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I have highlighted honest left wingers, and I’ve acknowledged several who have confessed that gun control is misguided.

A columnist for Vox also is honest. Dylan Matthews starts by acknowledging that the standard agenda of the anti-gun movement is pointless.

Congress’s decision not to pass background checks is not what’s keeping the US from European gun violence levels. The expiration of the assault weapons ban is not behind the gap.

But don’t get your hopes up that Matthews is on the right side.

His problem with the incremental ideas is that they don’t go far enough.

What’s behind the gap, plenty of research indicates, is that Americans have more guns. …Realistically, a gun control plan that has any hope of getting us down to European levels of violence is going to mean taking a huge number of guns away from a huge number of gun owners. …And here’s the truth: Even the most ardent gun control advocates aren’t pushing measures that could close the gap. Not even close. …Obama’s plan to tackle gun violence focused on universal background checks for gun sales, banning assault weapons again, and increasing criminal penalties for illicit gun traffickers. That’s nowhere near as dramatic as taking…America’s guns off the street.

I obviously disagree, but I give him credit for honesty. Unlike other leftists who privately share the same ideology, Matthews is open and honest about his desire to eviscerate civil liberties.

Even if he understands it’s not going to happen any time soon.

…large-scale confiscation look like easily the most promising approach… Large-scale confiscation is not going to happen. That’s no reason to stop advocating it.

So I applaud Matthews for not hiding his true desire. Just like I applaud leftists who openly admit that they want 90 percent tax rates or who freely confess that they think all our income belongs to government.

I think they’re all profoundly misguided, but that’s a separate issue.

Now let’s briefly contemplate what would be necessary for Mr. Matthews to get his wish of total gun confiscation.

Reason produced a mocking “five-step” video on the near-impossible actions that would be needed to achieve that goal.

But the first three steps in that video were about how difficult it is to amend the Constitution and I don’t think that’s what the left has in mind. If they ever get to the point of trying to ban guns, presumably it will be after a leftist President has put a sufficient number of doctrinaire Ruth Bader Ginsburg clones on he Supreme Court. In which case, they will simply pretend the 2nd Amendment doesn’t say what it says.

And if that happens, then presumably it will be easy to envision the fourth step, which is legislation prohibiting private ownership of firearms. After all, does anybody doubt that this is what Chuck Schumer and Nancy Pelosi actually would prefer?

But I fully agree that the fifth and final step – actually confiscating guns – would be extremely difficult.

There was a poll on this issue back in 2013 and it’s worth noting that respondents, by a 3-1 margin, said they would defy such a law.

I oscillate between being proud about the result and being disappointed that the margin isn’t 10-1 in favor of defiance.

Regardless, the takeaway from this result is that there would be pervasive and ubiquitous civil disobedience.

Moreover, it goes without saying that the people who obeyed such a fascist law would not be the criminals. So the net effect of such legislation would be an unfortunate shift in the ratio of good gun owners and bad gun owners.

We've documented a growing number of gun

President Donald Trump left, waves to the crowd as he is introduced by Defense Secretary James Mattis, right, aboard the nuclear aircraft carrier USS Gerald R. Ford for it's commissioning at Naval Station Norfolk in Norfolk, Va., Saturday, July 22, 2017. (Photo: AP)

President Donald Trump left, waves to the crowd as he is introduced by Defense Secretary James Mattis, right, aboard the nuclear aircraft carrier USS Gerald R. Ford for it’s commissioning at Naval Station Norfolk in Norfolk, Va., Saturday, July 22, 2017. (Photo: AP)

The United States (US) and South Korea have agreed to resume joint military exercises previously sidelined before the Olympic Games. The announcement comes shortly after North Korean leader Kim Jong Un, crippled by severe sanctions, was pressured to request a seat at the table with President Donald Trump.

