Wednesday, February 24, 2010
Wealth, taxation and wealth envy in the US
The following is a response to my friend Will, who struggles with what he apparently perceives as inequality in income and taxation in the US. This came out of a wall post he made on my facebook page:
Remember when we were talking about the highest tax bracket. It appears they pay less than 17 percent taxes on their income. Most of it was from capital gains which is a maximum 15 percent tax.
Personally I'd like to see progressive capital gains after data like this. 400 people in the united states make up 30 percent... of the total wealth in the US, but only pay 17 percent taxes, and since the poorer pay more like 20-30 percent taxes when you take into account social security, medicare and other capped taxes too. So how much medicare social security and such before it's capped?
Ya know, it's possible they didn't teach statistical analysis in high school, or that you can look at one small area and miss the whole picture. So, first, the data quoted is for 2007, it fails to take into account current stats. The current data isn't yet available except as estimates. The IRS typically runs 2 years behind in getting this data out; I've followed it for several years. So let’s just dive deeper into the numbers.
When you look at all the IRS statistics for the 2007 tax year in question, you may want to notice that the top 1% of income earners paid 40.42% ($450,926B) of all income taxes. The top 50% paid 97.11% (%1,083,243B) of all income taxes. This means that the bottom 50%, those with an annual AGI of $32,897 or less paid cumulatively 2.89% ($32,261B) of all income taxes. That kinda blows that old liberal mantra that the wealthy don't pay taxes, doesn't it.
According to IRS statistics, in 2007 the average tax rate for the top 50% of income earners was 14.03%, for the top 1% of income earners it was 22.45%. Now that is just income tax, not total payroll taxes lest you start getting your panties in a wad.
One thing that isn't clear in the data is how much negative tax payments, i.e. earned income tax credit, and other "entitlement" payments such as food stamps, welfare, etc were received by those in that bottom 50%, effectively a wealth transfer from the top 50% to the bottom 50%. There was $371.9 Billion in means tested entitlements which includes Medicaid, food stamps, family support assistance (AFDC), supplemental security income (SSI), child nutrition programs, refundable portions of earned income tax credits (EITC and HITC) and child tax credit, welfare contingency fund, child care entitlement to States, temporary assistance to needy families, foster care and adoption assistance, State children’s health insurance and veterans pensions. You can be pretty certain that all those "payments" went to the bottom 50%. (The Budget For Fiscal Year 2007)
There was $581.2 Billion in Social Security payments which would include payments to those above and below the 50% threshold so for simplicity, let's just say the bottom 50% got half, or $290.6 billion of Social Security payments.
After combining both categories together, we can extrapolate that there was a wealth transfer of about $662.5 billion to the bottom 50% who cumulatively paid in 2007 $32.261 billion in income taxes.
Now you said that "the poorer pay more like 20-30 percent taxes when you take into account social security, medicare and other capped taxes too." Actually, the Medicare tax rate is 1.45% and the Social Security part is 6.2%. By my rudimentary math skills that comes to 7.65%. If you assume that the bottom 50% paid an average of 2.89% in income taxes (IRS figures), that totals 10.54%, a far cry from your 20-30%, and that's before those pesky negative tax payments that brought the real rate for much of this group to zero, or less.
Now, I'll grant you that when it comes to payroll taxes, i.e. social security (I use that term advisedly) and Medicare, the lower income percentiles pay a greater portion of their income than the higher percentiles. That is a function of the tax code and Congress, not the income earners. But one thing that isn't clear in the Tax Analysis statement is whether their analysis takes into account only those payroll taxes paid by the income earner, or if they also include those paid by the employer, which effectively double the tax payroll tax paid.
I'll also have to say at this time that I would support a change in the law that would means test both social security and Medicare, provided that those who didn't receive the benefit were not required to make the contribution (sic).
The other thing that must be considered is the source of some of the analysis. Professors Emmanuel Saez and Thomas Piketty are economists at the University of California at Berkeley, an institution well known for it decidedly liberal bias.
Nevertheless, I was somewhat surprised to see the opening hypothesis of their 1998 study "Income Inequality In The United States" (pdf) make the statement, "...steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks (the Great Depression and WWII).
They go on to predict that "...the decline of progressive taxation observed since the early 1980s in the United States could very well spur a revival of high wealth concentration and top capital incomes during the next few decades."
The apparent despair of Messes. Saez and Piketty isn't limited to the "income elite." They also bemoan the increasing wealth disparity of the working class in "The Evolution of Top Incomes in the United States"(pdf).
"The labor market has been creating much more inequality over the last thirty years, with the very top earners capturing a large fraction of macroeconomic productivity gains...We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional reforms should be developed to counter it."
So it would seem that the authors would have issue with even working class individuals who aspire to escape the bounds of their entry level hourly incomes and seek higher incomes and personal wealth. That apparently doesn't fit into their paradigm of the Marxist dogma, "From each according to their ability, to each according to their need."
Now, the bottom line is, are you a victim of wealth envy. Of course "victim" is a misnomer. The term victim implies there wasn't a choice in the matter, but, wealth envy is a choice.
So is it your choice that that higher income earners should be penalized for their success? If so, where will you make the cutoff? Or will there be a cutoff? You just decide that everyone makes X amount, say $20K, a year.
The Soviet Union and other communist/socialist based economies used this methodology. Only those in power and position, or in the favor of those in power, were able to enjoy the wealth of the nation. The rest of the bourgeoisie lived a subsistence existence, waiting in bread lines, stores had minimum amounts of inventory, families living squeezed together in tiny apartments waiting on a list for years for the opportunity for a larger apartment, or a separate one for adult children.
And what happens when you take away the incentive for entrepreneurship, for individuals taking risk to chase their dreams and goals? What happens is, dreams die. Goals go unrealized, and with them jobs, income for those who would have been employed, innovation and economic growth.
You see, this is not a zero sum game where you can penalize an achiever on the one hand and not see a change in behavior or income or success on the other. There is a penalty. It may not be at 20% or 30% or 40% or even 50%, but at some point, the achiever says, why should I continue to work so hard if I'm not going to be compensated for it.
Think of it in your own life. If you were going to have the opportunity to double or triple or quadruple your income if you contributed another 30% of your time would you do it? Would you want the opportunity even if you decided not to? How about giving another 30% of your time if you could only increase your income by 10%? I dare say you'd laugh at them, if not in their face, behind their backs.
So what makes you think penalizing the entrepreneur for his time and effort and intellect would have no effect on what he is willing to do?
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: income, IRS, progressive, taxes, wealth envy
Tuesday, December 22, 2009
Health Care For Less?
So, the Harry Reid health insurance bill going through the Senate will increase taxes by $518 billion initially. I refer to it as the “Harry Reid” bill because it has no resemblance to the bills that came out of the Senate committees and was concocted under the cover of darkness over this past weekend.
Anyway, it will increase taxes by a reported $518 billion for the purpose of insuring the “30 million uninsured.” That comes to $17,266 per individual to insure all of these allegedly uninsured. Or, with the average family consisting of 3.14 persons according to the US Census Bureau, $54,217 per family.
