The loudest rhetoric coming from President Obama lately has been about the Buffett Rule that millionaires should pay 30% of their income in taxes.
But now it comes out that he and Michelle only pay 20.2% of their income of about $800,000 in taxes! The flunk their own standard by ten points!
How many brains does it take to get the whole country stirred up demanding that the rich pay 30% in taxes and then fail to do that yourself?
The other major point Obama has been touting is his success in turning around General Motors, saving American jobs. Oh Really? The fact is that of the 202,000 General Motors employees, only 68,500 live and works in the United States. Two-thirds of the corporations labor force lives abroad. Obama is not saving American jobs, he is saving jobs around the world. Indeed, General Motors of which the government with a one-quarter share is the largest stock holder by far is also the biggest corporate out-sourcer of jobs.
And, while we are on the subject of having the rich pay their fair share of taxes, how about the fact that General Motors, which is, in effect, owned by the government, paid not a penny of taxes on a profit of $7 billion last year! They, too, flunked the Buffett Rule.
The fact, of course, is that all the Buffett rule does is, in effect, raise the capital gains tax rate from the current 15% to 30%. Every time the government has raised the capital gains tax rate, revenues have fallen. Every time it has lowered the rate, revenues have risen.
It is a tax that costs money and raises nothing.
When Reagan cut the capital gains tax from 28% to 20% in 1981, capital gains tax revenues rose from $12.5 billion under the old 28% rate to $18.7 billion under the 20% rate. The rate dropped by a third and revenues rose by a third.
Then, when Reagan bowed to liberal pressure and put the rate back up to 28%, revenues from the capital gains tax fell from $328 billion to $112 billion. The tax had risen by eight points but revenues had dropped by two-thirds.
And, in 1996, when Clinton cut the rate back down to 20%, tax collections from the capital gains levy rose from $66 billion to an average of $100 billion over the next four years. More important, the capital gains tax cut stimulated investment and capital gains. Under the higher tax rate, in 1996, there were $261 billion in capital gains in the U.S. In the three years after the cut, the total of capital gains rose to an annual average of $440 billion.
So the Buffett Rule makes no economic sense and wont do anything to cut the budget deficit. In fact, it will probably cost us revenue.
Nor does it make political sense for a president who, himself, fails to live up to its requirements.
The Buffet rule isn't law, and although a majority in the US Senate voted to make it law yesterday, it was filibustered by a minority, so nobody will ever have to live by the Buffet rule. Not Obama who pays 20.2% on his annual $800,000. And Certainly not Romney who pays 14% on his annual $20,000,000. Obama wants to change the tax code in such a way that he will be required to pay more, but he's not going to voluntarily pay more before such tax code change goes into effect. I see no hypocricy in what you seem to be all excited about.
Investment income is far less noble than income earned by people who labor for it. I will never understand why you support the idea that people who sit by the pool and wait for their dividend checks to roll in should pay a lower rate than people who have to shower after work, but I can only surmise that in your life, you've never had to work in a job that actually made you dirty? It must be nice being born into a wealthy family?
As long as you're here Gerry, I have a question for you. You once told me that a person who develops a new product or technology while working for a company, will rarely ever personally prosper from it because it is the property of the corporation, not the employee who developed it. So why is it then, that your grandfather became wealthy from developing DELO oil? Wasn't he working for an oil company at the time?
Who said my grandfather was wealthy? He never received a dime in any sort of royalties etc. for any of the inventions/processes he patented while at Standard Oil of California (nee Chevron). My maternal grandfather was one of 8 children who grew up on a farm in rural Idaho, outside of Boise. That's hardly the makings of a "rich" lifestyle. He went to the US Naval Academy in Annapolis and served as a lubrication researcher during WW2, for US diesel submarine powerplants. He retired from the Navy Reserve as a full captain (equivalent to a US Army Colonel). Military made him wealthy? I don't think so. After the war he joined Standard Oil of Calif. and was always in the technical/research end of things, never an executive. Not too sure that he got rich from that either. Rather, I think he was a good investor and didn't live a lavish lifestyle. He drove a 1965 Chrysler Newport station wagon (yes, it had a 413) until the day he died in the early 1990s.
