Here is How Obamacare is Going to Implode

Published: Fri, 04/18/14

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10 Freedom-Crushing Aspects of the Income Tax
 

EJ-SmithMy Cato friend and tax policy expert Chris Edwards breaks-it down for the policy makers:

Here are 10 freedom-crushing aspects of the income tax that policymakers should tackle:

1. Complexity and Ambiguity. Certainty in the law is a bulwark against arbitrary and abusive government. But there is no certainty under the income tax because it has an inherently complex base that is shot full of loopholes. Many studies have found that citizens, tax professionals, and the IRS all commit a large number of errors on their tax calculations. Looking at these studies, Professor David Vance of Rutgers University recently concluded that “the tax code is so complex that it is unconstitutionally vague,” likely violating due process under the Fifth Amendment.

2. Huge Size and Instability. Citizens are required to know the laws and comply with them. Yet federal tax rules are massive in scope and constantly changing. Tax laws, regulations, and related rules span 74,608 pages, according to CCH Inc. The number of pages has more than tripled since President Jimmy Carter called the tax system “a disgrace to the human race.” CCH estimates that there have been almost 5,000 changes to the federal tax code over the last decade.

3. Vertical Inequality. Although equality under the law is a bedrock American principle, the income tax treats citizens very unequally. Vertical inequality means different tax burdens on citizens of different incomes. For example, households earning between $100,000 and $500,000 pay an average income tax rate two and a half times higher than those earning between $50,000 and $100,000. Such inequities violate the spirit of equal protection under the Constitution.

4. Horizontal Inequality. Even people with similar incomes are treated unequally by the many exemptions, deductions, credits of the income tax. For example, the tax differences between homeowners and renters with the same incomes can be thousands of dollars because of the mortgage interest deduction.

5. Lack of Privacy. The income tax generates a large invasion of our privacy. The IRS gains access to mortgage records, credit card data, bank records, college tuition data, medical expenses, and much else. The broad IRS authority to obtain records without court supervision was referred to by the Supreme Court in 1964 as “a power of inquisition.” A huge and growing problem with the IRS amassing all this data is identity theft. The IRS has had to assign more than 3,000 agents to deal with this crime.

6. Denial of Due Process. In addition to the tax code’s complexity, the Fifth Amendment right to due process is ignored in other respects under the income tax. Due process requires that government provide accused citizens a clear notice of a claim against them and allow them a hearing before executing enforcement action. But the IRS engages in many summary judgments, and enforces them prior to any judicial determinations.

7. Shifting the Burden of Proof. For non-criminal tax cases — the vast majority of cases — the tax code reverses the age-old common law principle that the burden of proof rests with the accuser. Except in some narrow circumstances, the IRS does not have to prove the correctness of its determinations. When the IRS makes erroneous assessments — as it often does — citizens carry the burden to prove that they are wrong.

8. No Trial by Jury in Tax Court. Despite Sixth and Seventh Amendment guarantees of trial by jury, the federal tax system sidesteps such protections. To contest an IRS tax calculation prior to assessment, one must file a petition in the U.S. Tax Court. But since this is an administrative court, not an Article III court, no jury trial is required. To obtain a jury trial and related rights for civil tax cases, one must file suit in a U.S. District Court. But before that can happen, the alleged tax, penalties, and interest must be paid in full.

9. Unreasonable Searches and Seizures. In most situations, the Fourth Amendment guarantees that, before the government can search private property and seize records, it must demonstrate to a court that there is probable cause to believe that lawless conduct exists. However, the IRS’s summons authority under tax code section 7602 allows it to obtain records of every description from any person without showing probable cause and without a court order. In recent years, there has also been a big expansion in information reporting required by the IRS and in its computer searching for personal records.

10. Forced Self-Incrimination. The requirement to file tax returns under penalty of perjury operates to invalidate the Fifth Amendment protection against self-incrimination. Citizens face a legal dilemma. On the one hand, refusing to file a return would expose a citizen to prosecution for failure to file. On the other hand, disclosing information sought in tax returns constitutes a waiver of Fifth Amendment protections. The IRS can and does release that information to federal, state, and local agencies for both tax and non-tax law enforcement purposes.

What should Congress do about all this? The first thing should be to greatly cut the government’s size to reduce its rapacious demand for our money. The next thing should be to proceed with a pro-growth and pro-freedom tax overhaul, which optimally means scrapping the income tax altogether in favor of a low-rate, consumption-based tax system.