So, I wondered, how does that compare to the average health insurance premium in the United States. Just how much do these “unaffordable” health insurance premiums the Democrats have so vilified as “too expensive” for the average family actually cost?
According to an article on About.com:
In a report (Individual Health Insurance 2009: A Comprehensive Survey of Premiums,Availability, and Benefits) made public in October 2009, America's Health Insurance Plans (a trade group representing health insurance companies) presented some interesting information that gives a sense of what health insurance policies cost when purchased by an individual.Across the country, the annual premium was $2,985 for a single person and $6,328 for a family. The annual premium was very different from state to state. For example, the premium for a family health plan in New York was $13,296, while a similar plan in Iowa was $5609. The annual premiums for health plans were also very different depending if the annual deductible was high or low. For example, family plans with no deductible had an average premium of $12686 each year, while plans with an annual deductible of $10,000 had an average premium of $5380 each year.
So while the premiums obviously vary widely according to the options a family selects, the average family health insurance premium costs $6,328 per year. Those “outrageous” private health insurance premiums actually cost $47,889 per year less than the “affordable” health insurance plan that Harry Reid has concocted when prorated over his target audience of an allegedly 30 million uninsured.
It seems that the Democrat plan to “lower the cost” of health care is actually going to cost eight and one half times more than what those nasty private insurance companies charge. Perhaps the citizens need to be investigating the excesses and illegal practices of Congress. It appears that the health insurance industry is actually doing a good job holding down the cost of health insurance.
If Reid had thought to simply buy insurance from the private companies for the alleged “uninsured” it would have only cost the taxpayers $60.46 billion. So it makes you wonder, what is this really all about? Is it about insuring the “uninsured” or is it about giving more power to Washington and socializing our national economy? The data would suggest it certainly isn’t about “cutting the cost of health care” as these bozos in Washington continually repeat.
Anybody ready for a tea party?
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: Democrats, Harry Reid, health care, insurance, taxes, tea party
Sunday, December 20, 2009
Like A Thief in the Night
The Senate, led by Harry Reid, is planning a preliminary vote on Reid's "health care" legislation at 0100, that's 1AM on Monday morning, December 21.
A vote in the middle of the night is very indicative of the nefarious nature of those trying to push this bill through. If it was good for the nation and had the support of the American people this vote would take place in the light of day, in full view on C-Span and in time to make the next day newspaper headlines.
That the Democrat leadership is sneaking around in the middle of the night like cockroaches speaks volumes.
Among other things, to get this bill this far Reid and his cronies has had to tighten rules against funding abortion, rules that will no doubt be stripped in conference. He also, apparently in a nod to his Hollywood supporters, stripped a tax on cosmetic surgery while throwing the youth who supported Obama under the bus by adding a 10% tax on tanning bed services.
This bill will add an additional $1 Trillion to the federal budget and while it is supposedly budget neutral, that is because the collection of new taxes will begin immediately, in some cases retroactively, while "benefits" won't start until 2014.
So while on paper the bill is "neutral" for the first 10 years, no one, at least on the Democrat side, is talking about what happens after that. Anyone with a 5th grade education can see that after 10 years, this bill will produce at minimum 30% annual deficits. That's before the inevitable excess costs inherit to every spending bill that has come out of Congress begins producing massive deficits.
If this bill passes, our government will have set in place the tool of its fiscal destruction and the collapse of the American economy. It may not be 5 or 10 or even 15 years away, but with this kind of reckless spending, no individual, business or, yes, even government can even hope to keep its financial head above water.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: Democrats, financial crisis, health care, legislation, taxes
Thursday, November 12, 2009
Hold onto your shorts!
"The administration projects the deficit will remain above $1 trillion in 2011. In fact, according to the estimates it made in August, the deficit will never drop below $739 billion over the next decade." AP Business writers Martin Crutsinger And Daniel Wagner
Hold onto your shorts, this means that in 10 years the national debt, which today is $11,986,954,033,520.56, will soar to about $22 TRILLION! That's almost double what it is now and at that level, interest alone on the national debt will be north of $700 Billion!
The interest that we will be required to pay will be not all that short of the $1.116 trillion collected in 2007 income taxes, the latest year those figures are available. Most calculate receipts for 2008 and following will be less, considering the current and near term future economic picture.
So, why should you "hold onto your shorts?" With that amount of federal debt, lender nations, i.e. the Japanese, Chinese and Saudi Arabia among others, will be getting very nervous (reality check, they already are starting to fidget) about purchasing our debt and the interest rate we consumers will pay will go through the roof.
Consider it an embedded tax, courtesy of the generosity of your elected officials who have yet to see a spending plan they didn't love, an election they didn't think they could buy.
Hope and Change? Let's hope, and vote, for change, a political sea change in Washington. Starting with my congressman and senators.
How 'bout yours?
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: interest rates, national debt, taxes
Wednesday, November 12, 2008
How progressive taxes work...
Came across a paraphrase of the following on another networking site I regularly visit. Snope's can't verify attribution so I'll leave that part off.
Still, the analogy is sound and clearly explains the fallacy of a progressive tax system and especially one geared towards wealth envy, such as ours.
How Taxes Work . . .
This is a VERY simple way to understand the tax laws. Read on — it does make you think!!
Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men — the poorest — would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.
That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement — until one day, the owner threw them a curve (in tax language a tax cut).
"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." So now dinner for the ten only cost $80.00.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six — the paying customers? How could they divvy up the $20 windfall so that everyone would get his "fair share?"
The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.
But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20," declared the sixth man who pointed to the tenth. "But he got $7!"
"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar, too . . . It's unfair that he got seven times more than me!".
"That's true!" shouted the seventh man, "why should he get $7 back when I got only $2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!
And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!
Sadly, in America today, according to a recent Gallup poll 46% of those polled would prefer to be the first 4 or 5 guys. They approve taking from the others, only they don't want it done voluntarily, they want it under the threat of government coercion.
That says much about the state of their self motivation and one might even say moral depravity. What happens when government gets into the business of wealth redistribution? Well, I'm talking more than we currently have and more like has been proposed by the incoming powers of our government, both legislative and executive branches.
In the mid '90's I was in Hungary, a nation that lived under Communism. In 1989 she came out from under that heavy handed rule and while the Budapest was thriving, outside the city the people still labored in a state of despair.
Old world horse carts still traveled the roads as people moved themselves and the fruits of their backbreaking labor in their gardens and fields. Once the socialist economic principles of Communism took hold, breaking their grasp on those weaker, poorer victims of it's failed policies was near impossible.
This is what some in power want for our nation. I have no doubt they don't wish the wearying daily struggle, but we have already seen the results of unintended consequences of well intended government intervention gone wrong.
The Community Reinvestment Act of 1977, at the heart of our current financial crisis. I've written much about that. The 2005 Energy Bill, expanded in 2007, mandating ethanol production. That short-sighted, well intended legislation resulted in dramatically higher grain prices and ultimately grocery prices, with little to show in energy production. There are currently calls to freeze its mandates at the current levels.
Social Security, a well intended product of the Roosevelt era, has had progressively steeper demands placed on it, disability benefits, survivors benefits, constantly increasing the meager monthly payments. All the while the population of those drawing SS checks grows as our population lives longer and the pool of those worker paying in continues to decrease as the birth rate declines.
