A Rationale For Ending The Tax On Corporate Profits

John Steele Gordon provides a helpful survey of the history of American taxation, here, including the chronically avoided topic of how the tax on corporate profits (ruled constitutional as an excise tax "on the privilege of doing business as a corporation") was meant to be a temporary tax on the rich:

In the first decade of the 20th century, the stock of corporations was owned almost entirely by the rich. So taxing corporate profits was, in a very real sense, taxing the rich. Congress passed the legislation and in 1911 the Supreme Court ruled unanimously that the tax was constitutional. ...

Unfortunately, the [subsequent] personal income tax did not replace the corporate income tax that had originally been intended only as a stopgap. Nor did Congress integrate the two taxes so that income, whether corporate or personal, was only taxed once. The two taxes simply ignore each other as if corporations are owned by Martians, not people.

At the tax levels of the early 20th century, the harm was inconsequential. But when tax levels rose dramatically to fund the great wars that soon followed the personal income tax, the pressure to legally avoid taxes rose equally. As a result, the two separate, uncoordinated tax systems became a uniquely powerful engine of complexity as accountants and lawyers have played the two systems off each other and Congress has tried, unsuccessfully, to close or regulate the resulting “loopholes.” ...

The two income taxes have been the main reason that the tax code has exploded to a 4-million-word incomprehensible mess.

Global Warming Skepticism Bothers CNBC More Than Calling ObamaCare Fascist?

For quite some time now CNBC has chosen to showcase Whole Foods' co-founder John Mackey for his global warming opinions rather than for his characterization of ObamaCare as fascist. So many targets, so little room in a headline.

From the story:

As for regulation to reduce global warming, he said, “We can probably eliminate poverty on the planet earth in the next 50 years if we will just continue to follow the tenets of free enterprise capitalism to the greatest extent possible. So I just don't want to see that change.”

Mackey’s taken some heat for some of his other publicly stated opinions. In a recent interview on NPR, he characterized President Obama’s health care legislation, ‘Obamacare’ as “more like fascism.” He backpedaled in subsequent interviews.

This Is A Depression, Says Dem. Billionaire Mort Zuckerman

"We believe we live in more normal times—and we do not. Millions of people today are experiencing exactly the same struggle as the millions did in the Great Depression. They can't find work. They depend on government and philanthropy. They live on hope denied. ...

"The reality is, we are experiencing a modern-day Depression. It is harder to find work than it has been in any previous economic recovery period. ...

"The Pew Research Center reports that for the first time in the post-World War II era, middle-class families finished the decade significantly poorer in terms of household net worth—which is down almost 40 percent since 2007—and with lower incomes than a decade earlier. This has hit the middle class harder than any other group. According to Pew, one third of Americans now identify themselves as lower class or lower middle class, a deterioration since 2008 when one quarter identified themselves that way. ...

"We are living through a breakdown of the great American jobs machine. This is not a recovery. Annual GDP growth in 2010 and 2011 averaged a mere 2.4 percent; in 2012, GDP growth slowed to 1.8 percent. In other words, cumulative growth for the last 11 quarters was just 6.8 percent, less than half the 15.2 percent average growth in GDP after previous recessions over a similar period of time. This is the slowest growth rate following all 11 post-World War II recessions. ...

"No recession since the end of World War II has been as deep or as long as this one, severely testing the optimism, confidence, and animal spirits that typify the temper of America. The question of the hour is how can we find a way to avoid becoming a low-wage, part-time country."

Read the full story, "How We Can End Our Modern-Day Depression," from Mort Zuckerman, here. 

Wily Democrats Ramped Up Spending Baseline Almost 18% In 2009

The Tax Policy Center here provides a useful history in pdf format of federal outlays and revenues going back to 1940.

