IRS and Obama State Department conferred about ways to deny tax-exempt status to pro-Israel groups

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Obama ought to be impeached for this alone. He has turned the United States government into an instrument to punish his political enemies, and shows in this particular incident how deeply he hates Israel and how ardently he supports the “Palestinian” jihad. Obama and the Left seem bent on destroying what was one of the great achievements of the United States: the continued existence of a loyal political opposition that was not subject to violence or oppression, but allowed to operate freely and accorded respect, as it accorded the same respect to the majority. Those days are over. There is a single perspective that is allowed in the mainstream media, the educational system, and the entertainment industry, and now Obama has gone one step beyond that and endeavored to make a group’s legal privileges subject to its submission to his political line. Dark days, indeed.

“The IRS’s Foreign Policy,” Wall Street Journal, July 28, 2014:

The IRS has stuck by its story that tax-exempt applications by conservatives got slow-rolled because of bureaucratic bungling not because the groups opposed President Obama’s policies. Now the slow drip of email evidence to congressional investigators is casting further doubt on that tale.

In 2009 the Pennsylvania group Z Street applied for tax-exempt status for its mission of educating people about Israel-related issues. In 2010 an IRS agent told Z Street that its application was delayed because the tax agency’s Washington, D.C. office was giving special scrutiny to groups whose missions might conflict with Administration policies. The IRS’s “Be On the Lookout” list that November also included red flags for groups referring to “disputed territories.”

Z Street sued in August 2010 for viewpoint discrimination and its case is headed for discovery in federal court. Emails uncovered by the House Ways and Means Committee show that the IRS and State Department were conferring in 2009 about pro-Israel groups like Z Street and considering arguments to deny their tax-exempt applications.

In an April 16, 2009 email, Treasury attache to the U.S. Embassy in Jerusalem Katherine Bauer sent IRS and Treasury colleagues a 1997 JTA News article sent to her by State Department foreign service officer Breeann McCusker. The subject was whether 501(c) groups buying land in Israel’s disputed territories were engaged in “possible violations of U.S. tax laws.” The article chronicles the controversy and whether “ideological activity” can “legally be financed with the help of U.S. [tax] dollars.”

“Thought you might find the below article of interest—looks like we’ve been down this road before,” Ms. Bauer wrote. “Although I believe you’ve said you can’t speak to on-going investigations, I thought it was worth flagging the 1997 investigation mentioned below for you if it can be of any use internally when looking for precedence [sic] for the current cases.” A Treasury spokesman declined comment on Ms. Bauer’s behalf.

The “current cases” would have been applications like Z Street’s in which Israel-related activity was apparently being scrutinized for its ideological and policy content. The government says Z Street got special scrutiny because it was focused in a region with a higher risk of terrorism, which is hard to believe and in any case doesn’t explain all of the IRS’s behavior.

It doesn’t cover, for instance, why one questionnaire we’ve seen from the IRS to another Jewish group applying for tax-exempt status asked, “Does your organization support the existence of the land of Israel?” and “Describe your organization’s religious belief system toward the land of Israel.” No matter the answers, they should not affect the processing of an application for 501(c) status. The State-IRS emails reveal a political motivation for IRS scrutiny that gives Z Street powerful evidence for its suit charging IRS bias….

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Did you know all of the Sarasota County School Board/Union salary and benefit negotiations are open to the public?

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I didn’t think so.

If you go to the Sarasota County School District website in the lower right is a section titled “Upcoming Events”. If you click on the small print “Click for Monthly Calendars” you will learn that the School Board has since June 11th, 2014 been negotiating salaries and benefits with the Sarasota County Classified/Teachers Association (SC/TA). These negotiations are normally scheduled each Wednesday from 3:00 – 5:00 p.m. The next scheduled School Board and SC/TA meeting will be on Wednesday, July 30, 2014. All negotiations are held at the SC/TA offices located at 4675 South Tamiami Trail, Sarasota, FL.

What you can’t find on the website is that all of these negotiations are open to the public. 

According to Scott Ferguson, Communications Specialist Sarasota County Schools, “The meeting location and dates/times are posted to our website for public notification; members of the public may attend if they wish.”

You would think the Sarasota County School Board members would want the public to know about these negotiations since salaries and benefits make up such a large portion of the district budget. According to the 2013-2014 Final Budget General Fund Executive Summary salaries and benefits make up approximately 78% of the total budget.

Why should taxpayers care about the Sarasota County School Board Budget? Because 76% of the money comes directly from local property taxes. About 23% comes from the state and less than 5% comes from the federal government.

Another reason these negotiation are important is because President Obama’s Race to the Top for Student Success, codified in Florida Senate Bill 736, requires all teachers be evaluated and paid based on performance measures.

According to the White House website on Race To The Top (RTTT):

Race to the Top marks a historic moment in American education. This initiative offers bold incentives to states willing to spur systemic reform to improve teaching and learning in America’s schools. Race to the Top has ushered in significant change in our education system, particularly in raising standards and aligning policies and structures to the goal of college and career readiness. Race to the Top has helped drive states nationwide to pursue higher standards, improve teacher effectiveness, use data effectively in the classroom, and adopt new strategies to help struggling schools.

Improve teacher effectiveness means performance pay for teachers. Specifically Florida’s RTTT for Student Success: Reforms teacher evaluations; Ends Professional Service Contracts for new teachers hired after July 1, 2011; Creates 2 pay schedules after July 1, 2014: “Performance” and “Grandfathered” Pay Schedules; Eliminates pay supplements for advanced degrees out of certification area; and Ends “last-in-first-out” for reduction in force decisions.