I have two nephews, a niece, two step sons and two grandchildren who will be footing the bill for my Social Security payments, assuming it is still in force 12 years from now. Currently the estimated benefit for myself and my wife is $2489 in today's dollars. In 2020, at the current rate of growth, its estimated that for every recipient there will be 2.4 workers, and the ratio gets smaller every year. (More info)
That means, on average, out of each of their monthly paychecks, about $520 will be taken off the top to pay the social security for me, my wife and every other recipient. That, my friends, is wealth redistribution.
But for those currently coming into power in Washington, its a non-issue. The wealth redistribution they are pushing takes this much further and in the process the Ponzi scheme known as Social Security, Medicare, National Healthcare, Welfare, Child Credit ad nausem will end up breaking the back of the American economy.
Good intentions? Certainly, though some more skeptical will argue its merely buying the vote of the lower economic classes. But good intentions do not make good policy.
We've already seen in microcosm the results of human nature in the financial bailout. Companies are repositioning themselves to become eligible when they weren't before. Companies not related to the financial crisis are demanding a bailout for their sectors. Citizens are concocting schemes, dreaming up ways they think they should get a piece of this action.
What everyone forgets is that it isn't government who foots the bill. Government doesn't create wealth, it only takes it. Government doesn't produce a salable product. The current model seems to be redistribution.
According to the Tax Foundation analysis of 2006 tax data, if you earned $153,542 you were in the top 5% of income earners and paid 60% if income taxes. If you earned a modest $64,702 you were in the top 25% of income earners and one of the wealthy. You and your group paid 86.27% of all income taxes.
What does this tell us? For starters, the idea that the wealthy don't pay income taxes is a myth. Perpetuated by a political class with an agenda of riding wealth envy to power. Secondly, you could have confiscated the total incomes of the top 5%, those making %153,542 in 2006 ($2.43 trillion), and the total going to the government would come close to to paying the $2.7 trillion budget for that year, but only once.
The only answer to this is to reduce spending. In 2006 the federal government spent $248 billion just on interest on the national debt, that is more than twice the $117 billion spent on the Iraq war that year and $22 billion more than the federal deficit that year.
Confiscating wealth, nor redistribution of wealth, is the answer. A fair review of the data is convincing. The only answer for the fiscal dilemma our government is in, less government.
The only problem with this is the current and the incoming leadership on both sides of the aisle seem committed to more government, more intrusion into the private sector, more spending, more and increased entitlements, more deficits, and a higher national debt.
I've oft repeated this quote from Alexis de Tocqueville, "The American Republic will endure, until politicians realize they can bribe the people with their own money."
Our legislators discovered this long ago, the people are swallowing this hook into their collective gut and it will eventually rip us all inside out.
I want more for my nephews, niece, step sons and grandchildren. They deserve more, yet sadly, I'm afraid their generation may have fallen victim to the elixir of wealth envy and may well be bringing to power those who will orchestrate their own fiscal demise.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: federal budget deficit, national debt, politics, Social Security, socialism, taxes, wealth envy
Thursday, October 30, 2008
Profits, profit margins, get the whole story
With 58% Jump in Profit, a Record Quarter for Exxon
As usual the NYT, like most of the rest of the media fail to put oil company profits in perspective.
The "record" was set with the highs in oil prices back in the summer. I want to know what the profit "margin" was. The numbers are impressive, but most Americans don't differentiate between "profit" and "profit margin" or the net earnings to revenue ratio.
That is the real telling figure. Microsoft averages 28-29%. Coke averages 18%. Most people think a 10% margin is acceptable. Historically, oil companies earn 7.5-8.5%, even during the recent "astronomical highs." Exxon's net margin is 9.21%. Coke 18%, Microsoft 28%, Exxon 9.2%. Who's really raping the consumer?
In this quarter they spent $7 billion on research and development, nearly $33 billion on taxes (that's before the Obama "windfall" profits taxes) and had earnings of $14.8 billion.
And those earnings are returned to the investors, i.e. pension funds, mutual funds, 401-K's, individual investors, institutional investors. If you have a retirements fund or mutual fund, you may very well be a beneficiary.
All I want to see is perspective in these articles but they are determined to demonize these companies without which our economy would come to a screeching halt. No energy to run it, no economy, no jobs, no home, no retirement, no food, clothes, goods etc.
Do they make a lot of money, Sure do! Is that bad? Let 'em go bust and see what happens. Do they earn excessive profits, not even.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: capitalism, energy, Exxon, New York Times, oil, profit margin, profits, taxes, windfall profits
Friday, October 03, 2008
The 10 most feared words
The 10 most feared words, “I’m from the government and I’m here to help you.” - Ronald Reagan
I missed this in my quick perusal of H.R. 1424 yesterday. Had I taken more time, looked closer and realized the greater implications of the following, I would have been even more adamantly against this piece of legislation.
The very important section is as follows:
10 (b) HOMEOWNER ASSISTANCE BY AGENCIES.—
11 (1) IN GENERAL.—To the extent that the Fed-
12 eral property manager holds, owns, or controls mort-
13 gages, mortgage backed securities, and other assets
14 secured by residential real estate, including multi-
15 family housing, the Federal property manager shall
16 implement a plan that seeks to maximize assistance
17 for homeowners and use its authority to encourage
18 the servicers of the underlying mortgages, and con-
19 sidering net present value to the taxpayer, to take
20 advantage of the HOPE for Homeowners Program
21 under section 257 of the National Housing Act or
22 other available programs to minimize foreclosures.
23 (2) MODIFICATIONS.—In the case of a residen-
24 tial mortgage loan, modifications made under para-
25 graph (1) may include—
1 (A) reduction in interest rates;
2 (B) reduction of loan principal; and
3 (C) other similar modifications.
This section of 1424 in essence gives the US government the authority to modify the terms of any mortgage over which it has control under H.R. 1424. Since that includes Fannie Mae and Freddie Mac, this provision extends to the majority of mortgages in the United States.
This means that if you are unhappy with the terms of your mortgage and it is in a security under the authority of the US government, you can petition the appropriate authority and they can have the holder of your mortgage lower the interest rates, reduce the principle amount owed, change the length of the note, lower the points, or what ever they determine will make you happy.
One can infer that the opposite could also happen. If you are not a constituency of what ever party is in power, if you petition the government in your behalf, it is possible they could use their authority to punish you for not having the correct political leanings. Raising your rates, increase your principle, shorten the length of the note or what ever they wish to convince you to see it their way.
This is a gross violation of both the rights of the property owner and the mortgage holder. If you are holding a note in the sale of property while you have a mortgage covered under this section, while you may be able to secure a reduction in the terms of the mortgage you owe, you may be required to reduce the terms to the individual to whom you are selling the property as well. In effect, reducing the income you receive from the sale of the property.
This is a huge socialization of the mortgage industry that very well may have implications far beyond the $700 Billion bailout of the financial markets. If you think this analysis is overblown, consider that lines 15, 16, and 17 state that “…the Federal property manager shall implement a plan that seeks to maximize assistance for homeowners and use its authority to encourage…”
That is a mandate, not a suggestion, to federal officials to secure the very best situation for the homeowner. There is no mandate to ensure a fair process, to take into consideration the costs, risks or profits of the holder of the mortgage.