After taking complete control of the federal purse strings in January 2009 with the election of President Obama, the Democrat-controlled House and Senate proceeded to ramp up federal spending almost 18% in 2009 compared to 2008, from $2.98 trillion to $3.52 trillion. You can see from the chart that expenditures have continued at that new, higher level ever since, despite the fact that revenues have not recovered. Is this the height of irresponsibility, or what? It certainly is one of the more baneful consequences of one party Democrat rule. Now you understand why Democrats won't pass budgets. Continuing this excess using continuing spending resolutions keeps their names out of the papers.

You'll notice on the revenue side for 2008 and 2009 that the government's income from taxes of all sorts declined almost 17% while these expenditures were being dramatically increased at nearly the same rate, opening up a gigantic fissure in the government fiscal landscape. Revenues declined by $419 billion between 2008 and 2009 while expenditures increased $535 billion. The revenues declined due to the bursting of the housing bubble, the ensuing financial panic and the massive unemployment which followed. Nearly 11.31 million Americans lost their full time jobs between November 1, 2007 and December 1, 2009. People who don't work don't pay taxes. With federal outlays already running over $450 billion in excess of revenues, you can understand why the deficit in 2009 swelled to over $1.4 trillion, and continues elevated at that level every year since. Deficits for fiscal years 2009-2012 will top well over $5 trillion in the end. At the Bush-level of deficit spending, the number would have been closer to $3.5 trillion.

In exchange for that astounding liability we have fat bankers not prosecuted for their crimes; bigger banks more dangerous than ever; fat government salaries at every level compared to the private sector; crony capitalism in banking, autos and healthcare; 5 million homes repossessed in seven years; over 12 million officially unemployed; over 2 million per year leaving the labor force for Social Security disability, reduced lifestyles, poverty, or retirement; nearly 48 million on food stamps; GDP struggling to average 1% per year under Obama, the worst performance in 65 years; interest rates near zero destroying returns on retirement capital; an exploding wave of reduced work in the form of impermanent contract and part-time labor; and on and on.

And what's hot on the web right now?

"Where's my refund?" 

High Taxes On Imports A Chief Cause Of The Civil War

So says Michael Sivy for Time, here:

The income tax has always been hated – but so were the taxes it replaced. In Colonial America and the early U.S., taxes were typically on goods like sugar, tea, or whiskey (which triggered the Whiskey Rebellion in 1791). Other taxes were on land or were poll taxes (which was a flat amount per person and had nothing to do with voting). Later on, there were high custom duties on imports, which were one of the chief causes of the Civil War because they pushed up the prices of manufactured goods, helping the North but hurting the agrarian South. Real estate taxes were always extremely unpopular and still are.

It wasn't until 1863 when The War of Northern Aggression was going badly for Lincoln that it became officially about slavery.

Under Obama 2.1 Million/Year Left Labor Force, Under Bush 1.3 Million/Year

Those not in the labor force reached a new record high level on January 1, 2013: 89.008 million. On 1-1-01 there were 70.008 million not in the labor force. On 1-1-09, 80.507 million. What that all means is that under Bush people left the labor force at a rate of 1.302 million per year, but under Obama it rose dramatically to a rate of 2.125 million per year, 63% higher than under Bush.

Believe it or not, under Ronald Reagan, whose unemployment record had been the worst in the post-war period until Obama, just 147,000 left the labor force ANNUALLY, for a TOTAL of only 1.176 million in eight years. Under Clinton the rate rose almost four times that, to 566,000 annually.

Personal Defense Weapon

Department of Homeland Security says so, here.

The Obamas Are Sweet Potato Lovers

From Boston.com, here:

The first lady has described her family as sweet potato lovers. This fall, she harvested the potatoes from the White House Kitchen Garden, sometimes with the help of children from the Bancroft and Kimball elementary schools in Washington.

"Sweet Potato Tastes Good. I Like It."

Unemployment: Remember How You Felt In January 2009? Things Are The Same.

So why should you feel better if we're back to where we were when Obama took office?

Just because that unemployment sadist with the drill has stopped boring holes in your skull is no reason for optimism, is it?