The simple fact that Obama and Buffet aren't willing to voluntarily pay what they seem to want others to pay, to me seems hypocritical. Why don't either/both of them lead by example?
The reason is that they want to hang onto as much of their money as the next guy. Greed is, unfortunately, human nature. Even for socialists. Why do you think there is/was an "elite" ruling class in countries like the USSR, China, North Korea and Cuba? Shouldn't the rulers be living the same egalitarian lifestyle as the rest of the population? Of course they want the perks and power and money associated with being a government leader. Human nature. But it does go against their own philosophy.
If Buffett and Obama really believed in what they espouse, they'd be voluntarily raising their own tax rates, leading by example, and encouraging others to follow suit.
There's nothing wrong with investment income. Some of us are avid investors and work hard at it. If you do it right, and do your homework, you can parlay a small amount of money into a nice chunk of change in a relatively short amount of time. It is very easy to turn, say, an initial investment of $5,000 into hundreds of thousands of dollars through the use of derivatives, options, and momentum investing. In a matter of months, or a couple of years. There's nothing wrong or illegal about that. It's called "capitalism".
So, if I was a full-time options trader, sitting at my computer for two hours every morning making the day's trades (their "work day"), then doing whatever I want to the rest of the day... you're telling me that I'd be earning dirty money, far less worthy than the union mechanic who is earning $35 an hour fixing engines for United Airlines? How so? I mean, the airline mechanic could do the same thing as the "morning" day trader if he wanted to, and earn far more money doing it.
You see, there is nothing wrong with earning as much money as you can -- IF you want to do that. If I wanted to earn a million-plus dollars a year, I'd work as a commodities trader (there are plenty of them here in Houston), or a Wall Street investment banker. You can do that in America, if you choose to. But the fact that certain occupations make more (sometimes MUCH more) money than others, isn't a sin or less "noble". What about you vs. the $9 an hour "burger flipper" at McDonald's who has to go out and clean up the parking lot and mop the floors twice each shift. Is the money that person earns more noble than the money you earn pulling computer codes from engines and replacing parts that your electronic workshop system's diagnostic trees tell you to replace? Seems to me by your standard, that the burger flipper is doing MUCH more manual labor than you are, standing under a car and pacing back and forth to your toolchest and computer manuals.
My parents made me save 50% of every dollar I ever earned - gift money, 7 years of my paper route, high school and college summer jobs, working while in college, etc. And in fact, I worked three summers during university doing heavy building maintenance for a 12-story building in downtown Tacoma, Washington. Everything from taking apart large computer room chillers to replacing fluorescent office light fixtures to painting the building's 4 staircases (roof to sub-sub basement) and power-washing the sidewalks and building exterior. And at the time, I earned a decent wage of $5.00 doing it (minimum wage was around $3.00-3.25 an hour). And you know what I did with the money? I **saved** it and **invested** it starting as a youngster (under the tutelage of my parents), and it turned in to a $40,000 nest egg by the time I graduated from college, which went on to form the basis of my adult investments.
No PowerStroker, I'm self made, just like my parents and my grandparents before them. Does my first car, a 1967 AMC Rambler Rebel with a 232-straight-six, sound like the car of a privileged youth to you?!? :)
Yes, my grandpa shared several patents (including as co-inventor of the original RPM DELO oil in the 1950s, with 1-2 other (researcher) colleagues, depending on the specific patent. So not understanding what your question/confusion is?
Now, for your taxation question. It depends on the type of unearned income you are talking about. It seems you are talking about passive (and probably portfolio) income, which is generally unearned.
