Mr. Buffett’s recent decision to invest in Bank of America represents another tax-avoidance triumph for the Berkshire chief executive. U.S. corporations are subject to a top federal income tax rate of 35%, the second highest in the world. But the Journal’s Erik Holm notes that Mr. Buffett and the Berkshire bunch won’t pay anything close to that on their investment in BofA preferred shares.
That’s because corporations can exclude from taxation 70% of the dividends they receive from an investment in another corporation. This exclusion is intended to prevent double- or even triple-taxation as money is earned by one company, paid to another company and then ultimately paid out to shareholders. The policy makes sense; we only wonder why the exclusion isn’t 100%.
Battered by a weak economy, the nation’s biggest banks are cutting jobs, consolidating businesses and scrambling for new sources of income in anticipation of a fundamentally altered financial landscape requiring leaner operations.
By naming Krueger to be the chairmanship of the president’s Council of Economic Advisers, replacing the departed Austan Goolsbee, Obama is sending a strong signal to the business world, Wall Street and the rest of America: expect little in the way of major economic policy shifts.
The New York Times reported last week that the Obama administration was considering a proposal to “allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent.”
The measure’s supporters tout this as an almost cost-free way to stimulate the economy, boost the housing market and reduce foreclosures. But universal refinancing is far from free, and is poorly designed to stimulate either the economy or the housing market. Certainly, Fannie Mae and Freddie Mac, the huge finance companies now under government control, will have to allow some mortgage modifications in order to reduce their foreclosure losses. That calls for smart, selective policies, not universal refinancing.
As the economy remains stalled, and the election draws closer, the Obama administration seems increasingly willing to consider proposals that will further distort the housing market and seem to have the ultimate goal of preserving a major role forFannie Mae and Freddie Mac — the two giant government sponsored enterprises at the core of the housing finance debacle that caused the Great Recession
There is nowhere left to hide. America’s governing elites begin to internalize the magnitude of their failure to generate jobs. CBO now predicts worse than 8% unemployment until 2014. America begins to engage, seriously, with the implications of the faltering dollar and reconsider the appeal of the gold standard. From The New Yorker to The National Interest to The Washington Monthly to The Nixon Foundation, thoughts turn to gold.
The White House said Monday that Obama is nominating Krueger to head the White House Council of Economic Advisers. If confirmed by the Senate, he would replace Austan Goolsbee, who left the administration earlier this month.
In Europe, the VAT rate started out in the single digits in France in the 1950s. But because the VAT funds Europe’s ever-expanding welfare state, the rates now range from a minimum of 15% to a high of 25%, and they are heading upward.
In Europe, the VAT on top of the income tax is a crushing burden. In France, where the VAT rate is 19.6%, total tax as a percentage of GDP is 46%, versus 30% in the United States. Britain now has a 20% VAT in addition to a 50% top rate on its personal income tax, a 26% corporate tax and a host of other taxes. Even if a U.S. VAT remained in the midrange of rates compared to Europe, it could easily push the total tax burden up to 40% of GDP.
In addition to its voracious appetite, the value-added tax is a master of disguise. Because it is levied on the sale of a product at each stage of production—whenever value is added—and at the final sale, the VAT is portrayed as a tax on consumption. The French once illustrated the VAT with an example: The farmer passes the tax to the miller, the miller passes it to the baker and the baker includes it in the price of bread. Ever since, the VAT has for political purposes been viewed as a burden on the consumer, thereby providing politicians with an excuse for “compensating” large numbers of favored voters with disproportionately large cash subsidies or exemptions.
The U.S. Postal Service, which expects to lose $7 billion this year, spent $4.3 million on employees who DID NOTHING in the first half of the year because of requirements in union agreements, an audit found.
…why not offer legal protections to the ugly, as we do with racial, ethnic and religious minorities, women and handicapped individuals?
Gee, next thing, you know employers will start discriminate on education, IQ, productivity, sales….Why not give legal protection to fat people,people who wear glasses,people who are left-handed,short people,people who are too tall,people who are stupid…
RATES of mental illnesses including depression and post-traumatic stress will increase as a result of climate change, a report to be released today says.