The Florida Education Association describes President Obama’s Race to the Top for Student Success (SB 736) thusly:

Despite all the talk about local control and less government, this bill reduces a school district’s flexibility and authority over teacher evaluations, pay schedules and working conditions. This bill gives new power and authority to the Department of Education and the Florida Legislature.

RTTT for Student Success is a component of Common Core State Standards, renamed Florida Standards.

According to the June 11, 2014 Bargaining Negotiation Notes, “Some conversation ref. highly effective teachers, summer school and performance pay – parties tabled the discussion for later.” To see a sample of the new PRIDE Teacher Evaluation Form click here or the PRIDE Document Checklist click here. Ferguson states, “Topics/proposals to be discussed at future meetings have not yet been determined.”

Taxpayers and interested citizens may want to sit in on these negotiations that will define “effective teachers” and lay out teacher “performance pay” and evaluation standards. Don’t you think?

Question from our readers: Why doesn’t the Sarasota County School Board hold all of these negotiations in the District chambers and televise them?

Georgia FairTax® Scores A Major Victory

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The media’s eyes were on the state of Georgia this week as voters went to the polls in their Republican runoff election for the U.S. Senate. The Georgia FairTax (GFFT) organization played a pivotal role in helping educate voters on where candidates stood on the FairTax® Plan.

The monumental effort began in 2012, led by volunteer GFFT state director Jim Duffie and GFFT board chairman Bill Fogarty, when the GFFT team developed and published a comprehensive non-partisan candidate scorecard for rating candidates for elective office on their support of the FairTax.

In preparation for the 2014 election, GFFT volunteers began identifying and contacting candidates from both the Republican and Democrat parties. In addition, they researched positions of candidates on tax reform, volunteering hundreds of hours to bird-dog candidates and document what they actually said about tax reform during campaign stump speeches.

The team then offered candidates from both political parties a telephonic or in-person briefing on what the FairTax is, how it differs from proposed flat and current income tax systems and if desired, how to defend it from attacks.

Thanks to the generosity of GA FairTax supporters, all candidates who accepted the GFFT FairTax briefing were given a specially prepared binder containing copies of the FairTax white papers submitted to the 2013 U.S. House Committee on Ways and Means Tax Reform Study Group. These binders were a labor of love by GFFT volunteers and left a very strong impression on candidates regarding the depth of research that has gone into the FairTax legislation.

U.S. Senate candidate David Purdue accepted GFFT’s in-person offer, and went on to request an extended briefing with Phil Hinson and other GFFT leaders to ensure he understood the details of the legislation.

Perdue then made it a point to address tax reform while on the stump, noting that he was “a fighter for the FairTax.” Purdue’s diligence in learning about and fighting for the FairTax paid off when he was declared the victor in Tuesday’s run-off election.

This outstanding team effort by the GFFT serves as a model of what can be done across the nation.

Congratulations GFFT – we are FairTax proud!

A Great Plan to Replace the EPA

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For years now I have been saying that the Environmental Protection Agency (EPA) must be eliminated and its powers given to the fifty states, all of which,have their own departments of environmental protection. Until now, however, there has been no plan put forth to do so.

Dr. Jay Lehr has done just that and his plan no doubt will be sent to the members of Congress and the state governors. Titled “Replacing the Environmental Protection Agency” it should be read by everyone who, like Dr. Lehr, has concluded that the EPA was a good idea when it was introduced in 1971, but has since evolved into a rogue agency threatening the U.S. economy, attacking the fundamental concept of private property, and the lives of all Americans in countless and costly ways.

AA - Jay Lehr

Dr. Jay Lehr

Dr. Lehr is the Science Director and Senior Fellow of The Heartland Institute, for whom I am a policy adviser. He is a leading authority on groundwater hydrology and the author of more than 500 magazine and journal articles, and 30 books. He has testified before Congress on more than three dozen occasions on environmental issues and consulted with nearly every agency of the federal government and with many foreign countries. The Institute is a national nonprofit research and education organizations supported by voluntary contributions.

Ironically, he was among the scientists who called for the creation of the EPA and served on many of the then-new agency’s advisory councils. Over the course of its first ten years, he helped write a significant number of legislative bills to create a safety net for the environment.

As he notes in his plan, “Beginning around 1981, liberal activist groups recognized EPA could be used to advance their political agenda by regulating virtually all human activities regardless of their impact on the environment. Politicians recognized they could win votes by posing as protectors of the public health and wildlife. Industries saw a way to use regulations to handicap competitors or help themselves to public subsidies. Since that time, not a single environmental law or regulation has passed that benefited either the environment or society.”

“The takeover of EPA and all of its activities by liberal activists was slow and methodical over the past 30 years. Today, EPA is all but a wholly owned subsidiary of liberal activist groups. Its rules account for about half of the nearly $2 trillion a year cost of complying with all national regulations in the U.S. President Barack Obama is using it to circumvent Congress to impose regulations on the energy sector that will cause prices to ‘skyrocket.’ It is a rogue agency.”

Dr. Lehr says that “Incremental reform of EPA is simply not an option.” He’s right.

“I have come to believe that the national EPA must be systematically dismantled and replaced by a Committee of the Whole of the 50 state environmental protection agencies. Those agencies in nearly all cases long ago took over primary responsibility for the implementation of environmental laws passed by Congress (or simply handed down by EPA as fiat rulings without congressional vote or oversight.”

Looking back over the years, Dr. Lehr notes that “The initial laws I helped write have become increasingly draconian, yet they have not benefited our environment or the health of our citizens. Instead they suppress our economy and the right of our citizens to make an honest living. It seems to me, and to others, that this is actually the intention of those in EPA and in Congress who want to see government power expanded without regard to whether it is needed to protect the environment or public health.”

