January 15, 2013
Al Gore: Now 30% Richer Than Mitt Romney...
Someone finally has done all the math on the recent sale of Al Gore's Current TV to the Arabic language channel Al-Jazeera for $500 million. Jobs were lost, buzz created, employees angered, but the former vice president had little to say about it. He did walk away with a reported $100 million — a tidy sum for a man who had less that $2 million in assets when he ran for president more than a dozen years ago, says Forbes magazine.
"Taking into account taxes to be paid on the deal, possible earlier debt and the fact that Gore's representatives declined to comment, Forbes conservatively estimates the former vice president's net worth to be at least $300 million, making him wealthier than unsuccessful Republican presidential candidate Mitt Romney," says Ryan Mac, a Forbes analyst.
"Last May, Forbes estimated Romney's net worth to be around $230 million," he adds.
Holy Income Inequality, Batman!
We can understand wanting to build a nest egg, but $300 million? Wtih so many Americans struggling from paycheck to paycheck, does Al Gore really need all that money? If we didn't know any better, we'd say this smacks of social injustice.
Fortunately, we're above that kind of divisive and destructive rhetoric.
January 02, 2013
This Is What "Balanced Deficit Reduction" Looks Like?
“Today’s agreement enshrines, I think, a principle into law that will remain in place for as long as I am president,” Obama said after the House voted. “The deficit needs to be reduced in a way that is balanced. Everyone pays their fair share. Everyone does their part. That is how our economy works best. That is how we grow.”
December 10, 2012
Obama's Untenable Position on Taxes, Growth
In the WSJ, Kimberly Strassel puts forth an amusing suggestion that the Editorial Staff has already stated its support for:
To read the current fiscal-cliff coverage, President Obama holds the upper hand and is poised for the "victory" of winning an increase in the top two tax rates.
So successful has the White House been in defining this fight, few have stopped to consider how paltry that victory is likely to be. For a short-term win on this ideological issue, President Obama may well cede most everything else.
Let us assume that Mr. Obama is correct in his bet that the GOP will prove more responsible than he is and won't cliff-dive. The president's recent baiting of Republicans—his unreasonable offers, his public campaign to belittle them, his refusal to negotiate—has not put them in a generous mood. If Republicans have to fold on the top tax rates, it's a decent bet they will do only that—and nothing more.
If the pundits are correct, the President's entire "plan" for raising revenue and righting the economy amounts to proposing something even his own party is unlikely to swallow: tax hikes for the top 2 income brackets (that won't raise the revenue they need) with no matching cuts in spending. Now that it's safe to point out the flaws in Obama's position, even the NY Times is starting to complain that the President's math doesn't add up:
Even if Republicans were to agree to Mr. Obama’s core demand — that the top marginal income rates return to the Clinton-era levels of 36 percent and 39.6 percent after Dec. 31, rather than stay at the Bush-era rates of 33 percent and 35 percent — the additional revenue would be only about a quarter of the $1.6 trillion that Mr. Obama wants to collect over 10 years. That would be about half of the $800 billion that Republicans have said they would be willing to raise.
We know that raising marginal tax rates on top earners will NOT raise the revenue Obama is promising. But there's another problem that doesn't bode well for the Democrats' future electoral chances. When the new ObamaCare taxes kick in, families who earn over $250,000 will see their tax rates go up even more:
Under the healthcare law adopted in March, the Medicare tax will rise that year, from 2.9 to 3.8 percent. Also, a new 3.8 percent tax, called the Unearned Income Medicare Contribution (UIMC), will be imposed on high-income taxpayers’ interest income and most of their pass-through business income that’s not subject to Medicare tax. So, under the president’s proposal, virtually all of top earners’ ordinary income will be taxed at 44.6 percent, starting in 2013. We’re not just going back to the Clinton-era rates of 40.8 and 43.7 percent.
A similar pattern holds for capital gains. Under the president’s plan, in 2011 and 2012, the top rate on gains, now 15 percent, will go to 20 percent, with the stealth provision adding 1.2 percentage points, sending the tax back to its 1997–2002 level of 21.2 percent. Starting in 2013, though, capital gains will also be hit by the UIMC, pushing the rate to 25.0 percent.
How will these families react? Let's look at one family - the one residing at Villa Cassandranita. Our combined income is over $250K. We are very comfortable, but hardly wealthy. Because we both work and have no child labor units infesting our domicile, we hired two enterprising Latina women (one of whom started her own business and is going back to school at night) to clean our house. We also pay for a yard service staffed by Latino men to mow and edge our lawn once a week. Remembering how grateful she was for the opportunity to earn money performing the very same jobs during the early years of her marriage, the blog princess remains blissfully free of racial or class guilt about this arrangement. This weekend, after reading an article about how this generation of retirees isn't divesting itself of debt in anticipation of living on a fixed retirement income, we had a discussion about the effect of this administration's tax and economic policies on our current work and lifestyle choices.
The conclusion was hard to escape - the Obama administration's tax policies amount to a punitive tax on my earnings (the "marginal" portion of our joint income). Once one factors in the extra money we spend on travel and personal services associated with my job, it's doubtful whether it makes economic sense for the blog princess to work.