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Putin Advisor Alexander Dugin: Anti-American, Anti-European and Powerfully Expansionist
 

dug Alexander Dugin’s neo-Eurasianism conceives of a Eurasian state that would incorporate all the former Soviet states and would go so far as to establish a protectorate over all EU members. For Dugin, the enemy is the United States. Alexander Dugin also would have Vladimir Putin push into the east and south Ukraine. Here at Foreign Affairs, Anton Barbashin and Hannah Thoburn lay out the anti-United States philosophies of Dugin, including the Eurasianists interest in Genghis Khan’s empire lessons of “a strong central state and pyramid-like system of submission and control.”

The roots of Eurasianism lie in Russia’s Bolshevik Revolution, although many of the ideas that it contains have much longer histories in Russia. After the 1917 October Revolution and the civil war that followed, two million anti-Bolshevik Russians fled the country. From Sofia to Berlin and then Paris, some of these exiled Russian intellectuals worked to create an alternative to the Bolshevik project. One of those alternatives eventually became the Eurasianist ideology. Proponents of this idea posited that Russia’s Westernizers and Bolsheviks were both wrong: Westernizers for believing that Russia was a (lagging) part of European civilization and calling for democratic development; Bolsheviks for presuming that the whole country needed restructuring through class confrontation and a global revolution of the working class. Rather, Eurasianists stressed, Russia was a unique civilization with its own path and historical mission: To create a different center of power and culture that would be neither European nor Asian but have traits of both. Eurasianists believed in the eventual downfall of the West and that it was Russia’s time to be the world’s prime exemplar.

In 1921, the exiled thinkers Georges Florovsky, Nikolai Trubetzkoy, Petr Savitskii, and Petr Suvchinsky published a collection of articles titled Exodus to the East, which marked the official birth of the Eurasianist ideology. The book was centered on the idea that Russia’s geography is its fate and that there is nothing any ruler can do to unbind himself from the necessities of securing his lands. Given Russia’s vastness, they believed, its leaders must think imperially, consuming and assimilating dangerous populations on every border. Meanwhile, they regarded any form of democracy, open economy, local governance, or secular freedom as highly dangerous and unacceptable.

In that sense, Eurasianists considered Peter the Great — who tried to Europeanize Russia in the eighteenth century — an enemy and a traitor. Instead, they looked with favor on Tatar-Mongol rule, between the thirteenth and fifteenth centuries, when Genghis Khan’s empire had taught Russians crucial lessons about building a strong, centralized state and pyramid-like system of submission and control.

Eurasianist beliefs gained a strong following within the politically active part of the emigrant community, or White Russians, who were eager to promote any alternative to Bolshevism. However, the philosophy was utterly ignored, and even suppressed in the Soviet Union, and it practically died with its creators. That is, until the 1990s, when the Soviet Union collapsed and Russia’s ideological slate was wiped clean.

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Campaign Spending Increases Voter Knowledge
 

Debs-Photo Cato Institute’s Trevor Burrus explains how campaign spending is actually helpful to voters. Imagine, writes Mr. Burrus, that contributions were limited to, say, $50 or $100. How long would it take a new candidate to amass enough money to get his or her name and ideals out there to challenge an entrenched incumbent? One study from The American Journal of Political Science concludes that advertising increases voter knowledge, interest and even turnout. Read here from Mr. Burrus three things about money in politics that you may not know about.

Campaign spending increases voter knowledge.

This may seem counter-intuitive, but imagine a world where contribution limits to candidates were set at $50, or even $100. It would take a long time to amass enough money to run just a single ad telling voters your name and ideals. Challenging an incumbent under those conditions would be nearly impossible. This is one reason why incumbents tend to like campaign finance laws.

Moreover, many studies have shown that ads increase voter knowledge, interest, and even turnout. One study concluded that “exposure to campaign advertising can produce citizens who are more interested in a given election, have more to say about the candidates, are more familiar with who is running, and are ultimately more likely to vote.”

Money doesn’t buy elections.

Money is important in elections, particularly when challenging an entrenched incumbent with name recognition and media presence. For a House candidate, the first $500,000 or so is absolutely crucial. After that, the returns diminish sharply, and each next dollar spent is worth less than the last.