Eliminating the EPA would provide a major savings by eliminating 80% of its budget. The remaining 20% could be used to run its research labs and administer the Committee of the Whole of the 50 state environmental agencies. “The Committee would determine which regulations are actually mandated in law by Congress and which were established by EPA without congressional approval.”

Dr. Lehr estimates the EPA’s federal budget would be reduced from $8.2 billion to $2 billion. Staffing would be reduced from more than 15,000 to 300 and that staff would serve in a new national EPA headquarters he recommends be “located centrally in Topeka, Kansas, to allow the closest contact with the individual states.” The staff would consist of six delegate-employees from each of the 50 states.”

“Most states,” says Dr. Lehr, “will enthusiastically embrace this plan, as their opposition to EPA’s ‘regulatory train wreck’ grows and since it gives them the autonomy and authority they were promised when EPA was first created and the funding to carry it out.”

The EPA was a good idea when it was created, the nation’s air and water needed to be cleaned, but they have been at this point. Since then, the utterly bogus “global warming”, now called “climate change”, has been used to justify a torrent of EPA regulations. The science the EPA cites as justification is equally tainted and often kept secret from the public.

“It’s time for the national EPA to go,” says Dr. Lehr and I most emphatically agree. “All that is missing is the political will.”

© Alan Caruba, 2014

RELATED ARTICLE: Fight Heats Up Over EPA Sabotage of Alaska Gold Mine

Fraud in the Florida Department of Economic Opportunity

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According to Jesse Panuccio, Executive Director of the Florida Department of Economic Opportunity (DEO), “A core principle of the state’s economic development incentive program is that businesses are paid based on verified performance, meaning no tax dollars are paid until job creation or capital investment numbers are audited and confirmed to protect taxpayer investment.”

Since 2011 Department of Economic Opportunity has awarded $269,114,050 in incentives. In 2011 Florida businesses were paid $32,901,728 and created 2,292 confirmed jobs. That is at a cost of $14,355 per job created. According to the U.S. Department of Labor, Bureau of Labor Statistics, Florida employs 7,453,230 people, with a mean hourly wage of $19.78 and an annual wage of$41,140. For the cost (taxation) of three incentives one average wage job could have been created by Florida businesses.

But are incentives paid based upon verified performance? Is using Florida’s tax payer dollars to create jobs a role for government?

Director Panuccio is working to stem the bleeding in a lawsuit involving John Textor the former CEO of Digital Domain. Senator Christopher L. (Chris) Smith (D-FL District 31) is asking questions about the role played by the department and the Economic Development Council in funding Textor and Digital Domain. But is Senator Smith asking the right questions?

Senator Smith wrote to Governor Rick Scott about Digital Domain. Director Panuccio, replying to Senator Smith on behalf of the Governor, wrote:

As for the specific concerns in your letter, first, please allow me to address the forthcoming lawsuit against those associated with the Digital Domain Media Group. In 2009, the Office of Tourism, Trade, & Economic Development (“OTTED”) – predecessor agency to the Department of Economic Opportunity (“DEO”) – distributed tens of millions of taxpayer funds to Digital Domain. As noted in the 2013 Inspector General Report (Report Number 2013-11), the usual state regulatory processes governing the award of such funds were circumvented. In 2012, Digital Domain filed bankruptcy and laid off all of its employees – thereby breaching the grant fund agreement. DEO has filed a notice of claim against Digital Domain in the bankruptcy proceeding. DEO has also hired outside counsel to identify any and all legal action available against the principals of Digital Domain and any other individuals or entities involved in wrongdoing related to this deal. DEO is committed to recouping all monies owed to the state, including approximately $20 million in incentive funding.

Panuccio concludes with, “In short, Florida’s economic development system is working better today than at anytime in the past – an opinion shared by economic-development professionals across the state and nation.  We follow the law, we protect taxpayer money, and we get results.  Florida’s economy has turned around thanks to Governor Scott’s leadership.  We appreciate your support of our efforts. ”

What is missing from this entire conversation between Senator Smith and Director Panuccio: Is there a role for government in economic development and if so, what is it?

Many believe government has no role in funding, via incentive programs, business. These “incentive programs” are described as “crony capitalism” and “corporate welfare” by Main street Americans. In April U.S. Senator Mike Lee (R-Utah) gave a thoughtful speech (watch the below video) warning of “America’s crisis of crony capitalism, corporate welfare, and political privilege.”  The victims are every day folks, “the poor and middle class” excluded by government “from earning their success on a level playing field.” Senator Lee noted, ““Big government isn’t just inefficient, it’s fundamentally unfair.”

Mark Shousen, writes, “In his classic work, The Spirit of the Laws (1748), Montesquieu expressed the novel view that the business of moneymaking serves as a countervailing bridle against the violent passions of war and abusive political power. ‘Commerce cures destructive prejudices,’ he declared. ‘It polishes and softens barbarous mores . . . . The natural effect of commerce is to lead to peace.’ Commerce improves society: ‘The spirit of commerce brings with it the spirit of frugality, of economy, of moderation, of work, of wisdom, of tranquility, of order, and of regularity.’”

Government does just the opposite. Digital Domain is a prime example of the Florida Department of Economic Opportunity creating “destructive prejudices.”

Perhaps it is time to rethink the need for this Florida Department? For you see the only thing that creates a job is profit. Government does not create wealth, it takes it and redistributes it. Corporations are at their best when they cater to their customers, and at their worst when they lie in bed with government. Can you say corporate prostituting themselves to government?

Adam Smith wrote, “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.”

Treasury Secretary Jack Lew: U.S. corporations must be “punished” with new penalties and restrictions

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More American jobs and the products that make your life better are under attack by those in Washington who do not seek a solution, but merely want to mask the failures of our horrific income tax code.