“Secretary of Defense James N. Mattis and the Republic of Korea Minister of National Defense Song Young-moo have agreed to resume the annual combined exercises including Foal Eagle and Key Resolve which were deconflicted with the schedule of the Olympic Games,” the U.S. Defense Department said in a statement to People’s Pundit Daily. “The exercises are expected to resume April 1, 2018, at a scale similar to that of the previous years.”

The North and South remain in a technical state of war. The 1950-53 Korean War ended with an armistice, not a peace treaty. The U.S. and South Korea say the military drills on the Korean Peninsula are defensive in nature and routine.

“The United Nations Command has notified the Korean People’s Army on the schedule as well as the defensive nature of the annual exercises,” the statement added. “In accordance with the previous practices, the Neutral Nations Supervisory Commission will observe the exercises to confirm their compliance with the armistice agreement.”

The United States (US) and South Korea

President Donald Trump speaks during a swearing-in ceremony for Attorney General Jeff Sessions at the White House. (Photo: Reuters)

President Donald Trump speaks during a swearing-in ceremony for Attorney General Jeff Sessions at the White House. (Photo: Reuters)

The White House on Monday unveiled President Donald Trump’s Initiative to Stop Opioids Abuse and Reduce Drug Supply and Demand. The three-pronged strategy will target the factors identified as fueling the opioid crisis.

First Lady Melania Trump spoke of her visit last month to Cincinnati Children’s Hospital in Ohio. She discussed research conducted on neonatal abstinence syndrome (NAS), which occurs in newborns who are exposed to opioids before they are born.

“In my role as First Lady, much of my focus has been towards understanding the negative effects the opioid epidemic is having on our children and young mothers,” First Lady Trump said at Manchester Community College in New Hampshire. “Many young mothers are not even aware of this disease, so we must continue educating them about the real dangers of opioids on unborn babies.”

Prevention and education are included in the third part of the strategy, which also plans to end over-prescription, targeting illicit drug supplies, increasing access to evidence-based treatment and recovery support services.

“Real progress is also being made because of the hard work by doctors and nurses across the country who have taken special interest to research and offer resources for those addicted to opioids,” First Lady Trump added.

Attorney General Jeff Sessions praised the plan, which will rely on his department to implement. The U.S. Department of Justice (DOJ) has and will continue to crack down on over-prescribers and the illicit drug trade that was allowed to prosper in the absence of border security.

“Drug dealers show no respect for human dignity and put their own greed ahead of the safety and even the lives of others. Drug trafficking is an inherently violent and deadly business: if you want to collect a drug debt, you collect it with the barrel of a gun,” Attorney General Sessions said. “As surely as night follows day, violence and death follow drug trafficking, and murder is often a tool of drug traffickers.”

“At the Department of Justice, we have made ending the drug epidemic a priority,” he said. “We will continue to aggressively prosecute drug traffickers and we will use federal law to seek the death penalty wherever appropriate.”

The outlined plan, which was provided by the White House, can be read in full below:

REDUCE DEMAND AND OVER-PRESCRIPTION: President Trump’s Opioid Initiative will educate Americans about the dangers of opioid and other drug use and seek to curb over-prescription.

  • Launch a nationwide evidence-based campaign to raise public awareness about the dangers of prescription and illicit opioid use, as well as other drug use.
  • Support research and development efforts for innovative technologies and additional therapies designed to prevent addiction and decrease the use of opioids in pain management.
    • This will include supporting research and development for a vaccine to prevent opioid addiction and non-addictive pain management options.
  • Reduce the over-prescription of opioids which has the potential to lead Americans down a path to addiction or facilitate diversion to illicit use.
  • Implement a Safer Prescribing Plan to achieve the following objectives:
    • Cut nationwide opioid prescription fills by one-third within three years.
    • Ensure that 75 percent of opioid prescriptions reimbursed by Federal healthcare programs are issued using best practices within three years, and 95 percent within five years.
    • Ensure that at least half of all Federally-employed healthcare providers adopt best practices for opioid prescribing within two years, with all of them doing so within five years.
    • Leverage Federal funding opportunities related to opioids to ensure that States transition to a nationally interoperable Prescription Drug Monitoring Program network.