However, dumping massive amounts of cash into an election certainly does not guarantee victory. Take former eBay CEO Meg Whitman, who spent $144 million of her own money only to lose the California gubernatorial race to Jerry Brown. Or conservative donor Sheldon Adelson, who spent $42 million in 2012 backing nine candidates with only one of them winning. Or the Koch brothers, who spent $33.5 million on ads attacking Obama, and we know how that turned out.

True, the higher-spending candidate usually wins the election, but did he/she win because of the money? That’s a more difficult question. Donors like to back winners, and they will often give to candidates just because they think they will win. This is especially true when low contribution limits make it difficult for a single donor to make a big difference in the outcome. Rather than giving a small amount to someone who will lose anyway, they give to the leading candidate. Candidates in safe districts, districts where the margin of victory all but ensures that one party will win, still get donations. According to election guru Nate Silver, the number of landside districts has doubled since 1992. There are now 242 of them. Candidates who oppose the entrenched party or incumbent receive very few donations and party support, thus essentially ensuring that, in those 242 districts, the “bigger spending” candidate will win. But it is the demographics and gerrymandering that cause those victories, not the spending.

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How Investor’s Are Getting Strong Armed
 

You need to sit up and pay attention. As if managing money weren’t hard enough already, there’s some fine print I want you to understand. The issue is whether your investment advisor/broker works under a fiduciary or suitability standard. There’s a big difference between the two.

When you work with a broker, he is guided by the weaker suitability standard. It basically means putting you into the best product suitable to you that’s he’s selling. Think of it like going to McDonald’s. You’re getting something your way, but it’s still basically a burger, chicken, or piece of fish.

But what if you’re a vegetarian? And you can’t possibly stomach another one of their so-called salads? You need to move on to another venue.

An investment advisor, on the other hand, must follow a strict fiduciary standard or diet, if you will. That means it’s the investment advisor’s responsibility to find the best investment for your situation, no matter what.

In my example, that may mean packing the fam back into the car to find a new place to eat.

Suitability versus  fiduciary standard is the fierce debate going on behind closed doors down in Washington. Guess who has the most seats at the table?

Big Wall Street brokerages depend on the suitability standard. They have the distribution network already in place with their army of brokers. All they need to do is shout the command and soldiers peddle the equivalent of the burgers, chicken, and fish to the uninformed prey.

But don’t take my word for it. “Those dealing with a broker are under the misconception that they’re dealing with a financial professional legally obligated to put their best interests first; that’s not the reality,” says Barbara Roper, director of investor protection at the Consumer Federation of America.

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The War Dogs Got 90,000 Americans Killed in Korea and Vietnam
 

vietnam war memorialHere Pat Buchanan outlines this astounding number. The United States, Pat explains, has today no vital interest in Syria, Crimea, Iraq, Afghanistan, the South China Sea, or the Senkaku Islands. And Mr. Buchanan correctly notes that countries all over the world want America to come and fight their wars.

On our TV talk shows and op-ed pages, and in our think tanks here, there is rising alarm over events abroad. And President Obama is widely blamed for the perceived decline in worldwide respect for the United States.

Yet, still, one hears no clamor from Middle America for “Action This Day!” to alter the perception that America is in retreat.

If a single sentence could express the seeming indifference of the silent majority of Americans to what is going on abroad, it might be the simple question: “Why is this our problem?”

If a Russian or Ukrainian flag flies over Simferopol, why should that be of such concern to us that we send U.S. warships, guns or troops? If Japan and China fight over islets 10,000 miles away, islets that few Americans can find on a map, why should we get into it?

And, truth be told, the answers of our elites are unconvincing.

One explanation for America’s turning away from these wars is that we see no vital interest in these conflicts — from Syria to Crimea, Afghanistan to Iraq, the South China Sea to the Senkaku Islands.

Moreover, the prime motivator of a half-century of sacrifice in a Cold War that cost us trillions and 90,000 dead in Korea and Vietnam — the belief we were leading the forces of light in a struggle against the forces of darkness that ruled the Sino-Soviet Empire — is gone.

The great ideological struggle of the 20th century between totalitarianism and freedom, communism and capitalism, militant atheism and Christianity is over.

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VIDEO: New questions over Rep. Cummings’ connection to IRS probe
 


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A War on Meaningless Statistics
 

Read here how Obama is firing up racial and gender resentments to get out the vote. His policy is deepening the national divide by carving the electorate into blocs and inflaming racial and other tensions.

