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Nothing in this world can be said to be certain, except death and taxes. Benjamin Franklin
The only difference between death and taxes is that death doesn’t get worse every time Congress meets. Will Rogers
According to Freakonomics, the much loved “death and taxes” quote dates to the early 18th century.
This is usually attributed to Benjamin Franklin, who wrote in a 1789 letter that “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” However, The Yale Book of Quotations quotes “‘Tis impossible to be sure of any thing but Death and Taxes,” from Christopher Bullock, The Cobler of Preston (1716). The YBQ also quotes “Death and Taxes, they are certain,” from Edward Ward, The Dancing Devils (1724). (Freakonomics)
There is a lot of noise about taxes today. President Trump desperately needs a “win” given that he has accomplished little but a flurry of Executive Orders. Cutting taxes is the go-to tactic for Republicans when nothing else is working. Tax cuts remind Republicans of the halcyon days of Ronald Reagan when conservatives wore white cowboy hats and always got the girl. Reagan is idolized by the right for his tax cuts and also for his “Mr. Gorbachev, tear down this wall” speech that presaged the end of the Soviet Union. Few Americans remember that Deng Xiaoping’s famous cat quote (“it doesn’t matter whether a cat is white or black, as long as it catches mice”) predated Reagan’s speech by 25 years. Since then, China has flourished while America has languished to the point where Xi Jinping, China’s current leader, has been described as “the world’s most powerful man” by The Economist. On the other hand, “Donald Trump has no grasp of what it means to be President” according the same magazine.
The tax-cut tactic (something President George H.W. Bush called “voodoo economics”) was based on a piece of napkin art produced by economist Art Laffer (my T. A. at Stanford in a course on MONEY by the famous Ed Shaw. At least one of the architects of the so-called “supply-side” economic theory that underlies the tax-cut tactic has the integrity to come out and say he was wrong: “I helped create the GOP tax myth. Trump is wrong: Tax cuts don’t equal growth.”
Somehow the Ayn Randian Paul Ryan and his white-hat posse failed to get the message and Sir Donald is salivating over what he says will be a “big beautiful tax cut” passed by Christmas. Sadly the American people (as opposed to the new age cigar smoking robber barrons) will, as usual, be left high and dry and confused as to why their sons and daughters (not to mention grand children) will be left with a bag of unpayable loans from an increased national debt to a crushing college loan burden. Oh well, some people never learn.
The Death and Taxes thing has become so popular that it has become a ubiquitous part of the national lingo. There is a Death and Taxes restaurant:
In this world, nothing can be said to be certain except death, taxes, and (if we may be allowed to improvise here) our love for Ashley Christensen. From her flagship Poole’s Diner to Chuck’s Burgers to Joule Coffee & Table, the reigning chef of the Raleigh-Durham scene is unstoppable. The latest addition to her family, Death & Taxes (named for the two previous tenants of the historic building, a funeral home and a bank), is Christensen’s most ambitious restaurant to date: a marble, leather, and dark-wood–clad Southern brasserie built for a memorable night out. The real celebration taking place here, however, is of wood-fired cooking. Most everything comes off the grill, from lamb sausage with pickled celery to roasted oysters with chili butter. Vegetables make up nearly half the menu, imbued with smoky flavor via the coals: There are embered beets with red-eye vinaigrette, a squash gratin with “embered” cream, and even an “ember-killed” salad (greens wilted by a warm country-ham dressing). Oh, we forgot one more thing that we can say with certainty: If it’s a Christensen restaurant, the bartenders will know how to make a great cocktail. We’ll have the Widow’s Joy, a clean and simple white-port-and-tonic spritz.
DEATH & TAXES BLACK BEER:
A San Fransico-Style Black Lager. Deceptively light-bodied and highly drinkable. Drinks like iced coffee with a different effect.
Death & Taxes is made from the milk of a single small herd of certified organic Jersey cows that live and graze on the rolling pastures of an historic dairy ranch near Tomales Bay. During ripening, the wheels are washed with Moonlight Brewing Company’s Death & Taxes black lager, which encourages a yeasty, slightly funky aroma. The semi-firm, fudge-like paste offers notes of butter, bread and chocolate closer to the rind.
a Death and Taxes magazine and even a Death and Taxes poem.
