Rich

“Wealthy” households living hand-to-mouth

Princeton economists Greg Kaplan and Justin Weidner, along with Giovanni Violante of New York University recently concluded something we already knew: those our government tries to paint as “wealthy” actually own a lot of assets they cannot readily access, and are living paycheck-to-paycheck, much like the poor, at whom the government focuses aid.

And because these people, for the most part, only have access to their regular paychecks, “The wealthy hand- to-mouth… behave in many respects like households with little or no net worth, yet they escape standard definitions and empirical measurements based on the distribution of net worth,” conclude the economists.

Now, I’m not going to tell you to pass around a collection plate for these poor souls. They are, for the most part, educated, and the financial shocks they experience only last a couple of years. But if you’re wondering what happens to these people’s money, let me give you a personal example.

Pretend I have a house. Said house is worth $500,000. I have $50,000 in a 401K plan. I also have a job. Said job pays me $150,000 per year. One would think that I’m sitting pretty, right?

Well, no. Not really. I can’t exactly sell the house right now. It’s not easy. It requires resources I just don’t have right now. I can’t take money out of my retirement plan – not without substantial penalties that will cut my $50,000 significantly. My job is great, but 35 percent of my paycheck disappears. After federal and state taxes, Social Security, and medical and dental deductions, I’m only taking home 65 percent of my pay.

That still seems like a lot, right?

Why GOP needs to remake their image

The Republican Party has an image problem.  Really, anyone who follows politics knows it.  Years upon years of corporatist policies has lead to people who really believe things like this quote that was in the Atlanta Journal-Constitution:

“I hadn’t paid attention to the race, but I’m voting the Democratic ticket,” said Bryan Dabruzzi, a 43-year-old from Atlanta who is finishing a degree in nuclear engineering. “I’m not rich, so I can’t vote Republican.”

Now, Dabruzzi is probably a pretty bright guy.  After all, I’m not even close to finishing a degree in nuclear engineering.  At 43 years old, he’s also not likely to be some kid who just doesn’t know any better.  No, most likely, this is an opinion based on years of observation.  For what it’s worth, this quote was made in reference to a governor’s race here in Georgia.

It’s easy to discount Dabruzzi’s quote as someone who, while maybe not unintelligent, just doesn’t understand politics.  However, one would think that a member of Forbes staff might look at things a bit different.  One would be wrong though, according to John Tamny:

Having lost an eminently winnable presidential election to a failed president in Obama, the Republicans are a Party desperately seeking a message, image, and probably both.

Quit bashing the successful

If you spend enough time on Facebook, you’re bound to see some of the meme’s floating around about income inequality.  They point out how little one group of people make, then talk about how some CEO brings in so much more than they do.  These memes are designed to point out how gross the difference of income truly is and try to motivate people to oppose the discrepancy.

They’re also completely irrelevant.

Folks, I have run two businesses.  Both were classified as small businesses.  I own one, and was running a friends for a little while.  I know a little bit about business at this point.  Not a lot, but a little.  One thing I do know for sure is, it ain’t easy and not just anyone can do it.  This is also true of a lot of other aspects of business.  Here’s an example from Democracy for America.

DFA Meme

Now, it’s pretty obvious the difference in income.  Of course, it’s also irrelevant.  While Ray Dalio’s income really is pretty high, there are some key differences between what he does and what a teacher does.

First, teachers are far more common than hedge fund managers.  That automatically dilutes the market for their skills.  Second, Dalio works year round and most likely puts in some pretty insane hours.  That includes a lot of weekend and holidays, periods when teachers are off from work.  In addition, that summer vacation that teachers get?  Probably not a factor for Dalio.

Is Warren Buffett a hypocrite?

Is the Oracle of Omaha a hypocrite?  He is, according to the New York Post.  For those with faulty memories or who simply weren’t paying attention, Warren Buffett wrote an op-ed claiming that he and his fellow “mega-rich” weren’t really paying enough in taxes.  Obviously, this tore through the internet with both sides battling over Buffett’s arguments.  However, the Post claims that despite Buffett’s claims that he’s not taxed enough, his own company hasn’t even paid what it owes.

This one’s truly, uh … rich: Billionaire Warren Buffett says folks like him should have to pay more taxes — but it turns out his firm, Berkshire Hathaway, hasn’t paid what it’s already owed for years.