And that last part, “use it’s authority to encourage.” As we all know, the federal government doesn’t “encourage” anything. They “mandate, direct, require.” Does the IRS “encourage” you to pay your taxes?
Does the State Department “encourage” you to get a passport if you wish to re-enter this country after you visit a foreign nation? Does the military “encourage” you to serve you full term of enlistment?
While many parts of this bill are legislated to expire at a date certain, and there are provisions to extend the authority set in the bill, there is no sunset provision of the authority given in Section 110. Therefore, without specific legislation by Congress, this authority will extend for as long as the federal government holds interest in any mortgages, either directly or by proxy via an institution in which it holds interest.
No, our representatives have not voted for a bailout of the financial system, they just voted in a far more sinister move to socialism than the original bill rejected by the House on Monday.
We all need to take a very jaundiced look at our Washington legislators and put them and the legislation they consider under the microscope of democracy. The actions they are taking, some with cunning and guile, others by misguided counsel and poor oversight, is taking us in a direction where we will lose the ability to live our lives in freedom.
With freedom comes responsibility. When we accede responsibility to a higher authority, we also give up our freedom.
Download and read the full text of Section 110
Read the full text of H.R. 1424
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: financial crisis, HR1424, legislation, mortgage crisis, Ronald Reagan, socialism, taxes
Thursday, October 02, 2008
H.R. 1424 remains step toward socialism
Dear Representative Keller,
Thank you for taking the time to listen to your constituency. I’ve written previously about the “bailout” legislation for the financial markets. Specifically, I’ve been decidedly against any such legislation.
I want to reiterate that I remain so. I am a small investor, a postal worker who lives frugally and saves and invests about 20% of my gross income. I have a pretty fair exposure to the markets and have in the past year watched the value of my investments go down considerably.
The negative reaction, some would say temper tantrum, of the markets the past few days has in no way changed my take on the so-called “Emergency Economic Stabilization Act.” I remain convinced that government intervention in the private markets is dangerous and ultimately will have negative repercussions in the US economy.
Because of the nature of politics, government cannot intervene without distorting the marketplace to try to gain some political advantage for one party or the other. It’s the nature of the beast.
The current legislation sent over from the Senate remains a piece of legislation that I think if approved will one day will be looked upon as the day the United States took a great leap into socializing the US financial markets and industry as a whole.
Still, I know that the art of politics is compromise. If there is anyway that this bill can be stripped of it’s socialist underpinnings while keeping the legislative changes insuring troubled assets (Sec 103 ), Mark to Market (Sec.132), FASB 157 (Sec.132), and increases in FDIC insurance to $250,000 (Sec.132) it has the makings of a decent bill that addresses the problems that created the stagnation in the financial markets.
I would also like to see repeal of some of the provision of the Community Reinvestment Act that have resulted in a situation where many who truly cannot afford the responsibilities of home ownership are now finding themselves strangled with unaffordable mortgages. The result of which is the sub-prime “meltdown” we are now seeing.
Sec. 124 addresses some changes in the HOPE program, but I have neither the resources nor the expertise in legislative language to cross-reference and discover the implication of these changes.
I am glad to see codified in the legislation that all proceeds from the sale of the purchased assets will be returned to the Treasury for the purpose of reducing the public debt. I can only hope that future administrations and Congresses will not find a loophole around this provision.
The inclusion of sunset provisions for the aforementioned legislative changes is distressing. If we recognize that the original adoption of these provisions was a precursor to the current situation, that we would even consider returning to them a some future time demonstrates an amazing lack of foresight and stewardship with the public trust.
The addition of “sweeteners” to this legislation makes it even more distasteful to me. Inclusion of important legislation on energy issues, a plethora of random tax provisions and Title V Subtitle B are acid to me. They should stand on their own without being thrust though on the coattails of H.R. 1424.
The provisions of Title V Subtitle B alone will most likely result in further increases in health insurance costs, for benefits many would not opt for, during a time when costs are escalating on their own at intolerable rates.
While I don’t support this bill in it’s current form, it’s preferable to the original legislation defeated on Monday. I am concerned that with a new administration coming, depending on their political leanings may migrate more towards the provisions of Sec. 101 rather than those of Sec. 102. That would be a tragedy for the American people and the long-term health of US economy.
Download H.R. 1424 as passed by the Senate October 1, 2008 from FoxNews
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: abuse of power, capitalism, financial crisis, legislation, mortgage crisis, Ric Keller, taxes
Tuesday, September 30, 2008
Congressional statesmen hold the line for the people.
An open letter to Florida Rep. Ric Keller:
Thank you for your vote against the flawed Emergency Economic Stabilization Act of 2008 - H.R.3997. It was and remains deeply flawed and fails to address the fundamental problems underlying the current weakness in the credit markets.
It seems that many in Congress have the mindset that the only solution to a problem is to “throw” money at it. You cannot fix is problem caused by bad legislation with more bad legislation.
There is a much better solution that will be less costly to the American taxpayer. According to William Isaac the Fair Value Accounting rules, better known as mark to market, are a prime culprit in the current crisis.
According to Isaac, “This is contrary to everything we know about bank regulation. When there are temporary impairments of asset values due to economic and marketplace events, regulators must give institutions an opportunity to survive the temporary impairment. Assets should not be marked to unrealistic fire-sale prices. Regulators must evaluate the assets on the basis of their true economic value (a discounted cash-flow analysis).”
One Rep. John Linder has said that were this rule returned to mark to par almost every financial institution that is now in trouble would be back on solid footing. Mark to par served our nations financial institutions well for 220 years. FAS 157 and mark to market has resulted, in conjunction with other flawed legislation such as the Community Reinvestment Act, in the current crisis in our financial markets.
The CRA requires banks and lending institutions to make loans to that were otherwise fiscally indefensible. Many of the loans made under CRA form the basis of the current sub-prime mortgage foreclosure problem.
Community organizers have used CRA to force banks to make loans they otherwise would not have extended. A.C.O.R.N., for one, is well know for its methods of “shaking down” lenders and requiring them, under the auspices of CRA, to make “exotic” loans to unqualified applicants.
Contrary to assertions by Democrats, deregulation by Republicans has not been a factor in the current crisis in the financial markets. To the contrary, Sarbanes-Oxley, voted into existence by a Republican Congress in response to Enron, WorldCom, Tyco, et. al., was a buzz saw where a scalpel was needed.
This should be revisited and repealed in part or, better, in whole.
Additionally, updating F.D.I.C. insurance to cover up to $250,000 in deposits will ensure small businesses that the money they need for payrolls and operating expenses will be there when needed despite the turmoil in the credit markets.
I’m not financial wiz, but I do understand that when government gets involved in the private sector, the primary result is chaos and disruption. There is a place for prudent regulations and laws to punish abusers.
But government manipulating the private sector for the purpose of advancing “progressive” policies that fly in the face of common sense and good business practice must stop.