Currently, America’s corporations pay 39.1% in income taxes – the highest tax rate of 33 industrialized countries!

To stay alive under this punitive tax structure, American businesses first moved their profits to foreign countries. Now they are moving their headquarter operations.

And how is Washington responding? Incredibly, instead of addressing the real problem – the income tax code – Treasury Secretary Jack Lew has stated these corporations must be “punished” with new penalties and restrictions!

Wasn’t it Albert Einstein who said insanity is “doing the same thing over and over again and expecting different results”?

It’s time for our nation’s tax insanity to end. Our country does not need more punishing economic policy.

Corporations leaving vs FairTax

What we need – what we must demand – is for the FairTax® legislation to be given an immediate vote in Congress.

AFFT needs your immediate support with your most generous donation. We must send a strong and unified message to Washington that the American people want a strong and robust economy.

Our nation needs the millions of jobs that will result from corporations flooding into our country once the FairTax is enacted. The FairTax legislation will make America the “go-to” place for investing and growing a business.

Please join me in standing FairTax strong.

Send your gift today: www.FairTax.org/Donate

Let’s tell Washington that America defines economic patriotism as the FairTax Plan. 

Conflicting Court Rulings May Have Big Implications for Employer Mandate

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Within a few hours of each other, two federal appeals courts issued conflicting rulings on Obamacare. The final outcome could have major implications for employers.

The legal question of involves whether the Patient Protection and Affordable Care Act allows people to receive subsidies for health plans purchased on federally-run exchanges—covering 34 states and the District of Columbia–or only through state-run exchanges. In a 2-1 decision, the DC Circuit ruled in Halbig v. Burwell that under the law, only those buying through state-run exchanges are eligible.

Judge Griffith wrote in the court’s split opinion:

The fact is that the legislative record provides little indication one way or the other of congressional intent, but the statutory text does. Section 36B plainly makes subsidies available only on Exchanges established by states. And in the absence of any contrary indications, that text is conclusive evidence of Congress’s intent.

Judge Randolph concurred:

[A]n Exchange established by the federal government cannot possibly be “an Exchange established by the State.” To hold otherwise would be to engage in distortion, not interpretation. Only further legislation could accomplish the expansion the government seeks.

A few hours later, in King v. Burwell the 4th Circuit unanimously upheld those same subsidies:

For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.

Why is it important to know who is eligible for a health plan subsidy? As the DC court’s Judge Edwards explains in his dissent, it triggers the employer mandate, [emphasis mine]:

Specifically, the ACA penalizes any large employer who fails to offer its full-time employees suitable coverage if one or more of those employees “enroll[s] . . . in a qualified health plan with respect to which an applicable tax credit . . . is allowed or paid with respect to the employee.” (linking another penalty on employers to employees’ receipt of tax credits). Thus, even more than with the individual mandate, the employer mandate’s penalties hinge on the availability of credits. If credits were unavailable in states with federal Exchanges, employers there would face no penalties for failing to offer coverage. The IRS Rule has the opposite effect: by allowing credits in such states, it exposes employers there to penalties and thereby gives the employer mandate broader reach.

No subsidies, no employer mandate penalties.

Michael Cannon, the Cato Institute health policy expert, estimates that if the Halbig ruling stands, more than 250,000 firms would not be subject to the employer mandate.

There is no immediate change to the law, since the courts are a long way from settling the subsidies question. There will be appeals, other courts may weigh in with additional rulings, and since two circuit courts issued conflicting rulings, the Supreme Court may hear the case. Also, Congress could pass a bill to clarify the law. Not likely in the current political environment but possible.

What we do know is that the employer mandate imposes complex reporting costs and isn’t necessary. At the same time it gives employers the perverse incentive of either not hiring workers or hiring part-time workers instead of full-time ones. Obamacare is a law packed with problems that needs to be fixed in order to have a health care system that has high quality, expanded access, and lower costs.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

EDITORS NOTE: The featured image is of President Obama signing the Patient Protection and Affordable Care Act (A.K.A. “Obamacare”) in 2010. Photographer: Andrew Harrer/Bloomberg.

Former Congressman Allen West: “America At Its Best”

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Former Congressman and retired U.S. Army Lieutenant Colonel Allen West’s full “America At Its Best” speech from the Western Conservative Summit in Denver, Colorado.

[youtube]http://youtu.be/CNXADfiQUR8[/youtube]

Cliches of Progressivism: Rich People Have an Obligation to Give Back by Lawrence W. Reed

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For a society that has fed, clothed, housed, cared for, informed, entertained, and otherwise enriched more people at higher levels than any in the history of the planet, there sure is a lot of groundless guilt in America.

Manifestations of that guilt abound. The example that peeves me the most is the one we often hear from well-meaning philanthropists who adorn their charitable giving with this little chestnut: “I want to give something back.” It always sounds as though they’re apologizing for having been successful.

Translated, that statement means something like this: “I’ve accumulated some wealth over the years. Never mind how I did it, I just feel guilty for having done it. There’s something wrong with my having more than somebody else, but don’t ask me to explain how or why because it’s just a fuzzy, uneasy feeling on my part. Because I have something, I feel obligated to have less of it. It makes me feel good to give it away because doing so expunges me of the sin of having it in the first place. Now I’m a good guy, am I not?”

It was apparent to me how deeply ingrained this mindset has become when I visited the gravesite of John D. Rockefeller at Lakeview Cemetery in Cleveland a couple years ago. The wording on a nearby plaque commemorating the life of this remarkable entrepreneur implied that giving much of his fortune away was as worthy an achievement as building the great international enterprise, Standard Oil, that produced it in the first place. The history books most kids learn from these days go a step further. They routinely criticize people like Rockefeller for the wealth they created and for the profit motive, or self-interest, that played a part in their creating it, while lauding them for relieving themselves of the money.

