Thursday, December 27, 2012

To Fall or Not to Fall: The Fiscal Cliff

Should we or should we not fall off the "Fiscal Cliff"?  The quick answer is we'd prefer not to, but it really depends on the alternative.

If the alternative permanently enshrines low tax rates for the wealthy, well, then go off the cliff.  Ditto if the alternative also enshrines low tax rates for capital gains, dividends and other income that typically only the wealthy realize.  Go off the cliff if otherwise it means that the elderly will not be able to afford health care or retirement in general.  Go off the cliff if otherwise it means that the Defense Department budget is totally out of proportion to our need to truly defend ourselves.

If a partial measure is proposed that preserves tax cuts for those who earn $250,000 and under and extends the debt ceiling (or eliminates the need for it to be extended altogether) go for it but if it does that while extending the unjustifiable, forget it.

The "grand bargain" that is so often mentioned truly should be a no-brainer.  Here is what it should contain:

  1. A very progressive income tax structure - more progressive than the current structure, probably with more tax levels, such as 0%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, etc., as income increases.  This should be the goal: the share of taxes paid by the wealthier in proportion to their increase in wealth should increase, not decrease as it has for the last couple of decades.  Apologists for the wealthy like to point out that the rich pay a higher percentage of the total tax burden than ever before but they deliberately fail to note that the income of the wealthiest Americans has grown far greater than the proportion of the tax burden that they pay has grown.  In other words, their tax burden has increased less than their wealth.  The slack has, in the past, been picked up by the Middle Class.  This has contributed to a shrinking Middle Class and reduced demand and a more slowly growing economy.
  2. No special treatment for capital gains, dividends, etc.  Income is income.
  3. A corporate income tax that is more competitive internationally, perhaps around 28% to 30%.
  4. Tax reform; elimination of all deductions and credits except for local taxes.  This could be phased in over 10 years, with a 10% reduction in allowable deductions each year until there are no deductions.  This could be made revenue neutral by adjusting the income levels for each tax bracket.  This will also help the Middle Class if the tax brackets are done correctly.
  5. Deep defense cuts as per the Simpson-Bowles commission.
  6. Universal health care - Medicare for All which should decrease the rate of growth overall of US health care spending if not decrease the cost of health care overall as it does around the world, without a sacrifice in quality of health care.  There are numerous examples of superior health care systems around the world, including Canada, on which to base our system.  This would solve two problems at once - saving money for US citizens and covering all citizens for health care.  All kinds of tweaks are possible, such as means testing, incentives, payments based on results, not based on pointless tests, etc.  Business will finally be free from providing health care, a boon to them!
  7. Tweaks to Social Security to stabilize it for the next century.
  8. Stimulus - for infrastructure, education and energy self-sufficiency - and jobs.  If we do the above, we can easily afford this, and all of these items are necessary and productive uses of capital.
You might ask, "aside from # 5, where are the tax cuts?"

Actually, to the US citizen, #6 is a huge spending cut; it's just that not all of it is a tax cut.  Does it matter to you whether you save money by having lower taxes or having health care cost less?  Health care is not exactly discretionary unless you don't mind suffering or dying.  If you consider that total health care costs might be 40% less than what they are now if a Canadian type system is  instituted (approximately 7% to 8% of GDP saved) would you complain?  Although no one is talking about it, controlling government spending pretty much consists of cutting defense and reforming health care costs, and not simply reforming Medicare and Medicaid. 

Well I think my work is done.  That was simple.

You're welcome!

Thursday, August 16, 2012

Get Over It!

I turn on the tube and what do I see
A whole lotta people cryin' "Don't blame me"
They point their crooked little fingers at everybody else
Spend all their time feelin' sorry for themselves
Victim of this, victim of that
Your momma's too thin; your daddy's too fat
Get over it… (Glen Frey, Don Henley of the Eagles)

Maturity; what a concept!

Exactly what is this thing called maturity, that some seem to possess in great portions while others seem to have none? Is it a measure of experience or intelligence, age or knowledge or is it something difficult to define, such as “charisma.”

The dictionary is not a lot of help - it says maturity is: the state of being fully grown or developed.

Thanks for not too much. How does a person know that they are fully developed? Are all persons who have stopped growing, and therefore as fully developed as they’ll ever be, “mature?” I do not think so.

