Roberts Rules

St. Thomas More practiced civil disobedience before it was cool.

It is altogether fitting that the ruling in the ObamaCare case comes during the Fortnight for Freedom, which started on the Feast of St. Thomas More and ends on Independence Day. More gave his life for his faith in the ultimate act of civil disobedience. In our own time, Chief Justice Roberts quietly points to a fatal flaw of ObamaCare which may yet render the law unenforceable and impractical through sustained and widespread civil disobedience of a less violent nature.

In his discussion of the Congress' taxing power, Roberts was careful to note that the penalty for not purchasing insurance is weak enough that it does not actually amount to compulsion. According to that test, if the tax was severe enough to amount to punishment or was enforceable by criminal penalties, it would run afoul of the Commerce Clause, but in this case the court judges that it does not fail the test. If a subsequent Congress increases the amount of the tax or attaches criminal penalties for failure to pay, ObamaCare could potentially fail that constitutional test and thus become open for re-litigation.

In particular, Roberts notes twice in his opinion that 26 U. S. C. §5000A(g)--which concerns the penalty for not complying with the individual mandate--specifically states that the IRS may not enforce the penalty through criminal prosecution, additional penalties, or any lien or levy on personal property. In the event that the law is not repealed before 2014, the last resort is to simply disobey the law and refuse to pay the penalty. The Prolix Patriot is not a lawyer, but it seems plain enough that a law which cannot be enforced does not have any power.

Thus, in a ruling which superficially appears to uphold the most onerous provisions of ObamaCare, Chief Justice Roberts actually reduces the individual mandate “tax” to a nullity while at the same time drawing a bright line limiting the power of Congress under the commerce clause and the spending power as applied to the several states. Rather than viewing this as a defeat, opponents of ObamaCare should celebrate that Roberts’ ruling has opened many new avenues for subsequent legislation and litigation to eliminate ObamaCare’s abuses and also to restrain Congress’ seemingly limitless ambitions.

Moreover, as Roberts noted in his opinion, "It is not [the court’s] job to protect the people from the consequences of their political choices." Instead of blaming Roberts for some imagined betrayal, opponents of ObamaCare should place the full blame for the law’s many shortcomings squarely at the feet of the laws namesake--President Obama himself. As presidential contender Mitt Romney said today, "If we want to get rid of Obamacare, we're going to have to replace President Obama."

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How Big Is $1.5 Trillion?

Marinus van Reymerswaele, "Two Tax Collectors"

With talks on raising the debt limit grinding along in Washington, D.C., it's worth considering just how big the problem really is.  President Obama and the Democrats have been pushing tax increases as a solution to the nation's budget woes, but don't think for a moment that such increases will only affect the super rich.  When the tax man comes around, we're all going to pay the price for the government's profligacy.

According to the Congressional Budget Office, the estimated 2011 U.S. federal budget deficit is $1,480 billion dollars.  But what does that really mean?  Comparing this number to data from the International Monetary Fund, the U.S. federal deficit is roughly the same as the Gross Domestic Product of the following countries and regions:

• Canada - $1,574 billion

• India - $1,537 billion

• Russia - $1,465 billion

• Spanish-speaking South America (i.e., except Brazil) - $1,443 billion

• Spain - $1,409 billion

• Australia and New Zealand combined - $1,375 billion

• All of Africa, minus South Africa - $1,357 billion

Consider this when evaluating President Obama's claim that we can solve the nation's fiscal problems if we simply close some tax loopholes for "millionaires." Unless we make major cuts to spending--including entitlements--the scale of the problem is so immense that we are all going to have to bear some of the burden.

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How To Lie With Statistics

Let us ignore some of the more glaring inaccuracies with the new "Tax Receipt" calculator that was created by the White House on Monday and instead focus on the more subtle manipulation of the data to accomplish President Obama's political goal of shifting attention away from entitlement reform.

Using the White House's default setting for a family of four making $80,000/year, the application helpfully breaks down how much of this hypothetical family's taxes go to different categories.  However, what immediately jumps out is that the (large) portion of taxes that go to Social Security and Medicare are not included in the percentages even though they are counted towards the total spending at the bottom.

