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Archive for the ‘Taxes’ Category

Billionaire Sezwhat?

In Taxes on August 15, 2011 at 9:09 pm

You may have seen the New York Times article in which billionaire investor Warren Buffett asks the U.S. to “stop coddling” him when it comes to taxes. Buffett cries foul that, for all the billions that he’s worth, he paid a mere $6.6 million in taxes last year. If that seems low, you’re right.

What Buffett, the Oracle of Omaha, leaves out is the corporate taxes that have already been taken from his earnings. Let me explain:

A company makes an investment of, just to use an easy, round number, $100. For the Read the rest of this entry »

Paul Krugman, Societal Barometer

In Economy, Taxes on September 20, 2010 at 2:33 pm

Paul Krugman. (photo Fred R. Conrad/ The New York Times)

Anger is sweeping America. True, this white-hot rage is a minority phenomenon, not something that characterizes most of our fellow citizens. But the angry minority is angry indeed, consisting of people who feel that things to which they are entitled are being taken away. And they’re out for revenge.

No, I’m not talking about the Tea Partiers. I’m talking about the rich.

…if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won’t find it among these suffering Americans. You’ll find it instead among the very privileged…

So opens Paul Krugman’s New York Times editorial. Because the Keynesian hawk of class warfare has his finger on the pulse of the nation, no doubt.

The fact is, however, that there is no line of distinction between the “rich” and the Tea Party. The Tea Parties are not focused on how much a person has but on what the government takes. That this is inconceivable to Krugman comes as no surprise, steeped as he is in Marxist notion of the proletariat vs. the aristocracy. Typical of the class warrior, Krugman is himself a member of the aristocracy as he defines it. But he is somehow the noble exception to the soullessness that he perceives among his peers. In the former Soviet Union these noble exceptions were party bosses and they were the embodiment of socialist tyranny.

Krugman then waxes sarcastic:

…it has become common to hear vehement denials that people making $400,000 or $500,000 a year are rich. I mean, look at the expenses of people in that income class — the property taxes they have to pay on their expensive houses, the cost of sending their kids to elite private schools, and so on. Why, they can barely make ends meet.

Here our Keynesian friend shows, once again, that his grasp of the Tea Party philosophy is skewed by his distorted worldview. Krugman is flat wrong for two reasons.

First, if someone earns $400,000 or $500,000 per year, it’s their own money to spend on their homes or their children’s education as they see fit. The notion that high earners somehow owe society a proportionally greater debt is simply false. The politics of envy that the left has been comfortably riding on for decades is directly challenged by the idea of personal liberty that is the core of the Tea Party movement. Ironically, Krugman calls that “a belligerent sense of entitlement.”

Second, the assertion that earners in the $400,000 to $500,000 range are rich can only be purposefully deceptive coming from someone with a degree in economics (as well as a Nobel, for what that’s worth) as Krugman has. Many in that income range are owners of either a LLC or an “S” corporation. This means that all profit and loss for their business passes through their personal income tax return, the money shown as “personal income” provides their respective businesses with capital for expansion (and therefore job creation) or collateral for credit. These earners are the engine of the U.S. economy. Krugman would have you imagining them idly collecting half-million dollar paychecks while performing a job of questionable value or importance (sort of like a NY Times columnist).

An economist of Krugman’s purported calibre should know, especially in light of the recent financial crisis, the important role business credit plays in the economy. More accurate would be to replace Krugman’s use of the word “rich” with “employers.”

With unemployment hovering around 10%, couldn’t we use more employers?

The ‘Cost’ of Extending the Bush Tax Cuts

In Economy, House, Taxes on August 15, 2010 at 8:21 am

Hoyer

The New York Post ran a little blurb about the Joint Committee on Taxation and the debate on whether to extend for another year the Bush tax cuts to the top income brackets.

House Majority Leader, Steny ‘Strong-arm’ Hoyer, decries the $38.8 billion dollar “cost” of extending the cuts through 2011 as if it were an expense. If Hoyer can’t differentiate between “expense” and “revenue”, as the $38.8 billion would more properly be accounted, then he has no business making tax policy in the first place.

In early 2009, the Associated Press ran a story about yacht builders laying off workers because the economic downturn caused the wealthy to purchase fewer yachts. For all the mainstream media’s vilification of the “trickle-down” economic theory, the AP validated it in this story. Logically, if lack of spending by the wealthy takes away jobs, spending by the wealthy creates them.

Rather than the tired, class warfare battle-cry of “No fair! Tax cuts for the rich!”, Democrats could have simply skipped the most recent $26 billion bailout and covered most of the revenue short-fall. Instead, Hoyer, who can’t distinguish revenue from expense, has deemed himself better qualified to determine how money is spent than the Americans from whom he aims to collect it.