The Current Tax Code is Already Unseemly and Socialist

Because of the way it massively extracts taxes from the top 50 percent of earners and redistributes the benefits to every class of people, to be sure, but disproportionately to the poorest who pay nothing in federal taxes. They number in excess of 63 million tax filers.

So why can't Bruce Bartlett, here, just say that?

"Perhaps the right and left can at least agree that it is unseemly for those in the top 1 percent of income distribution, with incomes at least 10 times the median income, to pay no federal income taxes. It’s not socialism to ask them to pay something."


"Unseemly"? We're talking 24,000 filers in the top 1 percent. Why isn't it unseemly, and in fact a scandal, that over 5 times as many people in the lowest two quintiles pay no federal income taxes than in the highest three quintiles?

Bartlett well knows that the rich who pay no federal taxes may in fact pay capital gains taxes, and may also be massively financing America's municipalities in the bond market to escape federal taxes, just as he knows the poor who work pay Social Security taxes just like everyone else who works.

That's the problem with the tax code. It's balkanized and hyphenated, just like America, and when only looking at one part of it and from that perspective, it only provokes judgments as distorted as the code itself.

A tax code which taxed all income in all forms and at all levels without exception and at one low rate would go a long way to repairing the divisions in this country.

Unfortunately we don't have very many people in leadership advocating for this.

From the article:

'High Frequency' or 'Program Trading' is on the Rise in Asia

So says a recent story from Reuters, predicting it will take only three to four years for Asia to catch up to the US:

Japan is the only market that comes close right now to the HFT seen in western markets. ... [T]he proportion of trades classified as high frequency [is] around 30 percent . . ..

High frequency trading now accounts for as much at 70 percent of turnover in US equity markets, where have HFT systems are dealing with up to 2.3 million messages per second in some cases.

Read the full story here.

7 in 10 Democrats Sympathize with Communism

According to the latest Gallup Poll, here:

Seven in 10 Democrats believe the government should levy taxes on the rich to redistribute wealth, while an equal proportion of Republicans believe it should not. The slight majority of independents oppose this policy.

Recall Ebenezer Elliot (1781-1849):

What is a communist? One who has yearnings

For equal division of unequal earnings.

Idler, or bungler, or both, he is willing

To fork over his penny and pocket your shilling.

How Much Capital Backs Your Assets?

Spanish banks are scrambling to raise capital amid new rules upping the requirements for "solvency":

Under the new rules, [Spanish] savings banks must raise the proportion of core capital they hold to 8.0 percent of total assets from the current six percent, or 10.0 percent if they are unlisted.

So imagine you have assets (for example, loans outstanding on a house and a car), together actually worth about $250,000.

Up until now, if you were a Spanish bank, you'd have to have 15,000 simoleons stashed away to cover the "business." The new rules mean you're going to have to have 20,000, or 25,000 simoleons.

In your case, think IRA, or 401K, or your brokerage account. Or some CDs at the bank. How much do you have stashed away?

And then consider that the median amount saved for retirement in America is only $2,000. That means half of the country has more than that saved, and the other half has less than that saved. But even at the median, that $2,000 is less than 1 percent of $250,000 in assets.

Easily half of the US population is probably insolvent by this measure, as are many US banks.

My own bank operates under a Consent Decree requiring Tier 1 capital of 8 percent, and total capital of 11 percent. Roughly 10 cents on the dollar.

Most of America is built and runs on this kind of debt. And much of it is insolvent, even on these less easy, easy terms.

"Owe no man anything . . .."

Obamacare Waivers Explode to 729 from 222 Since December 2010

Can we still say "explode"?

We've gone from 1.5 million to 2.2 million Americans on waivers in under two months.

The new health care law applies to fewer and fewer Americans because specially privileged groups seek and get waivers from the requirements. Which is to say that healthcare inequality under Obamacare is a growing problem.

How much you wanna bet under Obamacare the specially privileged never reach 85%, the proportion of Americans who had private health insurance before the law was passed and wanted to keep it? Which is to say that more Americans will lack "desirable" coverage because of Obamacare than will have lacked it before it (15%).

View the burgeoning list here.

Would Our Democrats Outlaw Even This Kind Of Speech?

Wonderful is the effect of impudent and persevering lying.

The British ministry [think: the Democrat Party]  have so long hired their gazetteers [think: The New York Times] to repeat and model into every form lies about our being in anarchy, that the world has at length believed them, the English nation has believed them, the ministers themselves have come to believe them, and what is more wonderful, we have believed them ourselves.

Yet where does this anarchy exist? Where did it ever exist, except in the single instance of Massachusetts [think: The Tea Party of 2011]? And can history produce an instance of rebellion so honourably conducted? I say nothing of its motives. They were founded in ignorance, not wickedness.

God forbid we should ever be 20 years without such a rebellion. The people cannot be all, and always, well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty.

We have had 13 states independent 11 years. There has been one rebellion. That comes to one rebellion in a century and a half for each state. What country before ever existed a century and half without a rebellion? and what country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms.

The remedy is to set them right as to facts, pardon and pacify them. What signify a few lives lost in a century or two? The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure.


Our [Constitutional] Convention has been too much impressed by the insurrection of Massachusetts: and in the spur of the moment they are setting up a kite to keep the hen-yard in order. I hope in God this article will be rectified before the new constitution is accepted.