CUT OFF THE SUPPLY OF ILLICIT DRUGS: President Trump’s Opioid Initiative will crack down on international and domestic illicit drug supply chains devastating American communities: 

  • Keep dangerous drugs out of the United States.
    • Secure land borders, ports of entry, and water ways against illegal smuggling.
    • Require advance electronic data for 90 percent of all international mail shipments (with goods) and consignment shipments within three years, in order for the Department of Homeland Security to flag high-risk shipments.
    • Identify and inspect high-risk shipments leveraging advanced screening technologies and by using drug-detecting canines.
    • Test and identify suspicious substances in high-risk international packages to quickly detect and remove known and emerging illicit drugs before they can cause harm.
    • Engage with China and expand cooperation with Mexico to reduce supplies of heroin, other illicit opioids, and precursor chemicals.
  • Advance the Department of Justice (DOJ) Prescription Interdiction and Litigation (PIL) Task Force to fight the prescription opioid crisis. The PIL Task Force will:
    • Expand the DOJ Opioid Fraud and Abuse Detection Unit’s efforts to prosecute corrupt or criminally negligent doctors, pharmacies, and distributors.
    • Aggressively deploy appropriate criminal and civil actions to hold opioid manufacturers accountable for any unlawful practices.
  • Shut down illicit opioid sales conducted online and seize any related assets.
    • Scale up internet enforcement efforts under DOJ’s new Joint Criminal Opioid Darknet Enforcement (J-CODE) team.
  • Strengthen criminal penalties for dealing and trafficking in fentanyl and other opioids:
    • DOJ will seek the death penalty against drug traffickers, where appropriate under current law.
    • The President also calls on Congress to pass legislation that reduces the threshold amount of drugs needed to invoke mandatory minimum sentences for drug traffickers who knowingly distribute certain illicit opioids that are lethal in trace amounts.

HELP THOSE STRUGGLING WITH ADDICTION: President Trump’s Opioid Initiative will help those struggling with addiction through evidence-based treatment and recovery support services:

  • Work to ensure first responders are supplied with naloxone, a lifesaving medication used to reverse overdoses.
  • Leverage Federal funding opportunities to State and local jurisdictions to incentivize and improve nationwide overdose tracking systems that will help resources to be rapidly deployed to hard-hit areas.
  • Expand access to evidence-based addiction treatment in every State, particularly Medication-Assisted Treatment for opioid addiction.
  • Seek legislative changes to the law prohibiting Medicaid from reimbursing residential treatment at certain facilities with more than 16 beds.
    • In the meantime, continue approving State Medicaid demonstration projects that waive these barriers to inpatient treatment.
  • Provide on-demand, evidence-based addiction treatment to service members, veterans and their families eligible for healthcare through the Departments of Defense or Veterans Affairs.
  • Leverage opportunities in the criminal justice system to identify and treat offenders struggling with addiction.
    • Screen every Federal inmate for opioid addiction at intake.
    • For those who screen positive and are approved for placement in residential reentry centers, facilitate naltrexone treatment and access to treatment prior to and while at residential reentry centers and facilitate connection to community treatment services as needed.
    • Scale up support for State, Tribal, and local drug courts in order to provide offenders struggling with addiction access to evidence-based treatment as an alternative to or in conjunction with incarceration, or as a condition of supervised release.