Further reading:
- Wikipedia - Mark to Market
Talk Gwinnett - 10 Reasons Why Republican Oppose the Bailout
TMP Cafe - William Isaac's quote
Wikipedia - Community Reinvestment Act
Michelle Malkin - The A.C.O.R.N. Obama knows
Wikipedia - Sarbanes-Oxley Act
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: Democrats, financial crisis, legislation, politics, Republicans, Ric Keller, taxes
Friday, August 08, 2008
Windfall profits?
Microsoft reports a net profit of 29.3% (5 year average of 27.9%) Industry 5 year average 16.3%
Coke reports a net profit of 18.4% (5 year average of 21.2%) Industry 5 year average 16.2%
Gannet (Newspapers) reports a net profit of -22.8% (5 year average of 15.8%) Industry 5 year average 7.2%
BP reports a net profit of 7.3% (5 year average of 8.2%) Industry 5 year average 10.9%
Exxon reports a net profit of 9.2% (5 year average of 9.6%)
Conoco-Phillips reports a net profit of 7.6% (5 year average of 6.7%)
So who's making more on their investment and which company are you going to invest in? Who is making more off the consumer? The "profits" are distributed to the investors, the stockholders. I.e. Mutual Funds, 401-K's, Pension funds and individual investors. Tax these "excess" profits and who are you taking the money away from? Vanguard, Washington Mutual, College Retirement Equities, Fidelity and 1624 more mutual funds and institutional funds hold 52% of Exxon alone.
Research the other oil stocks and see who is holding them, the majority holders include your next door neighbor, maybe even yourself. So before you demonize, know what it is you're demonizing.
The politicians are merely playing into the ignorance of the American, public school educated, people. It takes work to know the facts. Try it, it's empowering.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: election, fuel prices, politics, power, taxes, windfall profits
Wednesday, June 11, 2008
Congressional windfall profits grab...
The rising price of gasoline is hurting nearly every family in America. We are tired of Congress doing nothing but bowing down to the environmentalists.
It is time for Congress to develop a program that allows the exploration of America's energy sources without materially affecting our environment. Congress should put our families first, ahead of the environmentalists!
Recent actions by Congress to demonize oil companies while Congress does nothing of substance are deplorable. Senator Claire McCaskill castigates oil companies for earning $83,000 a minute in profits in 2007.
At the same time, for every minute of 2007 and 2008 Congress spends $5,137,000.00 of the American taxpayers hard earned money, and continues to ask for more. That's over $5 million a minute with nothing of substance to show for it.
As a nation our problem is not the oil companies, who produce a needed product and earn a reasonable 8-10% profit margin for their efforts. Our problem is a Congress who is in the pockets of the environmental cartels that are bent on the destruction of the American economy while Congress aids and abets the ruin.
It's time Congress acted with substance, not throwing fodder to the masses in the form of an oil company "windfall profit tax" "trust fund" that will be raided by this do nothing Congress in the same way the Social Security trust funds are.
If this is the best our elected officials can do I suggest they do the American people the greatest service a politician can and just get out of the way and allow the American economy and private industry go to work and fix this problem that by it's very nature Congress cannot.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: crude oil, Democrats, fuel prices, oil, politics, profits, Republicans, taxes
Thursday, June 05, 2008
A comprehensive solution needed
Finally, a major factor in the rising cost of crude oil and fuel is the decline of the dollar. Having lost about a third of its value since 2001, this loss of value has weighed heavily on the cost of foreign goods imported into the US. Taken another way, all else being equal, a barrel of oil that sells on the futures market for $133 would, with the dollar returned to its former strength, cost only about $90. That would result in a corresponding drop in the price of gasoline back to about $3.00 - $3.15 per gallon, just on the strength of the dollar.
Of course the question is, “how do we do this?” The short answer is, “we don’t.” The rise and fall of the dollar is a response to US monetary policy. In the US the Federal Reserve, a non-governmental group that wields huge control over the money supply, drives monetary policy.
In it’s attempts to thwart a slowing economy, fight inflation, stabilize the stock market and generally reassure everyone from Wall Street to Main Street, the Fed raises and lowers interest rates and increases and decreases the availability of money.
As it relates to the value of the US Dollar (USD), low interest rates, while good for business and consumers, decrease the investment potential of US currency, increase the investment potential and therefore demand of foreign currencies, and in the process lower the value of the dollar as it relates to the world currency market.
When the Fed increases the money supply, and the US Treasury increases the amount of dollars in the economy, the value of the dollar is diminished as well. The value of the dollar in your pocket is not fixed. It is based in the perceived value of that dollar as relates to the integrity of the US government to back it.
Many think the basis of the value of the dollar is the US Gold Reserves. They couldn’t be more wrong. The US total Gold Reserves is reported to be 8,133.5 tonnes valued at $256 billion, the largest in the world but a mere fraction of the total gold ever mined.
At the same time, the US M2 money supply as measured by the Federal Reserve is $7676.1 billion, or 30 times the total of US Gold Reserves. In practice this means that faith in the US government and economy are by far the driving factors in the value of this fiat currency called the US Dollar, not the objective value of an underlying treasury reserve.
Why does the value of gold go up in terms of US Dollars? In short it’s because the USD is seen as having less value. The same goes for the price of crude oil. Supply and demand being as they are, they affect the day-to-day price fluctuation of this commodity. The longer-term price is impacted by the value of the USD in the world.
The lower it goes, the less it buys and more of it is required to purchase a particular item of value.
To increase the value of the USD the Federal Reserve and US monetary policy should begin to take steps to normalize interest rates and money supply. While that may have a negative effect in the short term on the US economy, the short term pain would result in longer term gain.
Secondly, the US policy towards business should be less restrictive in terms of tax policy. As noted before, businesses do not pay taxes but merely collect them from consumers embedded in the cost of goods and services, from investors in lowered investment value and passes it on to government.
Corporate income taxes and such issues as the Lieberman-Warner “Cap and Trade” scheme currently before the US Senate saddle business with costs and expenses that strangle it in the world economy, often driving business and the attending jobs away from US shores to nation with more friendly tax policies.
Voters must demand that politicians get control of government spending, cutting back budgets and reducing spending to minimal levels and enact a transparent and balanced budget. The US has over $9 trillion in Public Debt having a devastating effect on the national economy, interest rates and exposure to the whims of overseas investors.
The Fair Tax put forth by Congressman John Warner would create a transparent US tax policy, replacing all federal taxes, Income, Social Security, Medicare ad infinitum, with a single sales tax. While there is plenty of discussion over this proposal, and it’s attendant misrepresentation, there remains difficulty in gaining traction in Washington.
So in summation, the problems facing the energy crisis are multifaceted in nature and require a comprehensive response. There is no one “magic bullet” solution. Rather, in the interests of long term solutions and national security, answers must be long thought out, deeply researched, span a variety of technologies and energy sources to protect against vulnerability to single source attacks like we’ve seen on crude oil.
As a nation we should:
It’s not a matter of finding answers to the current pain nor is it simple environmental, economic or security in nature. In the long term it’s a matter of providing a sustainable future for the nation and our children and grand children. To think less is nothing more than selfish.
