Archive for the ‘Tax’ Category
Mr. Mulligan is a professor of economics at the University of Chicago and the author of “The Redistribution Recession” (Oxford, 2012).
The health-care law, starting Jan. 1, will begin driving up marginal tax rates—well above 50% for many.
A new wave of redistribution will arrive in America on Jan. 1, primarily thanks to the Affordable Care Act. The president’s health-insurance plan forces those who hire, work and produce to pay full price for health care, while creating generous discounts for practically everyone else.
…In the years 2015 and beyond, full-time workers with median incomes will keep only half of the compensation created by their decisions, with the other half going to the government in the form of additional taxes and savings on subsidy payments. By keeping 50% rather than 60%, workers will find that the reward for holding a job will have fallen a damaging 17%
The £155,000 proceeds from the sale of her villa in Paralimni, near Ayia Napa, hit her account two hours before close of business on March 15. The next day, EU officials announced that to qualify for a bailout the bankrupt island must enforce draconian measures, including an unprecedented tax on depositors with more than 100,000 euros (£85,000).
Sharon’s two accounts at the Bank of Cyprus, one set up especially for the transaction, were immediately frozen. The 55-year-old, who fears she could lose £42,000, said: “On the same day that the money went into the bank I sent an e-mail. In it I instructed them to transfer the funds, some of which were in euros and some in sterling, to the UK but on Saturday morning the news broke that Cypriot banks were in major financial difficulty.”
“I believe in our Constitution. I am a veteran, I served for six-and-a-half years proudly and I served to protect our rights,” he said. “Now whenever I have someone coming in and trying to pollute my child’s mind with biased opinions…there’s no education in that.”
On the same day ESPN broadcast the Rutgers tape, The New York Postreportedthat Kathy Boudin, a professor at Columbia University, was named the 2013 Sheinberg Scholar-in-Residence at NYU Law School. In 1984, Boudin, a member of the Weather Underground, a violent, oafish association of upper-class “revolutionaries,” pled guilty to second-degree murder in association with the infamous 1981 Brinks armored car robbery in Nyack, New York. Babbling in the language of anti-racism and anti-imperialism, Boudin assisted in ending the life of three people, including Waverly Brown, the first black police officer on the Nyack police force, and left nine children fatherless. She was sentenced to 20 years to life in prison. In 2003, Boudin was released; by 2008 she had landed a coveted teaching position at an Ivy League university.
Indeed, Boudin’s Columbia University biography doesn’t mention her violent past, describing her simply as “an educator and counselor with experience in program development since 1964, working within communities with limited resources to solve social problems.” Neither does an official NYU press release announcing her new gig, instead explaining that Boudin “has been dedicated to community involvement in social change since the 1960’s.” Well, that’s one way of putting it.
VIDEO ‘Drug smugglers’ show just how easy it is to cross into US
It’s Tax Day, and for millions of Americans that means ponying up to the IRS. The federal government does many things these days—most of which would be more efficiently carried out at the local level, or in the private sector. But Uncle Sam also engages in a particular form of charity that many Americans overlook: spending many tens of billions of dollars to defend wealthy, developed nations.
A new Cato infographic puts it all in perspective. It shows how much American taxpayers spend to subsidize the security, and to defend the interests, of other nations that are more than capable of defending themselves.
Bulls love bull markets. History’s most famous bull, Yale economist Irving Fisher, loved the Roaring Twenties of the Great Gatsby.
Remember, weeks before the Crash of 1929 this brilliant Yale professor told investors: “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon, if ever, a 50 or 60 point break from present levels, such as bears have predicted. I expect to see the stock market a good deal higher within a few months.”
When asked why he robbed banks, Slick Willie Sutton famously answered, “Because that’s where the money is.” Today, millions of Americans appear to have jumped onto our disability rolls for the very same reason. Today, 8.8 million Americans – nearly 6 percent of our workforce – claim they are physically incapable of working.
Add in dependents, and the figure swells to nearly 10.9 million. The number has grown every month since January 1997, when there was a small dip, and has grown faster than the number of added annually to the workforce. For the United States, this is an expensive proposition. The Social Security Administration spent $137 billion on disability last year; Medicare costs for this group tack on another $80 billion, since folks on disability automatically qualify for Medicare.
WHAT prices will today’s home buyers get if they sell a decade from now?
Most people live in their home for many years. They don’t need to view it as an investment at all, but if they do, they surely need a long forecasting horizon.
The problem is that modern economics has a poor understanding of past movements in home prices. And that makes the task of predicting the state of the market in 2023 challenging, at the very least. Still, we can learn something by analyzing the factors that affect home prices in general.
German journalists have discovered barrels of radioactive waste on the floor of the English Channel, just a handful of thousands dumped there decades ago. It was previously thought the material had dissipated. Now politicians are calling for the removal of the potentially harmful containers.
By Jesse Drucker on January 23, 2013
Inside Reindert Dooves’s home, a 17th- century, three-story converted warehouse along the Zaan canal in suburban Amsterdam, a 21st-century Internet giant is avoiding taxes.
The bookkeeper’s home office doubles as the headquarters for a Yahoo! Inc. (YHOO) offshore unit. Through this sun-filled, white- walled room, Yahoo has taken advantage of the law to quietly funnel hundreds of millions of dollars in global profits to island subsidiaries, cutting its worldwide tax bill.
The Yahoo arrangement illustrates that the Netherlands, in the heart of a continent better known for social welfare than corporate welfare, has emerged as one of the most important tax havens for multinational companies. Now, as a deficit-strapped Europe raises retirement ages and taxes on the working class, the Netherlands’ role as a $13 trillion relay station on the global tax-avoiding network is prompting a backlash.