The White House on Monday unveiled President

President Donald Trump speaks during a bicameral meeting with lawmakers working on the tax cuts in the Cabinet Meeting Room of the White House in Washington, Wednesday, Dec. 13, 2017. Attending the meeting are, from left, Rep. Kevin Brady, R-Texas; Trump; Sen. Orrin Hatch, R-Utah; Rep. John Shimkus, R-Ill., and Rep. Fred Upton, R-Mich. (AP Photo)

President Donald Trump speaks during a bicameral meeting with lawmakers working on the tax cuts in the Cabinet Meeting Room of the White House in Washington, Wednesday, Dec. 13, 2017. Attending the meeting are, from left, Rep. Kevin Brady, R-Texas; Trump; Sen. Orrin Hatch, R-Utah; Rep. John Shimkus, R-Ill., and Rep. Fred Upton, R-Mich. (AP Photo)

President Donald Trump and Republicans in the House of Representatives are gearing up for “Phase Two,” a push to make tax cuts for individuals permanent. The move puts Democratic lawmakers in a precarious situation.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, said he intends to release new proposals.

“We are exploring what good new ideas can be brought forward in tax reform,” he said Friday on Fox Business Network’s “Varney & Co.”

“It will lead with permanence,” he said. “The tax cuts for families and small businesses were long term, but they weren’t permanent. We think that’s important for growth and certainty.”

In December, the president signed the Tax Cuts and Jobs Act, the first overhaul to the U.S. tax code in 31 years. The president’s signature tax reform legislation didn’t receive a single Democratic vote in either chamber and is now supported by the majority of Americans, with larger margins among voters in battleground states.

“We’re actually going for a phase two, which will help in addition to the middle class, will help companies, and it’s going to be something I think very special,” President Trump said at an event in Missouri last Wednesday.

As People’s Pundit Daily (PPD) and others reported, the TCJA has resulted in millions of Americans receiving bonuses, wage increases and other related benefits. Roughly 85% of American workers received a cut to their tax burden and 90% received more money in their paychecks, while less than 5% saw a hike.

The latter group is mostly wealthy, higher-earning taxpayers. The Personal Income and Outlays report from the Bureau of Economic Analysis (BEA) confirmed the near-immediate rise in wages due to the TCJA.

House Minority Leader Nancy Pelosi, D-N.Y., referred to wage increases and other announced tax reform-related benefits as crumbs. Yet, many Democrats in the House and Senate claimed to have opposed the bill based on the permanency of individual tax relief.

“I am 100 percent behind that and would support it and even help promote it,” said Rep. Mark Walker (R-N.C.), Chairman of the conservative Republican Study Committee told The Hill last week. “Democrats said all the time that these tax cuts should have been permanent, so I would expect them to support that legislation.”

Meanwhile, Senate Democrats led with a proposal to run on a massive tax hike and $1 trillion in new spending.

President Donald Trump and Republicans in the

As FBI director, Robert Mueller speaks before the Senate Judiciary Committee on June 19, 2013. (Photo: Reuters)

As FBI director, Robert Mueller speaks before the Senate Judiciary Committee on June 19, 2013. (Photo: Reuters)

Slightly more than three-quarters of the roughly 700,000 people who took the Drudge Poll say President Donald Trump should fire Special Counsel Robert Mueller.

As of the writing of this article, a sizable 709,711 votes were cast in the non-scientific poll on the conservative-leaning news aggregating website. The vast 76-percent majority, or 538,408 respondents, said “Yes” to the question “SHOULD PRESIDENT TRUMP FIRE MUELLER?” and only 24% (171,303) said “No.”

“While it’s true that the Drudge Poll is not a scientific poll, we’ve found only about 20% of American voters still believe there might be something to the Russia investigation,” Big Data Poll Director and PPD Election Projection head Rich Baris said. “On the other hand, other reputable polls find most Americans believe FBI and DOJ officials broke the law to stop President Trump.”

A recent Rasmussen Reports national phone and online survey found half of likely U.S. voters believes it is at least somewhat likely senior officials at the FBI and DOJ broke the law in an effort to prevent Donald Trump from winning the presidency. Fifty-percent (50%) of voters believe that to be the case, including 32% who say it is “very likely” and 18% who say it is at least “somewhat likely.”

By contrast, nearly 60% of voters believe Hillary Clinton broke the law by using a private server to conduct official business while serving as the secretary at the State Department.