Or maybe it is:

"Stockholm syndrome, or capture–bonding, is a psychological phenomenon in which hostages express empathy and sympathy and have positive feelings toward their captors, sometimes to the point of defending them. These feelings are generally considered irrational in light of the danger or risk endured by the victims, who essentially mistake a lack of abuse from their captors for an act of kindness. The FBI's Hostage Barricade Database System shows that roughly 27% of victims show evidence of Stockholm syndrome."

Unemployment Rate Ticks Up To 7.9%: Obama Remains Solidly In Last Place Since 1948

Full pdf from the BLS here.

The average report of unemployment under Obama for all months of 2009 through 2012 comes to 8.98%, the very worst record since 1948.

Obama's nearest competitor for worst performance during the period was Ronald Reagan. For all months of 1981 through 1988 Reagan's average report of unemployment was 7.53%, nearly 20% better than Obama's. Under George W. Bush, whom Obama blames for everything, unemployment averaged just 5.27% for the 8 years 2001-2008, one of the five best records since 1948.

The worst stretch of unemployment since 1948 gets even longer under Obama with today's report at 7.9%. 

Chart here.

Uh Oh. Peter Schiff Is SELLING $3 Million In .5 Ounce Gold Maple Leaf Coins

As he promotes OWNERSHIP.

Wily devil.

Story here.

Obama Shrugs, Sunsets His (Mostly Ignored) Jobs Council

Safely reelected, Obama's Jobs Council sunsets this week, even though millions still can't find work:

WASHINGTON (AP) — President Barack Obama will let his jobs council expire this week without renewing its charter, winding down one source of input from the business community even as unemployment remains stubbornly high. ...

Obama met with the council only a handful of times. During the last meeting, in February 2012 . . . 

Read the rest, here.

Why Obama's Done Nothing To Restore Jobs And Growth

It's not his thang, baby, dontcha remember? He told you so almost four years ago:

"Nobody would be happier than me to stay out of it. I have more than enough to do without having to worry [about] the financial system."

-- President Obama, March 2009

Jobs and GDP are an annoyance to Obama, as are stocks, banking and Bibi Netanyahu, and boy is he ever proving it.

What's The Difference Between GDP Growth Of +3.1% And -0.1%?

What's the difference between GDP growth of +3.1% and -0.1%?

If you said 3.2%, you are a dumb ass.

3.2 is the spread in percentage points, not the percentage difference.

Think of the measurement, in this case of the GDP  expressed as a rate, as steps on a ladder, the rungs of which each represent 0.1. You are standing way up there on rung 3.1 in Q3 2012, from which you descend during Q4 all the way down to rung 0.1, then to rung 0.0, and finally to rung -0.1, if you can imagine a ladder with zero and negative rungs.

How many steps did you take? The answer is 32. That is a long way down from where you were. Since each step has a value of 0.1, 32 x 0.1 = 3.2, the value of the spread.

Now that you know the value of the spread, you can calculate the percentage difference between the two measurements the spread spans, otherwise called the percentage drop in this instance. This is where people, even in the financial media, get confused, because they have to figure out the percentage difference between rates, which by definition are already expressed as percentages. But really it is not difficult, no more difficult than calculating the percentage difference between two quantities of apples, oranges or any other things you can enumerate. Forget that they are percentages you are calculating the percentage difference between in this instance, and imagine instead that they are the number of times Red Forman kicked your ass last week vs. this week, or whatever else you like.

Once you know the spread between the two things, you say to yourself: "What percent of the higher number is the spread?" You ask it that way because you want to know how much you declined in percentage terms. (You'd ask the question of the lower number if it had been an increase). Since percent is the amount per hundred, you turn that word problem into an equation: x divided by 100 (what percent means the amount divided by 100), multiplied by (of) 3.1 (the higher number of 3.1 or -0.1, the place from which you climbed down to -0.1) = (is) 3.2 (the spread).

You write it this way:

x                 3.1  
---       x     -----     =    3.2
100              1

Another way to say the same thing is:

3.1x
------  = 3.2
100

Next you begin to isolate x by multiplying each side of the equation by 100, which gives you 3.1x = 320.