For corporate dividends paid to company shareholders, it is unfair to have high taxes because the profits of the company paying the dividend are already taxed. So taxing dividends paid out to the shareholders, is in all sense of the word, a double-tax. This is particularly hard on folks like the elderly, who tend to rely on the fruits of their investments to augment their pensions and/or Social Security income .. which is often quite limited. I would agree with the past Republican proposals to eliminate this [double] tax altogether. However, under Obama, this dividend tax is generally slated to increase by about 50% starting in 2013.
Most other types of passive income (such as rental money, royalties received, alimony, inactive business partnerships, etc.) are taxed as regular income with the exception of FICA taxes not being taken out, as is the case with active (labor) income. So that is pretty darn close to being even.
However, philosophically, the reason that passive income is taxed at a lower rate than active income, is because the government wants to incent the investor (or passive income recipient) to pursue activities, investments etc. that grow the economy and create jobs. Generally most people with freed-up capital, i.e. a business owner, will take the profits created by less taxation and invest the money into someone else's venture, or create a new venture of their own, or re-invest the money into expanding their own business that created the profits in the first place.
I think generally that capitalists and Republicans tend to subscribe to this belief. Obviously there are other viewpoints and beliefs that these excess monies should be used to fund government programs and pay down debt caused by government spending.
Yes, my grandpa shared several patents (including as co-inventor of the original RPM DELO oil in the 1950s, with 1-2 other (researcher) colleagues, depending on the specific patent. So not understanding what your question/confusion is?
Wasn't he working for an oil company as a researcher at the time??? How did he get the patent and not the company?
Now, for your taxation question. It depends on the type of unearned income you are talking about. It seems you are talking about passive (and probably portfolio) income, which is generally unearned.
Yes
For corporate dividends paid to company shareholders, it is unfair to have high taxes because the profits of the company paying the dividend are already taxed. So taxing dividends paid out to the shareholders, is in all sense of the word, a double-tax.
No actually I disagree. According to my Republican friends, Corporations are people. This means it's not a double tax because the corporation person pays a tax on their share, and the natural person who owns stock in a corporation pays a tax on their dividend. These are 2 separate people paying a tax on their respective share and therefore nobody is being double taxed.
This is particularly hard on folks like the elderly, who tend to rely on the fruits of their investments to augment their pensions and/or Social Security income .. which is often quite limited. I would agree with the past Republican proposals to eliminate this [double] tax altogether. However, under Obama, this dividend tax is generally slated to increase by about 50% starting in 2013.
Do you think we should eliminate this "double tax" from corporations like Exxon Mobil and General Electric which didn't pay a dime to the US Government for the last several years, and actually got refunds? How much taxpayer money do we have to shovel at corporations before you will feel satisfied?
Most other types of passive income (such as rental money, royalties received, alimony, inactive business partnerships, etc.) are taxed as regular income with the exception of FICA taxes not being taken out, as is the case with active (labor) income. So that is pretty darn close to being even.
Not close enough for my liking.
However, philosophically, the reason that passive income is taxed at a lower rate than active income, is because the government wants to incent the investor (or passive income recipient) to pursue activities, investments etc. that grow the economy and create jobs. Generally most people with freed-up capital, i.e. a business owner, will take the profits created by less taxation and invest the money into someone else's venture, or create a new venture of their own, or re-invest the money into expanding their own business that created the profits in the first place.
Or we could give a bigger tax cut to working class people instead. That way, instead of living paycheck to paycheck, they can have a little extra money laying around to invest themselves.
I think generally that capitalists and Republicans tend to subscribe to this belief. Obviously there are other viewpoints and beliefs that these excess monies should be used to fund government programs and pay down debt caused by government spending.
Would you consider the Bush tax cuts to be government spending? How about the wars? The no bid contracts? Corporate welfare?
Watching Democrats push for tax increases for the rich is somewhat funny. Anyone who would advocate raising taxes, rather than curbing spending (the real problem) is soon to find out that once they raise the taxes on the rich, the poor and middle class tax increase will soon follow. Idiots!