Mr. Baris explained why it’s probably likely Drudge Report readers oppose the special counsel investigation by a larger margin.

“It’s entirely likely that some of the ‘No’ votes are the president’s supporters concerned over the political firestorm that would erupt if President Trump did fire Mr. Mueller,” he said. “There’s no way to know for sure, but I’d be willing to bet that’s a not-so insignificant percentage.”

The Drudge Poll was put up after Attorney General Jeff Sessions fired former FBI Deputy Director Andrew McCabe on Friday. Mr. McCabe was removed from his post over misconduct and apparent corruption, but had been trying to ride out the scandals currently at the center of at the FBI and DOJ.

But the Office of Professional Responsibility (OPR) disciplinary process recommended he be terminated after they concluded he lied to the DOJ Inspector General Michael Horowitz during an internal review. Attorney General Sessions made the decision just days before his retirement went into effect.

FBI pensions are determined by a formula that is based on years of service and prior salaries.

The White House issued a statement that President Trump does not intend to fire Mr. Mueller and his legal team is cooperating with the investigation. However, there is no doubt that the president ramped up his criticism, including pointing out that the investigation was predicated on what we now know to be false information.

John Dowd, who serves as President Trump’s personal lawyer, provided The Daily Beast an emailed statement applauding the firing of Mr. McCabe. He said Deputy Attorney General Rod Rosenstein should follow the example of his boss, Mr. Sessions.

“I pray that Acting Attorney General Rosenstein will follow the brilliant and courageous example of the FBI Office of Professional Responsibility and Attorney General Jeff Sessions and bring an end to alleged Russia Collusion investigation manufactured by McCabe’s boss James Comey based upon a fraudulent and corrupt Dossier,” Dowd then wrote.

Mr. Dowd also emailed The Daily Beast the text below, which is an annotated version of a line from a well-known 20th century play.

“What’s that smell in this room[Bureau}? Didn’t you notice it, Brick [Jim]? Didn’t you notice a powerful and obnoxious odor of mendacity in this room[Bureau}?… There ain’t nothin’ more powerful than the odor of mendacity[corruption]… You can smell it. It smells like death.” Tennessee Williams — ‘Cat on a Hot Tin Roof’

Slightly more than three-quarters of the roughly

Mark Zuckerberg gestures while addressing the audience during a meeting of the APEC (Asia-Pacific Economic Cooperation) CEO Summit in Lima, Peru, November 19, 2016. (Photo: Reuters)

Mark Zuckerberg gestures while addressing the audience during a meeting of the APEC (Asia-Pacific Economic Cooperation) CEO Summit in Lima, Peru, November 19, 2016. (Photo: Reuters)

Facebook, Inc (NASDAQ: FB) shares took the biggest hit in more than two months on Monday amid revelations millions of users’ data were retained without their consent. Usage is declining and U.S. and European officials are demanding answers.

Shares fell nearly 6% to $174.68 after a little more than an hour of trading.

On Friday night, Facebook announced that they suspended Cambridge Analytica, a firm was funded by large Republican donor Robert Mercer. Donald Trump’s campaign used it to target ads on Facebook. However, while most Big Media reports indicate this is a new phenomena, it is not.

With Facebook’s help, the Obama campaign built a new database incorporating Vote Builder, the Democratic Party’s central database of voter information, with user information.

Meanwhile, the company’s top executives are selling shares. Mark Zuckerberg plans to sell almost $13 billion worth of shares by mid-2019. That represents roughly 18% of his stake in the company he founded. The money will allegedly support the Chan Zuckerberg Initiative (CZI).

More than 24 hours after the story broke, neither Mr. Zuckerberg nor his number-two, COO Sheryl Sandberg, have responded. Ms. Sandberg, who offered to do whatever she could to help Hillary Clinton become president, already sold over $300 million.