I do think I’ve come up with an answer to the question of “what is maturity?” however. It has nothing to do with age or interests or whether one enjoys the WWE or prefers Shakespeare. It has nothing to do with whether one is wealthy, independent or a leader. The answer became somewhat obvious to me when I was once asked how my parents affected me as a person. For better or worse, was I the person I have become because of my parents?

Obviously my parents did affect me is some way; what I have realized is that my behavior, particularly when I screw up, in no way can be blamed on my parents or anyone else. Even if my parents raised me improperly, I own my choices, now and in the future.

For many, it is easy to blame one’s parents or others for their behavior. Some are abused when young by a family member and grow up troubled. They may abuse drugs or alcohol or slip into self pity leading to depression.

Even as an adult, one could blame others for the loss of their job or other personal catastrophes and it would be absolutely fair to assess blame for those who have harmed you and to seek redress against them. Justice, keep in mind, is a virtue; revenge, however, is not.

But here is what one should not do – blame others for one’s own behavior. You may indeed have been harmed in the past but maturity is taking full responsibility for your behavior. Seek justice, seek redress, seek damages if morally and legally proper, but your behavior and actions must continue to be ethically proper.

Maturity is owning your behavior no matter what has happened to you – maturity is not making excuses.

As the Eagles so eloquently put it, “Get over it.”

Wednesday, August 8, 2012

The Non-Existent 3.8% Sales Tax on All Real Estate Transactions and What to do About It

Have you seen this email?

"Under the new health care bill — did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don’t kick in until 2013 (presumably after Obama’s re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what? …

"Oh, you weren’t aware this was in the Obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either (result of clandestine midnight voting for huge bills they’ve never read). AND, there are a few other surprises lurking."

The above claim is not true. All real estate transactions will NOT be subject to a 3.8% sales tax in 2013. None will, to be precise.

What a very few real estate transactions will be subject to is a small increase in a capital gains tax, which by all rights, is still way too low (if fairness matters.) The low capital gains tax rate is the loophole that allows a fellow such as Mitt Romney to pay a 14% income tax rate, by the way. We all know that poor Mr. Romney needs that low rate or he won’t help create jobs!
Here is a portion of the actual law in question:



‘‘Sec. 1411. Imposition of tax.


‘‘(a) IN GENERAL.—Except as provided in subsection (e)—

‘‘(1) APPLICATION TO INDIVIDUALS.—In the case of an individual,

there is hereby imposed (in addition to any other tax

imposed by this subtitle) for each taxable year a tax equal

to 3.8 percent of the lesser of—

‘‘(A) net investment income for such taxable year, or

‘‘(B) the excess (if any) of—

‘‘(i) the modified adjusted gross income for such

taxable year, over

‘‘(ii) the threshold amount.


of an estate or trust, there is hereby imposed (in addition

to any other tax imposed by this subtitle) for each taxable

year a tax of 3.8 percent of the lesser of—

‘‘(A) the undistributed net investment income for such

taxable year, or

‘‘(B) the excess (if any) of—

‘‘(i) the adjusted gross income (as defined in section

67(e)) for such taxable year, over

‘‘(ii) the dollar amount at which the highest tax

bracket in section 1(e) begins for such taxable year.

‘‘(b) THRESHOLD AMOUNT.—For purposes of this chapter, the

term ‘threshold amount’ means—

‘‘(1) in the case of a taxpayer making a joint return under

section 6013 or a surviving spouse (as defined in section 2(a)),


‘‘(2) in the case of a married taxpayer (as defined in section

7703) filing a separate return, 1⁄2 of the dollar amount determined

under paragraph (1), and

‘‘(3) in any other case, $200,000.

‘‘(c) NET INVESTMENT INCOME.—For purposes of this chapter—

‘‘(1) IN GENERAL.—The term ‘net investment income’ means

the excess (if any) of—

‘‘(A) the sum of—

‘‘(i) gross income from interest, dividends, annuities,

royalties, and rents, other than such income

which is derived in the ordinary course of a trade

or business not described in paragraph (2),

‘‘(ii) other gross income derived from a trade or

business described in paragraph (2), and

‘‘(iii) net gain (to the extent taken into account

in computing taxable income) attributable to the disposition

of property other than property held in a trade

or business not described in paragraph (2), over

‘‘(B) the deductions allowed by this subtitle which are

properly allocable to such gross income or net gain.

In other words, if there is a capital gain on the sale of an investment, over the deductions properly allocable to such gross income AND the person meets the income requirements in the law (over $200,000), then a tax of 3.8% on the profits may apply.

