Meet in the Middle: Abolish Taxes on Overtime & Second Jobs!

So here is a novel idea. I believe it is an idea that should be nearly unanimously supported by both parties, though perhaps for different reasons. Still, I do not think it will be supported by either side because the political class often does not really mean what they say. They only say the things they say because they believe that is what they need to parrot to get votes and win elections.

I will first lay out my idea, and then I will go over the rationale behind it.

First, a disclaimer: I do not support the income tax. It is a vicious and destructive, as well as immoral, tax. The fact that the state is able to determine how much of a man’s earnings he should be able to keep is abhorrent. If I had things my way, the income tax would be abolished immediately.

Clearly, the majority do not agree with me on this point, so I propose the following counteroffer:

  1. The government should only tax an individual on one job—naturally, whichever job grosses the most would be the one to be taxed.
  2. Taxes should not be levied on overtime pay.

It is really that simple. Those on the Right, everyone from Rand Paul to Jeb Bush to Donald Trump, all advocate for cutting taxes. Obviously, this proposal constitutes a significant tax cut. Though it would arguably be but a minor dent in the overall revenues collected by the government, the proposal would nonetheless lift a huge burden off the shoulders of the poor, single mother with 3 kids who is working 2 jobs. For our hypothetical taxpayer, she would actually get to keep all of her overtime pay, and all of the money she makes from her lower paying job.

Now for those on the Left, this idea appeals to many of their stated objectives (e.g. empowering of the poor), but it carries with it some challenges. For one, there is no vilifying and soaking of the rich. Additionally, even though it will greatly help minorities and women, the proposal is not expressly geared towards them, and so the Left may fear that they will not be able to pander to and receive credit from the constituents whom they are seeking to save.

But here is the thing: top income earners more often than not do not get paid hourly wages, and they very rarely have multiple jobs that they hold at the same time. Poor people do work multiple jobs, and they do work overtime. Generally, physicians do not receive overtime pay, nor do they work second jobs. The same is true of lawyers, executives, top level bankers, and CEOs.  In other words, this is a proposal for the little guy, and one that middle class workers will also benefit from when they work overtime.

Keep everything I have noted about income taxes in mind, and recognize that there is a big difference between making $50,000 a year as an office professional working 40 hours a week, and making that same amount by working in a warehouse 60+ hours each week. Alternatively, we could compare the mid-level manager who makes $100,000 a year working 40 hours a week with the factory worker who works 70+ hours a week to hit that 6-figure mark.

Insofar as our system continues with a progressive income tax, we should consider the manner in which the the money is being earned. There are compelling distinctions- human reasons-that support the notion that overtime money and income from 2nd jobs should not be taxed. In short, the taxes from one job- the taxes from 40 hours- should be enough for any working man (or the poor, single mother with 3 kids) to be deprived of by the government.

I am not rich, so I cannot speak to whether or not the rich are paying their fair share or not, but I do know that the poor and the middle class are paying more than their fair share. This needs to stop, and this proposal is the perfect opportunity for both sides- Right and Left- to meet in the middle and achieve the objectives of their respective ideologies. Can you hear it now? The sweet Kumbaya of the Democratic Socialist (whatever that means) and the Tea Party Republican, at once united in a common cause for the little man and economic freedom: “Abolish taxation on overtime wages and second jobs!”

The Fallacy of Irrational Action from Richard Thaler

It’s been dry lately, and busy. It’s been a combination of being super busy, a string of shows that aren’t particularly controversial, and a bit of writer’s block. It’s been one of these constantly, every time I sit down to write. Well, one of the latter two when I do sit down to write, and then for the days where I don’t get that far it’s from being so busy and exhausted.

I’m here now and I have found time to read quite a bit lately. I looked into behavioral economics, a school of thought that Jason talked about a long long time ago. It’s interesting. I’m not sure all of it is really economics, either by Sowell’s definition or by the Misessian definition, but much of it does seem plausible. There are some very basic and fundamental problems with behavioral economics. Since the show hasn’t been giving me a lot of material lately- or what material there is, is either out dated or purely political- I’m going to take on Richard Thaler.

In his book, “Misbehaving” Thaler attacks one of the fundamentals of economics, as it has been known since the late 1800s. Thaler takes pride in demolishing “homo-economicus.” That is the “old” notion that men base all their actions according to calculations regarding their own value scale, opportunity costs, values, costs vs profits, and their time preferences, and assessments of the probability of varying unknown future events. In other words, men act rationally and are self-interested.

The Austrian School teaches that all men act, and that the purpose of each act is to relieve a felt sense of uneasiness. Or, to put it another way, each act aims at exchanging the actor’s current condition for a better condition. It is purposeful action that employs means to attain ends.

Furthermore, there is a logical structure of the mind, so that individuals prefer some things to others, our limitations of time and resources create the necessity for us to prioritize how we spend our time and resources. This leads to what is referred to as a value scale.

