Hedgehog Party

Creative Thinking-The Rich and the Rest of Us

This article in the "Nation" is a repeat of the same "tax the rich" philosophy that carries the left to electoral victory from time to time.  Cavanagh and Collins lament about inequality in our economy, and, of course, propose much higher income taxes on the rich and expanded social programs as a solution.  Insanity is understood to be "doing the same thing over and over and expecting a different result."  In this case the result would be a weaker economy and more tax code games.

The Hedgehog proposes a different approach.  Change the tax regime to include an asset tax so that the rich are really taxed.  Use a single rate income tax to create upward mobility for the hardworking and creative.  Use a balanced budget amendment to keep everybody honest about public financing.

Medicare Insurance

This column by Scott Burns analyzes the effect of the escalation of Medicare premiums.  It is a sobering article when you consider the potential for renewed inflation.

The Burns column does not address a larger question.  Why is it that Medicare as well as other medical insurance premiums consistently rise faster than inflation?  A large part of the answer is the tax code.  When we allow new benefits in any system, a fragmented tax code and unbalanced budgets encourage political expediency.  That is the reason that our Congress and President were able to pass a Medicare prescription benefit with little cost debate and no new taxes.

Political corruption of healthcare finance does not end there.  I have written a short piece linked here that addresses the general question of high inflation rates of health insurance.  Specifically, it discusses the effect of medical cost shifting to private health insurance buyers.  This practice, encouraged by health insurance companies, drug companies and federal agencies, is wrecking our healthcare finances.

The tax proposal in "The Rats are in the Cheese" is a major step in the solution to one of the thorniest policy issues of our time.

Welcome "Money Sense" Listeners

I'd like to welcome those of you who are visiting our site following my radio interview with Karen Ellenbecker.  The interview was taped last week, and it was broadcast today, June 14, from 3:00 to 4:00 p.m. EDT. 

Feel free to look around on our site - there are lots of interesting posts on the problems we face because of our flawed tax code.  In addition, I'd like to draw your attention to a few items that best summarize some of our own thinking:

• A synopsis of our proposals for tax reform
• A piece entitled "Four Goals of Tax Reform - Revisited"
• An editorial I wrote entitled, "Mr. Buffett's Taxes"

Finally, please consider buying the book!  I know you will enjoy the story and appreciate the serious call for reform embedded therein.  Amazon has it for sale here.  Thanks!

Radio Interview - Saturday June 14

I taped an interview with Karen Ellenbecker, who hosts a regular radio show called "Money Sense."  Ms. Ellenbacker owns an investment management firm in Milwaukee and frequently addresses issues regarding finances and investing on her program. 

The interview will be broadcast this Saturday, June 14, on WISN News Talk Radio 1130 AM from 3:00 p.m. to 4:00 p.m. EDT.  You can hear our lively discussion on the radio (if you're in Milwaukee!) or by clicking onto the station's web site here.

I had a lot of fun with this interview!  At the end of the program, I offered to come to Milwaukee to speak about the book.  We're already planning this trip, which will likely be after Labor Day.  Listen in if you can, and let me know what you think.  Cheers!

Tax Uncertainty

Maybe it is a Financial Planner "full employment" bill that both of the presumptive candidates are proposing.  Both candidates are obviously for tax change...therein lies the problem.

The Tax Prof makes a comparison of the Obama and McCain tax proposals.  Both plans are straight down the party lines.  They play to the major constituencies of both parties.

The average taxpayer should vigorously object to both of these plans.   We have described the average taxpayer as "Generation V"...the Vegamatic Generation.  Our politicians "slice and dice" the taxpayers to pander for votes.  After each cycle, some group of taxpayers is disadvantaged, and there is more out of control spending...frequently in favor of the well-connected rats.  Over time, the average taxpayer foots most of the bill.

Why stand still for this?  Let's enact the Hedge Tax, and end the class warfare over taxes for good.

Tax Complexity - Amity Shlaes

Amity Shlaes has a good piece today on Bloomberg.com (here) regarding the complexity of tax plans offered by Democrats and Republicans.  Tax complexity serves a variety of interests, none of them productive:

• Obscures tax increases, or at least makes them hard to see and understand
• Enables the wealthy and well-connected to avoid taxation, since they're the only ones really able to navigate complexity to their advantage
• Empowers politicians, who can reward or punish groups with targeted tax breaks or increases 
• Facilitates fiscal irresponsibility 
• Fans the flames of class warfare and division

The Hedge Tax is designed to eliminate complexity, which is the most important tax reform we need to undertake. 

Tax Relief for the Agile Wealthy

This blog post summarizes the effects of two seemingly minor tax code modifications.  The extension of foreign tax credits and the removal of deductible limits on Katrina related donations have been a bonanza.  Wealthy people that do not have to depend on domestic W-2 income can "score at will" as they say in the NBA.  Those that do carry the load for the well-connected rats. 

An important lesson from this post is to realize the futilty of reform of the existing code.  Unintended consequences and shrewd manipulation will undo the best of intentions.  As citizens, it is past time to realize that tax reform via the Hedge Tax is urgent.  The Hedge Tax puts the power to tax and spend in the hands of all of the people instead of a few vested special interest rats.