Facebook, Inc (NASDAQ: FB) shares took the

Russian President Vladimir Putin meets with representatives of Russian major animation studios in the Kremlin in Moscow, Russia, Wednesday, May 31, 2017. (Photo: Kremlin Pool Photo via AP)

Russian President Vladimir Putin meets with representatives of Russian major animation studios in the Kremlin in Moscow, Russia, Wednesday, May 31, 2017. (Photo: Kremlin Pool Photo via AP)

Exit polls are signaling an overwhelming victory for Russian President Vladimir Putin, who will serve for another 6 years and for a 4th term. While the reelection victory was expected, President Putin appears to have won at least 73.9% of vote, an even bigger share than he received in 2012.

Another two exit polls indicated Mr. Putin won at least 70% and upwards of 77%.

Exit polls are signaling an overwhelming victory

Don King explained why the elites in charge of the corrupt system “put out a mandate” to “destroy and stop” Donald Trump, “whatever the cost.” In an interview on “Making Money with Charles Payne,” the most famous and successful boxing promoter ever said President Trump had forsaken the system out of “his love for the American people” and it now views him as a “betrayer.”

“Everyone agrees that the system is corrupt, the GOP, the Dems, the Independents, the atheists, all agree that the system is corrupt,” he said during the interview on FOX Business. “But only one man had the guts, the intestinal fortitude to challenge the system.”

Mr. King, 86, went on to say first and foremost that the president isn’t beholden to special interest and the corrupt elites, which makes him dangerous to them.

“He is unpredictable. He is uncontrollable. He can’t be intimidated or coerced,” he said. “He can’t be bought and the only people he has to answer to is the American people.”

“Secondly, and what’s most important: Donald Trump – white, blonde hair, blue eyes – is what the system was created for. He forsake [sic] this system and they feel he’s a betrayer. He forsake the system because of his love for the American people and his respect for America.”

“They put out a mandate: Destroy Trump no matter what the cost; no matter how much it cost in lives, no matter how much it cost in human values; how much the cost in property. Whatever the cost, destroy and stop Trump and his family and his supporters.”

Don King explained why the elites in

Economic analyst Lawrence "Larry" Kudlow appears on CNBC at the New York Stock Exchange, (NYSE) in New York, U.S., March 7, 2018. (Photo: Reuters)

Economic analyst Lawrence “Larry” Kudlow appears on CNBC at the New York Stock Exchange, (NYSE) in New York, U.S., March 7, 2018. (Photo: Reuters)

Ideally, there should be no capital gains tax.

After all, the levy is a self-destructive form of double taxation that reduces the quantity and quality of investment. And that’s not good for wages and jobs.

To add insult to injury (to be more accurate, to add injury to injury), the tax isn’t indexed for inflation. So investors get taxed on the full increase in the value of an asset even though a significant chunk of the increase often is due solely to inflation.

Steven Entin of the Tax Foundation has some new research on this issue.

Many elements of the income tax are adjusted for inflation, such as tax brackets, standard deductions, and income thresholds or dollar amounts of some tax credits.However, the purchase price of assets later sold for capital gains or losses is not adjusted for inflation. As a result, inflation can do a real number on savers by turning real losses into taxable nominal gains. To avoid such outcomes, it would make sense for the government to allow an inflation adjustment for the cost of assets.

Steve points out that the absence of indexing is very brutal during periods of high inflation – which may soon become a relevant issue again.

During the late 1960s and 1970s, when inflation was high and the stock market was flat, it was not uncommon for people who sold assets to report inflated nominal capital gains that were negative in terms of purchasing power. In effect, the savers were taxed on a real loss. …Suppose one had bought $100 of stock in the XYZ Corporation in 1965, and sold it in 1981, for $110. This looks like a $10 gain. But…The stock would have had to rise to $286 just to keep pace with inflation. …the investor lost $176, in 1981 dollars ($286 – $110). Any tax collected on the nominal $10 gain was, in fact, a tax on a real loss.

But even if inflation remains low, this is still an important issue.