Individuals organize their desires in a linear sort of way, a man prefers A to B, and B to C, and C to D, and so on. Not that every person writes all this out in long hand, but merely that this is how we operate, this is how we must operate. We must act and each act precludes other acts. So that on a given afternoon you must make a choice between taking a walk or going to a movie, or going fishing. If you choose to do any of those, it is proof you prefer that activity more than the other possible activities.

Thaler presents some challenges to this notion, one being how people would respond to the different scenarios. For instance if given two choices: A, where you are guaranteed to win $100, and B, where you have a 50% chance of winning $200 and a 50% chance of winning nothing, most folks chose the sure thing. When presented with a second choice: A, a sure loss of $100, or B, a 50% chance of losing $200 and a 50% chance of losing nothing, most people take the gamble.

In each case it was just about 2 to 1.  But this isn’t really the realm of economics at all. The main point of this study is trying to understand how people make their choices, not a study of human action.

Somewhere in that book he presents a problem that actually had me questioning the whole notion of a value scale for about 5 minutes. He mentioned two guys who won tickets to a game. One man sold the tickets for $1,000. The other man went to the game. Neither could understand the logic of what the other was doing. Clearly an example of subjective value theory at work.

Consider this: suppose “YOUR TEAM” is going to the Super Bowl. You enter a raffle at work or at the local chamber of commerce or whatever and you win! Now you have two choices: you go or you don’t go and you sell the tickets for $2,000. For the sake of argument, let’s pretend there is no travel expenses, just suppose the Super Bowl is in your home town… Now, what do you do? If you go, it clearly demonstrates you prefer attending the game over $2,000. But suppose you don’t win any tickets. You can either buy the tickets for $2,000 and go, or you can not spend the money and watch it on T.V. In this case, if you don’t go it is because you prefer $2,000 to attending the game.

It seems plausible that this could happen, but how could this fit into that neat Misessian/Rothbardian value scale?  I put the book down and began to question how this could be. How can a person prefer A to B and at the same time prefer B to A? I considered if this were my situation, If I could go to the Super Bowl for free, why I would go, and why I wouldn’t go if my team did go to the Super Bowl but I had to buy the ticket.

I began to think over the fundamental premises of economics. Men use means to attain ends. Each act is intended to exchange one’s current condition for a more desirable condition. And that was it, in a flash, it made perfect sense.

Before the tickets are acquired, my condition is $X in the bank. After the tickets are acquired, I either have $X in the bank and the tickets. If I won the tickets, or $X-$2,000 if I had to buy the tickets. And, of course, $X+$2,000 if I decide to sell the tickets. Depending on what that $X is, my choice would be different. If $X=$500, I’m selling the tickets if I win them and I will not buy them if I don’t win them, obviously.  If $X=$1500 I may go to the game if I win the tickets, but I will not buy them if I don’t win them. And if $X=$6,000 I  will buy the tickets if I do not win them.

Now that’s perfectly logical and reasonable. There are actually 3 sets of value scales, not one.

1. $6,000 and tickets
2. $4,000 and tickets

1. $1,500 and tickets
2. $1,500 and no tickets

1. $2,500 (after selling tickets that were won)
2. $500 and no tickets.

Maybe the Austrians do have some cracks somewhere, but not here. Men do use reason (many times flawed). Men plan, quite imperfectly sometimes, and men do act in order to better their condition, even if they regret their actions later and their condition is actually worsened.

I do think we are homo economicus, but that doesn’t mean we are always right, or that we don’t make gross errors in our calculations. But, all the theory of homo economicus states is that we do make calculations.

What’s Wrong with Conscription

It isn’t enough just to be on the right side of an argument. We should have a good foundation, and well thought out reasoning as to why we hold the positions we do. For almost every issue raised there is an ethical, as well as a utilitarian (or economic) case, to be made one way or the other. It’s rarely ever possible to argue effectively for a position from an ethical standpoint if the person you’re debating is only concerned with the justice of their cause. The reverse is also true, to an extent, if a person has a utilitarian complaint, all the moralizing, about people being entitled to make their own choices and having a right to control their own bodies. Therefore, it’s always good to be brushed up on both, and sometimes you need both. A great example is in debating neo-cons on the matter of drug legalizations, where they argue both that it is immoral, and that it leads to high crime and more accidents.

So what is our case against conscription?  Is it so obvious that we are at a loss of words?

Let’s start with the economic concerns. By conscripting people to be in the military, we are diverting labor away from more urgently needed tasks. Instead of marching around on a field somewhere those men could be busy producing goods people want and need. Thus conscription increases the amount the rest of us have to pay for goods and services.