The paper, prepared for the Climate Institute, says loss of social cohesion in the wake of severe weather events related to climate change could be linked to increased rates of anxiety, depression, post-traumatic stress and substance abuse.
The vast majority of part-timers, defined as those who work less than 35 hours a week, are happy with their status. Those who would prefer full-time work make up only 31% of all part-time workers, according to the Labor Department.
U.S. Cities Strangled by Cost of Ballooning Pensions – Do not worry – US is not Greece some say….But US is Greece. Never mind we can print more money. At the end we all be millionaires with a millions worth as much as single roll of toilet paper. This is not happening just in California it is happening in all states. How long we can continue the ponzi schemes …not very long.
“Until that point, the city published staff compensation exclusively by “salary,” which represents only about half what the City of Beverly Hills pays per employee,” he said. Added to that amount are: guaranteed overtime (city employment agreements with unionized workers includes “guaranteed” overtime), overtime, administrative leave, paid vacation, sick time off (paid if not used), 100 percent retirement contributions (the employee pays nothing), full health care, “9/80” days (every other Monday or Friday off), and legal holidays, he said. Exempt employees get the same amount of sick leave and vacation time, but receive administrative leave instead of overtime pay.
With a population of 34,000, Beverly Hills has one employee for every 34 residents, the highest ratio in California.
There does appear to be an unhealthy sense of entitlement on the part of the First Lady, which seems in poor taste at a time when 14 million Americans are out of work, the housing market is collapsing, and the United States is facing the strong possibility of a double-dip recession. Perhaps Mrs Obama could take a few tips on austerity as well as humility from her British counterpart Samantha Cameron, whohas just one assistant, in contrast to at least 17 personal staff for the First Lady, and doesn’t feel the need to travel en masse with an entourage at taxpayers’ expense. The vast majority of Americans are making significant sacrifices at this time of economic turmoil, and tens of millions are struggling even to make ends meet. It’s time for both the President and the First Lady to exercise a bit of fiscal responsibility, not least when they are spending other people’s hard-earned money.
International oil companies are jockeying for advantage in the new Libya, buoyed by news that damage to the energy infrastructure appears to be slight. But they remain anxious about a lack of security and are holding off sending workers back into the country.
Some industry analysts believe that is optimistic. Sources at Italian oil company Eni (the largest producer in Libya) forecast production at 750,000 barrels by sometime early next year. Energy consultants Wood Mackenzie estimate it will take three years for production to recover to the prewar level. But that would depend on the prompt return of foreign workers.
…Tiny changes in overall cloud cover can result in relatively large temperature changes.
Unsurprisingly, it’s a politically sensitive topic, as it provides support for a “heliocentric” rather than “anthropogenic” approach to climate change: the sun plays a large role in modulating the quantity of cosmic rays reaching the upper atmosphere of the Earth.
Finding no “evidence of research misconduct,” the Arlington, Virginia-based National Science Foundation closed its inquiry into Mann, according to an Aug. 15 report from the inspector general for the U.S. agency. Pennsylvania State University, where Mann is a professor of meteorology, exonerated him in February of suppressing or falsifying data, deleting e- mails and misusing privileged information.
Rep. John Yarmuth (D-Ky.) slammed President Obama’s promise that the stimulus package would deliver lower unemployment rates as “the stupidest thing that basically any administration probably ever said” in an interview Wednesday with WFPL News.
“I think if you asked them now they will say that was the stupidest thing that basically any administration probably ever said because that’s not something they can necessarily control,” Yarmuth said.
While the government defends its new monitoring program of online postings concerning the accident at the Fukushima No. 1 nuclear power plant to stem the spread of “inaccurate” information, critics say it harkens back to Big Brother.
The Agency for Natural Resources and Energy said tweets on Twitter and postings to blogs will be monitored for groundless and inaccurate information that could inflame and mislead the public.
Japan’s nuclear regulator says the operator of a damaged nuclear plant knew it might be hit by a far bigger tsunami than it was designed to withstand.
The Nuclear and Industrial Safety Agency says the operator informed it just four days before Japan’s massive March 11 earthquake and tsunami that waves exceeding 10 meters (33 feet) could hit the Fukushima Dai-ichi nuclear plant.
The plant was only designed to withstand a tsunami about half that height.
