The Problem with the Income Tax

Incentives matter. 

The reason capitalism is a superior economic system to socialism is because the reward of getting to keep what one earns provides sufficient incentive to take the risk of starting a business and working hard enough to provide a service to one’s fellow citizens, a service for which the citizens will, in turn, pay a fair price.

To the contrary, when the fruits of one’s labor are pooled such that those who gave half the effort as one’s neighbor are entitled to the same resulting benefit, the hard worker has no incentive to continue to work harder than his neighbor, and a decrease in overall productivity is the result.

So, the policies which define the system provide the incentive necessary for economic growth. 

Keep this in mind as we turn our attention to our tax structure.

History of the Income Tax

The income tax in its current form was created by the passage of the sixteenth amendment in 1913. Prior to this, the federal government raised revenue through tariffs applied to imported goods.  

(For more on the history of income tax percentages, see our previous entry on the subject here.)

Problems with the Incentives of the Income Tax

The income tax is a progressive tax, meaning that the greater one’s income, the higher percentage of tax he or she pays.

(This has led many to believe the narrative that the rich are not paying their fair share. Our thoughts on that can be found here.)

While it may appear on the surface that the progressive nature of our tax code is fair, it appears so for many of the same reasons socialism is attractive to so many.

The problem is with the incentive, or in this case, disincentive.

By taxing the higher wage earners at a higher rate, this effectively punishes productivity.  The result, on a macro scale, of punishing productivity is a reduction of it.

This is why, for the opposite reason, large across the board tax cuts have historically spurred economic growth. Tax cuts create an incentive to earn more because the earners are allowed to keep more of their own income.

(See the history of tax cuts and economic growth here.)

So much in life can be traced back to dollars and cents. Just follow the money.

Tomorrow, we’ll look at more problems with the income tax and a better solution for generating federal revenue.

-John Anchor

Follow us on Twitter @JohnAnchorBLOG



U.S. News


Is Donald Trump a Fascist?

How many times have you heard President Trump called a fascist?  Here is one example:  Sean Spicer Apple Store.

Is there any truth to the accusation? Let’s look into that.

According to Merriam-Webster, fascism is “a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition.”

Let’s break it down:

“Exalts nation/race above the individual”

“Make America Great Again” is a campaign slogan, but does it rise to the level of oppression of individuals in favor of the state?  No.  That is not a reasonable argument. Patriotism, and even belief in American exceptionalism, is not a fascist movement because they do not involve oppression of individuals.  Just the opposite. America, at its best, promotes freedom and democracy around the world.

Has President Trump ever promoted one race as superior to others?  I know of no evidence for this.  

(Some may point to his travel ban executive orders as evidence he discriminates against one religion, but the facts do not support the allegation: the stated purpose of the travel executive order was national security as the seven chosen countries, previously identified by the Obama Administration as countries of concern, do not have functioning central governments and therefore, travelers cannot be effectively vetted for ties to terror on their end. In that regard, the selection of those countries for the order makes logical sense. In addition, the travel restriction was not permanent, but a 90 day stoppage until additional vetting procedures can be put in place.)


Do you know who has promoted one race as superior to others? The Black Lives Matter movement.  Repeatedly, promoters of Black Lives Matter have denounced those who use the phrase “All Lives Matter” as racist. Just google “All Lives Matter apology” to see how many people have been pressured to apologize for using the phrase “All Lives Matter”.

It’s been explained this way: If you break your arm and have your doctor say, “All bones matter,” you’ll respond by saying your broken bone is the one that matters most right now.


So Black Lives Matter, by virtue of that explanation, is saying that right now, black lives matter most.  How is that not exalting race above the individual?

“Stands for a centralized autocratic government headed by a dictatorial leader.”

Does President Trump display this characteristic?  Using his healthcare push as an example, President Trump reached out to many more members of Congress in an attempt at persuasion than President Obama ever did. 

