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We All Float Down Here, Georgie…

A Rambling Note on Taxation and Stuff Because I Was Being Lazy and Avoiding Writing

You may all lament with me: I did not win the $1.5 billion Powerball last night.

Of course, I didn’t play it…

I’ve been watching the growing insanity associated with the lotto for the past few years and couldn’t help but shake my head at it. After reading about how Illinois isn’t paying out lottery winnings to cover the shortfalls in the budget (and considering just how high taxes are in Illinois, I’m wondering just where the hell all that money is going), it makes me distrustful of the entire process. Well, okay, I didn’t really trust it in the first place, but still.

My foster dad has a financial planner, a guy he pays about $100 a month (this is on average) to help manage his funds. He’s a long-term planner, and he’s always looking at the way the economy will move before it’s obvious to everyone else (it’s how he avoided the dot-com bubble of 1999-2000 and the real estate collapse in 2007… he’s like a freaking wizard or something). Lately he’s been grumbling about the “unsustainable Californian taxation policies” (that is a direct quote… I was nodding and wondering how we’d gone from talking about my future prospects in Virginia to California stuff) and wondering if he should pull all of his liquid assets out of the state as a whole. I was about to laugh at him until I recalled the Illinois situation. It made me wonder. Can a state legally prohibit a U.S. citizen who is not a convicted criminal from taking their money elsewhere?

The answer is, surprisingly, yes.

Of course, it’s not as simple as that. The state can’t stop the average Joe from taking his few hundred dollars and moving to another state. However, if you’re like my foster dad and you’ve got your retirement tied up in multiple businesses and investment properties across the state that are actually sorta valuable, the state doesn’t want to see that money leave. That means less taxable income for them, and a further lack of steady investing as well. But how can they prevent someone from taking their money? Simple: by tying the owner up in court and placing a hold on all assets.

“But Jason,” you might be saying, “why would the state waste it’s time to try and tie someone up in court? It’s frivolous!”

To which I say yes, yes it is. However, unlike criminal court (where the prosecution must prove the guilt of the innocent), a government suing an individual is not required to prove that there is guilt. Indeed, the burden of proof falls upon the shoulders of the accused. Which sucks for the average Joe, but is even worse for someone with a lot of assets. Why? Because, most people, that person is trying to find every tax loophole they can to pay less in taxes and, summarily, a lot of expenditures they claim are in a strange little gray area.

By the way, IRS? I promise that I do not do this. Really. I swear.

So by tying up all the assets in court, the state can prevent someone from removing their wealth and placing it elsewhere. That’s why whenever you see reports of multimillionaires going on trial, there’s usually a mention in the bottom of the news article that “all assets were frozen pending the outcome of the trial”, which means that even if they cannot prove you guilty, they can still take your money. I believe that it is called civil forfeiture.

Much like eminent domain, it is one of the dumbest things we allow our government to do to us.

Yes, we allow this. Much like the encroachment of the state upon our civil liberties, we continuously ignore this by electing officials who, in turn, pass laws which take away more and more. It’s kind of silly, if you think about it. We’re electing millionaires to represent the lower and middle classes, then bitch about it when they screw us over, then we go out and re-elect them. We elect lawyers to run this country, and who else is better at finding the loopholes in laws (or hell, rewriting them to suit their own needs) than lawyers?

People laugh at me when I say I hate having lawyers running this country. The usual saying is “How can the average Joe run this country? They couldn’t even begin to understand the layers of laws and all of the bills. It takes a lawyer to understand it all!”

To which I say “Bullshit.”

The laws are written in such a meandering and convoluted manner for a reason. By law, Congress must post the bills for the public to see before the vote (it’s why the Affordable Care Act was handed out a mere hour before the vote to pass it occurred… by the letter of the law, it was opened to the public before the vote). However, have you actually tried reading a proposed bill lately? Here is an example of H.R. 1644 — the STREAM Act:

Supporting Transparent Regulatory and Environmental Actions in Mining Act or the STREAM Act This bill amends the Surface Mining Control and Reclamation Act of 1977 to direct the Department of the Interior to make publicly available online and in the Federal Register, 90 days before publication, any draft, proposed, supplemental, final, or emergency rule, or any environmental analysis, economic assessment, policy, or guidance, and each scientific product upon which the Department has relied in developing the rule, the analysis, or the assessment.

