposes of the laws about which they speak? We must be very careful not to accept the law but deny its purpose. I have for some time now argued for a simplification of laws particularly with the tax code, but it is for the same reason as I am arguing now that people should be aware of the purposes for which laws are written. Many of today's problems are those which originate at the contortion of the Constitution and at the abandonment of the purposes of its clauses. This is not to say that the language is irrelevant, but a partner to the law's purpose. The wording of laws originate only from the meaning behind them; and without the meaning from which words are used to construct our laws, they have no purpose. The rule of law can only exist within the continuity of the purpose & language of the law; without which leaves little room to be filled with anything else but the rule of man. It seems that James Madison saw more purpose in the Ex Post Facto Clause than just a criminal application. Funny I don't hear much about Mr. Madison's views on this when someone wants to tax someone else at 90%; and if the government can do it to the people at AIG, who can't they do it to?
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
Yesterday, the U.S. House of Representatives voted to tax bonus payments of companies who have been given more than $5 Billion in government handouts. So, what's the problem with that? Companies shouldn't be profiting on a taxpayer subsidy. That sounds fair, right? It seems outrageous that a company would accept taxpayer money, and then its upper most echelon line its pockets with the money. I certainly agree it's outrageous. Think of college students (myself included) who's families would like to support them in further scholastic achievement by financing their continued education who cannot because the income which would go to such worthwhile causes is siphoned off by local, state, & federal taxes & fees. Then we see our hard earned money go towards some group of corporate fat-cats who had enough money to buy off a few influential government officials. Think I'm making this up? I don't hold John Stewart as having any debatable serious reporting or commentary stature, but check out 2:58-8:44 of his March 19th show. It's, I believe, fairly accurate and entertaining at the same time.
Honestly, what did you (and I'm talking to all of you who supported TARP & the bailouts specifically) think was going to happen? It was such an emergency that the stimulus spending package be passed in such a short time that no one could read the bill. The very idea that such actions would lead to anything other than corruption is absurd; and in my opinion in this particular legislation, intentional. The whole idea that you tax the citizens to give to entities which don't function in a prosperous manner is inherently backwards. This is the same thing as if AIG, GM, Chrysler, and all the rest who got their hands on tax payer dollars broke into everyone's home and stole what they wanted. (See my comments on mortgages on the force of government for a little more lengthy discussion on this idea.) There is a reason why we didn't buy their services/products to begin with. Let's maybe look at this a different way. I'm a typical person who is watching his money and trying to make it though the recession with as little effect to my finances. Does it make sense to take out a loan to buy a car from GM or Chrysler or possibly go out and give money to AIG out of my finances which, if you are following your grandmother's advice to not spend what you don't have, doesn't exist. That's essentially what the government has done. Ask yourself, does it make sense? Would you do it with your own finances? And just for those of you who think all of this money is coming from the rich, The bailout has increased the U.S. debt limit by $700 Billion. It's not coming from the rich, its coming from our creditors. I don't know about you, but I'd like not to owe China anything let alone make our children beholden to them.
Now as bad as this is, lets put this into perspective. AIG was given $182.5 billion. AIG's people got $165 million in bonuses.
$182,500,000,000
vs.
$165,000,000
vs.
$165,000,000
Of 182.5 B, $165 M is .09%. Pretty astounding how much difference a few decimal places makes. This means that if someone gave you $100, you would keep ¢9 (that's $0.09) to keep the same percentage. So go ahead, be outraged about the 165 million dollars. Go ahead, be worried about the pennies. Don't think to ask where the rest of it went. I'm sure it doesn't matter.
Now, back to the taxing of the bonuses. As reprehensible as the bonuses are, I cannot see justice being done by taxing the bonuses. There are constitutional issues with taxing the bonuses. Some say there isn't, but I think they might be wrong in some cases.
Here are the general provisions which some say are in contests with taxing the bailouted thieves' bonuses: Bills of Attainder, Ex Post Facto, Contract Clause, & the Fifth Amendment.
I think there may be some validity to the arguments in the above referenced piece in regards to the Contract Clause and the Fifth Amendment; however, I believe the Ex Post Facto & Bills of Attainder provisions in the Article I, Section 9 of the Constitution are clearly in contrast to this type of taxation.