You can tell it’s an election year because so many noncrises are suddenly urgent priorities. Real median household income is still lower than it was in 2007, the smallest share of Americans is working since 1978, and the Russians are marching west, but Democrats are training fire on race, gender and the grievances of identity politics.

“We have this congenital disease, which is in midterm elections we don’t vote at the same rates,” President Obama said at a Houston fundraiser the other day. He means that the Obama Democrats are now what they call the “coalition of the ascendent,” made up of minorities, young people, single women and affluent, college-educated cultural liberals. The problem is that this year they may be a coalition of the disappointed, so Democrats are trying to scare them to the polls with pseudo-controversies.

Take last week’s East Room reception for feminist celebrity Lilly Ledbetter, when Mr. Obama declared that “today the average full-time working woman earns just 77 cents for every dollar a man earns; for African American women, Latinas, it’s even less. And in 2014, that’s an embarrassment. It is wrong.” He’s right that it’d be wrong, except he knows this isn’t close to true.

The “pay gap” is the ratio between median earnings for men and women, according to Census Bureau data. But adjust for hours worked, occupation, decisions about marriage and children, education and risk, and equal work means equal pay. The war on women is really a war on meaningful statistics.

Still, women don’t have it as bad as Attorney General Eric Holder, who in a speech last week departed from his prepared remarks to feel sorry for himself after a testy House hearing. “What Attorney General has ever had to deal with that kind of treatment?” he asked. “What President has ever had to deal with that kind of treatment?”

Mr. Holder should recall the treatment of his predecessor Alberto Gonzales before implying that his critics are racist, but then he sees Jim Crow everywhere. In his speech before Al Sharpton’s National Action Network, he said the right to vote faces “unprecedented, unwarranted, ugly and divisive adversity.”

Some 34 states now require voters to show some form of government-issued photo identification, according to the National Conference of State Legislatures, up from zero in 2006. The states say such rules uphold public confidence in the integrity of the ballot.

And if the states are secretly trying to suppress minority turnout, they’re doing a lousy job. The Census reports that the black voting rate rose 13 percentage points from 1996 to 2012. At 66.2% black participation in 2012 surpassed the rate for non-Hispanic whites (64.1%).

Yet every Democrat seems to have received the white supremacist conspiracy memo. Last week Nancy Pelosi said at a news conference that “I think race has something to do with the fact that they are not bringing up an immigration bill. I’ve heard them say to the Irish, ‘If it was you, it would be easy.’” Yes, the Irish. Steve Israel of the Democratic Congressional Campaign Committee added that “elements” of the GOP are “animated by racism.”

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Here is How Obamacare is Going to Implode
 

Cato Institute’s Michael Cannon exposes the fraud of Obamacare signups.

Barack Obama wants you to know he enrolled 7.5 million Americans through Obamacare’s health insurance Exchanges. What he doesn’t want you to know is how.

Federal courts may soon rule that President Obama induced the majority of those enrollees to enroll by offering them taxpayer dollars he has no legal authority to spend.

If the courts put a stop to that unauthorized spending, a majority of Exchange enrollees would suddenly face the full cost of Obamacare coverage, and enrollments would plummet.

Under the Patient Protection and Affordable Care Act, states have the option of establishing an Exchange themselves, or letting the federal government do it. The Act also authorizes subsidies that can require taxpayers to cover nearly the entire premium for Exchange plans. Among the eligibility criteria for those subsidies is a requirement that recipients enroll “through an Exchange established by the State.”

Such requirements are routine, and this one is and unequivocal. Countless federal programs offer subsidies only in states that agree to implement them. The PPACA’s legislative history is littered with Republican and Democratic proposals to offer various subsidies — including tax credits and Exchange subsidies — exclusively in states that establish Exchanges.

The eligibility rules for the PPACA’s Exchange subsidies specify nine times, without deviation, that recipients must enroll “through an Exchange established by the State.” House Democrats even complained about this part of the Senate-passed PPACA before they themselves approved it, so they knew exactly what they were sending to the president’s desk.

Confounding supporters’ expectations, 34 states declined to establish Exchanges. Under the plain terms of federal law, subsidies are therefore available in the 16 Exchanges established by states, and not available in the 34 Exchanges established by the federal government.

In 2011, however, the Obama administration unilaterally announced it would force taxpayers to subsidize insurance purchased through federal Exchanges as well. It cited no statutory authority for its decision, and has stubbornly refused to follow its own law despite immediate and sustained criticism.

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