no third solution

Blogging about liberty, anarchy, economics and politics

Comments on Comments #29

November 18th, 2008

Here’s the latest edition of my responses to your comments. If you’ve been left out, it will probably appear in a forthcoming edition.


John at Blagnet followed up my post, with one of his own:Minarchist States and Basic Necessities, in which he dismantles arguments in favor of the holy triumvirate of minarchist libertarianism: the police, the courts, and national defense, often painted as basic necessities for a functioning society:

[T]hose types of things are not the most basic needs; food, water, shelter, and medical care are. Fire departments, defense from outside attackers, and criminal investigation/prosecution/punishment systems are very important in any remotely large society, but they are secondary needs. People have to be living healthily before they even consider those things relevant.

Good stuff, John. If you believe that a free market can provide the absolute necessities of life, then why can’t it also provide those secondary items?


Responding to How to Destroy the Middle Class, Kip says Obama isn’t trying to kill 401(k) type retirement accounts. He’s right. It is, on the other hand, something that the Democrats are considering. I wonder of the Obamessiah would nix it?

In addition to the 401k, I noted that eliminating the mortgage interest deduction would be a tax hike of calamitous proportions.

Jeff Molby is not in favor of the mortgage interest deduction because it encourages people to maintain dangerously low levels of equity in their homes. As long as people can be persuaded that paying $1 in interest to a bank and receiving 33 cents of their own money back is a good idea, this will be true. It doesn’t change the fact that eliminating the interest deduction would be the biggest tax hike in history.


1955Design left a comment on Can I Raffle My House?

I heard on today’s TV news that the owner had been instructed that what he was doing violated state gambling laws.

Go figure. The State is always eager to protect its monopolies, to which rhyddid alludes:

the State hates it when people compete with it … I wonder where the State draws the line? Schools use raffles for fundraisers all the time, giving away even cars sometimes… The State’s illogic continues to impress me with it’s depths.

Zach left a comment on Can I Raffle My House?

There is still a tax implication for the ‘buyer’ He could deduct the $100 from his taxes, but he would have to pay taxes on the fair market value of the house minus the $100 bucks. I think the effective tax rate at that high of “income” is somewhere around 36%-40%. I can not remember off the top of my head.

All these people getting “free” houses on Extreme Home Makeover have to pay taxes on these things. Remember the Oprah car debaucle (sic)?

…The winner of the home would be f’ed.

I mentioned the tax implications for the buyer, that’s significant, and most people couldn’t handle it.

As for the Extreme Home Makeover comment, my understanding of the situation is that a loophole exists which allows the homeowners to avoid the capital gains tax associated with an enormous home makeover. According to USA Today, ABC Network “rents” the house for a period of time, and accordingly, the owners are not liable for improvements made during the rental period. Some tax pros don’t agree with that opinion.

According to the letter of the law, ABC’s stance seems hunky-dory. Of course, the IRS can always decide to retroactively change the interpretation of its rules. In any event, the recipient of the new house is always liable for higher property taxes resulting from the improvements.


Josh left a comment on Medical Marijuana in Michigan.

Yes, lets maek pot legal so that we can be a country of stoners. Yay freedom!

Clearly, abstention didn’t improve his spelling and/or grammar.


RG left a comment on How do taxes Destroy Productivity? He had a number of questions about taxes that I hope to have answered with What is an Appropriate Tax Rate? (And Other Questions).


A number of people (some of whom are long-time Detroiters) seem to agree with my prognosis, that General Motors will go bankrupt. With each passing day, it looks more and more likely that they’ll get their bailout, though. This only makes things worse.


Mike left a comment in Slavic (I think?) on Dog Blogging.

No to je také zlaté psícko!!!!

I have no idea what it means. In any event, it seems she somehow scratched her eye roughousing with a friends dog while we were dogsitting. She is doing much better and no longer wearing the cone.


Thanks to Attack the System for plugging several of my posts in a recent digest.


Thanks to Rolling Doughnut for plugging my post, If You Subsidize It…, describing the moral hazard of subsidies, especially with regards to pseudo-insurance programs underwritten by tax dollars.



  • rhyddid says on: November 18, 2008 at 12:35 pm


    “No to je také zlaté psícko!!!!” As best I can tell (it’s Slovak or Czech, which are basically the same language), that says something like “No, that is to say Golden !!!”

    I could be wrong, but it doesn’t seem to make much sense — almost like it’s someone who doesn’t speak Czech trying to translate something in English TO Czech.

    Of course I don’t speak Czech either, this is from a coworker who spent some time in that region of the world, so take it with a grain of salt.

  • Mike Gogulski says on: November 18, 2008 at 3:19 pm


    :) It’s Slovak, and means, “Well, that’s such a cute doggie!”

    Poor thing, the cone treatment really sucks for them.

    Slovak and Czech are quite similar, but have enough differences that they really are separate languages.

  • Zach S says on: November 18, 2008 at 6:35 pm


    “ABC Network “rents” the house for a period of time, and accordingly, the owners are not liable for improvements made during the rental period.”

    As an accountant, I do find this a very creative loophole and more power to them. I did some more tax research, there is a tax “information letter” out about these makeovers in 2006. It basically says the IRS does not agree with the loophole.

    According to (sorry, I haven’t wrote HTML in forever), it doesn’t look like the IRS isgoing after these families, but if they get picked for an Audit, they might have to shell out some dough.

    I wish them luck!

  • RG says on: November 19, 2008 at 5:32 pm


    RE: primary vs. secondary needs being provided by the free market. I don’t see the question as whether these things can be provided by the free market. For instance, fire departments use to be 100% private. They suffered from the free rider problem/Problem of the Commons, and we decided that making them public was a better way of doing things.

    Most of this gets down to allocation of resources. Sure, it is possible that Comcast, AT&T, and Verizon could run cables into your house. You could then use the cable appropriate for whichever provider you want to use. Similarly, FedEx could buy up tons of land and build their own roads. This would be a great competitive advantage over UPS, which might not have as savvy a land-buying team and would only have 60% as many roads (which would of course run in parallel). We could then drive on Toyota or GM or Ford roads. All makes sense in the abstract, but none of these ideas address the finite nature of space or resources. Would be curious to hear what make you think such an aggravated competition for resources at every level would not result in commensurate violence. (Such as one sees in resource-rich countries around the world.)

    Also — as much as you have studied economics, I find it hard to believe that you support the market-distorting mortgage tax deduction. Granted, you believe nobody should ever pay taxes and we should live in caves. But given current circumstances, surely you can see that the tax deduction is nothing more than a transfer of wealth from renters and homeowners (e.g. no mortgage) to people who are somewhere on the 30-year journey to homeownership.

  • RG says on: November 19, 2008 at 5:57 pm


    One last comment: you appear to have a faith in free markets, which I share. However, why should this faith not exist to the marketplace of ideas? That is, if we assume that all human experience to date is encoded in the memories of the markets, shouldn’t the marketplace include the choice of systems of organization? Lots of stuff has been tried, many rejected. The marketplace of ideas has selected some form of taxation and some role for government in 100% of extant cases. If your idea is that much better, you have a very high burden of proof to surmount ~10 billion person-lives of experience that have chosen otherwise. Granted, those choices are not always right (ditto any market), but if you have faith in markets you do need to explain why this market is special in that its conclusions should be ignored.

  • rhyddid says on: November 20, 2008 at 2:16 pm


    @Mike: LMFAO!! I just told my coworker what the translation actually is and she laughed — said that maybe her translation skills (or lack thereof) are the reason she did so badly with the locals when she was there ;)

no third solution

Blogging about liberty, anarchy, economics and politics