Michele Bachmann recently called for and investigation into some members of the government she suspects of having ties to the Muslim Brotherhood.
While this sort of McCarthyism is always welcome here in America I think there is another investigation involving Michele Bachmann that should take precedent.
That investigation is regarding Michele Bachmann's secret agenda to promote the gay lifestyle.
It is a well known fact that Michele Bachmann's husband, Marcus, is a homosexual. After all, some of the most trusted talking heads have implied as much and if there is one thing that I have learned from watching Fox News it's that when a talking head says something it must be true.
Some will point to Marcus Bachmann's faith based clinic aimed at removing the gay from homosexuals as proof that he is not gay but common sense tells us this is a ruse. For example when the president expanded gun rights, no one was fooled. Everyone knows he is really secretly planning a full scale attack on the 2nd amendment at 5:00 am November 7th.
Similarly the only reason someone would be so adamant about curing gay is to cover the fact that they are secretly gay and plotting a gay revolution. Additionally this gives Marcus access to more homosexuals allowing him to more easily spread his secret gay agenda.
Another obvious sign of this covert operation are the 23 foster kids that the Bachmann's have helped raise. Given their wealth they weren't taking in foster kids for the money so the only possible explanation is that they want to indoctrinate as many children as possible with the pro-gay message. This allowed them unfettered access to a number of kids that they could keep quarantined until they were certain that the indoctrination was complete.
This also explains Michele Bachmann's penchant for publicly supporting so many fringe ideas. These are clearly meant as diversionary tactics to keep people for suspecting the Bachmann's of any radical agenda but as well respected journalist Nancy Grace says “When you’re pointing a finger at someone, you have four fingers pointed back at you.” To my knowledge Michele Bachmann has never come out and said she isn't planning a gay takeover. If she isn't then why wouldn't she just say so?
So while I applaud Michele Bachmann's efforts to end the obvious infestation of Muslim spies in our government who are attempting to spread Sharia law. I am adamantly against her clandestine plot to overthrow the government with a gay army. We true patriots need to take back to country from homosexual zealots like the Bachmann's and keep gay where it belongs - in the closet.
Wednesday, July 25, 2012
Wednesday, July 18, 2012
The Capital Gains Tax rate fallacy revisited.
Last week I posted an article about capital gains taxes which elicited a number of comments. The argument made most often was the idea that capital gains taxes should not be increased because capital gains is a double tax.
There are a number of issues with this belief that I wanted to discuss. The first and most basic issue is with the idea that the money you use to invest in the stock market has already been taxed and therefore is double taxed when you sell the stock. The problem with this belief is that your original investment is not subject to capital gains tax. Only the gain is subject to the tax. For example if you invest $1,000 and a year later you sell the stock for $1,500 only the additional $500 is subject to any capital gains tax.
The second and considerably more complex idea of how capital gains is a double tax is based on the idea that corporations already pay a rate of 35% on their income so when you as the investor pay your 15% you are actually paying an additional second tax.
One of the biggest problems with this line of thinking is the fact that around 69% of corporations paid no federal income tax and according to the Wall Street Journal the average corporate tax rate is 12.1% of profits not 35%. Obviously if the company paid no taxes then it would be difficult to claim double taxation.
Additionally this argument relies on the idea that stockholders bear 100% of the burden of this imaginary 35%. Analysis on the topic suggests this tax burden is instead shared by workers, consumers and shareholders. Lowering the shareholders tax burden even further.
It should be noted that capital gains is derived from many sources many of which this argument is not applicable for. As an example Mitt Romney had $13 million in carried interest which is taxed as capital gains even though it is really just commission and has not been taxed at any other point.
The same is true of stocks. For an investor to earn money in the stock market the companies they invest in do not have to make a profit. Stock prices often increase on the perception of future profit rather than actual profit. As I mentioned previously High Frequency trading accounts for around 70% of the stock market volume and these investors manage to make small profits every minute completely unrelated to the companies performance over the past few minutes.