More than once, philanthropists have bestowed contributions on my organization and explained they were “giving something back.” They meant that by giving to us, they were paying some debt to society at large. It turns out that, with few exceptions, these philanthropists really had not done anything wrong.

They made money in their lives, to be sure, but they didn’t steal it. They took risks they didn’t have to. They invested their own funds, or what they first borrowed and later paid back with interest. They created jobs, paid market wages to willing workers, and thereby generated livelihoods for thousands of families. They invented things that didn’t exist before, some of which saved lives and made us healthier. They manufactured products and provided services, for which they asked and received market prices.

They had willing and eager customers who came back for more again and again. They had stockholders to whom they had to offer favorable returns. They also had competitors and had to stay on top of things or lose out to them. They didn’t use force to get where they got; they relied on free exchange and voluntary contract. They paid their bills and debts in full. And every year they donated some of their profits to lots of community charities that no law required them to support. Not a one of them that I know ever did any jail time for anything.

So how is it that anybody can add all that up and still feel guilty? I suspect that if they are genuinely guilty of anything, it’s allowing themselves to be intimidated by the losers and the envious of the world, the people who are in the redistribution business either because they don’t know how to create anything or because they simply choose the easy way out. They just take what they want or hire politicians to take it for them.

Or like a few in the clergy who think that wealth is not made but simply “collected,” the redistributionists lay a guilt trip on people until they disgorge their lucre—notwithstanding the Tenth Commandment against coveting. Certainly, people of faith have an obligation to support their church, mosque, or synagogue, but that’s another matter and not at issue here.

A person who breaches a contract owes something, but it’s to the specific party on the other side of the deal. Steal someone else’s property and you owe it to the person you stole it from, not society, to give it back. Those obligations are real and they stem from a voluntary agreement in the first instance or from an immoral act of theft in the second. This business of “giving something back” simply because you earned it amounts to manufacturing mystical obligations where none exist. It turns the whole concept of “debt” on its head. To give it “back” means it wasn’t yours in the first place, but the creation of wealth through private initiative and voluntary exchange does not involve the expropriation of anyone’s rightful property.

How can it possibly be otherwise? By what rational measure does a successful person in a free market, who has made good on all his debts and obligations in the traditional sense, owe something further to a nebulous entity called “society”? If Entrepreneur X earns $1 billion and Entrepreneur Y earns $2 billion, would it make sense to say that Y should “give back” twice as much as X? And if so, who should decide to whom he owes it? Clearly, the whole notion of “giving something back” just because you have it is built on intellectual quicksand.

Successful people who earn their wealth through free and peaceful exchange may choose to give some of it away, but they’d be no less moral and no less debt-free if they gave away nothing. It cheapens the powerful charitable impulse that all but a few people possess to suggest that charity is equivalent to debt service or that it should be motivated by any degree of guilt or self-flagellation.

A partial list of those who honestly do have an obligation to give something back would include bank robbers, shoplifters, scam artists, deadbeats, and politicians who “bring home the bacon.” They have good reason to feel guilt, because they’re guilty.

But if you are an exemplar of the free and entrepreneurial society, one who has truly earned and husbanded what you have and one who has done nothing to injure the lives, property, or rights of others, you are a different breed altogether. When you give, you should do so because of the personal satisfaction you derive from supporting worthy causes, not because you need to salve a guilty conscience.

Lawrence W. Reed
President
Foundation for Economic Education

Summary

  • The innocent-sounding phrase, “I want to give back,” far too often implies guilt for having been productive or successful.
  • If you earned your wealth through free and voluntary exchange, don’t let others get away with making you feel guilty just because you have it.
  • The people who really should “give it back” are those to whom it doesn’t belong or who took it from others in the first place.
  • For further information, see:

“On Giving Back” by George C. Leef: http://tinyurl.com/lqd3lo6

“Give Up on Giving Back?” by Sandy Ikeda: http://tinyurl.com/or7jhh3

“Giving Back” by Steven Horwitz: http://tinyurl.com/pwqjqzw

20130918_larryreedauthorABOUT LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

EDITORS NOTE: Versions of this essay have previously appeared in FEE’s journal, The Freeman, under the title, “Who Owes What to Whom?”

The Foundation for Economic Education (FEE) is proud to partner with Young America’s Foundation (YAF) to produce “Clichés of Progressivism,” a series of insightful commentaries covering topics of free enterprise, income inequality, and limited government.

Our society is inundated with half-truths and misconceptions about the economy in general and free enterprise in particular. The “Clichés of Progressivism” series is meant to equip students with the arguments necessary to inform debate and correct the record where bias and errors abound.

The antecedents to this collection are two classic FEE publications that YAF helped distribute in the past: Clichés of Politics, published in 1994, and the more influential Clichés of Socialism, which made its first appearance in 1962. Indeed, this new collection will contain a number of essays from those two earlier works, updated for the present day where necessary. Other entries first appeared in some version in FEE’s journal, The Freeman. Still others are brand new, never having appeared in print anywhere. They will be published weekly on the websites of both YAF and FEE: www.yaf.org and www.FEE.org until the series runs its course. A book will then be released in 2015 featuring the best of the essays, and will be widely distributed in schools and on college campuses.

See the index of the published chapters here.

The IRS Is Not Out Of Control

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Jay Sekulow, Chief Counsel of the American Center for Law and Justice, provided an interesting perspective on last week’s House Oversight hearing on the IRS targeting scandal.

