Wealthy

“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.

My Humble Apologies to Occupy Wall Street

I need to offer an apology. For the last couple of months I’ve been highly critical of the Occupy Wall Street movement, accusing them of being violent, misbehaved, clueless social malcontents. However, in light of recent events, I’ve concluded I was wrong, and we should embrace the philosophy of government enforced equality for all. No more disparities in anything we do or have, just an equal distribution of everything to everyone.

I had this epiphany a few days ago while watching ESPN and coverage of the NBA lockout, now nearing its 150th day. What it boils down to is multi-millionaire owners and multi-millionaire players arguing over who gets the biggest piece of a multi-billion dollar league revenue pie. I realized that all of this bickering could be resolved by implementing the demands of equality espoused by the Occupy Wall Street protestors.

So here’s the deal…since President Obama wants to increase taxes on “the rich” who need to “pay their fair share” so that we can “spread the wealth”, we simply set the maximum NBA player salary at the level Obama defines as “rich”, which is $200,000 for an individual. That is $50,000 more per year that what it takes to be in the Top 5% of income earners in this country (a threshold which starts at just under $160,000). In fact, that will be the salary for EVERY NBA player, because it is immoral to discriminate simply on the basis of talent, productivity or some other performance-based metric. Just because one player was not born with the natural talent of another player, or refused to succumb to the oppressive dictates of some evil corporation (after all, the NBA is basically a big corporation) with its constant demands to maintain physical fitness and practice all the time, doesn’t mean they should be punished.

End the War on the Rich

There are more and more people out there pissed at the rich.  I certainly understand where they’re coming from, but they’re wrong.  The rich per se aren’t the problem.  It’s time to quit fighting against the rich.  Occupy Wall Street has been wanting to smack the rich, and making a lot of noise about it.  The problem is they’re wrong.  The rich are not now, nor have they ever really been, the problem.

No, the problem is the corporatists.  Those are the people we need to stand united against.

Corporations are a tool, a way to organize businesses.  They’re not the enemy either.  However, the people who seem to believe that corporations deserve tons of special breaks, including government bailouts, are.  They are the reason people are pissed.

Ezra Klein has a piece where he outlines many of the complaints of the OWS-ers.  Most of them are debt related.  A lot of it is student debt, debt that Presidents through the years told them to take on for a better life.  I understand that anger…to a point.

But you look around and the reality is not everyone is suffering. Wall Street caused this mess, and the government paid off their debts and helped them rake in record profits in recent years. The top 1 percent account for 24 percent of the nation’s income and 40 percent of its wealth. There are a lot of people who don’t seem to be doing everything they’re supposed to do, and it seems to be working out just fine for them.

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.

Marco Rubio’s underwhelming response to the State of the Union

Marco Rubio delivers the GOP response

You’ve no doubt heard about Sen. Marco Rubio’s stopping his speech for a few seconds to take a couple swigs of water — now known as “Rubio-ing,” because what the world needs is yet another meme. However, the substance of Sen. Rubio’s speech, in which he tried to present a distinction between the Republican Party and the vision of President Barack Obama, is vastly more important.

After the pleasantries and offering giving his extraordinary background, Sen. Rubio went right after President Obama’s economic agenda.

“Presidents in both parties – from John F. Kennedy to Ronald Reagan – have known that our free enterprise economy is the source of our middle class prosperity,” Sen. Rubio explained. “But President Obama? He believes it’s the cause of our problems. That the economic downturn happened because our government didn’t tax enough, spend enough and control enough.”

Sen. Rubio added that President Obama’s “solution to virtually every problem we face is for Washington to tax more, borrow more and spend more.”

He went right after the heart of President Obama’s proposed solutions to economic problems facing the country, explaining that more government isn’t going to get Americans ahead nor will it create more opportunities or inspire new ideas.

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?


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