Remember President Obama’s 2014 threat: “One of the things that I will be emphasizing in this meeting is the fact that we are not just going to be waiting for legislation in order to make sure that we are providing Americans the kind of help that they need. I’ve got a pen, and I’ve got a phone. And I can use that pen to sign executive orders and take executive actions and administrative actions that move the ball forward.”

Additionally, the Washington Times writes: “The president was never good at reaching across the aisle…He never accustomed himself to operating in a system where he was not the sole player.”

“Severe economic and social regimentation.”

President Trump said during the campaign he wants to cut taxes and eliminate regulations that hinder economic growth. This is the opposite of economic and social regimentation.  A reduction in taxes and regulations is a promotion of free market capitalism.

Do you know who is promoting economic and social regimentation?  Those who say the rich don’t pay their fair share, and they should be taxed more so their wealth can be redistributed to the middle and lower income brackets.

(We’ve discussed this issue here.)

“Forcible suppression of opposition”

Yes, President Trump has picked on the media. He is called them dishonest and labeled certain outlets “Fake News”.  One could argue, though, that this tactic, while perhaps not the most presidential of actions, is a defense against unfair treatment by the press.

Regardless, the “Fake News” label is mild compared to what we’ve seen elsewhere this week.

Exhibit One:  Ann Coulter’s invitation to speak at the University of California at Berkley. Students of the University rioted in an attempt to silence her.  

According to NBC News, “Tensions remained high…in part because of Berkeley’s recent history. Two disagreements over conservative speakers slated to appear on campus in recent weeks have erupted into violence.”

In other words, forcible suppression of opposition.

Exhibit Two: Climate Change

Bret Stephens this week wrote his very first opinion piece in the New York Times.  The subject he chose was climate change, specifically that their is not a scientific consensus. 

(See our thoughts on the issue here and here.)

Readers of the New York Times are cancelling their subscriptions over the publication of Mr. Stephens’ opinion.

So, the question becomes: Who is the real fascist?  Donald Trump or his opposition.

Please understand that in writing this, I am not accusing any one person or group of being fascists. I am merely pointing out that in many cases, those who are calling President Trump a fascist are guilty themselves of the characteristics of fascism.

More facts…less rhetoric.

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


Sean Spicer Apple Store

Travel Executive Order

All Lives Matter

Pen and Phone

Obama and Congress

Ann Coulter and Berkley

Bret Stephens New York Times

More About That Wall

Criticisms of the Wall

From the New York Times:

“Is there a threat of ISIS or Qaeda terrorists entering through the southern border?  Not much, according to many terrorism specialists. Seamus Hughes, deputy director of George Washington University’s program on extremism, said there had been few instances of would-be terrorists using the southern border to enter the United States.”

So because it’s rare, we don’t need to protect against it?  Is that logical?  If it is possible, we should protect against it. 

From CBS:

“But the Rio Grande, a natural barrier that separates the U.S. and Mexico, discourages border crossers.”

So it’s not needed because the natural river barrier has prevented illegal immigration from ever becoming a problem? Is that how you read that?

More from CBS:

“(The border wall) serves as a negative psychological impact on people that visit (Laredo). Could you imagine having a city with a huge wall there? It’s not very inviting. It’s very divisive.”

I’m sorry, but isn’t that the point?  The purpose of the wall is to prevent illegal immigration. It is not supposed to be inviting! 

LEGAL immigration is welcome and should be encouraged. We are, after all, a nation of immigrants. But immigrants should go through the proper channels and the proper crossings.

CBS again:

“The nearly 2,000-mile long southern border is already protected by almost 700 miles of fencing…For vast stretches, it is an imposing metal barrier. But other sections do little to stop people. And where it abruptly ends, it’s easy enough to step around it.”

It’s easy to step around it? That sounds like an argument FOR the wall!

From Senator Schumer, tweeting on February 28th:

“This nation was built by immigrants. They will always be welcome here. #NoBanNoWall”

Surely, one can see the difference between legal and illegal immigration. That is a straw man argument, that those who are for the wall are against immigration in all forms. The purpose of the wall is to protect against what is already a federal crime and has been for years. 

