One day I had lunch with a friend. We were friendly except for one tense moment.

He mentioned the high cost of Verizon telephone service. He said ‘it needs to be regulated’ meaning Verizon. I said ‘it is regulated, heavily.’

He glared at me. He was angry with me because my statement upset his belief about the benefit of regulation.
I told him that regulated industries often ‘capture’ the regulator, meaning the regulator often becomes converted into a protector of the regulated industry. Economists call this ‘Regulatory Capture’ because the industries use the regulator for their own purposes.
I think this is a sound outlook and can site many examples. One was airline price regulation by the Civil Aeronautics Board. It kept airline ticket prices high and discouraged new entrants. The CAB’s function was eliminated in 1985. The result was a healthy decline in ticket prices and a lot of new entrants into the marketplace.

At a garden party of a friend of my wife’s the subject of taxes came up. Most of the people there were liberal. Contradicting one person, I said the rich do pay more in taxes, on average, than the rest of us. A woman was incensed with me and said she didn’t want me to read the book she recently published.

The next day she called and apologized for her reaction, for which I admired her.

The rich do, as a group pay more in taxes than the rest of us, and I mean as a percentage of income, not just number of dollars. When all taxes are included (not just the income tax but regressive taxes as well, such as sales taxes) the rich, on average, pay a slightly higher percentage of income than the middle class, and the middle class pays a slightly higher percentage than lower income taxpayers. The differences are not large. One commentator said the United States has inadvertently achieved something resembling a flat tax.

I told my spouse that corporations do not pay taxes because only humans can pay taxes. What policy prescriptions follow from that might be debatable, but it is a fact. My spouse was upset hearing this. Formulating rational policy requires taking this into account.
Recently we bought a used car. Approximately 40% of the cost stemmed from taxes; corporate taxes, payroll and income taxes, real estate taxes, sales taxes and more. The car did not pay those taxes, nor did Honda. We paid them.

Economists state that most of the incidence of corporate taxes falls on workers and the rest on consumers.

I told a friend of mine the Social Security Trust Fund has no real assets. When Social Security taxes were more than a given year’s payout to beneficiaries, the Social Security Administration turned over the surplus to the Treasury. The Treasury spent it on other things because the rest of the budget was in deficit.

The physical evidence of the Trust Fund is in bonds the Social Security Administration printed on its own printer and then placed in a file drawer. The drawer is sometimes locked, sometimes not. If someone stole these ‘special purpose bonds’ they could not redeem them for anything.

Journalists and at least one President visited the Trust Fund to verify that it is no more than pieces of paper printed on a Social Security Administration printer and kept in a file cabinet.

Once I went through this explanation with an acquaintance. After I finished, I asked ‘do you still believe the Trust Fund is real?’ He said yes. At first, I thought ‘how can this be?’ but upon considering, I realize people, including myself, have a hard time giving up long-held views.

For some time now Social Security taxes have not been sufficient to pay benefits, so the government must borrow money to cover this shortfall. The ‘special purpose bonds’ don’t help.

My theme in this article is that people have difficulty giving up long-held views even when faced with contrary facts. Acknowledging facts such as these does not require, in any way shape or form, giving up ideals, such as concern for those less fortunate. However, the facts might lead to different policy prescriptions.

The opinions shared here do not necessarily represent the official position of the Libertarian Party. These editorial articles have been submitted by Libertarians across the country, and featuring these topics does not represent an endorsement of the content therein.

The opinions shared here do not necessarily represent the official position of the Libertarian Party. These editorial articles have been submitted by Libertarians across the country, and featuring these topics does not represent an endorsement of the content therein.