Among the tax reforms getting attention is a value-added tax, or VAT. Similar to a sales tax (more about this below), the value-added tax has become a significant part of the revenue systems of Europe and also has been adopted by over 100 other nations. The VAT is believed to be a magical device that can stuff government coffers with money without untoward economic political consequences. It is no such thing.
I didn’t know I needed the ability to read the Wall Street Journal and The Corner on a handsome handheld device at my breakfast table, on the Metro, on the Acela, or in any Starbucks I entered. But Steve Jobs did. I didn’t know I wanted to mix and match my music collection on a computer and take it with me wherever I went, but Steve Jobs did. I didn’t know I wanted a portable multimedia platform that would permit me and my kids to hurl angry birds out of a slingshot at thieving pigs. But Steve Jobs did.
All those successes were made possible by failure after failure after failure and the lessons learned from those failures.
There’s a moral here for a Washington culture that fears failure too much. In today’s Washington, large banks aren’t permitted to fail; nor are large auto firms. Next up will be too-big-to-fail hospital systems. Steve Jobs is a reminder that failure is a good and necessary thing. And that sometimes the greatest glories are born of catastrophe.
A MUST WATCH VIDEO – Steve Jobs: How to live before you die
In 2008, Obama was hailed as a genius, a “first rate intellect,” the smartest man to ever be president, and we know now the first part is true. He is the political genius who shed 30 points in his first years in office.
He’s the political genius who blew up his coalition in his first months in office, who led his party to annihilation in the 2010 midterms (while showing utter indifference to the fate of congressional Democrats), and gave the Republicans — who were on the floor, in a coma — more than they needed to come roaring back from the dead.
He is the policy genius who “leads from behind,” whose engagement ideas have gone nowhere, whose stimulus stimulated only the deficit, whose health care “success” helped kill off his recovery, and whose efforts to create jobs all fell flat.
The beauty of a free society is that someone slightly less gifted who works harder than usual can rise; the burden of a free society is that someone slightly less gifted is expected to work harder than usual. The socialist society, however, is problematic on all fronts. With no incentive to work hard, those of all gift levels simply stop working.
Which college field of study has the lowest standards and the highest grades — a magical Lake Wobegon world in which all the students are not just above average but way above average? If you guessed “teaching,” you’d be right.
After adjusting for inflation, spending per student nationally has increased almost threefold over the last 40 years (remember: per student spending accounts for population increases). Shouldn’t we be getting three times the services (heck, I’d settle for 1½ times) instead of the continued reduction of services?
Vice President Joe Biden said he “didn’t come to explain a damn thing” on his visit to China, adding that the country’s economy had become the world’s second biggest due to the stabilizing presence of U.S. troops in Asia.
Some media had suggested the purpose of his trip to China was to “explain our economic situation,” Biden told U.S. troops at Yokota airbase in Japan today. “I didn’t come to explain a damn thing.”
Biden, 68, spent four days traveling in China with counterpart Xi Jinping, who is the frontrunner to succeed PresidentHu Jintao in 2013. The vice president said he made the visit to the biggest foreign holder of U.S. debt to build a relationship with Xi and wanted to make clear that theU.S. economy is strong and that the nation is still a Pacific power. (it is not clear wHU’s nation is a Pacific power?)
How to explain those damn things then Mr BuyThen?…
As president and first lady of the largest economy in the world and the third-largest country by population, Barack and Michelle Obama top the list of the world’s most powerful couples. Michelle–named the globe’s eighth most powerful woman byForbes this year—doesn’t just sit in the White House. She leads the Let’s Move campaign to tackle childhood obesity and has made official trips to Africa, India, Latin American and the U.K. Not to mention, her fashion choices alone have contributed $2.7 billion to the retail sector, according to theHarvard Business Review.
New York Times columnist Paul Krugman, in a talk show August 14, remarked that the fiscal stimulus caused by a fake Alien invasion of the United States would best rescue the U.S. economy, providing the inflation and growth that according to him it needs (a real Alien invasion would be equally efficacious, but might cause unpleasant collateral damage.) In that one statement, we can at last nail the Keynesian fallacy, showing once and for all just WHY it is intellectually bankrupt. Krugman is after all not some mere scribbler who has misunderstood the exquisite and subtle nuances of Keynesian economics; he is the proud possessor, unshared with any collaborator, of the 2008 Nobel Memorial Prize in Economic Sciences.