My regards to Warren Buffett... 90% of the nation hates him, yet we should all listen to him? I wonder if Buffett will be rich enough to cheat his way out of death? He better hope so cuz the tax man will make bank when he passes that cash.
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What is to give light must endure burning -- Viktor Frankl
All patents awarded by the US Patent Office have a name or multiple names attached to them. You should read up about how the patent system works and the process by which patents are awarded.
For example, Steve Jobs was the name listed on quite a lot of patents that were awarded to Apple Inc. Most often it was Jobs and multiple other folks at Apple. But while the corporation or business entity is generally the OWNER of the patent and associated intellectual property, the names of the individuals within the corporation (who typically author the patent application) are actually the names on the patent itself. It is common practice for most companies in the high-technology industry to require their engineers/inventors to voluntarily provide the patents of the company they work for, to the company, so that they become the company's property. And this is what my grandfather did while at Standard Oil, as well.
That's just how the patent system works. Actually I'll check it out on Wikipedia real quickly.......
Wikipedia's entry on patents (excerpted to provide the relevant information here), says the following:
Ownership
In most countries, both natural persons and corporate entities may apply for a patent. In the United States, however, only the inventor(s) may apply for a patent although it may be assigned to a corporate entity subsequently[17] and inventors may be required to assign inventions to their employers under a contract of employment.
Your definition of "corporations as people" is not how the US government or the IRS or our legal system looks at things, not to mention basic accounting principles that have been held for centuries. So I would tend to go with how they think (because their thinking reflects the current laws of the land).
The way that corporations work is that they take in revenue, and they pay out money in the form of raw materials costs, operational expenses (facilities, power, sales & marketing, etc.), corporate/business taxes, FICA/unemployment taxes, payroll, medical & retirement employee accounts, and so forth. Any money left over would be considered profits. Some corporations (quite often, the more mature/older companies) pay out dividends from these profits; younger and growing companies tend to NOT pay dividends and rather to use the profits to re-invest to grow the business, reward employees with bonuses to retain them, and if they are a public company to buy back shares on the open market so as to increase their EPS (earnings per share) -- a key measure of corporate health and profitability. Larger companies also buy back shares to improve their EPS and to make themselves more attractive to investors. Investors love companies with high EPS !! All profits (monies left over after the bills are paid) are taxed, however.
It is certainly a well accepted fact that dividends paid out to shareholders are derived from corporate profits that are already subject to taxation (and typically are taxed). So, by all common government and legal standards and definitions, dividends are indeed taxed twice. Of course, the individual tax circumstances of various companies, and how much tax they pay, is another story. But all dividends are subject to taxation, and all dividends come from profits that the IRS/US Government also sees as taxable monies.
One of the benefits of being a corporate shareholder is that you (if you own a lot of shares) get to share in the company's profitability with an income stream ... i.e. dividends. Public utilities (such as power companies) tend to have super-high dividends -- much higher than corporations do. You may get $2.00 a share per quarter from a power company, while you get 10 cents a quarter per share from owning a company like my employer's. So investing in your public utilities is a great way to get some hard cash!! Much better than putting your savings in Wells Fargo or Citibank and earning 0.02% interest per month !!
If you had say 10,000 shares in your utility company, you could get a dividend of $20,000 (before taxes) per quarter at $2 per share, per quarter !! So while the stock isn't growing in price, it's sloughing off cash at a huge rate, and if you're retired that's some bloody nice income to have !! Utilities tend to be pretty stable as opposed to companies like my own, whose stock tends to go up and down over time.
Lots of corporations have DRIPs, which stands for dividend reinvestment programs. What that means is that all dividends are automatically collected on your behalf by the company and are used to purchase more shares, sometimes at a nice discount. One of my former employers, Intel (who makes computer chips), gave us a 15% discount on DRIP shares. So working at the company for 9 years, I accumulated quite a few shares that way. And that didn't include the many thousands of stock options that I was awarded. But stock options and other types of derivative investments are an entirely different conversation.