So is it possible that you as and investor are being double taxed on your investment? Yes. But even when that is the case the double taxed rate is typically lower than the rate you would pay if you had earned this money in the form of wages.
But the best proof that the capital gains tax is an advantage over other ways of earning money is the fact that the richest Americans earned 81.3% of their income from capital gains, dividends and interest while only 6.5% of their income came from salaries and wages.
There are a number of issues with this belief that I wanted to discuss. The first and most basic issue is with the idea that the money you use to invest in the stock market has already been taxed and therefore is double taxed when you sell the stock. The problem with this belief is that your original investment is not subject to capital gains tax. Only the gain is subject to the tax. For example if you invest $1,000 and a year later you sell the stock for $1,500 only the additional $500 is subject to any capital gains tax.
The second and considerably more complex idea of how capital gains is a double tax is based on the idea that corporations already pay a rate of 35% on their income so when you as the investor pay your 15% you are actually paying an additional second tax.
One of the biggest problems with this line of thinking is the fact that around 69% of corporations paid no federal income tax and according to the Wall Street Journal the average corporate tax rate is 12.1% of profits not 35%. Obviously if the company paid no taxes then it would be difficult to claim double taxation.
Additionally this argument relies on the idea that stockholders bear 100% of the burden of this imaginary 35%. Analysis on the topic suggests this tax burden is instead shared by workers, consumers and shareholders. Lowering the shareholders tax burden even further.
It should be noted that capital gains is derived from many sources many of which this argument is not applicable for. As an example Mitt Romney had $13 million in carried interest which is taxed as capital gains even though it is really just commission and has not been taxed at any other point.
The same is true of stocks. For an investor to earn money in the stock market the companies they invest in do not have to make a profit. Stock prices often increase on the perception of future profit rather than actual profit. As I mentioned previously High Frequency trading accounts for around 70% of the stock market volume and these investors manage to make small profits every minute completely unrelated to the companies performance over the past few minutes.
So is it possible that you as and investor are being double taxed on your investment? Yes. But even when that is the case the double taxed rate is typically lower than the rate you would pay if you had earned this money in the form of wages.
But the best proof that the capital gains tax is an advantage over other ways of earning money is the fact that the richest Americans earned 81.3% of their income from capital gains, dividends and interest while only 6.5% of their income came from salaries and wages.
Tuesday, July 17, 2012
The value of a helmet
There has been some discussion over the past few weeks on this blog on the value of helmet laws. Part of me thinks that mandating helmets is a good thing because it saves lives. Having said that I certainly understand the desire to choose to wear a helmet or not.
With that in mind I wanted to share an example of how you walk away from a motorcycle accident with a headache instead of being carted away in a body bag.
Look twice and drive safe.
With that in mind I wanted to share an example of how you walk away from a motorcycle accident with a headache instead of being carted away in a body bag.
Look twice and drive safe.
Friday, July 13, 2012
The Capital Gains Tax rate fallacy
One of the biggest fallacies generated by the rich and perpetuated by conservatives is the idea that the Capital Gains Tax (CGT) rate is an important component of a healthy economy.
The reality is that study after study finds no correlation between the CGT and economic growth or unemployment.
One of the biggest questions surrounding the CGT rate is why money earned for investing in the stock market should be subject to a different tax rate than money earned for actually working and receiving a pay check. This is a clear example of the government picking the winners and losers. Those who can make the bulk of their money in stocks are the winners and those who have to punch a clock for a living are the losers. Nowhere is this more evident than the IRS report showing the richest 400 Americans earned 81.3% of their income from Capital Gains, dividends and interest while only earning 6.5% from salaries and wages.
It should also be noted that the only time a company ever receives any money from the sale of stocks is in the initial public offering. Every trade after that is no different than selling a used car. The money goes to the seller not the manufacturer.
That is not to say there is no value in the stock market. Clearly if you are an investor your goal is to buy low and sell high and you need other buyers to consummate those transactions. But acting like eliminating this tax loophole will suddenly halt all capital investments ignores reality.