During the hearing, emails were presented showing that after seeing a draft copy of an IRS Inspector General report on the political targeting of non-profits, Lois Lerner told her co-workers to be “cautious” in their email communications because “Congress might be watching.” She also asked the IRS IT department if the department’s internal chat system was searchable.

Lerner’s IT colleague, Maria Hooke, responded, “No, the IRS does not routinely save chat communications – unless employees intentionally take steps to preserve their conversations.  These chat communications are not saved – and this is critical – despite the fact that “the functionality exists within the software.”

And how did Lerner respond?  “Perfect.”

I am reminded of something Lord Acton once said, “Everything secret degenerates, even the administration of justice; nothing is safe that does not show how it can bear discussion and publicity.”

Or, as Jay Sekulow opined, “Some have said the IRS was out of control.  I’d say the opposite.  It was very much in control – doing exactly what it was intended to do with relative impunity, including setting up its own IT resources not to preserve records but to cover its tracks.”

The online dictionary defines conspiracy as “an evil, unlawful, treacherous, or surreptitious plan formulated in secret by two or more persons; plot, a combination of persons for a secret, unlawful, or evil purpose, an agreement by two or more persons to commit a crime, fraud, or other wrongful act.”

American citizens live in constant fear of the IRS wrecking havoc on their lives, seizing their assets and throwing them in prison – and all with impunity. Yet evidence now shows that Lois Lerner and certain colleagues at the IRS clearly conspired to punish select politically conservative individuals and non-profits; actions that are a clear violation of federal law.

If this were an isolated incident one could make the case that Lerner and her cohorts could have been given appropriate reprimands and the IRS resumed normal business operations. But this is not an isolated case. Political targeting and retaliation by the IRS has been standard operating procedure since the agency’s inception. It is part of the organizational and operational DNA.

The Lerner case demands a special prosecutor. And America demands that the IRS be given a national pink slip.

The FairTax® stands ready to fully replace the current income tax code. And it is the only tax replacement plan before Congress that gives the IRS their walking papers.

If you agree, please send a note to your local newspaper and ask the editor to endorse the FairTax.

If you are on Facebook, share this picture and tell your friends why you support the FairTax Plan.

My name is FairTax

Tell them that under the FairTax they will never have to dreadApril 15 again, because their days of filing tax returns will be over. Most importantly, be sure and let them know the FairTax disbands, defunds and eliminates the IRS.

To learn more take a quick look at the FairTax, flat tax and income tax comparison chart. Share this chart with your family and friends.

An•es•the•tize: Deprive Of Feeling Or Awareness

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“Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein

Have you ever thought about winning a Powerball lottery? You know one of those multi-state ticket frenzies where the winning payout is so big your head explodes with visions of Tuscan villas, private jets and caviar-topped crostini’s. These mega lottery games get even the most cynical of individuals whipped into a frenzy thinking they might beat the staggering odds to win the pot of gold.

During House Oversight hearings, it was revealed that during the past five years, the federal government paid out “$100 billion in improper payments every year thanks to a combination of fraud, clerical errors and insufficient IRS enforcement.”

$500 billion over five years!

You would think this news would have also generated a frenzy in the minds of the American people. After all, it was their hard earned tax dollars that were wasted! Sadly, most people didn’t know the hearing existed. If they were aware, they may have heard through a major news outlet that it was simply a partisan witch-hunt.

And what was the response of IRS Commission Koskinen? “This is an important issue to the IRS”. Wow, thanks Commissioner.

America sleeps better at night knowing this is an important issue to the IRS. We are truly comforted knowing that the IRS will give the loss of $500 billion in taxpayer funds the same serious attention that has been given the IRS political targeting of non-profits and individuals, the destruction of Lois Lerner (and other IRS employee’s) emails and instant messaging, and their disciplinary action of an IRS employee who grotesquely violated the federal Hatch Act to campaign on IRS call center phones for a partisan political candidate.

What we have here is a lot of kabuki dancing, a heaping pile of photo ops and a generous portion of canned ham talking points by members of Congress seeking 10 minutes of air-time for their next newsletter or social media post.

What we don’t have is real, substantive action except by two federal judges who have just ordered the IRS to fess up, under oath, about what happened to Lerner’s emails and hard drive.

If you want real substantive change then please look closely at the 2014 candidates who want to represent you. If they say the support the FairTax, do they stand proud and can they defend it?

If not, ask them why. If they have not made their position on tax reform known press the issue. This candidate may well determine the future of HR 25, the FairTax Act, which is before Congress right now.

HR 25 is the only tax replacement plan before Congress that defunds, disbands and eliminates the IRS. 

It is also the only tax reform plan that transfers power from Congress to the people.

The American people are beat down, seemingly anesthetized. When they are told that our government wasted $500 billion of their hard earned money, they don’t even blink. Something is terribly wrong when this becomes the people’s reaction.

If you elect representatives who perpetuate the continued use of the income tax code as a political and financial weapon, then you have just become part of the problem.

Vow today that you will stand strong for the FairTax. Run, don’t walk to candidate meetings. Make your voice heard. Make time for Congressional town halls. Ask critical questions and listen to Candidate answers. Canned ham responses are a sign of disrespect to you as a constituent.

Don’t allow yourself to become any further sedated, any further complacent. America needs you. The FairTax needs you.

As Ronald Reagan once said, “You and I have a rendezvous with destiny. We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the first step into a thousand years of darkness. If we fail, at least let our children and our children’s children say of us we justified our brief moment here. We did all that could be done.”