And finally, regarding a letter signed by several senators, including Senator Schumer:

“Specific concerns highlighted in the letter included the cost of the border wall, the effectiveness of the border wall, and the lack of specifics from the Trump administration on the wall.”

Does anybody remember Senator Schumer threatening a government shutdown over the high cost of the Affordable Care Act which contributed to the doubling of the national debt during the Obama presidency?  I didn’t think so. 

Raising questions about costs, effectiveness, and specifics are important things for a member of Congress to be asking, but one gets the impression that much of the criticism is in opposition to President Trump specifically and is not grounded in logic.

If that is true, it is not too far of a stretch to say those who are doing so are playing politics with our national security.  And that isn’t right.

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


New York Times



About That Wall

“In the last several years, millions of undocumented aliens have illegally immigrated to the United States. They have breached our nation’s immigration laws, displaced many American citizens from jobs, and placed an increased financial burden on many states and local governments.” -President Carter, 1977

“All Americans, not only in the states most heavily affected, but in every place in this country, are rightly disturbed by the large numbers of illegal aliens entering our country. The jobs they hold might otherwise be held by citizens or legal immigrants. The public service they use impose burdens on our taxpayers.”

“That’s why our administration has moved aggressively to secure our borders more by hiring a record number of new border guards, by deporting twice as many criminal aliens as ever before, by cracking down on illegal hiring, by barring welfare benefits to illegal aliens.”

“In the budget I will present to you we will try to do more to speed the deportation of illegal aliens who are arrested for crimes, to better identify illegal aliens in the workplace…”. -President Clinton, 1995

The Secure Fence Act of 2006 included:

Construction of fencing and security improvements in border area from Pacific Ocean to Gulf of Mexico”

Passed House 283-138 (219 Republicans, 64 Democrats voted Aye)

Passed Senate 80-19 (54 Republicans, 26 Democrats voted Yea)

Yea Votes: Hillary Clinton, Chuck Schumer, Barack Obama, Joe Biden

“This bill will help protect the American people. This bill will make our borders more secure. It is an important step toward immigration reform.” -President Bush, October 26, 2006

Then and Now

What changed?

Are any of the statements made in the speeches above incorrect? 

Are they racist?

The difference? What has changed over the last few years is the political climate in the United States.

The logical question to follow is: Are our political leaders making decisions based on facts and following their convictions? 

Or, is their decision making based upon which way the political wind is blowing?

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


1977 Undocumented Aliens Message to the Congress

1995 State of the Union

Secure Fence Act of 2006

Class Warfare and the War on Poverty

“The rich aren’t paying their fair share!”

Class warfare division tactics are a frequent part of the political playbook.  The question that politicians and pundits seem unwilling to answer regards what tax percentage specifically makes up a fair share. (We’ve discussed it previously here.)

As far as the tactic of division goes, several points deserve to be made. The politicians who claim to be for reducing poverty through social programs need to be held accountable to the history of this practice. 

Let’s review. 

The greatest attempt and most dollars spent on poverty reduction was initiated through President Johnson’s “War on Poverty”.  Since 1965, the United States has spent over $22 trillion on social programs to fight poverty. (This is three times more than spent on all U.S. military wars since the American Revolution, inflation adjusted, and does not include Social Security or Medicaid.)

Has it worked?

Prior to the War on Poverty, the poverty rate was falling dramatically. From 32.2% in 1950 to 17.3% in 1965.  After the War on Poverty was initiated in 1965, the poverty rate basically flat-lined and has been around 15% ever since. 

It should be noted that the definition of the poverty classification has changed over the years. Those living in poverty today enjoy much improved living conditions over those meeting the poverty definition in decades past.  As our economy has grown, everyone, including those at the poverty level, have benefited. 