This series:
1. Gas prices, taxes and politics
2. Crude, profits and big government
3. Dealing with petroleum production
4. Optimizing petroleum
5. Is there a single solution?
6. Monetary policy and energy
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: battery technology, carbon tax, concentrating solar power, crude oil, csp, fuel prices, hybrid, nuclear power, oil, politics, power, solar power, taxes, technology, tidal generator, wave generator
Monday, June 02, 2008
Lieberman Carbon Tax a Dangerous Idea
The Lieberman-Warner carbon tax scheme before the Senate is a dangerous grab for power, tax dollars and control.
It's put forth as a marketplace to help business deal with carbon emissions. What it will end up being is another tax on the consumer. Don't be fooled. A tax on business is a tax on the consumer. In all business the cost of doing business is passed on to the consumer.
There are no corporate taxes, only corporations that collect for government taxes embedded in the price of their product or service.
- "The EPA has estimated what the McCain energy tax would mean to consumers. Since the bill’s provisions are phased in, the full cost of the tax would not be felt for a number of years. But in a letter to Senator McCain dated July 2007, the EPA estimated that the tax will be about $.26 cents in current dollars per gallon of gasoline by 2030 and $.68 cents per gallon by 2050. For electricity, the EPA estimates that the McCain energy tax would increase individual’s electric bills by 22 percent in 2030 and 25 percent in 2050." Roy Cordato-NRO
More power will be vested in Congress and the Lobbyists will have a field day working your Senator and Congressman for perks, loopholes, and breaks on the tax.
The loser will be the consumer, again. Anytime Washington comes up with a "great idea" its the taxpayer, the consumer, the citizens who pay. Make no mistake, this is a bad idea.
Even Canadians are concerned about carbon taxes and "cap-and-trade", and they have data to back it up. Never forget, government will never miss an opportunity to remove income from the pockets of it citizens.
The question is, will the citizens allow it to continue or will they rise up and say "NO MORE!"
We better decide quick or there won't be anything left to keep.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: carbon tax, lobbyist, politics, power, taxes
Friday, May 30, 2008
Let them know how you really feel......
I received an email from "The Freedom Project" making available a petition/protest to Congress regarding the current energy debacle. I wrote as follows:
Respectfully...
- "Please forget the Fed gas tax "holiday." It's merely political pandering and will in the long run produce more bad than good. The only reason for it is for politicians to be able to say, "I did something."
Do something real, pass legislation to expand exploration to areas now restricted. This is a National Security issue. We MUST be able to have control of our energy supply, otherwise we are at the whim of every third world dictator and despot.
For me, while the cost at the pump hurts, what hurts more is the loss of security for my family and my grandkids. We must regain control of our energy supply, otherwise their future WILL be owned by every country who sells us energy.
Do something real, open exploration in areas now restricted. Do something real, support expansion of research in Shale Oil production, i.e. Raytheon's new technology.
Do something now, stop diverting corn to ethanol and incentivize a change to switchgrass. Do something now and provide substantial support to research and implementation of new energy sources like Concentrated Solar Power.
Don't talk about it, study it, demonize oil companies or any number of non-productive "political" responses. The problem is not the oil companies nor is it even the foreign oil suppliers.
Look in the mirror. Had Congress addressed this problem decades ago instead of "studying" it, we would not be here. Instead Congress gets in bed with those whose agenda runs counter to the good of the nation and her people.
Then, testing the political winds a concentrated effort is made to do...nothing.
Do something now, pass "real" legislation to address the problems, or get out of the way to allow some who will the opportunity to do so.
Thank you."
If you want to add your "two cents worth," Visit The Freedom Project.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: crude oil, fuel prices, gas, oil, politics, taxes
Tuesday, May 20, 2008
Crude, profits and big government
At the end of my last post I said I’d give my personal take on the solutions to the energy crisis. But as I thought about it, I realized most people swallow the line put forth by the media and the left as to the cause of the rising price of crude oil and subsequently the price of gas at the pump.
They (the media and the left) would have you believe that “big oil” and its billion dollar profits along with inept policy on the part of the Bush administration is the reason you are paying nearly $4.00 per gallon for gas.
I’m gonna have to disagree with them, and I’ll tell you why in this post.
The price of crude oil is not determined by the oil companies. While they may affect it to some degree, the price of crude is subject to the same laws of supply and demand that govern the rest of the US and free world economy.
The prices seen on a daily basis that has the media whipping up a froth of alarm is actually the bidding in the oil futures market. Those prices quoted are for crude oil to be delivered the next month. It’s actually a little more complicated than that, but for our purposes that’ll work.
There’s also a spot market that is even more volatile for crude available for immediate delivery. What determines the pricing in these markets is not “big oil” or even market demand. What drives it is what the traders think demand will be compared to what they think availability will be at that time.
Geo-politics plays a huge role in this. The current major unknown (traders hate unknowns) is the condition of the Nigerian oil fields. In recent years these production facilities have been under constant siege by militants, action that may result in the closing down of Nigeria’s 2.16 million-barrels-per-day production. That’s about 7.2% of OPEC’s production and nearly 3% of total world output.
Normally that wouldn’t seem to be a problem, but with producing nations shipping near capacity, demand from developing countries increasing and some analysts predicting a peak in production in a few years with ongoing declines thereafter, the current pressure on prices doesn’t look to be temporary. Many analysts predict an upward march to near $200 per barrel of crude within 2 years or sooner. At the current rate, it may well be sooner.
China, India, Russia and other rapidly developing nations are competing with the US for the finite supply, exploring and drilling in areas either geographically inaccessible to us or off limits due to the environmental lobby. China, Cuba and Mexico are planning to drill in the Gulf of Mexico while China bids on pipeline services in Alaska.
Bit by bit our resources are sold off or abandoned to foreign competitors while we complain and do little else.
But what about “big oil” and their “billion dollar profits?” Aren’t they making a killing off the consumer? As it turns out the answer to that is…No! The table below compares the 2005 profits of several major companies including oil and you can easily see that while amounts are large, “big oil” exacts a margin much lower than other large US companies in other sectors.
Oil company profits: A perspective Earnings, Revenues, Profits (Billions) for selected companies, recent quarter, 2005 Source: Bloomberg News, reported in AAPG Explorer Dec. 2005 | |||
Company | Net Profit | Revenue | Profit Margin |
Citigroup (banking) | $7.1 | $21.5 | 33% |
Microsoft | $3.1 | $9.7 | 32% |
Coca-Cola | $1.3 | $6.0 | 21% |
Procter & Gamble | $2.0 | $14.8 | 14% |
General Electric | $4.7 | $41.6 | 11% |
ExxonMobil | $9.9 | $92.6 | 11% |
ConocoPhillips | $3.8 | $48.7 | 8% |
IBM | $1.5 | $21.5 | 7% |
Chevron | $3.6 | $51.1 | 7% |
Wal-Mart | $2.8 | $76.8 | 4% |
Oil industry average profit margin is about 8.2%; (3rd Q. '05) for all US industry, the average is about 6.8%. Profits in the oil industry were easily outpaced by those of the Pharmaceuticals, Banks, Household Products, Software, Telecommunications, Semiconductors, Consumer Services, and Food, Beverage and Tobacco sectors. | |||
Should you think that is an anomaly, early figures for the first quarter of 2008 have Exxon, Conoco and Chevron earning .0857% on their total revenues of $235.5 billion dollars. That’s a net profit of $20.2 billion. But don’t worry; at the same time they paid $47.86 billion in taxes.