By omitting entitlements, the percentage for defense spending is inflated drastically so that it appears as the largest share of spending, just narrowly edging out the next largest category--health care.  However, if we include entitlements, the picture changes dramatically.  According to the White House numbers, defense spending is really only 12% of overall spending, not 26%.

Also, if we look at the broad categories of welfare spending vs. government spending on constitutionally enumerated powers like defense, law enforcement, and foreign relations, we can easily see that spending on the welfare state in this country accounts for more than 80% of the hypothetical family's tax payments for that year.

Worse still, if we conjecture that the parents of this family are under the age of 40, it is almost guaranteed that neither parent will ever see a dime of the money that they are currently paying into the system, because Social Security and Medicare will be completely bankrupt and interest on the national debt will have overtaken non-defense discretionary spending by the time they retire.  Meanwhile, their children will be left with a debt they will never be able to pay down.

The hard truth that Obama doesn't want you to know is that the 20th century welfare state is at its breaking point.  The welfare programs currently in place benefit some, but unless Congress is able to implement drastic reforms, these programs will cease to function within our lifetimes.  The choice now is clear: we can follow President Obama in ignoring and obfuscating the problem, or we can have the courage to make serious reforms.

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Your Government In Action, Part 7

It's been a while since we last had one of these. In today's installment, you have to read the fine print to discover it's not actually a mistake. Tax Day will be postponed this year due to a District of Columbia holiday. If you've ever seen one of those D.C. license plates that says "Taxation Without Representation," now you know that it's a lie.

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Tax Reform and the "Hidden" Marriage Penalty

Stop the presses!!!  Longtime readers know that the Prolix Patriot is not usually a fan of President Obama.  However, today's New York Times suggests that massive losses for his party in 2010 are bringing the President around to more reasonable policies with genuine bipartisan appeal:

While administration officials cautioned on Thursday that no decisions have been made and that any debate in Congress could take years, Mr. Obama has directed his economic team and Treasury Department analysts to review options for closing loopholes and simplifying income taxes for corporations and individuals, though the study of the corporate tax system is farther along, officials said.

The objective is to rid the code of its complex buildup of deductions, credits and exemptions, thereby broadening the base of taxes collected and allowing for lower rates — much like a bipartisan majority on Mr. Obama’s debt-reduction commission recommended last week in its final blueprint for reducing the debt through 2020.

Republicans have made much hay over provisions such as the "marriage penalty" which was supposedly abolished as part of the Bush tax cuts of 2001 and 2003.  However, the graphic above shows that even after doubling the standard deduction for married couples, the tax code is still extremely unfair for married couples, especially for people with modest incomes.

In the graphic, the green and purple bands represent tax savings for married couples vs. the amount they would have owed Uncle Sam if they each filed as singles.  Conversely, the red and blue bands represent an increased tax burden for the couple after celebrating their nuptials.  From this, we can see that the current tax code punishes couples with similar incomes--even without the massive increases that will go into effect for 2011 if Congress fails to extend the current rates.

For hardworking parents who each bring home $25,000 a year in taxable income, the net tax savings from getting married is exactly zero.  Then, for two people who each bring home a taxable income of $40,000 a year before marriage, their taxes will actually increase by 10 dollars a year after saying, "I do."  Meanwhile, if a millionaire is betrothed to a pauper, his or her taxes will actually decrease by thousands of dollars each year.

Of course, liberals can take consolation that if couples both make six-figure salaries, they will really get taken for a ride at tax time.  If two people each make $110,000 a year and are thinking of getting married, they are actually better off staying single to the tune of $1,300 a year.  If you think the wedding reception is going to be expensive, just multiply the increased tax burden by 20, 30, or even 50 years of wedded bliss!

Bottom line: whether a couple is earning a modest income or is at the top of the income ladder, the tax code punishes hard working families with dual incomes and rewards single-income families--especially the super rich--with higher tax savings.  Given that the majority of American families have two incomes, meaningful tax reform that rewards hard work is long overdue.  If Obama wants to make good on his promise to lower taxes for the middle class, abolishing the hidden marriage penalty would be a good place to start.