The Dutch Parliament is scheduled to debate the fairness of its tax system today. Lawmakers from several parties, including members of the country’s governing coalition, say they want to remove a stain on the nation’s reputation.
“We should not be a tax haven,” said Ed Groot, a parliament member from the Labour Party, which along with the People’s Party for Freedom and Democracy took power in November. Both ruling parties are “fed up with these so called PO Box companies,” he said. “If they go somewhere else we are not sorry at all because they spoil the name of Holland. Otherwise you can wait for retaliation measures and this we don’t want.”
Last month, the European Commission, the European Union’s executive body, declared a war on tax avoidance and evasion, which it said costs the EU 1 trillion euros a year. The commission advised member states — including the Netherlands — to create tax-haven blacklists and adopt anti-abuse rules. It also recommended reforms that could undermine the lure of the Netherlands, and hurt a spinoff industry that has mushroomed in and around Amsterdam to abet tax avoidance.
Attracted by the Netherlands’ lenient policies and extensive network of tax treaties, companies such as Yahoo, Google Inc. (GOOG), Merck & Co. and Dell Inc. have moved profits through the country. Using techniques with nicknames such as the “Dutch Sandwich,” multinational companies routed 10.2 trillion euros in 2010 through 14,300 Dutch “special financial units,” according to the Dutch Central Bank. Such units often only exist on paper, as is allowed by law.
That is an old post going around the internet, but I think people need more examples like this one, to figure out, that we are on the path to kill the golden goose…
Our tax system explained with beer:
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes. it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
They realized that $20 divided by six is $3.33. But, if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now paid $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $50 instead of $59 (15% savings).
Each of the six was better off than before. And, the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $9!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got nine times more than I!”
“That’s true!!” shouted the seventh man. “Why should he get $9 back when I got only $2? The wealthy get all the breaks!”
“Wait a minute.” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But, when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!”
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
Updated June 25, 2012, 7:27 p.m. ET
The rules and burdens that explain Europe’s economic crisis.
Prime Minister Mario Monti has issued a new “growth decree” to revive Italy’s moribund economy. Among other initiatives, the 185-page plan proposes discount loans for corporate R&D, tax credits for businesses that hire employees with advanced degrees, and reduced headcount at select government ministries.
Will any of this solve Italy’s economic problems? Only in the sense that one could theoretically drain Lake Como with a ladle and straw. Allow us, then, to illustrate why Italy’s economy stagnates.
Imagine you’re an ambitious Italian entrepreneur, trying to make a go of a new business. You know you will have to pay at least two-thirds of your employees’ social security costs. You also know you’re going to run into problems once you hire your 16th employee, since that will trigger provisions making it either impossible or very expensive to dismiss a staffer.
But there’s so much more. Once you hire employee 11, you must submit an annual self-assessment to the national authorities outlining every possible health and safety hazard to which your employees might be subject. These include stress that is work-related or caused by age, gender and racial differences. You must also note all precautionary and individual measures to prevent risks, procedures to carry them out, the names of employees in charge of safety, as well as the physician whose presence is required for the assessment.
Now say you decide to scale up. Beware again: Once you hire your 16th employee, national unions can set up shop. As your company grows, so does the number of required employee representatives, each of whom is entitled to eight hours of paid leave monthly to fulfill union or works-council duties. Management must consult these worker reps on everything from gender equality to the introduction of new technology.
Hire No. 16 also means that your next recruit must qualify as disabled. By the time your firm hires its 51st worker, 7% of the payroll must be handicapped in some way, or else your company owes fees in-kind. During hard times, your company may apply for exemptions from these quotas—though as with everything in Italy, it’s a toss-up whether it’s worth it after the necessary paperwork.
Once you hire your 101st employee, you must submit a report every two years on the gender dynamics within the company. This must include a tabulation of the men and women employed in each production unit, their functions and level within the company, details of compensation and benefits, and dates and reasons for recruitments, promotions and transfers, as well as the estimated revenue impact.
The system does allow certain exemptions—provided your company stays small, or you hire the right gender or in certain areas. Industrial and security firms are exempt from paying into the national fund for temporary unemployment if they have 15 employees or fewer; retail and tourism companies don’t have to start contributing until they hire their 51st worker; and trade companies are exempt until they hire their 201st employee.
Here’s another loophole you might try to jump through: Businesses currently receive tax credits worth up to €15,200 per year per new permanent-contract hire—that being for new employees who are also women or under the age of 35 and live in the regions of Abruzzo, Molise, Campania, Basilicata, Puglia, Calabria, Sardinia and Sicily.
Businesses with no more than 250 employees may also still be enjoying their three-year profit-tax holiday, which was granted in 2010 for small and medium-sized firms that reinvest their profits in forging “networks” for “innovation” with other small businesses nearby.
All of these protections and assurances, along with the bureaucracies that oversee them, subtract 47.6% from the average Italian wage, according to the OECD. Two-thirds of that bite comes before payroll, meaning many Italian workers are unaware of their gross cost to employers.
But you as the employer are aware of them, which may explain the temptation to stay small and keep as much of your business as possible off the books. This gray- and black-market accounts for more than a quarter of the Italian economy. It also helps account for unemployment at a 12-year high of 10%, and GDP forecast to contract 1.3% this year.
Still, who knows: With any luck, you may discover a loophole in Mr. Monti’s new growth decree that will allow you to hire a few more employees without incurring too many costs—provided, one assumes, that all of the new hires are disabled, blue-eyed Sardinians under the age of 35.