There's a palpable irony here. During her years as a stay at home wife and mother with no college degree, the blog princess worked at mostly menial jobs (child care, lawn care, small repairs and painting) for pocket money. My earnings, though meager, yielded just enough extra money to fund DITY home improvement projects and a few small luxuries we would not otherwise be able to afford. Most weeks, she worked 25 hours or less.
Now, with a college degree and 14 years of continuous FT work experience, her earnings have multipled by a factor or 40 or 50 and yet, the Obama administration's policies bid fair to make working 50+ hour weeks no more profitable than it was to work fewer than 25 hours a week at a salary 40+ times smaller.
If this administration had purposely designed its economic policy to inflict maximum damage on women who aspire to move up the economic ladder through education and hard work, it could not possibly have done better. WAR ON WOMYNS!!11!
To add to the hilarity, the decision to stop working would mean less work for the Hispanic men and women we have been able to employ with my earnings.
One of the hardest lessons we learned as parents is that sometimes, the best way to drive home a point with our sons was to let them try whatever bone headed scheme they were hell bent on advancing. In our more mean spirited moments, we snidely ponder administering a similar object lesson to the Democrats. Stop arguing that their policies won't work and allow the same buyer's remorse that followed the passage of ObamaCare to do the work for us.
Discuss amongst your ownselves, knuckle draggers :p
Update: more grist for the discussion mill:
Even 39 percent of Republicans support raising taxes on households making more than $250,000. Independents favor such a move by 21 percentage points, 59 to 38 percent. Only 38 percent buy the GOP argument that raising taxes on households earning over $250,000 per year will have a negative impact on the economy. Fifty-eight percent do not.
In this post, I've argued that raising taxes on households making over $250K will negatively impact the economy (and moreover, it is likely to hurt lower income workers far more than it will hurt higher income workers).
Again, how do we change minds on this issue? We also found this rather amusing:
Since the era of Ronald Reagan, women have traditionally been more open to cutting defense spending than men. This has changed in recent years, and now women take a harder line than men on the military budget. While 41 percent of men favor making significant defense cuts and 56 percent oppose them, only 34 percent of women favor cuts and 62 percent oppose them. That’s a 15-point spread. Women believe the world is more dangerous, Democratic pollster Lake explained, and they see cutting the military budget as harmful to the troops.
There's a joke in there, somewhere. Fortunately our high principles prevent us from making it.
May 03, 2012
Has the NY Times been alerted to this? How about the "near poor"?
Our results show evidence of considerable improvement in material well-being for both the middle class and the poor over the past three decades. Median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009. In addition, the middle 20 percent of the income distribution experienced noticeable improvements in housing characteristics: living units became bigger and much more likely to have air conditioning and other features. The quality of the cars these families own also improved considerably. Similarly, we find strong evidence of improvement in the material well-being of poor families. After incorporating taxes and noncash benefits and adjusting for bias in standard price indices, we show that the tenth percentile of the income distribution grew by 44 percent between 1980 and 2009. Even this measure, however, understates improvements at the bottom. The tenth percentile of the consumption distribution grew by 54 percent during this period. In addition, for those in the bottom income quintile, living units became bigger, and the fraction with any air conditioning doubled. The share of households with amenities such as a dishwasher or clothes dryer also rose noticeably.
We consider several possible explanations for these patterns in material well-being. Our analyses indicate that tax and transfer policies have played an important role. Changes in tax policy have raised the resources of both the middle class and the poor. The impact of taxes is particularly noticeable for the poor, a substantial share of whom have been lifted out of poverty by more generous tax credits. Social security also accounts for some of the improvements at the bottom as the real value of benefits has grown. However, noncash transfers such as food stamps or housing and school lunch subsidies can account for only small improvements in well-being for the middle class or the poor over the past three decades. While we find that rising educational attainment accounts for some of the decline in poverty over the past three decades, in general, changing demographics account for only a small fraction of the overall improvement in well-being for the middle class and the poor. Together, this evidence suggests that other factors, perhaps most importantly economic growth, played a critical role in the improved living standards of the middle class and the poor.
Accurate measures of economic well-being are essential for evaluating existing policies and for determining the need for policy changes. The extent of economic progress for both the middle class and the poor is an important factor in the debates over key economic policy issues, including income tax policy, immigration, and globalization. Official poverty is frequently cited by those evaluating the need for and consequences of social programs, which account for a substantial amount of government spending. Programs such as Medicaid, Supplemental Security Income (SSI), and Temporary Assistance for Needy Families (TANF), as well as food stamps, housing benefits, educational grants and loans, energy assistance, and job training, cost more than $522 billion in 2002. In his opening comments in the debate on what became the landmark 1996 welfare reform legislation, former House Ways and Means Committee chairman Bill Archer said, "Government has spent $5.3 trillion on welfare since the war on poverty began, the most expensive war in the history of this country, and the Census Bureau tells us we have lost the war."
When you're in a hole...