Working on income tax reminds one of all the welfare that the US government gives to the rich. The biggest is probably the home mortgage deduction. It's nice for average people, but the average person probably gets only a few thousand dollars. On a mortgage in the $300,000 to $350,000 range, not too cheap, interest will be about $1,000 per month, or about $12,000 per year. On a $1 million mortgage, monthly interest is about $3,300 per month or about $40,000 per year. In addition the smaller homeowner will probably be paying taxes in something like the 20% range, which means that his deduction will be about $2,600. The richer homeowner will probably be paying taxes at a higher rate, say 35%, so that his deduction will be around $13,800. So, the government gives the richer person $11,000 more for living in his house than it gives the poorer person. And of course, renters, who tend to be poorer than homeowners get no help from the government to keep a roof over their heads.
Another less obvious giveaway to rich people is the lower tax rate for capital gains and qualified dividends. In this case the government basically rewards people for playing the stock market. Arguably, the provisions discourage just playing the stock market like gambling in Las Vegas, because they make you hold stock for at least a year. But if you do hold the stock for a year, the savings are enormous, cutting your taxes in half on stock market income, whether for trading stock or just collecting dividends. The richer you are, the more the government gives you. The government gives people like Mitt Romney millions and millions of dollars just because they are rich. No wonder Mitt Romney despises poor people who get hundreds of dollars a month from the government, when he gets millions. If poor people had any ambition, they would soak the government for millions, like he does. Like most rich people, Mitt hates paying soldiers in Afghanistan or widows on Social Security.
Wednesday, April 08, 2015
Gifts to the Rich
Abolishing traditional defined benefit retirement plans has been a huge gift to wealthy investors. In the old days, retirement funds invested in bonds, which returned something ike 4% annually, and which over a working life would provide the bulk of the funds needed for retiring employees. Now most companies offer 401(k) plans, in which the employee has to invest part of his salary, and the company may or may not match his contributions.
Companies could hire experts to decide how much they needed to invest and how to invest it. They weren't always right, but they had a better chance of being right than the average worker. Investment companies can help with 401(k) plans, but often their fees are so high that they eat up a significant part of the earnings.
But the huge benefit for big investors is the influx of new money into the stock market. This is partly due to low interest rates, which make it impossible to invest in bonds, but it is also due to the fact that small investors need rapid, big returns to cover their retirement. This is often possible in the stock market, but it is the exception, not the rule. In the meantime, the small investors create a huge pool of money for the rich to play in. It's somewhat like bringing thousands of players into a poker game and creating a gigantic pot. One of the small investors might theoretically win, but more likely one of the rich players who can keep anteing up will take the big pot. The 401(k)s mean that there is more and more money flowing into the market, funding IPOs and bidding up stock prices.
Low interest rates mean that the wealthy can borrow for almost nothing to bet on the market, and with all the help of quants, hedge funds, etc., are more likely to win big. The 401(k)s and IRAs will work out well mainly for the wealthy, like Mitt Romney, who had $102 million in an IRA. Romney hates the low income takers from the Federal Government, but because of the tax breaks he gets, the government is shoveling money to Romney with both hands. If he had to pay 40% tax on $100 million, that would be $40 million; so that is more or less what the government has given him, a lot more than if he collected food stamps. Meanwhile the average investor in an IRA will save a few thousand in taxes.
Companies could hire experts to decide how much they needed to invest and how to invest it. They weren't always right, but they had a better chance of being right than the average worker. Investment companies can help with 401(k) plans, but often their fees are so high that they eat up a significant part of the earnings.
But the huge benefit for big investors is the influx of new money into the stock market. This is partly due to low interest rates, which make it impossible to invest in bonds, but it is also due to the fact that small investors need rapid, big returns to cover their retirement. This is often possible in the stock market, but it is the exception, not the rule. In the meantime, the small investors create a huge pool of money for the rich to play in. It's somewhat like bringing thousands of players into a poker game and creating a gigantic pot. One of the small investors might theoretically win, but more likely one of the rich players who can keep anteing up will take the big pot. The 401(k)s mean that there is more and more money flowing into the market, funding IPOs and bidding up stock prices.
Low interest rates mean that the wealthy can borrow for almost nothing to bet on the market, and with all the help of quants, hedge funds, etc., are more likely to win big. The 401(k)s and IRAs will work out well mainly for the wealthy, like Mitt Romney, who had $102 million in an IRA. Romney hates the low income takers from the Federal Government, but because of the tax breaks he gets, the government is shoveling money to Romney with both hands. If he had to pay 40% tax on $100 million, that would be $40 million; so that is more or less what the government has given him, a lot more than if he collected food stamps. Meanwhile the average investor in an IRA will save a few thousand in taxes.
