Tea Parties are Reminders of Howard Jarvis and Eddie Chiles

When I first got involved in politics as a teenager in the late 1970s, it was during a massive tax revolt against a government that had grown out of control. The highest income tax rate was hovering around 70 percent. This attack on capital formation did not only weaken the economy, but under minded freedom itself and the ability for individuals to pursue their aspirations.

The man who came to the rescue and who fought the battle of middle America who were being pounded by taxes was Ronald Reagan. But, in many respects, Reagan was a product of what was going on in the political culture at that time. For decades Americans were told that the patriotic thing to do was to pay taxes. Many more taxes. Reagan believed the patriotic thing was to hold government accountable for its spending and that the American people fundamentally knew how to manage their money better than government.

Reagan's message resonated because of individuals like Howard Jarvis in California who led the Proposition 13 drive that changed the way people would be taxed and Eddie Chiles of Texas who said that he -- like millions of other Americans -- was "mad as hell" over what the government was doing to American taxpayers.

In the June 5, 1978 edition of Time Magazine you find Howard Jarvis on the cover with his fist in the air. At that moment a grass root movement had finally received mainstream credibility. The article in the magazine stated that "rising taxes are a burning concern all over the U.S. In California, they are nothing less than an obsession, and small wonder." About the movement's leader, it stated that "the furor has turned Howard Jarvis, 75, into a statewide folk hero to millions of Californians, a demagogic devil to others. A retired millionaire manufacturer, Jarvis has been railing against high taxes for 15 years. Jarvis, whose face looks a bit like a California mudslide, has been demolishing debating opponents with his oddly compelling blend of verbosity, profanity and humbug." His supporters included the great economist, Milton Friedman, who did TV commercials for free and it stated that "former Governor Ronald Reagan has rallied behind Jarvis." That last line was an understatement. In June in 1978 when this article was written, Reagan was considered a political "has been" and a perennial candidate who would not have a prayer if he ran for President again in 1980. This tax revolt movement became a major driver that helped to put Reagan in office.

A little further south you had a gentleman I knew named Eddie Chiles, who also rose up in business (while Jarvis was in manufacturing, Chiles was in the energy field) to become an advocate of smaller government who also rose to the scene in the late 1970s. The New York Times pointed out in an obituary for Chiles that "as a businessman, he shared his views in the late 1970's, usually about some government affront to business, through a series of radio commercials in which he proclaimed, 'I'm Eddie Chiles, and I'm mad." The commercials were broadcast on 650 stations in 14 states where Western (Company of North America, which he owned) had operations and spawned almost a million bumper stickers reading, 'I'm mad too, Eddie.'" Eddie helped fuel the flames that led to the rise of Reagan.

People are mad as hell today and you see this in the rise of the new tea parties. Among the thousands who are going to the streets we will find our next Jarvis and Chiles. Also, on the political landscape, we will find the right elected officials who will carry this message to Washington. Some may be merely running for Congress in 2010, others may already be in office, but they all have far more to be mad about today than we did in the 1970s when the anti-tax movement began. The federal budget in 2008 was $2.7 trillion. The government has increased that budget by more than fifty percent in the last six months alone. This will be paid for with funny money (inflation) and by raising the taxes of those who make more than $250,000 a year (the same people who create most of the jobs). I'm mad too, Eddie and so are millions of other Americans.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Only Barack Obama Could Pull this Off and it Would Cure Economic Woes

Every week we here of increasingly higher jobless numbers and policy makers are dumbfounded as to what to do about it. Approximately one year ago we had virtually full employment at around 5 percent unemployment. At current trends, it will likely be ten percent or higher by the end of the year, unless something miraculous happens.

However, we are not hearing about any stroke of genius, but rather traditional government "solutions" to economic problems. We are hearing about "make work" programs and "bailouts" that have government at the center of the solution. It is interesting that Barack Obama, who was marketed as an agent of change, would find his solutions in the waste bin of government created work, for answers. He needs to go deeper, he needs to pursue an entire paradigm shift.