Let’s put that in perspective. You have a, say, widget you sell for $100. It costs you $71.08 to design, produce and sell that widget. After you collect your $100 from the sale you cheerfully give $20.32 to the government to spend any way they please and they let you keep $8.58 to do with what you wish.
In the case of “big oil” that $8.58 goes to the share holders who risked their money to invest in their future via the stock market while the government, which risked nothing took away nearly 2 and a half times what the investors received. And now Hillary Clinton, Barack Obama, Nancy Pelosi, Harry Reid and other Democrats want even more. (Psst..companies don't really pay taxes guys, it get's passed on to the consumer via cost of goods. Always has, always will. It's under the table taxation of the public.)
If the oil companies were to cut their profits to zero the most that would be saved at the pump would be .91.5¢/gallon. But in reality only .46% of a barrel of oil goes into gasoline so you might in reality see only a .424¢/gallon reduction. But how long do you think that would last? No company is in the business to break even. And no investor will willingly put his hard earned money into an investment when he knows his return is zero.
So the company goes out of business or is sold to an off shore investor, either way people are out of work and either the new owner or other international oil companies pick up the business and they earn the profits. And the government, they lose their cash cow.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: business, fuel prices, oil, politics, profits, taxes
Sunday, May 18, 2008
Gas prices, taxes and politics
I just returned from a 13-day trip to Ocracoke Island and Myrtle Beach. While the destinations and itinerary of that trip will be the subject of future posts, my current interest is my observations on the ongoing debate over the soaring price of fuel.
In January of this year unleaded regular gasoline cost an average of $3.085/gallon and we all were crying the blues. Now, four and a half months later, the average price of a gallon of unleaded regular in Florida is $3.814, an increase of 23.6%. Annualized that’s an increase of 62.9%.
That hurts everyone and affects every part of our economy from food to transportation, from stock prices to entertainment; everything we do is connected in some way to the cost of fuel and crude oil.
The burning question on most people’s minds is, “who is to blame?” The media and the Democrat party will tell you its “big oil” and the Bush administration who are at fault. Most people go along with that assessment because it makes a neat little package and easy to understand.
I find it interesting that when asked a hard question, liberals (i.e. Democrats) will counter that the answer is not so simple, nuanced with many variables that must be addressed for one to understand their answer. But when it comes to the price of fuel, they simply pin the blame on “big oil” and the current administration.
But is it really so simple, and is the fix so simple as well?
They want to divert the deposits into the Strategic Petroleum Reserve to the marketplace for the rest of the year and eliminate the federal gas tax for 15 weeks during the upcoming summer driving months. Sounds good, but will it really make a serious impact?
The Strategic Petroleum Reserve (SPR) amounts to 70,000 barrels per day, about one tenth of one percent of world consumption and 0.0056% (that’s just over one half of one percent) of daily US imports.
If the SPR were full and we were to be cut off from the world oil supply, there would be only about 58 days of reserve before we would need to drastically cut back on consumption. In practice though, we would need to make those drastic cutbacks immediately.
The US is dependent on foreign crude oil for 60% of its consumption, the largest portion of which is refined into gasoline (9.253 million bpd). However, if the 12,000,000 barrels per day we import was interrupted not only would fuel supply be scarce, but manufacturing of most goods would grind to a halt.
Not only is crude used to make plastics, which permeate every part of our economy, but the machines which produce them and make every item we produce more affordable would stop for lack of lubrication and maintenance parts.
But returning to the immediate issue of the price of gasoline and the effect of the congressional and administrations band-aid approach. It’s estimated that diverting the SPR to domestic production will result in a reduction of about .03 - .05¢ gallon. That works out to about $53 in savings over 6 months of the diversion. Excited?
The moratorium on the 18.4¢ federal gas tax will save motorists an estimated $28 - $30 on average over its limited lifespan and in the process reduce available revenue for highway maintenance by $6.4 billion, affecting 10’s of 1000’s of highway related jobs.
So for the sake of saying they did something, our congressmen/women and the administration are going to save you about 83 bucks, expose a weakness in our national security, expose motorists to unsafe roads as they go unmaintained and throw thousands of highway workers into the unemployment lines.
In the end, who's gonna notice anyway? In 38 days at the current rate of increase the pump price of gasoline will be right back where it was before the "cuts" took place. At the end of the summer when the "tax holiday" ends and the price suddenly rises 18.4¢, do you really think the American people will remember they've been enjoying the largess of the US Congress for 3 months?
Sounds like a great plan to me.
My next post will include some of my ideas on what we should do to deal with this problem and the wider issue of the US energy supply.
"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson
Labels: Democrats, holidays, politics, Republicans, taxes
Monday, February 04, 2008
Who's gonna tote the load?
This Sunday, when asked in an ABC interview about her plan to enforce universal health care if elected, dodged the question of imposing fees and/or garnishing wages to do so. She specifically mentioned enforced enrollment and higher taxes.
Now one could ask, how could she do that to the poor and low income families. The most likely answer is, she wouldn’t. That’s how she would press the issue through and gain broad support of the masses. If they don’t have to pay for it, of course they’ll support it.
So who would she tax and or garnish? Those who are already paying the bill. The middle class and up. Currently the top 25% of income earners pays 86% of income taxes.
You may respond, well, that leaves me out. Think again. If your household has an annual income of $62,000 or more, you are in the group of those paying the bill (2005 Tax Foundation Data). Just as an FYI, the top 50% of income earners ($31,000 and above) pay 96.93% of all income taxes.
So who do you think Hillary or anyone else wishing to garnish wages, impose additional fees and increase taxes on the taxpayer to fund a giveaway to the lower 50% will appeal to? Do you think she’ll have any difficulty getting their support?
NOW! What was your income last year? Which of the above groups will you fall into? The upper 50% of income earners, or the lower 50%? Are you ready to increase the amount of your income you send to the federal government? Think, know the facts before you decide. Free heathcare doesn’t mean free, someone has to tote the load, the short odds are it’ll be you.
Labels: Clinton, healthcare, politics, taxes
Sunday, August 26, 2007
The following is a response to a humorous email I forwarded to liberal friend:
HILLARY IN "08" GET USED TO IT!!
I couldn't let him get away with that statement so lightly so...
Sometimes we need a good shock to see how really wrong we are... I think Hillary will be that shock. The nanny state will not be what "everyone" wants once they find out how much of their freedom it will cost.
Yeah, Bush was/is a disappointment in several areas. Yes the Republicans were disappointing in the legislative leadership on many fronts. Do I want a government that will "fix" every wrong in my life? Do I want a government that will be my source for every "need?" Do I want a government run by people who spend their lives looking for what's wrong with America and their answer is always bigger, more intrusive, more expensive, government? The answer is no.
But lets consider for a moment, how are they (specifically Hillary) going to pay for what they (she) propose? Tax the rich? I don't think so.