The best help for the poor is the job creation that comes through growth of a free market economy. Economic growth is often stimulated by tax cuts and regulatory reform. (For the 20th century economic effects on income tax reform, see here.)

Yet, so often we’re told that the rich are getting richer at the expense of the poor.  This implies that the only way for the poor to improve their circumstances is to take money away from the rich – otherwise known as income redistribution. 

A free market capitalist economy does not work this way. To use the pie analogy, everyone benefits when the size of the pie increases. To focus only on redistributing pie slices does not grow the size of the pie – and often shrinks it.  (See Venezuela.)

Look at the policies of the Obama Administration as an example.  The United States economy has grown at only an average of 2.1% since 2009, making it one of the slowest economic recoveries following a recession in United States history.

Why is that?

Let me suggest that a key reason is because the policies in place during the Obama presidency discouraged hiring. 

The Affordable Care Act incentivized small businesses to remain under fifty employees to avoid the employer mandate.  Many laid off employees to reach this number.

In the energy sector, stringent environmental regulations made it more expensive to do business.  This affected staffing levels.

The Heritage Foundation reported: “In its first six years the Obama Administration…imposed 194 major regulations on the private sector. That figure is more than twice the number imposed by the Bush Administration in its first six years.”

The high regulatory environment and slow economic growth during the Obama years is not a coincidence. The tax cuts and subsequent economic expansion during the Reagan years also is no coincidence.  They both should serve as a reminder of the importance of a free market economy and its benefit on citizens of all economic levels.

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


War on Poverty

Obama Recovery

Obama Small Business Report Card

An Example of Fake News

This week, President Trump approaches the completion of his first hundred days in office.  Of course, the importance of this day is mostly negligible in terms of legislative accomplishments over the course of a four year term. The hundred day mark should mean more to political pundits than to the administration, something akin to sports commentators comparing football teams from different eras. 

The Media Research Center recently released a study comparing press coverage of the Trump Administration between January 20th and April 9th. Of 1,687 statements about the Trump Administration from non-partisan sources appearing on the ABC, CBS, or NBC evening news over this span, 1,501 were negative. That calculates to 89%. 

Newsbusters writes: “The networks largely ignored important national priorities such as jobs and the fight against ISIS, in favor of a news agenda that has been dominated by anti-Trump controversies…”

Then, this happens.

ABC ran story over the weekend with poll numbers about Trump’s first hundred days in which they said: “Majorities say Trump lacks the judgment and the temperament it takes to serve effectively. Six in 10 doubt his honesty and trustworthiness, see him as out of touch and don’t think he understands the problems of people like them. Fifty-six percent say he hasn’t accomplished much in his first 100 days. And 55 percent say he doesn’t follow a consistent set of principles in setting policy…All told, 42 percent of Americans approve of Trump’s performance as president, while 53 percent disapprove.”

Imagine that!  89% of what the American people have been told about President Trump’s job performance is negative. Should it surprise anyone that a majority of people polled disapprove of that same job performance?

President Trump has made a habit of labeling certain headlines “fake news”.  He has been criticized for this, but this is a case where it’s true. This is an example of the media creating the story they are purporting to cover. 

The collective media has the power to drive public discourse in America simply based on what they choose to cover – or what not to cover. These decisions should be grounded in more fact and a lot less rhetoric.  It’s the right thing to do. 

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


Media Coverage

ABC Poll

Components of a Sound Energy Policy

The following components are necessary for an economically sound energy policy.

We must have a free market solution. Free market capitalism ensures American consumers receive affordable electricity in sufficient quantities to satisfy grid demand. 

Renewables are great in theory, but they are not yet economically competitive. To compete with fossil fuels, renewables (solar and wind) require subsidies at a rate twice that given to the fossil fuel industry. 

We cannot economically store large amounts of power…yet. It must be produced as it is used. The game changer for the energy industry will be when mass storage becomes feasible. It’s then that renewables will take off and soar. 