Taxing genuine capital gains is bad enough, so it’s not a surprise to learn that taxing inflationary gains is even worse. It exacerbates the anti-capital bias in the current tax code.

Taxation of fictitious gains or other capital income reduces saving and raises the cost of capital, thereby retarding investment, productivity growth, and wage growth. …In an ideal tax system, saving would not be treated worse than consumption. …When we earn income and pay tax, and use the after-tax income for consumption, the federal government generally leaves the consumption alone, except for a few excise taxes… The earnings are taxed, but not the enjoyment of the subsequent purchases. Saving is a purchase too. It lets us “buy” a stream of future income with after-tax money. But if we buy a bond, the stream of interest is taxed. If we buy a share of stock, the dividends are taxed, and any reinvested earnings that increase the value of the company are taxed as capital gains.

Here’s Steve’s conclusion.

Inflation raises the price of many assets acquired by savers. When they sell the assets, much of their capital gains may be due only to inflation. Inflation-related gains are not a real increase in wealth. Indexing the purchase price (tax basis) for inflation would provide savers some relief for this type of tax on fictitious income.

Well said, though I have one minor quibble. A capital gain, whether real or caused by inflation, is not income. It’s a change in nominal net worth.

Though I’m sure Steve would agree with me. He’s presumably using “income” because the tax code treats that change in net worth as income.

There is a chance we’ll see some progress on this issue. Ryan Ellis, writing for Forbes, is optimistic that the newly appointed head of Trump’s National Economic Council will try to fix this problem.

There’s one project that Kudlow needs to get to work on right away: indexing the basis of capital gains to inflation. …Just last August, Kudlow wrote an op-ed…urging President Trump to do this by executive order. …This finally may be the time that this issue is ready to cross the finish line.

Executive order?

Yes, because the law specifies the rates for capital gains taxation, but it’s up to the Treasury Department to specify what counts as a gain. And there’s a very strong argument that it’s not a genuine gain if an asset rises in value solely because of inflation.

Ryan explains the mechanics of how indexing would work..

How would indexing capital gains basis to inflation work? In the tax world, reporting a capital gain is a pretty simple exercise. When you sell an asset, like a stock, you report how much you sold it for. You can subtract what you bought it for (your “basis”) from what you sold it for to arrive at your gain. …If you’ve held the asset longer than a year, you generally pay tax at…20 percent, plus the 3.8 percent Obamacare investment surtax… A problem arises in that your basis purchase may have happened many years ago. The real value of the money you used to buy a stock has been eroded by inflation. For example, $100 in 1990 is only worth $51.41 today, a little more than half the supposed basis in real terms. …Someone whose $100 initial investment has grown to $500 would see a big difference in taxes.

Here’s the table showing that difference.

 

And here’s what it means.

Uncle Sam still gets to tax the gain–he just doesn’t get to take the phantom gains attributable to inflation. In fact, $22.50 of the current law tax–nearly one quarter of the tax bill–is entirely due to inflation, not any real increase in wealth. …This law change would help owners of real estate, including corporate owners of real estate. It would help small businesses who pay the capital gains tax when acquired by larger firms. It would help everyone in America with a prized collection of old baseball cards or stamps sitting in an album in their den. This is truly a tax cut for everyone.

For more information, here’s a video on the topic from the Center for Freedom and Prosperity.

As was pointed out in the video, Ronald Reagan indexed much of the tax code as part of his 1981 tax cut. Now it’s time to take the next step.

But let’s not forget that indexing should only be an interim step (assuming, of course, that the White House and Treasury are willing to do the right thing and protect investors from inflation).

The real goal should be total repeal of the capital gains tax.

The capital gains tax is a self-destructive

The U.S. Capitol Building in Washington D.C.

The U.S. Capitol Building in Washington D.C.

Way back in 2009, I narrated a video explaining that people worry too much about deficits and debt. Red ink isn’t desirable, to be sure, but I pointed out that the real problem is government spending.