For example the short term CGT receives no special treatment from the IRS and is taxed at the same rate as other income. Today the fastest growing method a stock trading is something known as High Frequency trading where computers make thousands of trades every second. It is estimated that High Frequency trading now accounts for around 70% of the total trade volume.
This buying and selling of stocks within minutes is all taxed at the higher short term CGT rate. If the meme of CGT rates affecting investment were true, we would see a massive shift towards long term holding but the complete opposite is true.
The reason for this is the return on investment. Even if you pay 35% on all of your profits there is no easier way to get such a high rate of return. As an added plus even if your investment goes bad the Government subsidizes your losses with a tax break.
Even Ronald Reagan realized the issue with the CGT loophole when he stumped for his tax reform act of 1986 which raised the CGT rate to the same as other income.
"We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying ten percent of his salary, and that’s crazy. [...] Do you think the millionaire ought to pay more in taxes than the bus driver or less?"
Of course words of wisdom from an iconic conservative and data showing that lowering the CGT rate has no affect on economic activity does nothing to dissuade Republicans from believing in this fallacy. Their blind faith actually has them clamoring for a complete elimination of the CGT. This should come as no surprise since over 90% of stocks, bonds and mutual funds are held by the top 10% who are generous with both their opinions and money around election time each year.
In the end if Republicans are hell bent on defending these robber barons with gratuitous tax loopholes and characterizing them as "job creation" then it should come as no surprise when Democrats respond with the Robin Hood like redistribution of wealth tactics in an attempt to level the playing field - the political equivalent of an eye for an eye.
The reality is that study after study finds no correlation between the CGT and economic growth or unemployment.
One of the biggest questions surrounding the CGT rate is why money earned for investing in the stock market should be subject to a different tax rate than money earned for actually working and receiving a pay check. This is a clear example of the government picking the winners and losers. Those who can make the bulk of their money in stocks are the winners and those who have to punch a clock for a living are the losers. Nowhere is this more evident than the IRS report showing the richest 400 Americans earned 81.3% of their income from Capital Gains, dividends and interest while only earning 6.5% from salaries and wages.
It should also be noted that the only time a company ever receives any money from the sale of stocks is in the initial public offering. Every trade after that is no different than selling a used car. The money goes to the seller not the manufacturer.
That is not to say there is no value in the stock market. Clearly if you are an investor your goal is to buy low and sell high and you need other buyers to consummate those transactions. But acting like eliminating this tax loophole will suddenly halt all capital investments ignores reality.
For example the short term CGT receives no special treatment from the IRS and is taxed at the same rate as other income. Today the fastest growing method a stock trading is something known as High Frequency trading where computers make thousands of trades every second. It is estimated that High Frequency trading now accounts for around 70% of the total trade volume.
This buying and selling of stocks within minutes is all taxed at the higher short term CGT rate. If the meme of CGT rates affecting investment were true, we would see a massive shift towards long term holding but the complete opposite is true.
The reason for this is the return on investment. Even if you pay 35% on all of your profits there is no easier way to get such a high rate of return. As an added plus even if your investment goes bad the Government subsidizes your losses with a tax break.
Even Ronald Reagan realized the issue with the CGT loophole when he stumped for his tax reform act of 1986 which raised the CGT rate to the same as other income.
"We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying ten percent of his salary, and that’s crazy. [...] Do you think the millionaire ought to pay more in taxes than the bus driver or less?"
Of course words of wisdom from an iconic conservative and data showing that lowering the CGT rate has no affect on economic activity does nothing to dissuade Republicans from believing in this fallacy. Their blind faith actually has them clamoring for a complete elimination of the CGT. This should come as no surprise since over 90% of stocks, bonds and mutual funds are held by the top 10% who are generous with both their opinions and money around election time each year.
In the end if Republicans are hell bent on defending these robber barons with gratuitous tax loopholes and characterizing them as "job creation" then it should come as no surprise when Democrats respond with the Robin Hood like redistribution of wealth tactics in an attempt to level the playing field - the political equivalent of an eye for an eye.