Statistics for 2004: The top 50% of income earners paid 92% of the taxes. The top 50% started at $50,000 annual incomes. That included you.
Those earning over $1M were less than one quarter of 1% but paid almost 21% of total taxes. That means those earning less than $50,000/year paid only 8% of taxes. Those are my gleanings from the IRS statistics freely available.
Others say essentially the same:
"The U.S. income tax system is so bad and increasingly reliant on a shrinking number of Americans to pay the nation's bills, that 40 percent of the country's households pay no income taxes at all, says Ari Fleischer, a former White House press secretary, and president of Ari Fleischer Communications.
Our tax system comes up short in a lot of areas; however, the one place where it does excel is at redistributing income, says Fleischer:
According to a recent study by the nonpartisan Congressional Budget Office (CBO),
"And those super-rich one percenters? Their share of the nation's income has risen, but their tax burden has risen even faster:
From the National Center for Policy Analysis
In 1993 Bill Clinton pushed through a plan to make the wealthy recipients of Social Security pay their fair share. In that plan that Clinton signed into law, "couples earning $32,000 or more on Social Security (and individuals above $25,000) get the opportunity to have the taxable portion of their benefits expanded from 50 percent to 85 percent." (See World News Communications article) So the definition of "wealthy" was lowered to just $25,000/year. Few disagree that Hillary was the brains behind the Bill Clinton administration and the policies attempted and implemented.
How about the corporations? We can just load up on their taxes and have them pay the costs of our ever increasing, every more expensive government. OK, who pays corporate taxes? The business, no, a business builds into it's products and services it's costs of creating, marketing and selling those products. All costs in business, and a tax is a cost of doing business, are passed on through the product or service to the end purchaser. And who is that? Who buys the products? The consumer, you.
What about the shareholder? Shareholders, whether as individual shares or in a fund are also ultimately individuals. Those taxed shares, even in a tax exempt portfolio such as an IRA or 401-K are still taxed before they become part of the investment vehicle and those taxes impact the total return and therefore the income available to the individual. Again, the individual pays.
So before you vote for Hillary or anyone else, you better think long and hard about how they are going to pay for all those promises. We should have been thinking about it all along, but now with 20% of the national economy at stake with the push to federalize healthcare, it's more so. All else aside, think rationally for a moment, have you ever trusted "the government" before to efficiently spend the dollars they take from your income?
Have you ever experienced the government to efficiently administer a service? Are you satisfied with the level of service you get with Social Security, Medicare, from the IRS, from any government service under any administration. What makes you think that will change now? Because someone promises to let your neighbor, the clerk at the grocery store, the guy behind the counter at the convince store or the kid who sells you at ticket at the movie theater share in your healthcare costs by charging them higher taxes?
And what about the uninsured? According to media reports and the Census Bureau, 47 million Americans have no health insurance. While that's a big number, it also mean's 84% of Americans are covered under employer, government and individual plans!
Of the 15% without, how many have been denied health services? And how many choose not to purchase health insurance. While the percentage rose during the period covered (2005-2006), that the economy was in a strong growth phase and the poverty rate declined (MarketWatch)would indicate that maybe not having insurance was a choice for some,not a lack of availability or ability.
We have county health services freely available at little or no cost to the recipient. Hospitals are required to treat any who come to their emergency rooms. And they do. It's all paid for by our taxes and insurance premiums.
Healthcare costs are rising at a crazy rate and we need to control them. Yes we do. But is nationalization of healthcare the answer? I think not. Anywhere you look where there is government administered healthcare, Canada, Europe, Cuba, wherever, there are restrictions on not just 24% of the population, but on everyone regarding the availability of health services. Waiting lists are the norm, not the exception. Why do people from all over the world come here for healthcare? Because of the wait or lack of services in their own countries.
Is our system perfect? Far from it. Can it be fixed? Yes, but it will take a change in attitudes from everyone. For starters, include or increase co-pays so those who won't regulate their own use of health services to when they really need it, will have to pay more for it, with or without insurance. Reduce the cost of bringing drugs to market and balance the cost paid by overseas consumers with those paid by the American consumer so they, and we, pay a fairer portion of the cost the medications we take. Create a system of more efficiently using medical resources instead of unnecessary duplication of services. But not to the extent of harming access to critical resources.
Do I trust Hillary to administer the challenges facing this nation? No. At heart she's a socialist. I know that's a flaming statement but when you rationally consider her proposals, that's where it all comes down to. Government control of all services instead of a free market economy.
On the other hand, do I trust the Republicans any more. I'm having a hard time with that one too. The last seven years have proven that when it comes to fiscal policy, the Republicans are just as much free spenders with the taxpayers dollars as any Democrat. On social issues I'm much closer to the Republicans than the Democrats, but even then there are many moving away from me.
Has the war in Iraq been prosecuted badly? Has any war at any time in history been prosecuted properly when viewed through the lens of history? Wrong assumptions were made that would have been made by any American administration because of our Western perspective.
Is George Bush evil? I Hillary evil? No to both. They are two different people with different agendas and perspectives on the place of government in the life of the individual and the role America should play in geopolitics. I just happen to agree more with Bush and less with Hillary. Certainly not totally in agreement or disagreement with either.
John Edwards made the statement that in essence characterized the Republicans as serving bumper sticker politics. If this little exchange is any indication, look at your statement and my response. Which is more suited for a bumper sticker and which is more of an in-depth analysis?
That's why the Democrats appeal to the poor and uneducated, present company excluded of course. Because they were educated in the government run, teachers union administered schools the economically and intellectually challenged lack the patience or skills to look beyond the "bumper sticker" and get to the meat of the matter.
That's enough of a rant for one day...have a happy!
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Labels: Clinton, politics, taxes
Sunday, April 30, 2006
Windfall profits? Is I don't hear cries of windfall profits when Coke Cola's profit margin is 20% or the pharmaceutical industries average margin is 16.5%. But when oil's margin of 8.5% generate profits of $3 to $8 billion, because of business volume, it’s called "windfall". A little basic economics 101 would help here.
So the congressional response to this "windfall" is to:
A) Pad the federal treasury with a new royalties when the PPB rises above $55,
B) Congress “feels our pain” with a $100 "rebate,"
C) Increase taxes on oil company inventories,
D) Rescind tax incentives on exploration in difficult areas.
What’s wrong with this? It's simply pandering. When we need to explore more, congress makes it more expensive. While congress gives $100 to the taxpayer on one hand, it comes right out of the other pocket.
Historically it's been charged that corporate America doesn't pay taxes. In truth that is a fact. All business taxes are passed through to the end user as a cost of doing business. So new royalties will come...out of the taxpayers pocket.
Taxes of oil company inventories, out of the taxpayer's personal budget. Rescind tax incentives, a double hit in both more taxes passed through and more increases in actual costs as the supply continues to diminish because of the costs of exploring areas like shale oil.
The whole issue is a blatant example of the left and both sides of the aisle in Congress preying on the ignorance of the American people. The local paper characterized the royaly cap as costing government billions of dollars. It would be better said, "the cap saves the US taxpayer billions of dollars," they're the ones who pay the bill.
If I can figure this out and understand it, what’s wrong with the "big guys?"
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