The president himself has admitted, if not in so many words, that the so-called Buffett Rule is little more than a gimmick. Bringing in $4.7 billion per year won’t do much to solve $1.4 trillion dollar deficits. And, the administration concedes, this latest attempt at soaking the rich does little to spur growth.

But what’s especially galling for those with a bull’s-eye on their back is the pious specter of Messrs. Obama and Buffett demanding higher taxes while deliberately ducking — albeit legally — the tax man themselves. Just how is it you make a moral argument about “fairness,” all the while eschewing your self-described moral obligation?

In the last couple of years, it appears that Mitt Romney, Warren Buffett and President Obama have had effective income tax rates of 15.4 percent, 17.4 percent and 20.5 percent, respectively. All took sizable advantage of charitable deductions, which taken together with other taxpayers costs the Treasury $52 billion annually.

This pales in comparison, however, with the tax code’s biggest loophole, the exclusion of employer-provided health insurance from taxable income. According to the Congressional Research Service, that amounts to more than $164 billion per year in foregone federal revenue, barely surpassing another middle-class tax break, tax-deferred pension contributions.

So why then is the president so obsessed with the Buffett dodge? True, when not preaching to the rest of us, the Oracle of Omaha has studiously kept his corporate salary at a minimum (i.e., less than his secretary’s), thus avoiding a 35 percent top rate on ordinary income.

By deriving the bulk of his annual wealth from his investments, Buffett enjoys the lower 15 percent rate for capital gains and dividends. But the “rule,” levying a 30 percent rate on any income for folks like Romney, Buffett and Obama, represents a massive new tax on investment and ignores the fact that corporate profits are already taxed at 35 percent before any gain is realized and even after any dividend is distributed.

Moreover, history shows that the “demand” for capital gains is, in economic terms, the most of elastic of all. If rates go up, gains simply aren’t realized, depriving the government of revenue. If rates decline, then revenue tends to rise along with after tax earnings. This is exactly what has occurred every time the capital gains rate was adjusted over the last four decades.

Regardless of the numbers, the larger ethical question remains. If paying more of one’s income in taxes is such a moral imperative, why haven’t those screaming the loudest for more government revenue voluntarily complied with their own rule?

No one forced the president or Warren Buffett to arrange their affairs in such a way to minimize their individual burden. It is, after all, one thing for those who think taxes are already too high to take advantage of every conceivable strategy to lower their effective rate. It’s quite another for those sanctimonious liberal souls yearning for “fairness” to do the same.

Call it the triumph of hypocrisy.

Contrary to popular myth, the wealthy already pay their “fair” share, with just 10 percent of the nation’s highest earners shouldering 70 percent of the income tax burden. And when you include the distribution of all taxes on the rich, the top 1 percent have an effective rate of 29.5 percent, according to the Congressional Budget Office. Meanwhile, the Tax Foundation reports that 58 million filers had no income tax liability whatsoever in 2010.

Yet if lower taxes on investment income so offend the sensibilities of the revenue-raisers, let me suggest a modest proposal: Lower the top marginal rate to, say, 20 percent, then tax all sources of income at that rate. Presto — you’ve done away with the Buffett dodge without raising taxes overall.

Don’t hold your breath — because this runs directly counter to the administration’s increasingly transparent strategy of raising taxes on a select few while taking larger and larger numbers of voters off the roles entirely for crass political gain.

Published in the Star Tribune April 29. 2012.

While District Court Judge Roger Vinson of Florida ruled enthusiastically for the then 26 states challenging Obamacare on federalism grounds, the 11th Circuit in Atlanta found only the bill’s requirement to carry health insurance unconstitutional. Other appeals courts have upheld the mandate, but until now, the nation has yet to receive a definitive ruling on the entirety of the two-year-old law.

And that’s what scares liberals the most.

Even though it’s unlikely, the Supreme Court has the potential of upending 75 years of New Deal judicial activism. Consider the issue that’s getting all the attention, the federal edict forcing Americans to buy health insurance or pay a fine (er… ah, tax, depending on what day it is for Obamacare defenders). The administration says this amounts to little more than regulating interstate commerce, a power specifically enumerated in the Constitution.

But just what economic transaction is it attempting to regulate when someone chooses not to purchase insurance, or any other product for that matter? If Washington can require health insurance, the court suggested this week in an unprecedented six hours of oral arguments, what’s to stop it from forcing Americans to buy cellphones or broccoli — virtually anything the feds say has an “effect” on commerce?

After all, as District Judge Vinson noted, “there is quite literally no decision that, in the natural course of events, does not have an economic impact of some sort.” So if that is the only rationale the federal government needs to regulate the internal affairs of its citizens, then its power to control is unlimited.