That’s right: As Americans for Limited Government President Bill Wilson notes, the company openly admits that it owes back taxes since as long ago as 2002.

“We anticipate that we will resolve all adjustments proposed by the US Internal Revenue Service (“IRS”) for the 2002 through 2004 tax years … within the next 12 months,” the firm’s annual report says.

It also cites outstanding tax issues for 2005 through 2009.

Um…oops?

Buffett is free to argue any position he wishes.  However, if he truly feels that he isn’t taxed enough, then why hasn’t Berkshire Hathaway, that he is chairman and CEO of, paid their taxes?  Or maybe it’s as the Post suggests, that he only wants to shill for President Obama.

Taxing the rich is smoke and mirrors

When it comes to debt reduction, one often cited method is to increase taxes on the richest Americans.  It’s a small wonder that this one gets trotted out so much, since it’s typically rather popular.  Even billionaire Warren Buffett has come out in support of this one, citing that he has a lower effective tax rate than his own secretary.  The problem is that it won’t actually solve a thing.

The whole “tax the rich” is smoke and mirrors, designed to look like those in power are addressing the issue of debt while really doing nothing more than taking more money that wasn’t theirs to start with.  We could take every penny from every billionaire in this country, as well was tax the profits of every Fortune 500 company in the U.S. and still have a problem with our debt.

There are plenty who will say that I’m arguing that if it won’t fix it all, then it shouldn’t be done at all.  I’m actually not.  What I’m saying is that the whole argument is predicated on it doing something that it really won’t.  People are free to support whatever policies they so choose, but they need to be aware of the fact that what they’re proposing won’t make a dent in the national debt.  It won’t really make a dent in the deficit either.

Taxation is essentially the government taking money from citizens to pay for whatever.  The key word in that is “taking”.  Making no mistake, it’s the correct verb.  They take it from Americans like you and me, and then spend it on things that we might not necessarily agree with.  They’ve used it to fund wars that were horrendously unpopular.  They’ve used it to arrest such nefarious criminals as guys who sell raw milk.  Ah yes, they use it oh so wisely </sarcasm>

Americans renouncing citizenship reaches a record high, tax laws blamed

passport

The Treasury Department released its quarterly list of Americans who have renounced their citizenship in 2013, finding that another 560 people have decided to leave the country to establish residency in friendlier climates elsewhere (emphasis added):

This year will set a record for expatriations by U.S. taxpayers, with at least a 33% increase from the previous high in 2011.

The Treasury Department published the names of 560 people who either were U.S. citizens renouncing their citizenship or long-term residents who turned in their green cards during the third quarter.

That brings the total so far this year to 2,369, according to Andrew Mitchel, a tax lawyer in Centerbrook, Conn., who tracks the data. For all of 2011, the number of published expatriates was 1,781, he said.
[…]
Taxpayers who expatriate aren’t required to give a reason, but experts said the overall increase was likely because of tougher enforcement of U.S. tax laws.

“Nothing has changed in immigration law that would make people want to renounce,” said Freddi Weintraub, an immigration specialist and partner at Fragomen Worldwide, a New York-based law firm. “Current or anticipated changes in tax law and enforcement are driving this increase.”

Some may question the patriotism of those who are leaving the United States and renouncing their citizenship. But why would anyone want to reside in a country where wealth and success are frowned upon by President Obama and congressional Democrats when its so much easier to uproot and move to a country with lower tax burden? That is, unfortunately, the way many people look at the situation.

Bill Kristol and Taxes

Written by Marian Tupy, a policy analyst, Center for the Global Liberty and Prosperity at the Cato Institute. Posted with permission from Cato @ Liberty.

It has been said of the neo-cons that they are often wrong but never in doubt. Well, Bill Kristol was at it again, predicting the future with his usual sense of supreme confidence.  According to the neo-conservative editor of the Weekly Standard, “It won’t kill the country if Republicans raise taxes a little bit on millionaires… .The Republican Party is gonna fall on its sword to defend a bunch of millionaires, half of whom voted Democratic, and half of whom live in Hollywood and are hostile to Republicans.”

