I actually agree that the ultra rich should pay more in taxes, and do agree with Buffett that the line should be drawn somewhere around the $1 million mark, not the $250K mark as others would suggest. One tax analyst I was watching said that this would raise something like $50 billion in the first year… but that is supposing that all of the people who make $1M decide to stay in the country. I imagine at least some would leave the country. Let’s say they don’t, and the gov raises an extra $50B… so what. That’s a drop in the bucket compared to the… what $12+ trillion of debt?

It’s silly to figure out what the government is spending, and then just try to raise that much money. That presupposes that everything the government spends money on is worthwhile… including war, the “vanishing 25 billion,” TSA, etc. What if the government decided to provide computers for all of us… that’s obviously not the role of government, but should we just raise taxes to meet that demand, or should we actually question what the government spends money on?

The end issue is philanthropy. They tell us that taxes feed the hungry and educate small children and every other fluffy thing they can think of. The reality is that most of the income tax goes to pay the interest on our debt to the federal reserve… so it goes to the bankers. State property taxes pay for schools, and capital gains taxes pay for defense. Federal money does not cover local roads, etc.

At the end of the day, I’d like to see money going to the disadvantaged, not lining the pockets of bankers and politicians, or funding wars and corrupt governments of other countries. What I’d like to see here is some REAL incentives to give to charities. Now, you get a tax deduction that is so small, it’s hardly worth declaring unless you are ultra rich in the first place, and donated tons of money. If in place of a deduction, I could outright REPLACE my taxes (or some percentage thereof) with charitable gifts, I’d make a freaking HOBBY out of charity. In other words, if I could pay 30% in taxes, or pay 10% in taxes and give 20% to give to the charity of my choice, I’d much rather give to charity directly. This also cuts the fat out of the middle man so that the people in need get a higher percentage of my gifts. I don’t have to pay someone to give someone else my money. I’d also feel like I was actually making a difference as opposed to throwing money into the black hole of government.

Another idea is the “opt out” idea. I’d like it if there was an option to pay 10% – 15% federal income tax, and then opt out of some of what the federal government provides. Opt out of social security (because let’s face it, we won’t get it anyway), opt out of medicare and medicade and save/invest/ get our own insurance. Then if the people who believe in the system decide to pay 30%-50% in taxes, more power to them.

I digress.

As it relates to this article, I think Buffett sort of implies in on sentence in the middle that higher taxes means more jobs… which is obviously silly. Even if the government could create jobs, we have no indication that the jobs they decide to create are worthwhile. One of my favorite economists Milton Friedman was in China and some of the government officials were showing him around. They went by a construction site, and there were hundreds if not thousands of Chinese citizens digging a foundation. He asked why they were not using modern machinery – that would make their task much more efficient. The government officials that he was with said “that’s true, but this is a jobs program.” He replied, “I see. Well, if you wanted to create more jobs, you could take away their shovels and give them spoons.” Having jobs for the sake of having jobs is as silly for taxing just for the sake of taxing. The market leads people to make good decisions on how to spend their money carefully. Central economic planners are wasteful because they can’t be as precise as lots of collective individuals.

I’m also wondering how long it takes to raise the taxes for the rich… it seems as though Obama has been in office for a while, and enjoyed a democratic house and senate for the first two years of his term… is it naive of me to think he could have done this? I think not; I think it’s naive for anyone to still believe there is any difference at all in these two parties.

P.S. the Super Committee is ridiculous. No constitutional authority, and small groups are very susceptible to corruption.

http://economix.blogs.nytimes.com/2011/08/15/who-pays-the-supercommittee/

Thanks for asking for my opinion 🙂 Sorry you actually got it.

Where is all of your money?

December 30, 2008

It is true – the rich are getting rich and the poor are falling into greater poverty. This, however, is no fault of the government. Guess who is to blame.

Us.

That’s right, you and me. After all, who goes to see expensive concerts? Who continues to pay overpriced movie tickets? Who pays an arm and a leg for season tickets to athletic events? It’s not the government, it’s the consumers.