When Zero’s Too High: Time preference versus central bankers by Douglas French

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Central banking has taken interest rate reduction to its absurd conclusion. If observers thought the European Central Bank (ECB) had run out of room by holding its deposit rate at zero, Mario Draghi proved he is creative, cutting the ECB’s deposit rate to minus 0.10 percent, making it the first major central bank to institute a negative rate.

Can a central-bank edict force present goods to no longer have a premium over future goods?

Armed with high-powered math and models dancing in their heads, modern central bankers believe they are only limited by their imaginations. In a 2009 article for The New York Times, Harvard economist and former adviser to President George W. Bush N. Gregory Mankiw wrote, “Early mathematicians thought that the idea of negative numbers was absurd. Today, these numbers are commonplace.”

While this sounds clever, Ludwig von Mises undid Mankiw’s analogy long ago. “If he were not to prefer satisfaction in a nearer period of the future to that in a remote period,” Mises wrote of the individual, “he would never consume and enjoy.”

Carl Menger explained that it is “deeply imbedded in human nature” to have present desires satisfied over future desires. And long before Menger, A. R. J. Turgot wrote of the premium of present money over future money, “Is not this difference well known, and is not the commonplace proverb, ‘a bird in the hand is better than two in the bush,’ a simple expression of this notoriety?”

Central bankers can set a certain interest rate, but human nature cannot be eased away, quantitatively or otherwise. But the godfather of all central bankers, John Maynard Keynes, ignored time preference and focused on liquidity preference. He believed it was investments that yielded returns, and wrote, “Why should anyone outside a lunatic asylum wish to use money as a store of wealth?”

If liquidity preference determined the rate of interest, rates would be lowest during a recovery, and at the peak of booms, with confidence high, everyone would be seeking to trade their liquidity for investments in things. “But it is precisely in a recovery and at the peak of a boom that short-term interest rates are highest,” Henry Hazlitt explained.

Keynes believed that those who held cash for the speculative motive were wicked and central bankers must stop this evil. However, as Hazlitt explained in The Failure of the “New Economics,” holding cash balances “is usually most indulged in after a boom has cracked. The best way to prevent it is not to have a Monetary Authority so manipulate things as to force the purchase of investments or of goods, but to prevent an inflationary boom in the first place.”

Keynesian central bankers leave time out of their calculus. While they think they are lending money, they are really lending time. Borrowers purchase the use of time. Hazlitt reminds us that the old word for interest was usury, “etymologically more descriptive than its modern substitute.”

And as Mises explained above, time can’t have a negative value, which is what a negative interest rate implies.

Borrowers pay interest in order to buy present assets. Most importantly, this ratio is outside the reach of the monetary authorities. It is determined subjectively by the actions of millions of market participants.

Deep down, Mankiw must recognize this, writing, “The problem with negative interest rates, however, is quickly apparent: nobody would lend on those terms. Rather than giving your money to a borrower who promises a negative return, it would be better to stick the cash in your mattress. Because holding money promises a return of exactly zero, lenders cannot offer less.”

But still, he approvingly cites German economist Silvio Gesell’s argument for a tax on holding money, an idea Keynes himself approved of.

Keynesian central bankers are now central planners maintaining the unshakable belief that low interest rates put people back to work and solve every economic woe. “But in reality,” writes Robert Murphy, “interest rates coordinate production and consumption decisions over time. They do a lot more than simply regulate how much people spend in the present.”

Murphy points out that low rates stimulate some sectors more than others. Lower rates generally boost housing and car sales, for instance, while not doing much for consumer goods.

More than half a decade of zero interest rates has not lifted anyone from poverty or created any jobs—it has simply caused more malinvestment. It is impossible for the monetary authorities to dictate the proper interest rate, because interest rates determined by command and control bear no relation to the collective time preference of economic actors. The result of central bank intervention can only be distortions and chaos.

Draghi and Mankiw don’t seem to understand what interest is or how the rate of interest is determined. While it’s bad when academics promote their thought experiments, the foolish turns tragic when policymakers use the power of government to act on these experiments.

ABOUT DOUGLAS FRENCH

Douglas E. French is senior editor of the Laissez Faire Club and the author of Early Speculative Bubbles and Increases in the Supply of Money, written under the direction of Murray Rothbard at UNLV, and The Failure of Common Knowledge, which takes on many common economic fallacies.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

Who decides the top foreign aid recipients?

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Viewing government documents showing a comparison of the top fifteen countries that received aid in 2002 and 2012 got me to wondering how a country gets on the coveted top fifteen handout list? After looking at the comparison between the two decades recipients I ended up with an uneasy feeling and let me explain as it is quite simple.

top-10-recipiens-of-aid-fy2013

For a larger view click on the chart.

In 2002 the top 15 countries consisted of those you would expect to be receiving aid like Israel, Egypt, Pakistan and Afghanistan. In 2012 those same four are on the top fifteen list but there was a major shift in the majority of the fifteen from 2002 to 2012.

In 2002 there was not one sub-Saharan country that was in the top fifteen recipients in the world. In 2012 that changed dramatically as eight of the top fifteen recipients were located in sub-Saharan Africa.

Kenya, home of Obama’s father, received $652 Million in aid in 2012 topped only by Tanzania with $752 Million. The other six countries rounding out the majority of eight in order of aid are Nigeria, Ethiopia, Mozambique, South Africa, South Sudan and Uganda totaling $4,619,000,000.00 in aid.

It is worth noting Kenya, Sudan, Uganda and Nigeria are ranked among the most corrupt governments in the world so it is only fitting the Obama administration would single them out for the most aid.

See the Congressional Research Office report Foreign Aid: An Introduction to U.S. Programs and Policy.

RELATED ARTICLE: “Foreign Aid” is Really Merely U.S. Crony Capitalism Enslaving the Poor via Taxpayer Money

In 1776 American Colonists Told the British “To Pound Sand” — Happy 4th of July!

