Reality versus Theory….

We are now in year 6 of the President and the Democrat party screaming, shaming, and outright lying about “paying your fair share”, “the offshoring of jobs” or “paying a living wage”.  No one ever asks the question of whyThe fact that the question isn’t asked or an answer given doesn’t shock me and those that read this blog, I doubt it shocks any of you either. The answer is right in front of us everyday…………………

Let’s not beat around the Bush or the Obama, the Untied States of America and most of its European brothers and sister are dead ass broke, insolvent, and on the edge of default.

Insolvency n. 1) the condition of having more debts (liabilities) than total assets which might be available to pay them, even if the assets were mortgaged or sold.

Pretty much sums up the United States and the rest of the Western world don’t you think?  $17 trillion is big damn number in case you are not aware.

So the playbook is to raise taxes, fees, fines, licenses, etc… in an attempt to raise revenue to the US Treasury, all this despite the fact history shows anyone who is willing to look that revenue to the government hovers around 16-19% of GDP no matter how high tax rates are in the US.

So, the only true solution would be economic growth, right?  Because if I get 19% of GDP as it stands today, then a larger GDP or economic activity would boost revenue to the Treasury, right?  You’d think, but whether its a Democrat or Republican the pursuit of growth doesn’t exist.  The policies of either party are roughly the same the only thing that changes is the speed of which we are traveling towards insolvency, nothing more.

So how does the United States approach growth?  Well……its really hard to tell because we are seeing what I would say are the exact opposite signs to growing economy

We have a growing number of companies moving corporate headquarters, selling out to much smaller foreign competitors, or simply leaving the United States all together.  Again no one asks why?

The President labels these companies as “unpatriotic” for trying to skirt America’s punitive tax code in favor of simpler, fairer, and less onerous ones.  The U.S. has one of the highest corporate taxes rates in the world at 35%, we also will tax a company again if they attempt to repatriate profits earned overseas, meaning if GE earns money in France, pays French taxes and attempts to bring those profits home for whatever reason the U.S. government will taxes those profits at the 35% corporate rate. This has resulted in billion of foreign earned profits parked off shore hoping that this stupid law will finally change, but it won’t.  Makes to much damn sense and it is counter intuitive for liberal to encourage profit making, we must always shame and punish profit.

Also the number of Americans that are renouncing their citizenship is skyrocketing up 221% in 2013.  It has grown triple digits every year Obama has been President, why? Taxation, Americans working for American based companies overseas are seeing the IRS pursue foreign earnings for US taxes, despite paying taxes in the country in which they work.  This is especially true if it is capital gains earning from saving or other means in foreign banks.  The only way to avoid this abuse by “Land of the Free” give up your citizenship.  That may not save you for long if Washington gets their way, Chuck Schumer and Bob Casey proposed a bill that would level a 30% penalty on all assets transferred out of the United States for taxes reasons by US citizens. You see anyone can come into this country for any reason, but try to leave and see what happens to you.  The way all tyrannical systems work.

We are the only modern nation on earth that wields imprisonment as a result for not paying taxes, we are also the only industrialized nation that attempts to double tax citizen working abroad and corporations. Example if you are an Italian citizen you only pay taxes on money earned in Italy, radical concept, huh?

I looked for a contrast to the United States as far as taxes and business climate.  I found tiny Estonia as an example of how one would act if attempting to lure business, drive GDP higher, and increase employment opportunities for its citizens.

Estonia has the following:

  • It’s tax code is 43 pages
  • Corporations are only taxed on dispersions of profits and they pay 0% if profits are reinvested into the business.  Meaning profits are only taxed upon payments to investors, share holders, or the actual owners
  • Income taxes are a low flat 21%
  • There is NO estimate tax

Results, since 2008 they have bucked the trend of the rest of the EU with GDP growth rates from 3.5 to 7.9%.  Capital investment is flowing into Estonia, don’t be shocked if you hear a company from the US exercising their “unpatriotic” duty and locating there in the near future.

History shows anyone willing to look what happens when you stifle business, tax your citizens to much, and accumulate mountains and mountains of unsustainable debt.  You just prove the theory you followed caved in to the actual reality that has always excited. 

The United States isn’t so special it will skirt the laws of simple mathematics, it won’t escape this fate because we are the largest economy on earth, etc…  We will suffer the same fate  which has engulfed the Roman Empire, The Spanish Empire, The British Empire, The Soviet Union, on-and-on………………..

We are creating an environment where hard working people can’t get by, can’t get ahead of inflation, and are becoming frustrated with text book policies to real world problems.  The below cartoon sums up the economic policies of government and academia.


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