Bills of attainder: Congress is singling out these people. Writing the bills in a broad sense may be a technical way around it, but the problems I see in it is that 1.) it may not be broad enough to pass a challenge in court; 2.) it makes the tax code that much more complicated; & most importantly 3.) the purpose is still the same. Lets say I want something my neighbor has. This thing is really cool, and I don't think he should have it for himself. Even though my representative sympathizes with my plight, he can't do anything because of the prevention of bills of attainder which wouldn't allow him to pass a law singling out the specific neighbor who has that really cool gizmo. Well, my neighbor doesn't have the same street address as I do; what if we write the law that says everyone who has a street address which ends in odd numbers (encompassing the neighbor's address and excluding my own) will be taxed at the cost of the really cool gizmo and such funds be directed to addresses ending in even numbers. Problem solved. Just because this law may be very broad natured, it doesn't remove the fact that I want a bill of attainder passed against my neighbor. Bills of attainder, regardless of how broad, exist as entities of purpose and not domain.
Ex Post Facto: This provision of the Constitution has been debated from the 1700's. The primary area of debate is whether the Ex Post Facto Clause applies to civil law in addition to criminal law. Everyone is familiar with the idea of criminal ex post facto. No one should fear drinking from a clear glass because if drinking from clear glasses were to be outlawed, no one would be subject to the penalties during the time previous to the passage of the laws when such activities were not subject to lawful penalty. No one disputes this, but what if legislatures are allowed to injure its population by passing laws to architect its will when such actions are contrary to agreements between two people? There would be no way to conduct business in any manner which derived it's intention from any expectation of the ability to be free from interference from a legislative body. In such a situation, no agreement can be binding. The Cato Journal has a very in depth piece on the civil application of the Ex Post Facto Clause in which quotes, as I do now, Federalist Paper 44 by James Madison.
Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. The two former are expressly prohibited by the declarations prefixed to some of the State constitutions, and all of them are prohibited by the spirit and scope of these fundamental charters. Our own experience has taught us, nevertheless, that additional fences against these dangers ought not to be omitted. Very properly, therefore, have the convention added this constitutional bulwark in favor of personal security and private rights; and I am much deceived if they have not, in so doing, as faithfully consulted the genuine sentiments as the undoubted interests of their constituents. The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and lessinformed part of the community. They have seen, too, that one legislative interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding. They very rightly infer, therefore, that some thorough reform is wanting, which will banish speculations on public measures, inspire a general prudence and industry, and give a regular course to the business of society.
The single problem with all of these issues in the replacement of the spirit & word of the law with the word of the law. The only way one can ignore the laws as they are intended is if they construe the wording to mean what is popular at the moment for the will of those who dismiss the purpose and distort the language of the law. This is why when people quote the Constitution or the law without addressing the Constitution or law's purpose, they do it often with the intention to dilute its meaning. When we hear people speak about the Constitution, how often do we hear the same people quoting the Federalist or Anti-federalist Papers or other documents discussing the purposes of the laws about which they speak? We must be very careful not to accept the law but deny its purpose. I have for some time now argued for a simplification of laws particularly with the tax code, but it is for the same reason as I am arguing now that people should be aware of the purposes for which laws are written. Many of today's problems are those which originate at the contortion of the Constitution and at the abandonment of the purposes of its clauses. This is not to say that the language is irrelevant, but a partner to the law's purpose. The wording of laws originate only from the meaning behind them; and without the meaning from which words are used to construct our laws, they have no purpose. The rule of law can only exist within the continuity of the purpose & language of the law; without which leaves little room to be filled with anything else but the rule of man. It seems that James Madison saw more purpose in the Ex Post Facto Clause than just a criminal application. Funny I don't hear much about Mr. Madison's views on this when someone wants to tax someone else at 90%; and if the government can do it to the people at AIG, who can't they do it to?
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
Saturday, March 14, 2009
No more Carrots, Just Sticks
Rutgers reports that the Senate will be debating their version of the "cramdown" bill already passed by the House earlier this month. The senate bill is not only having more successful opposition from Senate Republicans, but it is also seeing some opposition from the Obama administration in the desire for the bill to be “narrowed” as reported by Dowjones Business News.
For those of you who are not aware of the “cramdown” bill or the “Helping Families Save their Homes Act of 2009,” the U.S. Congress is attempting to pass legislation which would give judges the power to reduce the amount of the principal on mortgages whom have filed for chapter 13 bankruptcy. Chapter 13 bankruptcy is a way for people to have bankruptcy law protections while attempting to pay off their debts. The benefits of a chapter 13 bankruptcies are that the debtor can prevent foreclosure proceedings and make loan payments of smaller amounts among others.
I would like to take a few moments to address those of you who think that the Constitution forbids the government to interfere with private contracts. I have heard this more than once recently, and I want to debunk this. The contract clause, which people cite when talking about how they think the Constitution and its application to contracts, is found in Article I, Section 10:
“No state shall … pass any … law impairing the obligation of contracts…”
The most important phrase in Article I, Section 10 is “No STATE shall.” This means the federal government can do anything it wants to impair the obligation of contracts in regards to ArticleI, Section 10. So for all of you who keep ignorantly yelling, “Contract clause, contract clause,” go reread the Constitution. What should limit the federal government is the clause regarding Bills of Attainder and Ex Post Facto in Section 9.3.
