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  An American Manifesto
Saturday November 22, 2014 
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Incomes Taxes, Millionaires and Billionaires Ammo for the Battle of Ideas

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Off-the-books America

by Christopher Chantrill
December 25, 2010 at 3:47 am

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LAST WEEK Victor Davis Hanson wrote about the hollowed-out society in the Central Valley around his native Fresno, California. He wrote:

I wanted to witness, even if superficially, what is happening to a state that has the highest sales and income taxes, the most lavish entitlements, the near-worst public schools (based on federal test scores), and the largest number of illegal aliens in the nation, along with an overregulated private sector, a stagnant and shrinking manufacturing base, and an elite environmental ethos that restricts commerce and productivity without curbing consumption.

The elementary school that he attended as a child is now 94 percent Hispanic and well below standards in English and math. The rural roads are “fast turning into rubble.” The irrigation cutoffs have idled tens of thousands of acres, and unemployment is 15 to 20 percent.

There are many rural “trailer-house compounds” filled with junked cars, lean-tos, and trash, but for some reason the regulatory state does not reach out and regulate them.

It is almost as if the more California regulates, the more it does not regulate. Its public employees prefer to go after misdemeanors in the upscale areas to justify our expensive oversight industry, while ignoring the felonies in the downtrodden areas, which are becoming feral and beyond the ability of any inspector to do anything but feel irrelevant.

And, of course, nobody is doing anything about “the epidemic dumping of trash, furniture, and often toxic substances throughout California’s rural hinterland.”

For us middle-class drones, all this seems rather weird. How could the government be allowing all this illegal activity? How can our liberal ruling class, that lives to regulate everything that moves, allow this to happen?

But really, it all makes sense. An off-the-books economy is a direct result of the centralized regulatory state. And since the people that live and work in the off-the-books economy are often the poor and minorities, liberals just look the other way, and read a page or two from Barbara Ehrenreich’s Nickeled and Dimed to get themselves all riled up about Wal-Mart.

Suppose you are about to start on the bottom rung of the construction business, as a one-man residential fencing contractor. If you hire American laborers they might want to work as formal employees. Let’s just figure out what that would cost in Washington State, at the minimum wage of, say, $7.00 per hour. There’s the FICA tax of 7.65%. There’s the unemployment tax that, for a construction firm, is probably at the limit of 6 percent. Then there is workers compensation. That’s presently at $1.30 per hour for Landscape Construction and Renovation, or 18.6 percent of the hourly wage! All told, we are paying the government 32.2% in payroll taxes! You think that a seat-of-the-pants startup contractor is going to pay all that (let alone plow through the bureaucratic forms)? No, he’s going to hire illegal Mexican workers, because they want to get paid in cash. Bank account? Forget it: he’ll cash checks at The Money Tree.

Let’s look beyond the case of the gyppo contractor and the illegal alien workers. What about the marginal unskilled kid from the inner city or the white working class? Is he better off with his employer paying FICA, unemployment, and workers compensation? Of course not. He’d be much better off if he got the money in cash rather than the promises of Social Security in 40 years, unemployment benefits, and workers comp., all adding up to 32 percent of his wages that he never sees.

When ObamaCare gets going, of course, this situation will only get worse.

Every time the government enacts a new benefit, or tax or economic regulation, it increases the cost of doing business for ordinary, law-abiding businesses. Every marginal business affected by the new tax or regulation has to make a decision: does it try to obey the law, or does it go “off the books?” Of course, our liberal rulers understand the problem. That is why they often exempt small businesses from the latest regulation. But what they are admitting, every time they do it, is that their high-tax social-benefit state is profoundly unjust.

One of these days some right-wing demagogue is going to turn the general disgust with liberal injustice into a national political movement of bitter clingers.

But don’t expect the ruling class to notice until it is too late. As Deirdre McCloskey writes: a typical oligarchy rises, closes to new entrants, and then goes to sleep.

Meanwhile, the regulatory state starts to break apart from its internal contradictions, and more and more of the rest of us decide to work off the books. But there comes a time when it is not just economically necessary to avoid unjust laws and taxes. It becomes a moral imperative.

Christopher Chantrill blogs at www.roadtothemiddleclass.com.

Buy his Road to the Middle Class.

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 TAGS


What Liberals Think About Conservatives

[W]hen I asked a liberal longtime editor I know with a mainstream [publishing] house for a candid, shorthand version of the assumptions she and her colleagues make about conservatives, she didn't hesitate. “Racist, sexist, homophobic, anti-choice fascists,” she offered, smiling but meaning it.
Harry Stein, I Can't Believe I'm Sitting Next to a Republican


Racial Discrimination

[T]he way “to achieve a system of determining admission to the public schools on a nonracial basis,” Brown II, 349 U. S., at 300–301, is to stop assigning students on a racial basis. The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.
Roberts, C.J., Parents Involved in Community Schools vs. Seattle School District


Liberal Coercion

[T]he Liberal, and still more the subspecies Radical... more than any other in these latter days seems under the impression that so long as he has a good end in view he is warranted in exercising over men all the coercion he is able[.]
Herbert Spencer, The Man Versus the State


Taking Responsibility

[To make] of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier. — Gen. Hans von Seeckt
MacGregor Knox, Williamson Murray, ed., The dynamics of military revolution, 1300-2050


Responsible Self

[The Axial Age] highlights the conception of a responsible self... [that] promise[s] man for the first time that he can understand the fundamental structure of reality and through salvation participate actively in it.
Robert N Bellah, "Religious Evolution", American Sociological Review, Vol. 29, No. 3.


Churches

[In the] higher Christian churches... they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm


Sacrifice

[Every] sacrifice is an act of impurity that pays for a prior act of greater impurity... without its participants having to suffer the full consequences incurred by its predecessor. The punishment is commuted in a process that strangely combines and finesses the deep contradiction between justice and mercy.
Frederick Turner, Beauty: The Value of Values


Pentecostalism

Within Pentecostalism the injurious hierarchies of the wider world are abrogated and replaced by a single hierarchy of faith, grace, and the empowerments of the spirit... where groups gather on rafts to take them through the turbulence of the great journey from extensive rural networks to the mega-city and the nuclear family...
David Martin, On Secularization


Conservatism's Holy Grail

What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph


Moral Imperatives of Modern Culture

These emerge out of long-standing moral notions of freedom, benevolence, and the affirmation of ordinary life... I have been sketching a schematic map... [of] the moral sources [of these notions]... the original theistic grounding for these standards... a naturalism of disengaged reason, which in our day takes scientistic forms, and a third family of views which finds its sources in Romantic expressivism, or in one of the modernist successor visions.
Charles Taylor, Sources of the Self


Drang nach Osten

There was nothing new about the Frankish drive to the east... [let] us recall that the continuance of their rule depended upon regular, successful, predatory warfare.
Richard Fletcher, The Barbarian Conversion


Government Expenditure

The Union publishes an exact return of the amount of its taxes; I can get copies of the budgets of the four and twenty component states; but who can tell me what the citizens spend in the administration of county and township?
Alexis de Tocqueville, Democracy in America


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