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The Irish Grasshopper

Today's New York Times reports on a new kind of "troubles" in Ireland. After more than a decade of capitalizing on cheap labor and goods in the expensive Euro-zone, Ireland has fallen harder than most in the global downturn. The same forces that propelled Ireland's economy forward before the crash have now driven unemployment above 13%. Trapped by the Euro, Ireland cannot now devalue their currency to boost economic growth.

Despite this, the Times portrays Ireland's economic troubles as the tragic consequence of so-called austerity measures that were enacted in 2008 to prevent Ireland's government from defaulting. Sticking with the liberal playbook, the Times trumpets Keynesian stimuli enacted by other countries while lamenting that Ireland couldn't afford to save jobs with a stimulus of their own. This is preposterous: raising taxes while Ireland's economy was going down the toilet is the source of their trouble, not a lack of stimulus.

To wit, we have seen that the Democrats' massive $800 billion Keynesian "stimulus" package has done nothing to slow the loss of jobs here in America. After passage of the bill in February of 2009, the US unemployment rate continued to rise, spiking at 10.6% in January of this year. At 9.3%, it is still higher than it was then. Worse still, jobs "created or saved" by the stimulus—if not outright fabrications—are at best only temporary. Unless the private sector starts creating new jobs—which it has not—unemployment will spike again.

The real problem with Ireland's austerity is that, like all of Europe, they waited until after the crisis to address outrageous deficits and runaway spending. Like the grasshopper of fable, Ireland and the rest of Europe danced in the summertime, blithely spending money they didn't have to fund an ever-increasing entitlement state. Now, Europe's welfare bomb has exploded, and it can't be put together again. America still has hope of avoiding the same fate, but we must learn to save when times are good.

The Obama Administration has created vast new spending programs that will not take full effect for several years, and while repealing ObamaCare is a good start, it will take much more to put America back in the black. Politicians hate cutting spending; more so when revenues are high, but when the economy eventually recovers, we must remember this moment. If we do not reduce spending when times are good, we too will end up like the grasshopper, dying in the cold.

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Unintended Consequences

Amid all the destruction and terror of this past weekend, it is reassuring to finally hear some good news.

The Washington Post reports that the D.C. City Council is reassessing earlier plans to enact a soda tax similar to the one which has prompted outrage in New York after being proposed last year.  However, the fact that this tax was even contemplated should be cause for concern.  In both cases, the cities would levy a tax of one cent per ounce.  For the 12-packs of Coca-Cola pictured above, the tax of $1.44 per case would amount to 43 percent!

The proponents of the crippling soda tax have forgotten that the rise of soda fountains and of soft drinks in the first place was largely a reaction to prohibition.  As the New York Times reported in 1916 when the temperance movement was at its height, "The wave of prohibition that is slowly sweeping over the country has done more than any other one influence to develop the soda water trade."  Ginger ale and root beer were once billed as the healthy alternative to their alcoholic namesakes.

Meanwhile, the District of Columbia has some of the lowest alcohol taxes in the nation.  The tax for wine is only 30 cents per gallon, or roughly one-quarter of a cent per ounce while the tax for beer is an embarrassingly low nine cents per gallon, or less than one-tenth of a cent per ounce.  By raising taxes on soda to several times that of beer and wine, the D.C City Council will effectively encourage the citizens of our nation's capital to drink more alcohol instead of soft drinks.

Ironically, what started as the cure for the supposed evils of alcohol may ultimately cause more alcohol consumption. 

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Who Pays Taxes?

Today is tax day, so it begs the questions, what does the average American owe the Federal Government?  Based on Census figures, the median household income is $52,029.  If the parents are married, both work, and they send two children to preschool or day-care, they would owe a grand total of...drumroll...nothing at all!  That's right!  With child and child-care tax credits, the total tax owed is exactly zero dollars and zero cents!

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