Since the question about the “cramdown” bills isn’t about whether we can, we can't…and we shouldn’t. But what if the Constitution allowed it? Should we then? The whole point of a chapter 13 bankruptcy is restructuring. There is renegotiation on how fast payments are made, but now the principal amount. Let’s follow the money. A (Debtor) goes to B (Lender) and gets money for a loan. A then goes and buys a home. A then doesn’t pay the mortgage payments back to B. A then applies for chapter 13 bankruptcy. The judge says A doesn’t have to pay back 30% of the principal. B just got hosed, right? Nope. You just did. What B will do is raise interest rates for everyone else wanting a loan. You might be able to look at it this way. The 30% example from above is essentially a tax on B (the lender) so A (the debtor) can get a government subsidized home. The problem is that B is a bank (i.e., a business); and as much as people seem to be unaware, businesses don’t pay taxes. The bank will increase interest rates or fees or even possibly make you take out insurance against you defaulting on the loan. No matter what happens, the consumer is footing the bill. I am certainly not a fan of borrowing money, but I don’t want to be on the hook for someone who got in over his or her head and can’t pay their bills.
Another thing that this will do is that it will encourage people to declare bankruptcy. If people see a payday at the end of a bankruptcy, do you think that will cause more or less bankruptcy filings? We have had nothing but increases in bankruptcy filings for years, and we want to make bankruptcy more lucrative for dead beats? Check out some of the statistics from the American Bankruptcy Institute. Carrots and sticks people, carrots and sticks. Personally, I think we aught to take a couple lessons from Singapore, get rid of the carrots, and just use the sticks.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
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For those of you who are not aware of the “cramdown” bill or the “Helping Families Save their Homes Act of 2009,” the U.S. Congress is attempting to pass legislation which would give judges the power to reduce the amount of the principal on mortgages whom have filed for chapter 13 bankruptcy. Chapter 13 bankruptcy is a way for people to have bankruptcy law protections while attempting to pay off their debts. The benefits of a chapter 13 bankruptcies are that the debtor can prevent foreclosure proceedings and make loan payments of smaller amounts among others.
I would like to take a few moments to address those of you who think that the Constitution forbids the government to interfere with private contracts. I have heard this more than once recently, and I want to debunk this. The contract clause, which people cite when talking about how they think the Constitution and its application to contracts, is found in Article I, Section 10:
“No state shall … pass any … law impairing the obligation of contracts…”
The most important phrase in Article I, Section 10 is “No STATE shall.” This means the federal government can do anything it wants to impair the obligation of contracts in regards to ArticleI, Section 10. So for all of you who keep ignorantly yelling, “Contract clause, contract clause,” go reread the Constitution. What should limit the federal government is the clause regarding Bills of Attainder and Ex Post Facto in Section 9.3.
Since the question about the “cramdown” bills isn’t about whether we can, we can't…and we shouldn’t. But what if the Constitution allowed it? Should we then? The whole point of a chapter 13 bankruptcy is restructuring. There is renegotiation on how fast payments are made, but now the principal amount. Let’s follow the money. A (Debtor) goes to B (Lender) and gets money for a loan. A then goes and buys a home. A then doesn’t pay the mortgage payments back to B. A then applies for chapter 13 bankruptcy. The judge says A doesn’t have to pay back 30% of the principal. B just got hosed, right? Nope. You just did. What B will do is raise interest rates for everyone else wanting a loan. You might be able to look at it this way. The 30% example from above is essentially a tax on B (the lender) so A (the debtor) can get a government subsidized home. The problem is that B is a bank (i.e., a business); and as much as people seem to be unaware, businesses don’t pay taxes. The bank will increase interest rates or fees or even possibly make you take out insurance against you defaulting on the loan. No matter what happens, the consumer is footing the bill. I am certainly not a fan of borrowing money, but I don’t want to be on the hook for someone who got in over his or her head and can’t pay their bills.
Another thing that this will do is that it will encourage people to declare bankruptcy. If people see a payday at the end of a bankruptcy, do you think that will cause more or less bankruptcy filings? We have had nothing but increases in bankruptcy filings for years, and we want to make bankruptcy more lucrative for dead beats? Check out some of the statistics from the American Bankruptcy Institute. Carrots and sticks people, carrots and sticks. Personally, I think we aught to take a couple lessons from Singapore, get rid of the carrots, and just use the sticks.
Really agree with what you read? Really disagree? Somewhere in the middle?....Let yourself be heard in the comments!
_
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