The left has jumped on Kristol’s words. As Andrew Rosenthal wrote in the New York Times, “When even Bill Kristol, the severely conservative Weekly Standard editor, says Republicans should agree to raise taxes on the richest Americans, you have to wonder if the G.O.P. has thought through its post-election, hold-the-line strategy.”

To start with, Kristol misunderstands the opponents of the tax increases on the rich, whose main goal is not to ensure that the rich get to keep more of their money. Their main goal is to prevent the federal government from obtaining a new source of revenue. Why might that be?

The Coming Middle Class Tax Hike

While President Barack Obama is pushing to extend current tax rates for the middle class, one thing that hasn’t been mentioned much by the media is that the measure is only temporary. That’s right, folks. It’s a one-year extention. On January 14, 2014, tax rates for the middle class will increase, as James Pethokoukis explains:

recall what liberal journalist Noam Scheiber wrote in his recent book, The Escape Artists: How Obama’s Team Fumbled the Recovery.

Scheiber reveals that in the fall of 2009, Obama’s chief congressional lobbyist hatched a plan to extend the middle-class Bush tax cuts for two years while letting the upper-income tax cuts expire on schedule.

If Congress couldn’t devise a way to pay for the $2.3 trillion extension of the middle-class cuts, they would all expire in 2015. Schiliro easily sold White House budget director Peter Orszag on the idea. “[Orszag] believed the only practical way to balance the budget was to repeal all the Bush tax cuts, not just the upper-income variety.”

Orszag then presented the plan to Obama:

UN pushes billionaires tax

Over the last year or so, President Barack Obama and Democrats in Congress have made a push for a new tax, dubbed the “Buffett Rule,” on the rich. The tax, which would ensure than anyone making over $1 million pays at least a 30% tax rate, wouldn’t raise a significant amount of money, but its supporters say that it’s needed as a matter of “fairness.”

While the Buffett Rule won’t pass Congress anytime soon, it looks like the United Nations has a plan of its own to tax the wealthy for programs to help the poor around the world:

The United Nations on Thursday called for a tax on billionaires to help raise more than $400 billion a year for poor countries.

An annual lump sum payment by the super-rich is one of a host of measures including a tax on carbon dioxide emissions, currency exchanges or financial transactions proposed in a UN report that accuses wealthy nations of breaking promises to step up aid for the less fortunate.

The annual World Economic and Social Survey says it is critical to find new ways to help the world’s poor as pledged cash fails to flow.

The report estimates that the number of people around the globe worth at least $1 billion rose to 1,226 in 2012.

There are an estimated 425 billionaires in the United States, 315 in the Asia-Pacific region, 310 in Europe, 90 in other North and South American countries and 86 in Africa and the Middle East.

Together they own an estimated $4.6 trillion so a one percent tax on their wealth would raise more than $46 billion, according to the report.

Jon Lovitiz slams Obama on taxing the rich

As you know, President Barack Obama has made class warfare and the Buffett Tax a central part of his campaign re-election, part of a strategy to get attention off of his failed record on the economy. But Jon Lovitz, an actor that considers himself to be a Democrat and voted for Obama, isn’t happy with the assertion that higher-income earners aren’t paying their “fair share” in taxes:

“Saturday Night Live” alum Jon Lovitz sounds like he’s pretty fed up with President Barack Obama.

“This whole thing with Obama saying the rich don’t pay their taxes is f—-ing bulls—-. And I voted for the guy and I’m a Democrat. What a f—-ing asshole,” Lovitz recently said on his podcast “The ABC’s of SNL.” The episode was recorded in January and released on Sunday.

“The rich don’t pay their taxes? Let me tell you something, right,” he went on. “First they say to you – you’re dead broke –  the United States of America, you can do anything you want, go for it. So then you go for it, and then you make it, and everyone’s like, f—- you.”
[…]
“[Obama] is the perfect example,” the comedian added. “He’s amazing. He had nothing … and the guy ends up being at Harvard. He’s the president of the United States. And now he’s like,  ‘f—- me and everyone who made it like me.’”

I listened to the audio, which is available at the link above, and Lovitz was ranting, for sure. Whether or not the rant was just meant to be humorous is another question. Still, you’ve got to imagine that there are many other higher-income earners out that voted for Obama that feel like they are being targeted unfairly by the president’s divisive rhetoric.


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