Obama campaigned as a candidate who supported transparent government, but there is nothing more deceptive than our current tax system that discourages wealth creation and places businesses in the role as tax collector. Remember, businesses don't pay taxes, they are merely tax collectors. Taxes are a fixed cost of doing business. If taxes on businesses were eliminated, consumers would enjoy the savings over night because businesses couldn't afford to be reluctant to transfer the savings due to competition. These taxes on businesses are the single force undermining job creation today. They force businesses to find countries that are cheaper for doing business, be it in labor, taxes, or other factors. Currently, the US has the second highest tax rate of any industrialized country in the world and we do not even want to compete with cheap salaries (nor can we). Eliminating dishonest business taxes would restore some transparency to government and create many more jobs. It is as simple as that.

But those taxes would have to be replaced with others and the only honest place to raise those revenues are directly on the people and on their consumption (rather than income), however challenging to pursue. This is contrary to Obama and the Democrats class conflict philosophy, but it is the most honest, efficient, and the least damaging on all job creation (in fact, it would generate more jobs). Obama could make history with these realities.

No one, but an anti-Communist like Richard Nixon, could open relations with the Chinese. If any President who had a history of being "soft" on Communists open these doors, they would have been denounced and dismissed. Nixon brought an element of surprise that made the move possible. So, too, was the case with Bill Clinton who truly did end "welfare as we know it." It took a progressive Democrat to break the cycle of poverty that was holding the poor hostage. If a Republican President had proposed such a policy he would have been dismissed as being "cruel" and "heartless." To change our tax code towards a consumption system would require a similar element of surprise and would need to be done by someone who has promoted himself as a champion of the poor. That describes Obama very well.

With such a policy, the only serious challenge he would face is among his fellow Democrats in Congress. However, if he continues to pursue policies that destroy jobs, he will likely have a Republican Congress in 2011. This is a similar situation that Bill Clinton had in the 1990s in which a Republican Congress played a role in getting his reform passed. Clinton's welfare reform is one of the greatest policy achievements of the second half of the 20th century. A change in the way we collect taxes by Obama could be one of the greatest policy achievements of the 21st century and it is one many would love for him to seriously consider. Especially those facing unemployment.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Are You Ready For "Estaticide"?

I first thought of this idea while on the Steve Stockman Show in Houston, Texas and recently found myself discussing it with my friend on the Wall Street Journal Editorial Board, Steve Moore. The concept is "Estaticide." Estaticide is the extermination of individuals because of how punishing the tax implications.

This possible phenomenon is spurred on by the best of intentions. In 2001, President Bush wanted to provide relief to families that are devastated by the death of a family member. It is bad enough that mom or dad have passed away, without picking their pockets in the process. This led to the creation of the Taxpayer Relief Act of 2001 (which modified a similar act in 1997). This law would lead to a gradual increase in the tax credits associated with estate taxes and a reduction in the maximum rate until 2010 in which the tax would be repealed. The bad news is that the rate would go back to 2002 levels in 2011. That means the rate would go from zero to a maximum rate of 50 percent in one year.

Steve Moore, at a recent RightOnline.com event, pointed out that it would literally make this jump over night from New Years Eve 2010 to the new 2011. In his speech, he paints a morbid picture. You can see a family surrounding a dying love one in December 2009. Loved ones knowing he will pass away, but praying he makes it to January 1 when the maximum rate plummets from 45 percent to zero. Fast forward to one year later and you find a different family whose patriarch is on the death bed with hours being left before the tax rate goes from zero, back to 50 percent and without the credits. You can see them surrounding the bed and looking at their watches.

This leads to the concern about "estaticide." People mysteriously passing just before the tax laws change. Stranger things have happened. A better thing that could happen is if lawmakers would put an end to the insanity of severely penalizing people for dying once and for all. People work hard to provide for their families for both now and for future generations. It is one of the drivers that make people work harder and economies productive.

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.