Wednesday, July 11, 2012
Talking points for the upcoming tax debate
In an attempt to get out in front of the conservative talking point machine the president has again stated his desire to retain much of the Bush era tax cuts with the exception of income above $250,000.
There is a tendency for people to believe that under this proposal you will suddenly see a massive increase in your taxes once you hit $250,001 but the reality is that with our tax system your first $250,000 is taxed at the same rate regardless of how much you make beyond that and only the additional $1 would be subject to a higher tax rate. This is not a massive tax increase.
Another thing to consider with this proposal is that the debate and subsequent stalemate sure to follow will kill job growth. If you look back at the debt ceiling debate from last year you will see that jobs were increasing at a steady pace until the Republicans added in the uncertainty of expanding the debt ceiling which killed job growth for the duration of the debate. Once settled, jobs returned to their pre-debt ceiling debate levels and the unemployment rate dropped.
But the one thing I find really funny about the tax increase debate is the inconsistency with which it is argued. If you listen to conservatives they lament that something like 47% of tax payers paid no federal income tax. They will also claim that the top 1% pays around 36% of the taxes while only earning 17% of the income.
While both of these statistics are true, they are taken from different points in tax code. To prove that 47% of tax payers pay no Federal taxes you have to go to the point in the tax code after everyone has taken out their deductions and exemptions and determined their "Taxable Income" (Line 43 of Form 1040).
However to prove that the rich pay 36% of the taxes while only earning 17% of the income you have to use "Adjusted Gross Income" which comes from line 38 of Form 1040.
If you calculate both of these numbers at "Taxable Income" you still get 47% of tax payers paying no Federal income tax however it also changes the percentages for the Top 1%. Instead of earning 17% and paying 36% they earn 31% of the income while only paying 22% of the taxes.
If instead you decide that the important data is the "Adjusted Gross Income" then the Top 1% pays more than their fair share of taxes but that basically eliminates the 47% of tax payers that pay no Federal income tax.
The reason that understanding the difference between how these two talking points are figured is important is because they require different competing solutions. Essentially fixing one of these two issues will have a detrimental effect on the other. Broaden the base to include more tax payers and the percentage the Top 1% pays goes up, while cutting taxes will increase the number of people not paying taxes.
Getting people to believe that these are two sides to the same coin is a win win for Republicans since any attempts to fix either perceived problem will make the other look worse which of course will lead to louder cries for how unfair the system is.
Understanding the origin of these numbers is important to understanding how politicians and talking heads are intentionally or unintentionally manipulating the populous. Because an educated electorate is a politicians worst enemy.
There is a tendency for people to believe that under this proposal you will suddenly see a massive increase in your taxes once you hit $250,001 but the reality is that with our tax system your first $250,000 is taxed at the same rate regardless of how much you make beyond that and only the additional $1 would be subject to a higher tax rate. This is not a massive tax increase.
Another thing to consider with this proposal is that the debate and subsequent stalemate sure to follow will kill job growth. If you look back at the debt ceiling debate from last year you will see that jobs were increasing at a steady pace until the Republicans added in the uncertainty of expanding the debt ceiling which killed job growth for the duration of the debate. Once settled, jobs returned to their pre-debt ceiling debate levels and the unemployment rate dropped.
But the one thing I find really funny about the tax increase debate is the inconsistency with which it is argued. If you listen to conservatives they lament that something like 47% of tax payers paid no federal income tax. They will also claim that the top 1% pays around 36% of the taxes while only earning 17% of the income.
While both of these statistics are true, they are taken from different points in tax code. To prove that 47% of tax payers pay no Federal taxes you have to go to the point in the tax code after everyone has taken out their deductions and exemptions and determined their "Taxable Income" (Line 43 of Form 1040).
However to prove that the rich pay 36% of the taxes while only earning 17% of the income you have to use "Adjusted Gross Income" which comes from line 38 of Form 1040.
If you calculate both of these numbers at "Taxable Income" you still get 47% of tax payers paying no Federal income tax however it also changes the percentages for the Top 1%. Instead of earning 17% and paying 36% they earn 31% of the income while only paying 22% of the taxes.