But I will say that I've paid plenty of income tax on any and all realized investments (i.e. when I cashed out of a stock and took profits) I've ever made. So you should feel very happy about that.
I think you should consider utilizing our capitalist system to the maximum extent that you can, if you're not doing this already. Become an active investor !! Make the system work for you !! That way you can make more money, and at the same time you'll pay taxes on that additional money you make, so you will feel good that you are doing even more of your part than you currently are, to contribute your income to help the US citizenry. Particularly those less privileged than you.
The constitution as originally ratified allowed for Congress to provide for the common welfare of the people.
It also had no problem with owning slaves or preventing women from voting. I prefer to view the Constitution as a living document that charts the progress of our nation every time we amend it.
What happens when it gets so modified it turns into one big mess?
Keep it simple stupid! After my most recent experience that I wrote about in the AFR I am losing faith in government! Turning into a big circus!
I mean when we have the SS pulling people like Ted Nugent to the side for speaking his mind it's time to wonder if this is still America!
Maybe the reason America has been so great for all these years has been because of the fact America wasn't some big melting pot chock full of impurities! Are the immigrants and hyphen-Americans really looking out for the country or are they just looking out for themselves? I am starting to think many people would NEVER put country first just because they know damn well that by doing so they are just helping out some unappreciative blood sucker who could give a shit about the nation!
Before you race card idiots start putting them cards down you need to think about what an illegal immigrant and a hyphen American is... They are both people that place another nation before the one they are blood sucking! And that's a serious problem for someone who is a tried and true "American", regardless what color they may be! If you are an American their is no need to hyphenate it with another nationality. If you are here illegally you need to LEAVE until you nationalize. PERIOD.
-- Edited by SELLC on Tuesday 24th of April 2012 12:08:05 PM
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What is to give light must endure burning -- Viktor Frankl
Maybe the reason America has been so great for all these years has been because of the fact America wasn't some big melting pot chock full of impurities! Are the immigrants and hyphen-Americans really looking out for the country or are they just looking out for themselves? I am starting to think many people would NEVER put country first just because they know damn well that by doing so they are just helping out some unappreciative blood sucker who could give a shit about the nation!
Oh that's classic Rex. I'm pretty sure Hitler had the same thoughts about Germany and that's why he found ways to get rid of their "impurities." Which is why fascism is the far right wing extreme, and why you are much closer to Hitler politically than any liberal.
Before you race card idiots start putting them cards down...
I didn't even need to play the race card. The readers will judge your statements for what they are without any help from me.
Spare me the Hitler bullshit already! The impurities I speak of derive from a lack of patriotism. People here just to soak our nation with no intentions of being a citizen, or people here just to do this nation harm are the impurities I speak of! It's this lack of Americanism in this nation today that is making it weak.
I feel the mix of race, religion and beliefs could make for the strongest alloy out of the melting pot if only everyone could just agree that they are on the same team. Bring the pride back. No one is suggesting a little comradery isn't healthy, but at the end of the day we are all on the same team. Enough with the hyphen-American BS! Deport the illegals so our people have jobs! Make it MEAN something to be American, rather than just a free pass and the last ones standing here gets stuck with the tab!
If illegals want to be American, make them go thru the procedures! But be damn sure they do so while living in their native country! Enough is enough! Things need to make a turn for the better, we need to cut some waste and this is a damn good place to start!
But nice try PowerStroker.
-- Edited by SELLC on Wednesday 25th of April 2012 02:21:22 AM
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What is to give light must endure burning -- Viktor Frankl
By the messages coming out of the Obama campaign, I'm apparently supposed to be more outraged by what Mitt Romney does with his money than by what Obama does with mine.
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