Then all you have to do is divide each side by 3.1 to find the value of x. 320 divided by 3.1 = 103.2258. And what was that again? The amount per 100, otherwise called the percentage. So the answer is 103.2%. That's how much the GDP growth rate declined from Q3 to Q4. That's a lot bigger difference between the GDP numbers than 3.2%, isn't it? 3.2% is puny and insignificant on top of being just plain wrong. 103.2% is the stunning truth, and an arrestingly important warning.

In other words, from Q3 to Q4, we wiped out all the growth rate, 100% of it, and a little bit more. We were up the ladder at 3.1, and walked it all the way back 31 steps to the bottom, and then some, one more step, below ground level so to speak.

Now if we could just get people like Rush Limbaugh to understand this, maybe more people in the country would begin to understand the enormity of our problems. Unfortunately for us, the enormity of our problems begins with the fact that most of the voters can't do even this simple math. If they could, they wouldn't have reelected the guy whose slogan was Forward because they would have understood that he doesn't know which direction that is, let alone how to get there.

Obama Has Had 3 Recessions In His First Term, And May Get A 4th To Start His Second

If a recession is two quarters back to back with GDP declines, the second decline worse than the first, then Obama has had three recessions in his first term, and is likely to begin his second term with a fourth recession. "A fall in GDP in two successive quarters" remains the dictionary definition of a recession despite what trimmers everywhere say.

After Q4 2009, GDP declined from 4.0 to 2.3 and 2.2 in the first two quarters of 2010.

After Q3 2010, GDP declined from 2.6 to 2.4 and 0.1 in the last quarter of 2010 and the first quarter of 2011.

After Q4 2011, GDP declined from 4.1 to 2.0 and 1.3 in the first two quarters of 2012.

That makes three recessions at the ends of each of the first three years of Obama's first term, and the pattern appears to be repeating again at the end of the fourth year, going from 3.1 to -0.1 from the third quarter of 2012 to the fourth. With taxes rising dramatically in 2013 from the payroll tax reset, the increase in taxes on the rich, and the new ObamaCare taxes, and with spending cuts through sequestration looming, I'd say the odds favor a 4peat on the recession front because these factors are very negative for GDP, as are the employment rules for ObamaCare which will subdue incomes and thus spending.

Given the pattern of repeated recessions beginning already in 2010, what we have been going through since 2008 when GDP declined 0.3 and 2009 when GDP declined 3.1, a depression in fact all by itself, is actually better called an extended depression even though annually speaking 2012 represents a climb out of the pattern. Unless, that is, Q1 2013 isn't worse than -0.1 and future revisions to 2012 GDP aren't downward.

I wouldn't bet on it.

ObaMao Breaks A Few GDP Eggs To Transform The Country

After four years of the worst GDP in post-war history, are you starting to get the feeling that it's intentional?

"At present, our objective is to struggle against and crush those persons in authority who are taking the capitalist road, to criticize and repudiate the reactionary bourgeois academic 'authorities' and the ideology of the bourgeoisie and all other exploiting classes and to transform education, literature and art, and all other parts of the superstructure that do not correspond to the socialist economic base, so as to facilitate the consolidation and development of the socialist system."

-- The Decision, 1966

US GDP Growth Is So Bad Greece Is Doing Better Than We Are

h/t TradingEconomics.com

George Bush's GDP Sucked But Was 2.5 Times Better Than Obama's

2.04% on average for 8 years then vs. 0.825% for four years now.

Markets Shrug At Terrible GDP Report, Hang On Words Of Federal Reserve

Faced with the worst GDP report since Q2 2009, the markets shrug. What really counts for markets is whether the Federal Reserve this afternoon will announce some new intervention to boost the economy. Markets ignore reality, and hang on the words of the bankers. This is not free market capitalism. These are not free markets. These are rigged markets. This is corporatism. This is fascism. It favors an elite few in exchange for their support, while the majority of Americans gets by on crumbs.