Imagine: If all Congress had to do was to cite the Commerce Clause for whatever it passes, why did we bother to amend the Constitution in order to ban “the manufacture, sale or transportation of intoxicating liquors” during Prohibition? Why didn’t we just pass a law? I’ll tell you why: Because, in those days, the Constitution still required some intellectual honesty.

That all changed with FDR’s New Deal and a series of rulings designed to circumvent the document. By 1942, the constitutional coup d’etat was complete. In Wickard vs. Filburn, the Court ruled that homegrown wheat for personal consumption (outside the bounds of commerce, let alone interstate) was subject to federal regulation because the “commerce power was not confined in its exercise to the regulation of commerce among the states. It extends to those activities intrastate which affect interstate commerce …”

Can you imagine applying the same specious reasoning to the congressional prerogative regulating commerce with foreign nations — listed in the very same clause as the interstate power? That is, the idea that we could legally control another country’s domestic policy due to its effects on foreign trade? So much for sovereignty.

Alas, instead of overturning the entire scheme outright, the court is more likely to narrowly rule (stare decisis and all that) that since refusing to buy health insurance lacks the nexus of commercial activity, a federal mandate is without justification. This has the political convenience of leaving in place the New Deal precedents granting plenary power to the feds once any economic activity actually commences (think light-bulb mandates).

That’s more than a shame because federalism, as Justice Anthony Kennedy — the likely swing vote on Obamacare — put it in the court’s unanimous verdict in Bond vs. United States, “protects the liberty of all persons within a State by ensuring that laws enacted in excess of delegated governmental power cannot direct or control their actions,” thus securing “to citizens the liberties that derive from the diffusion of sovereign power.”

Published in the Star Tribune, March 31, 2012

Barack Obama, in his newfound role as patriarch-in-chief, has been lecturing the American family on the evils of selfishness. Pedestrian pursuits of individual happiness must forever be subordinated to the idea of “shared responsibility,” a favorite presidential buzzword.

Of course, for anyone with even a cursory knowledge of Democrat-speak, this is code for raising taxes and closing corporate loopholes.

In fact, rarely does the president miss an opportunity to talk about all those nasty oil company “tax breaks” he’s trying to repeal (even though, according to the Tax Foundation, the industry has actually paid $388 billion in income taxes to the federal and state governments over the last three decades). Liberals call these routine deductions “tax expenditures” as though they were the same as spending.

Nevertheless, as long as we’re talking about paying our fair share, it’s time we take a look at perhaps one of the greatest loopholes of them all: the tax-exempt organization. You see, tax-exempt entities raise massive amounts of capital, and what others might refer to as “profits,” they call expenses.

Consider the self-described “social purpose capitalism” of Minnesota Public Radio, which has resulted in a massive radio empire competing with its taxable broadcast brethren.

Oh, yes, I’m well aware of all the work these wonderful groups perform for the downtrodden, so spare me the outrage over questioning the status of so-called “nonprofits.” But someone has to create wealth before it can be redistributed.

Dare I say, the most beneficial social organization in society remains the profitable business. Indeed, the evil entrepreneur, far from begging for donations, is the one providing the goods and services for which people are actually willing to pay.

On the other hand, imagine a 501(c)3 tax-exempt outfit whose mission is to ensure that “resources accrue to all local citizens” within the “creation of ecologically sound and economically equitable communities.” Uh? Well, try the Institute for Local Self-Reliance.

Or how about a collection of smart growth groupies at Transit for Livable Communities, dedicated to increasing government funding for “bus and rail transit, bicycling, walking and transit-oriented development.”

And don’t forget to take that “charitable” tax deduction for contributing to the gang at Growth & Justice, a merry band of collectivists who think Minnesota state government isn’t big enough.

Of course, for sheer audacity you can’t ignore ClearWay Minnesota, granted tax favored status under section 509(a)3 of the IRS code for living off the largesse of the state’s tobacco lawsuit. Private shareholders may not benefit, but the six-figure salary management team isn’t fairing too poorly.

But, hey, how do you put a price on lobbying for smoking bans and funding vital programs that “build capacity in the African/African American, Asian American and Pacific Islander, Chicano Latino, Gay, Lesbian, Bisexual and Transgendered and American Indian Communities to develop and implement effective tobacco prevention and control programs and policies”?

The irony here is that far from relieving the government’s (taxpayer’s) social burden, most of these “public charities” seek to expand it.

Regardless, my favorite “tax expenditure” is a fledgling little project known as MinnPost. Here you’ll find a group of scribes still smarting over a market devaluation of their services. Hence, MinnPost’s creed is that high-quality journalism “can no longer depend only on the private sector.” Maybe that’s why they’re propped up by grants from yet another tax-exempt entity, the mega-McKnight Foundation.

In fact, these private foundations alone, says Virginia business attorney Ross C. Reeves, control $650 billion in wealth and, depending on the year, have investment income of around $60 billion — none of which is subject to income taxes.