And the bottom line is that most types of government spending are bad for an economy, regardless of whether they are financed by taxes or borrowing.

It is possible, of course, for a nation to have a debt crisis. But keep in mind that this simply means a government has accumulated so much debt that investors no longer trust that they will receive payments on government bonds.

That’s not a good outcome, but replacing debt-financed spending with tax-financed spending is like jumping out of the frying pan and into the fire. Or the fire into the frying pan, if you prefer. In either case, politicians are ignoring the real problem.

Greece is a cautionary example. Thanks to a period of overspending, Greek politicians drove the country into a debt crisis. But this dark cloud had a silver lining. The good news (at least relatively speaking) is that the government no longer could borrow from the private sector to finance more spending.

But the bad news is that Greek politicians subsequently hammered the economy with huge tax increases in hopes of propping up the country’s bloated welfare state. And the “troika” made a bad situation worse with bailout funds (mostly to protect big banks that unwisely lent money to Greek politicians, but that’s a separate story).

In other words, Greece got in trouble because of too much government spending and it remains in trouble because of too much government spending. As is the case for many other European nations.

And I fear the United States is slowly but surely heading in that direction. I elaborate about the problem of government spending – and the concomitant symptom of red ink – in this interview with the Mises Institute.

For all intents and purposes, I’m trying to convince people that deficits and debt are bad, but they’re bad mostly because they are a sign that government is too big. Sort of like a brain tumor being the real problem and headaches being a warning sign.

I feel like Goldilocks on this issue. Except instead of porridge that is too hot or too cold, I deal with people on both sides who think red ink is either wonderful or terrible.

For an example of the former group, here’s some of what Stephanie Kelton wrotefor the New York Times last October.

…bigger deficits wouldn’t wreck the nation’s finances. …Lawmakers are obsessed with avoiding an increase in the deficit. …It’s also holding us back. Politicians of both parties should stop using the deficit as a guide to public policy. Instead, they should be advancing legislation aimed at raising living standards and delivering…long-term prosperity.

Hard to disagree with the above excerpt.

But here’s the part I don’t like. She’s a believer in the perpetual motion machine of Keynesian economics. She thinks deficits are actually good for the economy and she wants to use debt to finance an ever-larger burden of government spending.

Government spending adds new money to the economy, and taxes take some of that money out again. …we should think of the government’s spending as self-financing since it pays its bills by sending new money into the economy. …the deficit itself could be deployed as a potent weapon in the fights against inequality, poverty and economic stagnation.

Ugh.

Now let’s check out the view of the so-called deficit hawks who think red ink is an abomination.

Here are some passages from a Hill report on the battle over last year’s tax plan.

A handful of GOP deficit hawks are worried that their party’s tax plan could add trillions to the deficit, deepening a debt crisis for future generations. …The tax plan could cost the government $1.5 trillion in revenue over the next decade… Sen. Bob Corker (R-Tenn.), who recently announced his retirement at the end of this Congress, has warned he’ll oppose the tax plan if it adds to the deficit. …In a separate interview, he told The New York Times that the debt is “the greatest threat to our nation,” more dangerous than the Islamic State in Iraq and Syria, or North Korea.

Ugh, again.

The threat isn’t the red ink. The real danger is an ever-increasing burden of government spending, driven by entitlements.

Besides, the GOP tax bill actually is a long-run tax increase!

Let’s close with a video on the topic from Marginal Revolution. It has too much Keynesianism in it for my tastes, but the discussion of Argentina’s default is useful for those who wonder about whether the United States is going to have a debt meltdown at some point.

P.S. I don’t agree with Keynesians and I don’t agree with the self-styled deficit hawks. But I can appreciate that both groups have a consistent approach to public finance. What really galls me are the statist hypocrites who are cheerleaders for debt when there are proposals to increase government spending, but then do a back flip and pretend that debt is terrible and must be reduced when tax increases are being discussed.

Red ink isn’t desirable for any nation,

People's Pundit Daily
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