A scientific product is any product that: employs the scientific method for inventorying, monitoring, experimenting, studying, researching, or modeling purposes; and is relied upon by Interior in developing any rule, environmental analysis, economic assessment, policy, or guidance. For scientific products receiving federal funds Interior must also make publicly available the raw data used for them (any computational process or quantitative or qualitative data not protected by copyright or containing personally identifiable information, sensitive intellectual property, trade secrets, or business-sensitive information). If Interior fails to make publicly available any scientific product for longer than six months, it must withdraw the rule, environmental analysis, or economic assessment policy or guidance. This requirement shall not apply, however, if a delay in the publication of a rule will pose an imminent and severe threat to human life.

So far as I can tell, this is to prevent the Department of the Interior from hiding scientific results regarding tests on public land from the public but giving them enough wiggle room to avoid doing so if they really have to. I think. With multiple college degrees, I like to think that I’m all sorts of smartified. But this? How the hell can we determine if our Congress is doing a good job when the typical bill is nothing more than gray matter and legalese?

Just remember: don’t create a law that you aren’t willing to kill for.

So if the Federal government is willing to do this to us (and they have the Dept of Treasury to back them up), just how far would a state government go to maintain the status quo? I know California has been suffering from a huge population drain of late, and is going to cost them some of the Representatives in Congress because of this (remember kiddies, the number of Reps each state has in the House of Representatives is determined by the Census… there’s a reason that high-population states seem to dictate policy in the House). How can a state prevent the population drain and, at the same time, keep the money in the state? By making it difficult to leave, that’s how.

Don’t think a state would stoop to such a level?

Really? Really?

This article isn’t exactly neutral-toned (one of the lines in it made me laugh out loud) but the gist of it is laid bare (I did like how the article’s author managed to bury the rise in sales tax and scurried on in the story, focusing instead on the rise in tax rates on those with $250,000 and up). It shows the different ways that states are trying to get money and the lengths they’ll go to in order to get it.

The big state tax news is that California voters said to sock it to the rich–specifically those with income of $250,000 and up. California Proposition 30, which Gov. Jerry Brown’s budget and public education in particular depended on, passed.

Proposition 30 creates three new upper income tax brackets for the next seven years. For example, folks with $250,000 to $300,000 a year in income will pay 10.3%, up from 9.3%. The new top income tax rate–for folks with income of $1 million-plus–will be 13.3%, up from a current top rate of 10.3%. That eclipses New Yorkers’ combined state and local top rate of 12.7% and Hawaii’s top rate of 11%. The income tax hikes are retroactive to Jan. 1, 2012, but the extra bill isn’t due until April 15, 2013. (See below for a photo gallery of the highest state and local income taxes on a $1 million income post election.)

Still, all Californians will be chipping in: Proposition 30 also raises the state sales tax from 7.25% to 7.5% for four years, starting Jan. 1, 2013. A competing initiative to raise income taxes in California, Proposition 38, failed.

and later:

Voters went both ways on sales tax hikes. Arizona voters nixed higher sales taxes when they rejected Proposition 204, “The Quality Education and Jobs Act,” which would have renewed and made permanent a soon expiring 1% temporary sales tax originally imposed in 2010 that brought the state’s sales tax to 6.6%. Note: 80% of the taxes raised would go to education, so this was in effect a vote against education, the opposite of California’s vote.

(Yes, that is the line that made me laugh)

Ugh. I’m getting a headache now. I’m supposed to be writing, damn it, not this. Still, this is an educational experience. I knew that states were shooting themselves in the foot, but I didn’t realize how bad they were doing it until I started this. The typical voter doesn’t see this, since they usually don’t research the bills or anything on what they’re passing, relying on so-called media “experts” to sift through the gray matter of the bills, read their chicken bones and decipher the meaning while ensuring that the stars are properly aligned. Politicians rely on our ignorance and laziness (yes, laziness) to slip laws into place that range from the truly strange to outright harmful.

Look, the only way to truly avoid this is to research bills and proposals and get involved. My foster dad is extremely pissed off about all this, enough so that he is considering moving to a lower tax state. I’d recommend Virginia to him except that he hates the cold and the suburbs outside of DC pretty much determined the laws for the entire state (which sucks even more).

Of course, the best way to reverse all of this is to get involved.

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