Monday, July 4, 2011

Tax and Spend. Tax and Spend. Tax and Spend. Lather, rinse, repeat.

While driving along the road in front of Waikiki beach, I saw a building that said, "Department of Homeland Security" right next to the harbor. I laughed. Prime location on the beachfront and the federal government has a brand new building for the Department of Homeland Security, in Waikiki no less. Isn't that ironic?

Jack Lord would have been proud.

"Book 'em Dan-o!"

Don't forget that this is the same federal government that was in charge of security when the Twin Towers were attacked on Sept. 11, 2011. Most people who blow their jobs get fired. Not these guys. They get nice offices in Waikiki. 

Funny, you know, if you were the fire chief of some hick town and screwed up  your duties on that day and a bunch of buildings burned down, you'd be fired or would certainly lose your job. Not the government though. They increase our taxes and expand their incompetent services. That's the way the government operates, you know. Their answer to every problem is to tax and expand. 

That's how it works, you see. 

People who have been paying attention will already know that golden rule of politics. And that rule is that no matter what occurs the government response will always be an expansion of that government and that will mean higher taxes for you and me no matter how you slice it.  

So bend over and take it.
On that note, there’s a couple of news stories about Japan that caught my “WTF!?” radar yesterday. I thought I’d write about them today. See if you can catch the irony of the situation.
The clowns in control of the Japanese government claim that they need to increase the current Sales Tax rate of 5% up to 10% in order to cover shortfalls in tax revenues and a burgeoning social insurance liability. They also are using the excuse of the March 11 earthquake, tsunami and nuclear accident at Fukushima as a ruse to fool the public that this tax increase is needed and is for the public good.
If it is for the public good, well then, they are not at fault for poor management, you know. Public good and all... But hey, weren't they just claiming that they needed to raise taxes for a different reason before the March 11 earthquake? Why, yes, they were! Then it was out of control spending.

But not now! No! Now is because we are all Japanese people and we must stick together to raise taxes to help the people up north. 
By claiming that monies will be used for reconstruction of the northern Japan region of Tohoku, the government can act like they have no choice but to  increase taxes for the betterment of the public. They’ll claim that they are being “forced” into raising taxes and it can’t be helped due to circumstances outside of their control.
Never mind the fact that Japan’s public debt, by this very same government and preceding administrations pushed the debt to past 200% of GDP long before the March 11 disaster struck. 

Regular readers of this blog will know what I think about this sort of political bandwagon nonsense. 
Here are two articles that I found that I’d like to share with you that shows just what kind of shenanigans go on in the halls of power at Nagatacho.
The first from the Daily Yomiuri newspaper about how the government of Naoto Kan, in spite of being resoundingly defeated in the last election due to an insistence on increasing Sales Tax, is going to push it through no matter what. 

Public opinion and a frail economy be damned. Great timing, eh? No election coming up and all. I wonder what the angle is for the criminals of the LDP? The Daily Yomiuri newspaper:

The government and the Democratic Party of Japan agreed on tax reform plans this week, and plans to submit related bills during the Diet's ordinary session next year. 

Woah! Watch out! "Tax reform" is a code-word for "Tax increase." 

It will need to clearly stipulate in those bills when the consumption tax should be raised and by how much.

Translation: One party agrees to tax hikes and "budget cuts" as long as their pork barrel projects remain intact.

However, there are piles of tasks to be completed before that can happen, such as deciding standards by which to assess the national economy's ability to withstand the tax hike, and determining how tax revenue should be shared between the central and local governments.

Yes. The pirates must always decide how to divvy up the loot.

Thus, the government will have to overcome some high hurdles to realize the agreed plan to raise the consumption tax rate to 10 percent "by the middle of the 2010s."

Hopefully those hurdles will be so high that they kill themslves on the way back down. Faithful readers of this blog might remember my post entitled: Japan's Government Headed for Ouster? Good. The Sooner, the Better. Where I pointed out that the best government that we could possibly hope for is one in constant deadlock because, if they are in deadlock, they can't pass any news taxes. See? I was right. That slimeball Kan snookered his way back into power and now they're talking about raising taxes.

Am I genius or what? No. Not genius. All governments are the same sneaky lowlife. I am merely an astute observer at best.