Until then, renewables must be backed by a constant source of power such as coal, natural gas, or nuclear. The sun doesn’t always shine. Wind fluctuates, and in the hot summer months when electric demand is at its peak, often doesn’t blow. Coal fired plants take a long time to ramp up to full power generation, but once online, provide a steady source of electricity that does not fluctuate. 

Fossil fuels are cheaper to burn than renewables are to generate, but the truth is we need as much electricity as we can generate. We need all sources of energy because our electric demand is higher than it has ever been and projected to grow.

One of the largest users of electricity in the world is Google. “The Cloud” by itself uses more energy in a year than all the world’s lighting in 1985. Streaming one hour of video once per week on a phone or tablet uses more electricity in a year than two refrigerators. 

We need energy.

Fracking technology has driven natural gas prices to an all time low, and as a result, coal is struggling to survive. Because of subsidies paid to renewables, electricity prices will actually go negative at certain times of the day, typically overnight, when demand is low. Negative prices mean that coal generators have to pay to put their electricity on the market instead of the other way around. Shutting down for an hour or two is not an option for coal because of the time it takes to ramp back up to full production. 

Subsidies to renewables risk forcing coal out of the market. If this happens, renewables cannot fill that void economically for reasons described above, and energy bills of American consumers will rise. 

Natural gas aside, coal is still the cheapest, most abundant source of energy available in the United States. Renewables will eventually reach a point where they are economically competitive on the free market. Until then, however, subsidies to renewables should be eliminated. For the sake of the American consumer, we need a level playing field. 

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


Energy Subsidies

Energy Storage

Electric Demand

Energy Usage

More on Energy Usage

Electric Prices

Is Climate Change Real?

Former President Obama once called climate change the greatest threat facing future generations. 

Bill Nye, The Science Guy said last year that he is open to the idea that “climate change dissenters” be criminally charged and face jail time. 

On this Earth day, news broke that an 11-year old and other students are suing President Trump for “violating their constitutional right to a healthy planet by not doing enough to limit the use fossil fuels.” A federal judge has allowed the lawsuit to move forward. 

We’ve been told “the evidence is overwhelming” and that “scientists worldwide are in agreement”.

Let’s look at the facts. 

The temperature of the Earth is naturally cyclical.  NASA tells us: “Earth has experienced climate change in the past without help from humanity…The paleoclimate record combined with global models shows past ice ages as well as periods even warmer than today.”

Is the Earth warming? 

Peter Ferrara wrote in Forbes in 2012: “Global temperatures have already been declining for more than 10 years…Temperatures dropped steadily from the late 1940s to the late 1970s.  The popular press was even talking about a coming ice age. In the late 1970s, the natural cycles turned warm and temperatures rose until the late 1990s.”

He also writes: “We are also currently experiencing a surprisingly long period with very low sunspot activity.  That is associated in the earth’s history with even lower, colder temperatures.  The pattern was seen during a period known as the Dalton Minimum from 1790 to 1830, which saw temperature readings decline by 2 degrees in a 20 year period.”

There are obviously numerous opinions among scientists that the Earth is warming, which brings us to our next question. 

Is there consensus among scientists? 

The Nongovernmental International Panel on Climate Change (NIPCC) has published volumes of scientific rebuttals, entitled “Climate Change Reconsidered,” to the United Nations climate panel reports. NIPCC also released a book in 2015 rebutting the claims of consensus and explaining why scientists disagree on the climate change issue. 

In addition, a whistleblower alleged earlier this year, that the National Oceanic and Atmospheric Association (NOAA) manipulated data to hide a pause in warming trends. This alleged manipulation is in dispute. It’s mentioned here to emphasize the political nature of the issue.  If we are going to “march for science” and declare that “facts matter,” we certainly should not be leaving out any facts. 