There is also a terrible misconception in this country that it’s always the government’s responsibility to fix our problems. I challenge that thinking – keep in mind the government is responsible for most of our problems. This topic however will be reserved for a future rant.

In a small survey I did with some close friends, here’s how our money usage is spent.

  • A little less than a third spent in taxes
  • A little more than a third spent in bills including shelter
  • A little less than a third spent in “entertainment” and food.

Ok, so let’s take a closer look at the “entertainment” section. For most Americans that means
movies, compact disks of some kind (DVD/CD), concerts, comedians, restaurants, etc.

If I go and see a mainstream artist in concert (depending on my income and the quality of the seat I paid for) I just gave this already ridiculously rich person MORE of my hard earned cash. In my specific example, a good seat at a mainstream concert probably cost me %10-%15 of my disposable income (the money left over after bills/taxes/etc). Sure, I might like the artist, but do I REALLY need to give them that much of my money?

The answer is no. Anyone who complains that we don’t tax the rich enough but goes supports these rich people with their personal funds are hypocrites. How ridiculous is it to say “Ok, I’ll give you my hard earned money” and then come tax season say “Hey, give that back to us!”

Music is a classic example – see my previous blog by clicking here.  I talk about MIDI files and how mainstream musicians do not deserve our love or money.  Music is an industry where one attractive person has a good to wonderful singing voice… that’s it.  They have entire staffs of people to write their lyrics, write their songs, and technology to make these processes flawless.  The technology utilized in concerts is dishonest and contrived.  The end result is this: Consumers think they are supporting an artist.  The fact is that every dollar spent in that artist’s name is a waste.  The artist (who is already rich) didn’t do nearly the amount of work that you did for that money.  Remember how hard you worked for that $75 concert ticket?  Say the concert had 3,000 attendees.  That artist just raised $225000 and did little to no work whatsoever.  Come on folks – our money is worth more than that.  I’d rather not have to remind people about impoverished people in our country and other parts of the world; I’ll save that for another post.

The bottom line here is this:  If you feel like athletes are overpaid and more money should be spent on cancer research, then don’t go to sporting events and donate more money for cancer research.  If you think the money in the pockets of the Hollywood types would be better spent in the pockets of those in poverty, don’t go to Hollywood films.

I understand as well as anyone else the value of entertainment.  We’ve all been brainwashed into thinking we can only get entertainment from big companies.  THAT IS COMPLETELY RIDICULOUS.  You like sports?  How about PLAYING them with your family or friends?  You like movies?  Hit up the independent movie theater or local film festival.  Remember Memento? Pans Labyrinth? These were at one point film festival movies that were so successful they were mass produced.  Independent films are great – do not believe the stereotype fed to you by the big studios leading you to believe that anything that does not come from them is crap.  Remember Speed Racer?  Pearl Harbor?  Superman Returns?  Valentine?  These were studio pictures and they were TERRIBLE!  How about music – do you really need to go to a concert and hear music (that is probably pre-recorded) when you already have the Mp3 files and/or the radio?  How about the local coffee shop that features talented folks in your community – don’t they need your support more than the mega-artists?  The answer is obviously YES!  Again, it is propaganda that only the big guns are talented.  At least the local kid who is getting NO CORPORATE HELP probably wrote his or her own songs for goodness sake.  We should definitely be supporting them and I’m telling you the music is just as good.  I’ve been to local coffee shops and small venues and I know it can be just as good.

In conclusion, think about this.  If you think the rich in America are too rich, you’ve got to stop supporting them.  WE are the reason they are getting richer and richer.  No matter poor we get – even if we can barley support ourselves, we STILL give these ultra rich people MORE of our money.  We’ve got to wake up.

The only thing more terrifying than being exposed to 5,000 ads a day (which we are) is realizing that IT IS WORKING.

Just think about it… and remember, people are dying of thirst in other parts of the world.