The bad news continues:

The government's plan is to raise the consumption tax rate in two stages. At first, the rate will likely be bumped to 7 percent or 8 percent in autumn 2013 or later, and then to 10 percent by the end of fiscal 2016.

Great! This means we still have a chance to boot these clowns before they do anymore damage.

It is feared that a single, all-at-once increase to 10 percent might hurt the nation's real economy.

Gee. Do you really think so? It's been proven that an increase in taxes coordinates with a corresponding decrease in tax revenues. Haven't these idiot politicians never heard of the Laffer Curve? No? OK. From Wikipedia:

One potential result of the Laffer curve is that increasing tax rates beyond a certain point will become counterproductive for raising further tax revenue because of diminishing returns. 

Gee wasn't the opposition LDP just claiming that they were against Naoto Kan's plans for reconstruction and didn't they just stand in the last election firmly against any increase in the Sales Tax rate? The Economist reports:

"...opposition parties have threatened to block implementation of the spring budget for the next fiscal year. Without big concessions..."

"Without big concessions!?" Gee, do you think that means that you grease our wheels and we grease yours?... Nah!

You know what is going on here, folks, is that the LDP wonks actually want to increase taxes too but they see a golden opportunity to increase those taxes while at the same time making Naoto Kan and the dimwitted Democratic Party of Japan (DPJ) take the blame for it.
See? The LDP gets their cake and eats it too and then win the next election because they can claim that they were against any tax hikes. Those sneaky genius bastards! Gotta hand it to them though… They didn't get to run this country for iffy years by not knowing how to play a very hardball game of poker.
Kan and those clowns are out of their league. The LDP is going to secretly get their tax increase (they were the ones who first put a Sales Tax into place) and they are going to blame the DPJ and return to power.
The next article would be a real head-scratcher except if you remember the golden rule: that no matter what occurs the government response will always be an expansion of that government and that will mean higher taxes no matter how you slice it.

Tax revenues for fiscal 2010 rose 7.1 percent from the previous year to ¥41.49 trillion, exceeding the earlier forecast of ¥39.64 trillion, thanks to improving corporate earnings, the Finance Ministry said Friday.

Did you do a double-take on that one? I sure did. WTF? The government coiffures  actually increased by more than 7% last year and these clowns still want to raise our taxes?!

Just to prove to you how much of a scam this all is and how completely and totally fiscally irresponsible these people are, here's another article from Feb. 24th, 2011, two weeks before the Tohoku earthquake and tsunami, that gives another totally different reason for raising our taxes: Government debt to GDP. From Bloomberg:

Moody's said that it cut its outlook on the credit rating on Japan because of “heightened concern that economic and fiscal policies may not prove strong enough to achieve the government's deficit reduction target”.
Also they said the government's policies would probably not be able to “contain the inexorable rise in debt, which already is well above levels in other advanced economies”.
Analysts said that the move by Moody's was widely expected after S&P's decision to cut its rating. However, they added that while it may have a limited impact on the bond and currency markets, it could have broader political implications.
“Politicians or the finance ministry could use this as a reason to push for fiscal reform, which could include a sales tax hike,” said Satoru Ogasawara, an economist at Credit Suisse. 
Uh oh, there's that "reform" word popping up again.
It looks like these people have their hearts dead-set on raising our taxes one way or another. It would never do to be responsible to do something like, say, cut spending. Oh no! Can't do that.
Twenty years of this sort of out of control spending and tax increases have landed this nation right where it is today: With a faltering economy and massive debt and our credit rating slashed.
At this rate, all we can realistically expect is twenty more years of the same.... That is if we don't go bankrupt before then.


Anonymous said...

Raising VAT (consumer's tax) is actually a good idea. Take Greece. It's consumers' tax is 21% and while this may be high, it is surely worth it when one remembers it has saved Greece economically.

mike in tokyo rogers said...

Dear Mark,
No, you misunderstand. I know Doug French well. He would never advocate any sort of taxes at all. That blog post is tongue in cheek. He is NOT advocating an increase in VAT taxes. His last line is "So Greece, how’s that VAT working for you? The standard VAT rate in Greece is 21%."
VAT hasn't saved Greece. Greece is defacto bankrupt:

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