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


President Obama

Criminal Charges


Cyclical Temperatures


Climate Change Reconsidered

NOAA Whistleblower

Climate Predictions of the Past

“Civilization will end within 15 or 30 years unless immediate action is taken against problems facing mankind.” -Harvard biologist George Wald, 1970

“The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years.” -Paul Ehrlich, April 1970

“It is already too late to avoid mass starvation.” -Denis Hayes, Spring 1970 

“Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions….By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine.” -Peter Gunter, 1970

“Scientists have solid experimental and theoretical evidence to support…the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution…by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half….” -Life Magazine, January 1970

“By the year 2000, if present trends continue, we will be using up crude oil at such a rate…that there won’t be any more crude oil. You’ll drive up to the pump and say, `Fill ‘er up, buddy,’ and he’ll say, `I am very sorry, there isn’t any’…If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000. This is about twice what it would take to put us into an ice age.” -Ecologist Kenneth Watt, 1970

“Entire nations could be wiped off the face of the earth by rising sea levels if global warming is not reversed by the year 2000.” -United Nations, 1989

“(In) as little as 10 years, the world will be faced with a choice: arable farming either continues to feed the world’s animals or it continues to feed the world’s people. It cannot do both.”  -George Monbiot, 2002

“There could be as little as eight years left to avoid a dangerous global average rise of 2C or more.” -United Nations, 2007

“(President Obama) has four years left to save the Earth.” -NASA Flight Center Head James Hansen, 2009

“(This is) the last chance we have to get anything approaching 2 degrees Centigrade. (If) we don’t do it now, we are committing the world to a drastically different place.” -United Nations Foundation President Tim Wirth, 2012

If the science is settled and scientists are in agreement, why were the predictions above so horribly inaccurate?

And specifically because the predictions of the past were so inaccurate, why should we set economy-damaging energy policy based on the climate predictions being made today?

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


Mark Perry

David French

Robert Tracinski

Michael Bastasch

United Nations

Congressional Term Limits

There has been a lot of talk these days about “draining the swamp” in Washington D.C. In the spirit of this discussion, and with the acknowledgement that public service should be a time to give back and not a time to get ahead, let me suggest a tool needed to aid the draining process: Congressional Term Limits.

Why are Congressional Term Limits needed?

Let’s look to the 22nd Amendment, which limited the Office of the President to two terms, for a comparison. The Heritage Foundation writes that “following George Washington’s decision to retire after his second elected term, numerous public figures subsequently argued he had established a ‘two-term tradition’ that served as a vital check against any one person, or the presidency as a whole, accumulating too much power.”

And furthermore, “We can safely conclude that those who drafted the amendment sought somehow to prevent the emergence of a President with a tenure as lengthy as (Franklin) Roosevelt’s. Many proponents of the measure further argued that they sought to codify the two-term tradition associated with Washington.”

If the thought behind the 22nd Amendment was to prevent any one person in the Presidential role from accumulating too much power, consider how that compares to our Congressional representatives who sometimes spend decades in office.

According to statistics put together by Sarah Rosier, “The median American citizen saw his or her household net worth decrease from 2004 to 2012 by an annual rate of -0.94 percent, while members of Congress experienced a median annual increase of 1.55 percent…For the first time in history, the majority of America’s elected officials in Washington, D.C. are millionaires.”

This is not to suggest that members of Congress are getting rich off their Congressional seats, although allegations of insider trading have been made. It is to assume, however, that decades in office may provide a level of comfort causing members to lose touch with the reasons they were elected.

At worst, this presents a conflict of interest whereby decisions get made with power in mind instead of the best interests of the country or constituents. Hence, the “swamp”.

Rotating new individuals through Congress on a regular basis, as term limits would require, might encourage an end to the partisan bickering that causes so much gridlock in the Capitol.

At a minimum, term limits would promote an honesty to the law making process that has been lacking in recent decades. New members bring fresh looks at old problems, and a knowledge that their stay in Washington is only temporary will cause a willingness to put the interests of the country over power accumulation.

-John Anchor

Follow us on Twitter @JohnAnchorBLOG


22nd Amendment

Changes in Net Worth

Insider Trading