Christians in Muslim Lands
The massacre of 147 Christian students in Kenya is only the latest attack on Christians in the Muslim world. Christians are under attack almost everywhere there, including in some places where the US has intervened, particularly Iraq. Christians had a better life under Saddam Hussein than they have under the government imposed by the United States. America has abandoned them at least party under the influence of Christ-hating gays and Jews in the US. We have seen the hatred directed at Christians by gays in Indiana, and we have seen the strong attacks on Obama by Jews in Congress for not prostrating himself before Netanyahu and Israeli/Jewish hatred of Iran.
Gays hate the Bible because it says they are immoral. Jews only support Christians if it does not adversely affect Jews. Jews largely see the Middle East as a zero-sum game in which if you help Christians, you hurt Israel and the Jews. Fundamentalist Christians love Israel, but that love is not reciprocated except to the extent that it strengthens Jewish power in the US.
In Syria, Assad has generally been tolerant of Christians, who had a much better life under him than they have under ISIL or any of the other Muslim factions fighting against Assad. Sen. John McCain and many other Republicans want to get rid of Assad by military force if necessary, thus condemning Syrian Christians to a horrible fate under his successor. McCain doesn't care; he now worships money and power, and has abandoned the faith of his fathers, Christians be damned.
In Libya, as a result of Gaddafi's overthrow by a coalition of American, European, and Jewish leaders, 21 Christians were beheaded in February. Christians did not have a great life under Gaddafi, but it was probably better than under the chaos of Muslim rule that exists in Libya today. They have taken control in the power vacuum left by the US and its allies in removing Gaddafi. Poor Christians!
An op-ed in the Washington Post summed up the situation of Christians in Iraq: "Christianity in Iraq Is Finished." Speaking about the ISIL takeover of part of Iraq, the article says:
Gays hate the Bible because it says they are immoral. Jews only support Christians if it does not adversely affect Jews. Jews largely see the Middle East as a zero-sum game in which if you help Christians, you hurt Israel and the Jews. Fundamentalist Christians love Israel, but that love is not reciprocated except to the extent that it strengthens Jewish power in the US.
In Syria, Assad has generally been tolerant of Christians, who had a much better life under him than they have under ISIL or any of the other Muslim factions fighting against Assad. Sen. John McCain and many other Republicans want to get rid of Assad by military force if necessary, thus condemning Syrian Christians to a horrible fate under his successor. McCain doesn't care; he now worships money and power, and has abandoned the faith of his fathers, Christians be damned.
In Libya, as a result of Gaddafi's overthrow by a coalition of American, European, and Jewish leaders, 21 Christians were beheaded in February. Christians did not have a great life under Gaddafi, but it was probably better than under the chaos of Muslim rule that exists in Libya today. They have taken control in the power vacuum left by the US and its allies in removing Gaddafi. Poor Christians!
An op-ed in the Washington Post summed up the situation of Christians in Iraq: "Christianity in Iraq Is Finished." Speaking about the ISIL takeover of part of Iraq, the article says:
... for Christians in Iraq, the past three months have been the climax of 11 years of hell. We Americans have short memories (that goes for you, too, in the “Bush Was Right” crowd), but it’s worth noting that Christians began having serious problems within a year after the fall of Saddam Hussein in 2003. Sometimes it was the work of al-Qaeda, sometimes Sunni insurgents pining for the return of Sunni control of Iraq. Sometimes it was Shiite militias fighting the Sunnis but finding time to persecute Christians....
So when I ask refugees their plans, it is unanimously to leave Iraq altogether. Enough is enough. This runs counter to the desire, expressed mostly outside Iraq, that a Christian presence be preserved in a land that has known Christianity for 2,000 years. It’s sad but true: Christianity in Iraq is finished. As one refugee told me, “We wanted Iraq. Iraq doesn’t want us.”America has essentially abandoned Christains in Muslim lands. Apparently Christianity doesn't matter. The worst is that we are largely responsible. We have destroyed the leaders and governments that allowed Christianity to exist. I wish fundamentalist Christians would quit worrying about Israel so much and worry about their Christian brothers and sisters.
Uncertainty about Taxes
Republicans and businessmen complain about uncertainty for planning, but a lot of that is due to the fact that businessmen are lobbying for change, and Republicans want to give them lower taxes. Meanwhile they block major changes to the tax code that might increase some sort of taxes. The Republicans have problems because they have so many special interests to take care of, from defense contractors to oil companies, to neighborhood businesses. Something that helps one, might harm another. So, they are responsible for much of the uncertainty that they complain about.
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