Death and Taxes
The housewives laugh at what they can’t avoid:
In single file, buckling one by one
Under the weight of the late summer sun,
They drop their bags, they twitch, and are destroyed.
He hears a voice (there is a bust of Freud
Carved on the mountainside). He tucks the gun
Under his rented beard and starts to run.
(“The housewives laugh at what they can’t avoid.”)
Like She-bears fettered to a rusted moon
They crawl across the parking lot and shed
Tearblood. The office park is closing soon.
Night falls. The neighborhood buries its dead
And changes channels—Zap! Ah, the purity
Of death and taxes and Social Security.
In you listen to our President who thrives on “alternative facts” and “fake news,” you would think “We’re the highest taxed nation in the world” which he often says. According to the fact checkers over at AP, this is not true:
Far from it. The overall tax burden in the United States is among the lowest in the developed world.
Taxes made up 26.4 percent of the total U.S. economy in 2015, according to Organization for Economic Cooperation and Development. That’s far below Denmark’s tax burden of 46.6 percent, Britain’s 32.5 percent or Germany’s 36.9 percent. Just four OECD countries, out of 32 developed and large emerging-market economies tracked, had a lower tax bite than the U.S.: South Korea, Ireland, Chile and Mexico.
Trump sometimes casts his claim more narrowly, as he did last week when he said that “when it comes to the business tax, we are now dead last among developed nations.” That’s closer to right, but still misleading. The U.S. does have the highest statutory corporate tax rate, but other countries with lower corporate taxes also charge a separate tax on consumption, known as a Value Added Tax. That lets them keep corporate rates lower.
Still, even if we are not the highest taxed nation in the world, isn’t a tax cut almost always a good idea? I mean, who doesn’t like lower taxes?
There are several reasons why this may not be the best time for a major tax cut, especially one that raises the national debt. The economist who first proposed deficit spending to get us out of a depression, J. M. Keynes, argued that we should run a deficit during lean times and a surplus during fat times. My friend Gary over at Global Macro Monitor explains how very different the economic situation is now compared to how it was during the beginning of the Reagan Presidency. I won’t repeat his arguments here but they are substantial and important. Go to the LINK to read them in detail.
There is another reason the proposed tax cut could turn out to be toxic for America. The gap between the rich and poor (inequality) is larger today than it has ever been. A tax cut that will increase this gap will further divide our society and could lead to further class unrest. Do we really want this? Do we want a dynastic or a democratic society?
Heirs to spectacular wealth get a huge tax benefit under the bill, which lowers and then eliminates the estate tax.
Currently, the 40 percent tax applies only to inheritances over $5.6 million for individuals and $11.2 million for couples. The GOP bill would start the individual threshold at $10 million and then drop the estate tax entirely in 2023. Heirs would still be eligible for a step-up in basis on investments, which means they would not have to pay taxes on earlier gains.
Ayn Randian Paul Ryan and his “merry band of pranksters” have found a way around all the above objections to make their ill-conceived ill-timed tax plan palatable to the fundamentalist Christians who make up much of their base.
Unborn Children qualify as College Savers in GOP Tax Plan
If this law passes it will bolster the arguments against abortion. Therein lies the hidden agenda. And its powerful for those so swayed.
There is a way we might escape both Death and Taxes in the new High Tech world of robots. CP3O and R2-D2 will do all the work for us including the required computations to make us immortal. Hmm. Something to look forward to, or not?
Very good piece, KD. You may be the next Nobel laureate. Did you realize the new tax bill wants to tax tuition assistance for Ph.D fellowships? So much for growth incentives and human capital development. You and I would not be economists today if it were tax law 30 years back. Only thing that matters is if THEY can eliminate the estate tax.
Thanks very much for this timely “Think in the Morning” piece. I love the way you combine educating the audience with the Seagull napkin art. Lovely essay.
This is a very good article. Thanks.