This has proved to be a convenient tool for the Warren Buffets of the world to claim an immediate write-off, reduce their estate tax, and promote such charitable causes as reproductive rights, saving the planet, and world peace. All the while clamoring for higher taxes on someone else.

What a country.

Published in the Star Tribune, March 4, 2012

There seems to be a growing chasm within the GOP as to what ‘conservatism’ really means. The critics of Ron Paul have derided his emphasis on individual rights, preferring a softer version of ‘compassionate conservatism.” Now, Rick Santorum has let the cat out of the bag with a full throated assault on ‘llibertarianism’ itself. Well, who better to set the record straight than the Gipper himself. You decide.

“If you analyze it I believe the very heart and soul of conservatism is libertarianism. I think conservatism is really a misnomer just as liberalism is a misnomer for the liberals–if we were back in the days of the Revolution, so-called conservatives today would be the Liberals and the liberals would be the Tories. The basis of conservatism is a desire for less government interference or less centralized authority or more individual freedom and this is a pretty general description also of what libertarianism is.

Now, I can’t say that I will agree with all the things that the present group who call themselves Libertarians in the sense of a party say, because I think that like in any political movement there are shades, and there are libertarians who are almost over at the point of wanting no government at all or anarchy. I believe there are legitimate government functions. There is a legitimate need in an orderly society for some government to maintain freedom or we will have tyranny by individuals. The strongest man on the block will run the neighborhood. We have government to insure that we don’t each one of us have to carry a club to defend ourselves. But again, I stand on my statement that I think that libertarianism and conservatism are traveling the same path.” — Ronald Reagan, interview with Reason Magazine, July 1975

Leave it to Al Gore to inspire a really bad idea.

As you may recall, the petulant presidential candidate lost the 2000 election, only to narrowly win the popular vote. That quirk (it had happened three times before) was all the popular-vote movement needed to get going. Nine states with 132 electoral votes have now signed on to a controversial compact that would automatically award their Electoral College votes to the winner of the national tally, regardless of how their particular states voted.

Though spearheaded by liberal Democratic fortunes, the National Popular Vote movement has attracted well-meaning, if misguided, bipartisan support. Proponents say the NPV reform plan would lessen the importance of swing states and steer candidates to less-traveled places — say, California, New York or North Dakota, where contests are all but settled in a winner-take-all system (Maine and Nebraska allocate their Electoral College votes based on congressional districts, a practice that, if adopted nationwide, would of course have the greatest impact on large states).

But deciding the presidential race by pure democratic rule would be a winner-take-all system on steroids — reducing the importance of winning the election within every state in favor of trying to grab the highest percentage possible in the most populous states. Indeed, the Electoral College actually encourages candidates to campaign in more regions of the country. Campaign resources are finite, and in a popular-vote scenario, less populated states would remain fly-over country as candidates flocked to the most populated urban centers.

As it stands now, and thanks to the “undemocratic” awarding of two senators (originally chosen by state legislatures) to every state, regardless of size, our Electoral College system is weighted ever so slightly in favor of smaller states. So swing states such as Iowa, Nevada and New Hampshire — representing 16 electoral votes up for grabs — are more likely to see President Obama and the GOP nominee duking it out.

This is as it should be. A republic does not rest on pure majority (mob?) rule. It incorporates various checks and balances to filter the majority and protect the minority. The Senate, for example, accomplishes this through unlimited debate, and unless a supermajority can break the filibuster, why, slim majorities do not prevail. National policy requires a broad consensus, hence the complaint that one small state can bottle things up misses the point entirely.

States have disparate local interests they wish to protect, yet imagine if Minnesota decides to go predictably blue in this year’s presidential contest but the country has had enough of Obamanomics and votes Republican. Under the NPV plan — should Minnesota join the compact — our state’s electoral votes would be awarded to the GOP nominee regardless of a direct popular election within our borders. This is important, because we ought to be, at least to a degree, masters of our own universe.

As always, there is little doubt that the matter will be decided in the courts. While Article II, Section 1 of the U.S. Constitution properly gives the states the power to individually determine how their electoral votes are apportioned, Article I, Section 10 is equally as clear: “No state shall, without the consent of Congress … enter into any agreement or compact with another state …”

Nevertheless, the NPV juggernaut is rolling on, already halfway to its goal. Once enough states sign on — enough, that is, to deliver a 270-electoral-vote majority — the game is up. And that means a free-for-all every four years, in which the more candidates who enter the presidential sweepstakes, the easier it would be for one to get a simple plurality and become a truly minority president with little governing power.

Which brings us back to the 2000 election. The only way that contested race could have been more divisive is if every vote in every state, not just Florida, had to be recounted. Which is what may happen under a national popular vote.

Published in the StarTribune, February 4, 2012