Since it is possible I could be selling my home in 2013, the original email, which I received from a real estate professional, concerned me. I quickly discovered the email was full of lies and distortions – it was not difficult task to find this out. I will be paying no such tax; neither will 99% of my fellow home sellers since only 3% of Americans earn enough to qualify and a small minority of those sellers will have a large enough profit, if they have a profit.

What now concerns me is the irresponsibility of so many who pass along anonymously authored emails that are pretty much blatant lies, in order to influence an election. They spend the time to spam others with misinformation, but are too busy to check it out first. When I emailed back the person who sent me this email with the corrected info, including links and an explanation, instead of being thankful and eager to make things right, they were mad and accused me of denying them their 1st Amendment rights!

Yes, pointing out errors is now a violation of the 1st Amendment. Spreading lies is not.

And this brings me to the root of all evils, according to me at least; ideology. When one believes in a dogma, one is immune to fact. That is the whole point of dogmatic belief systems – making an ideology so sacred so that belief in the dogma itself is the virtue, not accuracy, truth or honesty. The ideology could be religious or secular or some combination. Examples of dogmatic ideologies include fascism, communism, socialism, conservatism, liberalism, Republicanism, Democratism, Christianity, Judaism, Islam, and being a Cubs fan.

All have this in common – they are in conflict with a free exchange and consideration of ideas.

Humanism, if it is to have value, cannot be dogmatic – it cannot be a list of things that must be believed. Humanism, as opposed to all dogmas, must always be in concert with the well being of persons, and adjust as new information is received, and most importantly, judge ethical norms on the basis of the consequences of putting those ethics into practice. In other words, lying about the new health care law is wrong and betrays either the dogmatic nature of the liars or a dangerous moral laziness.  If we value our freedom, and that's a big if, we must do better.

Monday, August 6, 2012

The Nature of Hate

Exactly why did a gunman (who shall not be named so that others will not be inspired by his furthered notoriety) open fire on a temple of worshipping Sikhs this weekend in Wisconsin, killing at least 7 persons and wounding many?

Indeed this is the question of the day and understandable since the answer may be of assistance in preventing future similar occurrences.

Some will explain it thusly: the ignorant killer believed his victims were Muslims, and he hated Muslims since Muslims planned and executed the 9-11 attacks on America.

This, of course, explains almost nothing. If I remember correctly, Germany and the Nazis perpetrated WWII and were killers of Americans. It couldn't be that this killer simply hated the perceived enemies of America or killers of Americans - he liked some and hated others. He was allegedly a neo-Nazi himself.

So exactly what is going on? He was most likely not "insane" in any standard medical sense - he was never diagnosed as such as far as is known right now. You could say he was a "hater," however, which you could then argue is simply the other side of the coin from being a "lover." Is being a "lover" insane? No, it isn't.

Perhaps being a vile racist is simply a biological imperative, at least in part. Perhaps some people are born caring deeply about their race (or hair color or the nation of their birth or their weight or the size of their muscles or the orderliness of the world around them, etc.) and cannot control their impulses to pursue these deep feelings. If they care deeply about their weight, perhaps they become anorexic. If they care deeply about order, perhaps they become obsessive compulsives. If they care deeply about race, perhaps they become racist neo-Nazis.

Much time has been spent for decades or even centuries explaining why some persons are shy, extroverted, heterosexual, promiscuous, gay, left-handed or any number of traits. Now it is believed that we were mostly “born this way” or at least have biological underpinnings for our traits. Perhaps it is time to expand this argument even further to explain at least either in part or at least some of the time why some persons gravitate towards certain ideologies and/or behaviors that were always believed to be the result of bad upbringing or environment.

Perhaps racist neo-Nazis are sometimes born, not made, at least in part. Perhaps this explanation is why human behavior – all human behavior including yours and mine, seems so often unexplainable; we are simply unable to fight the character traits that our biology imposes on us.  It is truly not easy to be "free."  It is truly not easy to live a life guided by reason.

So how would this explanation help in preventing future massacres? If we accept the probable fact that our behaviors are deeply influenced, if not dictated, by our biological makeup, them perhaps we could humbly begin to discuss our limitations and frailties and how we can create a saner society. Perhaps at that point, a sane discussion of gun control can begin.

But probably not. Some people just love their guns.


See the above.