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Today America celebrates her 238th birthday. On July 4, 1776, the Second Continental Congress adopted the Declaration of Independence whose 56 signers were not professional politicians but ordinary citizens of the day.

Yes, these were simple people including farmers, business owners, lawyers, ministers and physicians and what today we would call grassroots leaders.

People like you and me. The youngest was 26 and the oldest was 70.

Imagine 56 citizens crafting a document as profound as the Declaration without the benefit of the Internet, Facebook, Twitter, Instagram, or a host of political hacks churning out canned ham political spin.

Declaration of IndependenceFor 238 years, historians have analyzed the lives, motivations and contributions of these 56 patriots.

Notwithstanding their incredible vision and articulation, what has always captivated me most about their achievement was how they overcame what must have been overwhelming fear in the face of adversity. Their unflinching belief against taxation without representation seemingly provided the needed fortitude to confidently confront the Crown and its worldwide empire.

Today we find ourselves once again confronting a ruling class that imposes taxation without representation through the federal income tax code. Included in this system is an IRS enforcement arm that, as in 1776, strikes fear in the heart of every American citizen.

In 1776, the colonists had to make a choice. Continue status quo or tell the British to pound sand. Their courageous decision quite literally changed the course of history.

In 2014, American citizens again have to make a choice. They can allow the continued proliferation of a tax code that has now surpassed 74,000 pages and is rapidly eating away the very economic fiber of this nation. Or, they can tell the ruling class “pound sand” and engage in the campaign to enact H.R. 25, “The FairTax Act of 2013”.

H.R. 25 is in essence, the citizen’s Declaration of Taxation Independence.

It is the only tax replacement plan before Congress that sets forth a fair, simple and transparent form of taxation driven by the citizenry and not by the ruling class of Washington.

By its very nature, the FairTax embodies the principles envisioned and codified in the original Declaration of Independence. Declaration signer and Founding Father Benjamin Franklin said, “The ordaining of laws in favor of one part of the nation, to the prejudice and oppression of another, is certainly the most erroneous and mistaken policy.”

The FairTax Plan rights the wrongs of the income tax code by providing a tax code that treats every citizen the same – no exemptions, no loopholes for anyone – no prejudice or oppression.

William Burroughs stated this eloquently on the FairTax.org Facebook page yesterday when he said, “The only way to finance government in a free society is by the voluntary choice of taxpayers, and no better way to enact it than by a sales tax. End the income tax, a free people do not have to scurry around proving to bureaucrats how they earned their money.”

If you are not actively supporting the FairTax, we invite you to become a part of what is arguably, the largest grassroots tax reform movement in America. Take one minute to send a message to your Representative and become a part of the greatest tax revolution of our lifetime.

And on this July 4, Happy Birthday America!

RELATED STORY: Found in rare copy of Ben Franklin-owned newspaper, first news coverage of the Declaration of Independence

Tax Flight

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When federal and state taxes are accounted for, The United States has the highest corporate tax rate in the world. When it comes to the top marginal rates—including state taxes—of individual earners, many Americans are seeing more than half their income simply taken away. It’s no surprise, then, that some of the most productive citizens are leaving for more hospitable climes.

This behavior is called jurisdictional tax arbitrage. At a certain point, if you want to grow your business or keep the fruits of your enterprise, it makes sense to take advantage of more favorable taxation rates in other countries. In other words: Leave.

Some call this “unpatriotic.” Others attempt to characterize it as some evil superclass that wants to game complex global rules out of sheer greed.

Canadian pundit-turned-politician Chrystia Freeland writes:

What is more relevant to our times, though, is that the rich of today are also different from the rich of yesterday. Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves.

It’s not immediately clear from the foregoing passage whether we’re supposed to love or hate this new “super-elite.” But for the social democratic author of Plutocrats, this nation-unto-itself is just crying out for annexation by a voracious steroid-State that depends on transfers for its very existence.

Quicker than you can say “Koch Brothers,” the left has painted a picture not of entrepreneurs and investors who are trying to protect capital from predatory politicians and bureaucrats, but of a wealthyUebermenschen who have purchased the political process. And it is the grain of truth in this latter description that stokes the fires of redistributionist populism.

It is up to us to reframe such views and to disentangle the makers from the takers—the crony capitalists from the value creators. For if we do not, we will find that those who make the world a better place through principled entrepreneurship will simply take themselves away to Panama or Hong Kong. What will be left behind are precisely the sort of people who are willing to purchase the political process to ensure that rents flow into their coffers. Actually, this is not prediction. This is happening already. The question is, when will this brain-cum-capital drain complete itself?

The United States is no longer a home where value creators are welcome. They are viewed as geese with golden eggs to be slain for a laundry list of progressive ends. And progressive populism, with all its talk of one-percenters and “inequality,” will continue to drive good people to take flight. Worse, progressive populism drives the justification for global tax collectors to jet off in hot pursuit.

It’s a good thing entrepreneurs still have a place to go. If it were less costly to pick up and go, more of us might follow. In a global economy, at least valuable capital is protected from the parasitic political classes for a little while longer. After all, many of those who are taking their money and running are still stewards of capital, meaning it can still be deployed for the creation of goods and services. If Leviathan can get its tentacles on that capital, it will be lost in the belly of the transfer State—feeding the addictions of welfare queens, corporate cronies, and the military-industrial complex.

In honor of those one-percenters who have gotten the hell out of dodge, let us raise a glass and a stogie. Here’s hoping there is still sanctuary in the Caymans for turtles and tycoons.

The July/August issue of the Freeman is now live!

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.