One of the many false talking points of the Obama administration is that a rich man like Warren Buffett should not be paying a lower tax rate than his secretary. But anyone whose earnings come from capital gains usually pays a lower tax rate.
How are capital gains different from ordinary income?
Ordinary income is usually guaranteed. If you work a certain amount of time, you are legally entitled to the pay that you were offered when you took the job.
Capital gains involve risk. They are not guaranteed. You can invest your money and lose it all. Moreover, the year when you receive capital gains may not be the same as the years when they were earned.
Mr. Obama and many in the media seem to be clueless when it comes to the consequences of the administration’s economic policies. The president recently said on David Letterman’s TV show that the “deficit is not a problem now but will be in the future.” He does not seem to understand that the Federal Reserve’s response to the growth in spending and the deficit has had the same effect as a massive tax increase on savers, who tend to be the most responsible citizens. TheFed has held down interest rates by buying massive amounts of government bonds, which has destroyed the return on savings for most Americans, causing great hardship on those who have relied on their past savings to generate interest income for retirement or other purposes. Funding the deficit has also been a massive misallocation of what should be productive capital, causing much of the current stagnation.
You can influence the returns and risk of an equity portfolio in basically in three ways. One is company selection. Another is sector allocation. Another is how the portfolio is positioned across countries. Over longer periods of time, the latter appears to have the greatest impact.” In other words, over the long haul in a diversified portfolio variations in country performance tend to count more than variations in company performance.
In the mid-1950s, and again a decade later, the Army used motorized blowers atop a low-income housing high-rise, at schools and from the backs of station wagons to send a potentially dangerous compound into the already-hazy air in predominantly black areas of St. Louis.
Local officials were told at the time that the government was testing a smoke screen that could shield St. Louis from aerial observation in case the Russians attacked.