If instead you decide that the important data is the "Adjusted Gross Income" then the Top 1% pays more than their fair share of taxes but that basically eliminates the 47% of tax payers that pay no Federal income tax.
The reason that understanding the difference between how these two talking points are figured is important is because they require different competing solutions. Essentially fixing one of these two issues will have a detrimental effect on the other. Broaden the base to include more tax payers and the percentage the Top 1% pays goes up, while cutting taxes will increase the number of people not paying taxes.
Getting people to believe that these are two sides to the same coin is a win win for Republicans since any attempts to fix either perceived problem will make the other look worse which of course will lead to louder cries for how unfair the system is.
Understanding the origin of these numbers is important to understanding how politicians and talking heads are intentionally or unintentionally manipulating the populous. Because an educated electorate is a politicians worst enemy.
Thursday, July 5, 2012
When lying is justified
Last week the Supreme Court made a decision that angered a lot of people. They stuck down the Stolen Valor Act which made it illegal for a person to lie about their military record.
The Supreme Court ruled that falsely claiming to have won a particular military honor was an act of free speech and therefore the Stolen Valor Act was unconstitutional.
While on the surface this seems like a disappointing ruling it should be noted that anyone who lies and profits from those lies can still be prosecuted for fraud. Essentially our system is already set up to handle those who benefit from lies while also protecting a person's right to make up stories even when those stories are offensive to some.
Congress seems determined to take up the cause again and attempt to refine the law to make it pass constitutional muster. Which I think is great but I find it ironic that Congress is attempting to make lying illegal.
After all who lies more than a politician? They lie so often that an entire industry has popped up to fact check these prevaricators.
Making matters worse is that their lies actually have an effect on public opinion. Take for example the Affordable Care Act. When asked about the individual parts of the bill, many components have broad support but when asked about the bill overall the support goes down. This disconnect can be attributed to lies like death panels and coverage for illegal immigrants.
So if you are an elected official who is tasked with the job of helping run the country and in an attempt to defund the institution you say that abortion services are well over 90% of what Planned Parenthood does while in reality the number is closer to 3%, you can just slough it off by saying that the lie that you spoke on the floor of the Senate was never meant to be a factual statement. But if you lie about having earned a purple heart to impress your high school classmates, Congress thinks you should pay a fine and spend some time in prison.
Is lying about your military record reprehensible? Yup. Is it worse than lying to sway public opinion on public policy? Probably not. But these are the results you get when the good of the country becomes a distant second to the good of the party.
The Supreme Court ruled that falsely claiming to have won a particular military honor was an act of free speech and therefore the Stolen Valor Act was unconstitutional.
While on the surface this seems like a disappointing ruling it should be noted that anyone who lies and profits from those lies can still be prosecuted for fraud. Essentially our system is already set up to handle those who benefit from lies while also protecting a person's right to make up stories even when those stories are offensive to some.
Congress seems determined to take up the cause again and attempt to refine the law to make it pass constitutional muster. Which I think is great but I find it ironic that Congress is attempting to make lying illegal.
After all who lies more than a politician? They lie so often that an entire industry has popped up to fact check these prevaricators.
Making matters worse is that their lies actually have an effect on public opinion. Take for example the Affordable Care Act. When asked about the individual parts of the bill, many components have broad support but when asked about the bill overall the support goes down. This disconnect can be attributed to lies like death panels and coverage for illegal immigrants.
So if you are an elected official who is tasked with the job of helping run the country and in an attempt to defund the institution you say that abortion services are well over 90% of what Planned Parenthood does while in reality the number is closer to 3%, you can just slough it off by saying that the lie that you spoke on the floor of the Senate was never meant to be a factual statement. But if you lie about having earned a purple heart to impress your high school classmates, Congress thinks you should pay a fine and spend some time in prison.
Is lying about your military record reprehensible? Yup. Is it worse than lying to sway public opinion on public policy? Probably not. But these are the results you get when the good of the country becomes a distant second to the good of the party.
Subscribe to:
Posts (Atom)