SOME GROUND WORK

The main argument is on ethical grounds. I make a distinction between morality and ethics where most people use the two terms interchangeably. There are two different concepts out there that are blurred, and we float back and forth from one to the other using either of the two words. These two ideas quite often overlap. Theft is both immoral and unethical. Two unmarried people having sex is immoral, but is not unethical.  When I think of morality I think, “That which is pleasing to God, or a person’s God.” So another example might be drinking, or smoking, or even lying that is unrelated to a property transaction. These are all immoral but ethically neutral. Ethics is that sphere of conduct with relation to other men. It’s unethical to initiate physical aggression against another man, and it is unethical to defraud him. Ethics is about the point where it becomes justifiable to use violence to stop a behavior. It is, I believe, immoral to hate someone just for being different, but we can’t throw someone in jail for it. But it is unethical to initiative violence against a person for any reason. So if Bob is a hater and hates Ted, puts up signs denouncing Ted and makes mean faces at him, he is, according to most people, behaving immorally. However, he hasn’t hurt anyone. Once he does, if he does, now it becomes justifiable to lock him up. In addition, I just remembered Block’s book “Defending the Undefendable,” prostitution is immoral, not unethical.  I can’t think of anything unethical that isn’t also immoral, but there is plenty of morality unrelated to ethics. Morality is also much more subjective. One may consider homosexuality immoral, while others might not. The rule for ethics is transgression against another person, so as long as the engagement is consensual, it is ethically neutral.

THE ETHICAL CASE AGAINST CONSCRIPTION

With that out of the way, let’s look at the ethical arguments against conscription. We presume that each individual is a self-owner, that he owns his own body. The only other options would be some people own others, or each of us own 1/6 billionth of every other person and is, in turn, owned by everyone else on the planet. The former violates the principle of homesteading, wherein the first user of something is held to be its owner. As does the second scenario, but the second case is also entirely ridiculous seeing we would never be able to act in even the smallest capacity if we were beholden to everyone else on the planet before we acted.

So conscription involves depriving the person of his rights in the ownership of his own body. He is either jailed, or sent abroad to kill and be killed.

I suppose this might have something to do with why most people oppose conscription, that little part about killing and being killed. But that really is beside the point. We wouldn’t tolerate slavery if the slave shack was a 1,500 square foot 3 bedroom home and the slave were able to keep 60% of what he produced. The issue with slavery is the expropriation of labor, or the product of the labor, and the deprivation of the individual’s choice.   The same is true in the case of conscription, from an ethical standpoint; there is very little difference in slavery and conscription, the only difference being the term of service and the extent to which it is taken.

Let’s consider work conscription. Suppose a scenario where war hasn’t yet erupted, but it seems very probable. The government pulls draft cards, not to send the men off to fight and die, but just to work in a relatively safe setting, for good pay. Nevertheless, there is no choice in the matter for the individuals; they must begin work now towards building planes and tanks and bombs. Would this type of conscription be okay? I can still see some purists who are so opposed to war they would object to this merely on the grounds these men would be contributing indirectly to war.

What if, in our war on global hunger, the government drafted 5,000 men and women including you? They insist you must travel to some far flung third world country and help the locals plant crops and you are “obligated” for a 2 year tour. Would this be acceptable? As long as it is all other people who are selected, it might be seen as tolerable, but when it’s you without a choice, there will be few to give joyfully.

One might argue compulsory schooling is acceptable since they are children. Here we are talking about adults, and adults can decide for themselves.

We face the same argument for conscription we do for minimum wage laws. “You are not smart enough or capable enough to decide for yourself. If you were, you would choose to volunteer to protect your freedom. Likewise, you are not smart enough not to work for less than $7.25 an hour, so we will make it impossible for you to do so.” Never mind what the individual who might evaluate the threat or asses the opportunity costs for themselves.

In the end, conscription is the denial of self-ownership. Without self-ownership, what liberties can we have at all?

NOTES

This isn’t related to the show but something I thought would be worth covering while the show is offline until the 4th.

I don’t know of any books or articles that specifically govern conscription, but “Conceived in Liberty,” a 4 volume collection of the history of colonial America from 1607 until the peace treaty of Paris, by Rothbard, has some significant insights into the way war is and should be conducted by a people seeking freedom from an oppressive government.

On a more foundational level, I’m almost certain the concepts are addressed in “The Ethics of Liberty” by Rothbard. Both books are free in audio format on iTunes, and on pdf at mises.org.

Update

I want to let everyone who might have accidentally found this page, as well as a few of my closest friends who I’ve told about this site, I haven’t quit. Jason has gotten most everything right lately, and he hasn’t left very much room for elaboration on my part.

If that weren’t enough, I just finished a 7 day stretch of 12 hour days at the best tire plant in the world and I haven’t had the time or energy to write anything lately.

I am also trying to upgrade this site so it is more appealing and looks more professional, as well as make available some of my very own writings unrelated to and predating the Stapleton show.

I’m still here, and despite the heckling, I won’t be going anywhere.
Right now this site is online, it’s open to the public, and anyone can view it, but so far it has not been promoted, and I’ve only told about a half dozen people about it. January 1st 2016 will be the official launch date and then I will start promoting vigorously.

About the only metric I have as far as how many people visit and read what I write is the comments. I don’t have a fan page on Facebook. I don’t have a twitter account.

I might have a million people visiting this page, or it might just be my mom. The only way I’ll know you’re out there is if you leave a comment.
With that said, I will leave the remaining 21 hours I have off to eating, sleeping, and making this web page better.