If the notion that we are merely living through the aftereffects of a mere “recession” that ended in 2009 sounds somewhat ridiculous, that’s because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions.
Sales of new homes fell for the third straight month in July, a sign that housing remains a drag on the economy. If the current pace continues, 2011 would be the worst year for new-home sales on records dating back at least half a century.
It’s conventional wisdom in Washington to blame the federal government’s dire financial outlook on runaway entitlement spending. Unless we rein in Social Security, Medicare and Medicaid, the conventional wisdom goes, the federal government is headed for disaster.
That’s true in the long run. But what is causing massive deficits now? Is it the same entitlements that threaten the future?
A federal stimulus grant of nearly $500,000 to grow trees and stimulate the economy in Nevada yielded a whopping 1.72 jobs, according to government statistics.
In 2009, the U.S. Forest Service awarded $490,000 of stimulus money to Nevada’s Clark County Urban Forestry Revitalization Project, aimed at revitalizing urban neighborhoods in the county with trees, plants, and green-industry training.
No matter how you look at it, when Buffett – or anyone else pays more taxes to the government – there is an offsetting reduction in the amount of money and employment in the private sector. Although the rich may not notice the difference, the middle-class and poor pay the price.
How high the potential price may be is illustrated by the 1990 budget deal. To raise revenue, the Democratic Congress targeted the rich with a luxury tax on such expensive goods as boats that sold for more than $100,000, jewelry and expensive cars. But, the actual consequences were born by several hundred thousand middle-class people who lost their jobs and businesses when the demand for these now-higher-tax goods fell sharply – by 70% in the case of luxury boats.
And below it is illustrated how Illinois lost jobs after hiking taxes on the evil corporations
Why did Roosevelt’s New Deal fail so miserably? The larger problem is that federal spending can’t create jobs. It merely transfers wealth from taxpayers to central planners. But worse than that, most of FDR’s New Deal was driven by politics. It was economically unsound.
You can pick any number of things that could have caused the chairman and CEO of Goldman Sachs to go out and hire an expensive criminal defense attorney, but his most pressing concern has to be a guy named Rajat Gupta.
The majority view on the FOMC is flawed and carries serious downside risks to the economy. Monetary policy did not bring prosperity from the Great Depression, it did not undo the stagflation of the 1970s, it did not undo the lost decade in Japan and it will not likely create jobs now
There seems to be a Wal-Mart every four feet, leaving no more room for more stores. The expansion of stores has declined, and so have their sales. It’s had to raise prices to compete and appease shareholders, but customers don’t go to Wal-Mart for rising prices. They go for low ones, and so, declining sales.
Aging baby boomers may hold down U.S. stock values for the next two decades as they sell their investments to finance retirement, according to researchers from the Federal Reserve Bank of San Francisco.
Americans born between 1946 and 1964 are beginning to retire as the U.S. stock market is still recovering from the financial crisis that began in 2007 with the collapse of the subprime-mortgage market. The timing is “disconcerting” and, since stock prices have been closely tied to demographic trends in the past half century, “portends poorly for equity values,” adviser Zheng Liu and researcher Mark Spiegel wrote in a paper released by the bank today.
ASUSTeK started out making the simple circuit boards within a Dell computer. Then ASUSTeK came to Dell with an interesting value proposition: “We’ve been doing a good job making these little boards. Why don’t you let us make the motherboard for you? Circuit manufacturing isn’t your core competence anyway and we could do it for 20% less.”
Dell accepted the proposal because from a perspective of making money, it made sense: Dell’s revenues were unaffected and its profits improved significantly. On successive occasions, ASUSTeK came back and took over the motherboard, the assembly of the computer, the management of the supply chain and the design of the computer. In each case Dell accepted the proposal because from a perspective of making money, it made sense: Dell’s revenues were unaffected and its profits improved significantly. However, the next time ASUSTeK came back, it wasn’t to talk to Dell. It was to talk to Best Buy and other retailers to tell them that they could offer them their own brand or any brand PC for 20% lower cost.