-- Thomas Jefferson, November 13, 1787, here, writing from France about Shays' Rebellion

BUSH SUBSIDIZED THE POOREST AMERICANS AND CUT THEIR TAXES 33%

Because George Bush was a flaming socialist. The left hated him as they did not because of the Iraq war but because he out-performed them as a liberal. And if Obama lets the Bush tax cuts expire, the poorest Americans will lose their subsidies and their taxes will go up 50%, and Obama will become a conservative and all will be well with the world!

In 2000, the top 60 percent of taxpayers paid 100 percent of all income taxes.

The bottom 40 percent collectively paid no income taxes.

Lawmakers writing the 2001 tax cuts faced quite a challenge in giving the bulk of the income tax savings to a population that was already paying no income taxes.

Rather than exclude these Americans, lawmakers used the tax code to subsidize them. (Some economists would say this made that group's collective tax burden negative.)

First, lawmakers lowered the initial tax brackets from 15 percent to 10 percent and then expanded the refundable child tax credit, which, along with the refundable earned income tax credit (EITC), reduced the typical low-income tax burden to well below zero.

As a result, the US Treasury now mails tax "refunds" to a large proportion of these Americans that exceed the amounts of tax that they actually paid.

All in all, the number of tax filers with zero or negative income tax liability rose from 30 million to 40 million, or about 30 percent of all tax filers.

The remaining 70 percent of tax filers received lower income tax rates, lower investment taxes, and lower estate taxes from the 2001 legislation.

Consequently, from 2000 to 2004, the share of all individual income taxes paid by the bottom 40 percent dropped from zero percent to minus 4 percent, meaning that the average family in those quintiles received a subsidy from the IRS.

By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.

Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent's share dipped from 5.9 percent to 5.4 percent.

Clearly, the tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.


Read the rest from Brian Riedl, here.

That Was My Line, says Barry Ritholtz

"Two items are noteworthy (besides his lifting my 'If you want less of something, tax it.' line)."

-- Barry Ritholtz, January 20th, 2010, referring to former Reagan Administration Office of Management and Budget Director, David Stockman, in The New York Times

The famous maxim, "If you want more of something, subsidize it. If you want less of something, tax it," has been circulating since before the time when Barry Ritholtz was perplexed in college, trying to figure out whether he was preparing to graduate or matriculate. The meanings of things elude him still, for which he supplies the appropriate expletives in proportion to the want of knowledge. At any rate, he's no more the author of it than he is of "It was the best of times, it was the worst of times."

This is an annoying sort of narcissism which usually emanates from New York intellectuals at The Times, but that's obviously not the case here. David Stockman is from Michigan, of course, just as Rush Limbaugh is from Missouri, whom Michael Savage routinely accuses of stealing lines. Must be something in the water, there in New York, that creates visions of grandeur from an early age.

The maxim, for what it's worth, is variously attributed to either Milton Friedman, Jack Kemp, or Ronald Reagan, but without chapter and verse. A little tough to nail down. I suspect it may predate them all. Ronald Reagan expresses the ideas explicitly in his farewell speech of 1989, but not in the identical language. Stockman, of course, knows the lines from that era, not from The Big Picture blog.

It just goes to show that the free for all of the internet is no substitute for publications vetted by the knowledgeable.

The Pothead President

Just how big does the president think this country is, anyway?

Consider this from yesterday:

"I urge Congress to listen to AARP, listen to the AMA, and pass this reform for hundreds of millions of Americans who will benefit from it," Obama told reporters during an unannounced visit to the White House briefing room after the endorsements were announced.

Apparently to him, the country is really big.

But according to the U.S. Population Clock, the country currently has just over 300 million people in it. I guess President Obama could be referring to these "hundreds of millions," which is technically correct, but it sure sounds like he means a whole lot more people than that. You know, five, six, seven hundred million.

Would it be unfair to speculate that he's referring to all those extra Americans who live in the surplus states of the union he said in May of 2008 he had already visited up to that point in the primary campaign? What, fifty-seven, fifty-eight states?

It's big, man, really big.

Or is the president contemplating a future where the rest of the world continues to beat down our door to get our superior healthcare? Has it occurred to him that maybe after they've seen us all standing in line waiting forever for services they won't be so eager to come? Has it occurred to him that with the single payer system his plan intends for us that the number of abortions will skyrocket on the public tab and there won't be as many of us in the future as he thinks? Who's going to pay for all this spending, the Israelis? I don't think any of that has occurred to him at all.

Obama's troubles with geography and numbers go back a long way, and the instances have been the subject of some interest and amusement from the beginning. But the on-going failure to grasp the shape and size of things simply suggests that the president has an impaired sense of reality and its proper proportions.

Anyone who has known a dope smoker can pick out the telltale signs of the disconnect from reality, especially the frequently remarked detached quality of his personality. He seems passionless at the most inopportune times, strangely unmoved by events which deeply affect the normal among us. Off teleprompter, the president is haltingly vacant. He is apathetic to his core.

I say it's because he's a toker.

Congratulations, chicagoansforrio.com!

Congratulations Chicagoans! You escaped a financial catastrophe of Olympic proportions. Now if you could just get rid of Daley, Stroger, and Durbin. Good luck with that!

We've got lots of cheap real estate over here in Michigan. Come on over! And bring the poppy seed hot dog buns.